C'PA Rt:VI[:\I' SC'HOOL OI- I l-{l: PHll-tPl'lN t"s

Marrila

Saturclal . ScPteniber 14. 101

8:00 a.rn. to l0:00 a.rlr.

THITORY OF ACCOLJNTS
Final Preboard Exantination

SU'I' A
M{-JL'TIPLE CHOICE : MARK FULLY i"ith Pencil Na. 2 tlre letter of your choice on the att \\.er
sheet provided. Make lhe mark DAR.K trri do rr{,)t usc too niuch pressrlre. uRASttlLtlS I RH
STRICTLY NOT ALLOWED.

SnriilI tind rnediuur-sized entities are et'rtiiics that

3. Do not ha.ve public accountability arrd pr"iblir!: speciel ptirpose tlnancial repons
L}SETS.

h. llalc public accorttrtiibiliti,and publish gcllcrttl prlrpi)sc llttanciatl

LISC TS

ci.

ibr external

rcpolts tirr'c:.tcittitl Llscfs.,

llnanc ial |ell(,r'is t()t' c\t\'l'lltll
I

Havr. p6blic accol;ttabititl' and publish speciai pllrpose tjnancial reports

lbr crterrral

Ltsers,

2.

a.
b.
c,
d.

i'r^ray

Meralcir Public Utilities

Sr-rn Lit'e Financial Insurance
None oithese

a tirst-time adopter presents its tlnr:nciai :,tal;nrents in accordance with PFRS fbr SVII :is ot't
Decemher 31.2013 on comparative basis. rvl,lt is the,-jate ol'transitiorl to PFRS lbr SMEs'l
January 1, 2013 naman yung Opening Statement
n. I)ecer.nheril.201i
l^,. l)ect't-uher 3 l. 201 ]
Pero January 1, 2012 yung beg. of comparative
c. Jarruarf i.l0ll
period (beg of the previous yr)

il

d.

be cla.ssitred as a;r SME uitder Philippine.|urisiilctir:rr';'

Banco De ()rrr Bank

Whicit

,+.

.lanuary

l. 2010

All of the lbilowiltg cillt

be cltue b1'a tirst-tirrle il(i()ptel'o1'[)FItS lor'SMt:s irr its operling sturtcitrent

flrrancial position. except

Recognize all assets and lial-rilities r itt,s': rtargtlitiorl is required. hr I'FRS ritr SN4h.s.
Rcc,rgtrize all assets and liabilities retltti''c'cl t'l tirll Pi'RS even ilil'the PfrRS lbr SMl.: dt,c[ rrot
require such recognition.
c. Reclassii-v items that it recognizeC ulnder a pl'evious accounting f'tianreiroll< as one type ol',issetiiatrility or component olcquiiv trrrt a clitli:ren1 t)'pe of esset- liaLri,ilitr ol c()nrpoucnl ol'eqtrif -r
d. .\ppl)'PFRS ibr SMtjs in measurin;' :iil rlrcggirized asscts ancl Iiaahilities

o1'

a.
h.

,5.

he re'conc i l iation ol equity uuder the prev i':iri; ;c ;.rrti ng tian-ieworl'h to the c'quit-u- itnder I'['RlS lbr'
SMEs is made at
a. The diite oi'trarrsition to PFR.S tbr SI\4H:r onli.
b. 'The erttl of the cLtn'ettt reporlilrg pe r,oti irtrlr'.
c. I'lre clate oltransitir-lp to PFRS tgr i,M[:s; litri Lll tl-i'e eud oltlie cul't'cltt t'cportitrg pcriocl.
d. I'he dare of transitiorr to PFRS fbr S!1[-:; anii::r tlrt cnd ot'the prcccding cot.ltllaralive perit

-[

-f

A
he components oiother cornprehensive inctnre ,ri':rn S\(E, inc[,-tcle ail olthe fbllo*il1g. exc]
Cost Method ang
Reval Method is not equal to FV Method
Revaluation surplus during the year'
SMEs so wala
Actuarial gain arrd lo-ss => SMEs has the choice if to OCI or to P&L 'to
syang RE. Yung
'l-he
eff'ective portion o1'gain or loss oir ir*rJgirig instntmetrts clesigtituter.l as cash florl hedg
mga nirerevalue
Liailr or loss tiont transiating the flnancilil .slatet-trents of a tbreign operatiol'l
naman sa FV Method, diretso sa P&L yun.

a.
h.
c.
d.

7. '1he basic flnancial instnunents of an SME inclu,le all of the fullowillg. except
a. Bank accounts
b. Investrnents in nonconvertible and nonptrltali)e pr:efiretrce shares

c.
d.

iind similar clebt in-slrLilneuts

u itlr snecillc rjalr: ti'rrlalrtritl => dapat payable on demand
l-rlanr, 1o sLrbsidiaries or as;-cocintcrs ____________________
BLrurJs

Which of the tbllowing statbrnents is true about the PfiRS 'cir SMEs I'
I
at the transattlon
nteastrr':l
initi:ii1'
is
ass{ciate
in
investmelrt
thc
mddel.
ualJe
tair
the
U*der
a.
walang
I
price inch-rdiirg transactibn cost'
"deduction
b. Investnrent p;;p.;, i, J',.rrur.cl at either cost or fdir value'
from
c. A gor.r,-,n,.,.,ilrarrt relatecl io an asset n'ray be tr'eatecl as clelerred inc()i"ll3 or reductictrt irt the

8.

asset"
method
and SMEs
B
9.

d.

carrying atttount of tlre asset'

A parent need not presetlt con*qolidated iinancial statentetris if the parent hasorleonll' one'
vear'
cif rt v' itl'irl
subsidiarv which lvas acquired u,ith the intenrion of'seliing or ciisposing

T'he tlrrancial Statentents

of a nttttnrutit olgaliizi:tioll includc aii Lif the iolllririlg- llieepl'

a. Statenreut of flnarrc al p'osirion

b. Statetnent clf changes inl tirrrij balance
c. Statetlent ofactivities
d. Staterrient of cash t)ow:;i
i

1C.

i
i

actil'ities of
N'lanageineut and generali expenses- furicl i'aising anci nrenrbership deveiopment
nonprotir organization are classilleci as
a. Program serr,'ices
b. Support ser"'ices
c, Operating expenses
l,
i:
d. Nonoperating expettsesi

C Li}'iellt .1
3::ts{'-'t'i tt,i'
l l. \\, Itiuh trf tlre lbilo*irrg u'o'u['J resttlt in ir;l illurt 'tst' irt l"rl.''1li':rr'..
'edr"l
"ii;
ilt;t::naleci.
i'.'li
\\!
liiat ti'e
'"'-l
a. A private nonprotit irosIital ea,'tterj intere::I ol: investtli]riiS
If Boardrec!i'etl
h. .\ norrprolit organ izati,iu rec,-'i vcd tttrcslnditional prc ili ses',r-r
designated,
fionr a donttr
unrestrictedA nonprotit vttluntarl {ealth anil r,i,elf'are organizi.t{ion :eceived
'rt)
who siipulate<J that t[e honet,s5orilil i1,',r i',, 'i ,i', r iirrrii r .-').1
yun..
tire
o.gu'li'utit)rt recciVecl cash corrrl'ih'rtion ii'oiri a Jottot ri[1r stipltlated tliat
;;,;];;iii
ntolle\ be spept tilr eqr-ripmeut" none o1',viri:h'lras aciluirer lll liltl curl'elli l"ear'
I

except
12. Alt gf'the fbllowing are classif-red a.s ilr-ianciril:'.ri:ii 'iti':s ci'2;rsllf i"ii'nr'"1'r7a1ic'n"
a, Cash contribution restricted b1 the dr:,i.:cr fiir i'ac'':lt.r drvrrir)pnlr"I'
b. (lash contribution to Lre penlattetlilv it:r'trs,l':d'

c
d.

l3

-flie

l'unctiorrs of

f111

(lOA incl[rde ail ot'the ibilor"irj'''

t]'r;'i

,.
it. lg exarriine" atrti sr.ttlc ai] :icci)riltt:i ,)ert;1n,lr$ tr.r tirr ,'iii','r'.r' :1t.,'-l 'i:.))ct-'iiirilta:; o1'tlre naii00al
gr)\etnntent anil its suodit istttits. consliit-:;i,.;riltl i{r,,i:i..,. r).' i r'l'rir,'tri-t rri',:Lj or ctltltr0lled
b.
c.
cl.

3rrqllisrtilrl 'rt'-(\:r'lr' 'ijr'rqt:i; ;ll' 'lt

with
Caslr contribution liom a cionor who stip';iaieil ti"ll-'t tt - i'' '-r'' i' rf i'll ri-l ilccLrrdance
board. Unrestricted => Operating
decision of the governir.rg ____

Cash clividend and interest to bc Lrscd

corporatiotrs aud NGOs receivlr-lg s.rbSidl ir3;ii ihtl [,)\'i]ir-.ilrf rlt

["ti Iree p the general accot-tt-tts of'lire g{-)\'el'lllllc-ilt
To sublr]it to the President and Congress au annur"l r1.rii..,.. c,i'the ,i:lticnal goverru"nenl- lts
subtlivisions and gor,erllrncllt-o\"tted 6t'ctli'lttiriicti r',);g"," li :;':
'l'o clesign. prepare alrd,approve the zrccot-intin{ ii}st'inl ':rig3 '(;i'r1};.}rrl-lt it:liilci--S, => DBM ang

gumagawa nito..
l.t. An appropriation is
a. An authorizatioti by the legislati','e iroti'r ttr it'::i<e paitltt't-tisr i-'l;i ol g,J\'rlrilllient tlnds under
specitred conditions anci purposes. Appropriation
fr An autliorizalion by DBM io the head of an g-qenc' tri incut' chlig'ilions v'ithin a specified
anro Lntt. Allotment
c rhe atlpunt cot-tlmittet\ o1; tt'nt'acted hf i'(')'r'8:'il!'lie nt acl;:!riistr;'tii e oiliciai' Obligation
d. I hc practice gl gor. crnr-r-tcr-rt fbr" pliiuriil:p. pr'o;r,rar-tttrtitig lii.'ii briillri:ti.ig ilrt' iit rlilabiiit\ anci ltse
National Budget System
ot't'uClne'1 tirr the l-ieceSSat\ sf rvicc:; expt:cicd r,1- tltc g(,', i'l'i'tllltlllt.
I

1,5.

(ieneral income accounts of tl-re lro',/emulent inclitcl,:':ii oi'llle +i,ii.lilin!r c\rt'pt

3,. Filing t'ees in a court of'liiw' Gen. Income Accounts
b. Dii idend inconte fionr irtr estnterits Gen. Income Accounts

c. Grants nnd dotratiotrs Gen. Income

d. [:rncs ilrtd pcualtics Specific

Accounts

16.

Which of the foilov' inlr is nct a qualitative characte"istic of

a. Materialit5' sub-quality of Relevance 'to
b. Linderstandabilitv
c. Comparability

d.

fi

nancial statements?

Relevance

to
i7. Which oi.the fcrliowing is frue of the qr-ralitative characteristic of "understandability" in relation

inlormatio,t in ilrrrncial statements'7

a. Users shoulci be willing to study the inf'ormaticn u,ith reasonable diiigence
lr. Users are expected to have significant business knowledge
c. Finaircial statements should exclude complex matters
d. Finar-rcial statements should be fi'ee from material error

18,

Which of tl-re fbllowing is an example of an "expense"'?

a. A loss on the disposal ola noncurrent asstt
b. A decrease in equitl arising tion1 a distribu.tion to equity participapts
c. An int.rease in ecernomic benefrts during the accounting period
d. A reduction in income for the accounting period

is illcorrect?
A
1g. which oltl-,e follow,ir-rg statements concerning lhe conceplual Framev'ork
not legal a. The ('ilnceptua! F rarueu,ork provides th"at transactibns must be acc0unterJ tbr in accordance
with their legal forrn.
form but
b. primary responsibility for the preparation and presentation of the financial statements of the
substance
entity rests witli management.
over form c. Financial statements must not exclude complex matters in order to achieve understandability'
d. Where any conflict arises between the Conceptual Frumeworkand PFRS. the requirements of
the PFRS prevail.

20. Which of the foliorving statements regarding "profit'" is truc]

the
a. prof rt is any u*ol',nt over and abJre thal required to r.itaintain the capital at the beginning of
period. net asset approach
transaction
income'
from
deducted
been
have
protlt
expenses
atier
rernains
ihat
is the residual amount
b.
approach
capita concept is based
c. Proflt is normally deterrnined using the frnancial capita! concept. financial
on historical cost..
d. All of these statements are true.

i . Which of the following reports is nEt a component of the financial statements?

a. Statement of financiat pcsition
b. Statement of changes in equitY

c.

d.

f)irectors" repofi
Notes ro the finarrcial statements

22. Which of the following inforrnation is rrot :;pecifically a required disclosure?

a. Name of' the reportirrg entitl, or otirer means of identification. and any change
infbrmation from the previous yrar'
b. Nanres of itra.ior shaielrolders oi'tiie entit)".
c. Level of rounding used in preserrting the fipanciai Statements.
the indil'idual entity or a group of entities'
d. Whctl-ier the tlnancial statement,

in that

"ou.,

which of the
23. When an eptity cpts to present the inccme slatement classifying expenses by function'
tbllowing is not iequired to Lre disciosed a-q "adrJitional information"?
e. Depreciation expense
b, Emplc,vee benefit expense
c. Directors' remuneriltion
d.,A"mor1!zation expense
24. Which of'fl-re fbllowing statements in relatiori ro materialitl, is not true?
a. Ir4ateriality of items depends on their inclii,iduai or coliective influence on economic decisions'
XXXXXXXX
size and nature. relative size
b. Materiality of an ilem depends on its :rb:.oiute
c. An ite:l must nrake a dif'ference or it ueed not be disclosed.
d. An iterr is material if the inciusion or omission would influence or change the judgement of a
reasona.ble person.

25, Which of the fbllowing statements in relation to presentation of financial statements is true?
a. Dividends paid should be recognized rn the statement of comprehensive of income,
b. A loss on disposal of noncurrent asset should be recognized in the statement of changes in
equity.
c. Prorisions should be ri:cognized in the statement of financial position.
C. ,,\ revaluation su,i",lu:i during the year should be recognized in the statement of changes in
equity.

26. Which of the l'ollowing costs of conversion cannot he included in cost of inventory?
a. ('ost of iirect labor
h,. Factort' rent and r-rtilitii:s

c. Saiarie > of :sales stalf

d. Factor\, overhead based on normal capacity

27. Costs which are inventoriable include all of the following. except
a. Costs that are directly connected with the bringing of goods to the place

of business of

the

br"ryer.

b.

c.
d.

Costs that are directly connected with converting olgoods to a salable condition.
Buying costs cf'a purchasing department.
Selling costs of a sales clepartment.

28. Which of the following is not;rn acceptable method of applying the lower of cost or net realizable
value method to inventory'/
a. Inventory location
b. Group oi'inventory items
c. Individual item
d. Total of the inventory

29. Net realizable vaiue is the general rule fbr valr-ring which of the tbllowing types of inventory?
a. Clommodities held by broker-traders.
b. Computer components hrld lor sale to manuf'acturers,
c. Inventories priced on an item by itern basis but not those priced on a total inventory basis.
d. All of'the cht-rices are held at NRV,

30. How should an unrealized gain on foreign cLlrrency transaction be presented in a statement of cash
flows'7
a. As an inflow under "financing activities" because it arises fiom a foreign cLlrrency transaction.
b. It should be ignored as it is an unrealized gain,
c. It should be Cisclosed in the notes to the financial statements by way of abundant precaution.
d. As an adjustment to the net income under "operating activities".

31. How

r.paynlent of a long,ierm loan comprising repal'ment of the principal amount and

interest.lLlt tc date be treiled in a staternent of cash f'loil's'l
a, 'l'he repal,pent ol the principal ioan is an investing cash tlow and the interest payment is either
an operating cash f'lor,v or a financing cash flow.
b. '1'he repayment of the principal loan is a financing cash flow and the interest payment is either
an operating cash 1'low or a financing cash flow.
c. The repaymerrt ol the principal loan is a financing cash flow and the interest payment is either
an operating cash tlow or investing cash flow.
d. The repayment of the principal loan is a flnancing cash flow and the interest payment is netted
against interest ieceived on bank deposits and the net amount of interest is shown as operating
cash flow.
How to account change in policy:
32. An entity thal changeci an accounting policy should
(1) according to transitional
a. Infbrm sharehoiciers prior to taking the decision.
provision
b. Account tbr the change retrospectivelv
'freat
c.
the effect of the change as an extraordinary itern (2) otherwise, retrospectively
d. Accor-rr.rt for the change currently and prospectively.
shoLrici

.
C

raEr

33. V/hen the residital i'alue of plant ancl ma.chiner''' hacl ,jrastica,ri',.h111!:ei!, the entity should
a. Retrospectrvely change tire depreciation charge bas,vd r-,ri thc reviseci resiciual valrle.
b. Change the depreciation charge and treat il as a correction cf a;: ,:rror.
Change the annual depreciation for the eurrent ;,'eai and iiiture '/ears.
Ignore the effect of tlie change on ar'nuai

c.
d.

depreciation.

34. Which of the foltowing sltouiC not [:,e ireated::is a r hrrrge ir acciiuniin;r roiic,r'?
a. A new poiicy resulting tioni the require,;ient: oi'i rre\\ Plrl{S'
t,. items clf- ilropeny" plant and eq.ripinerrt erc no\\ ileasurecl at f-air value rvhereas they:had
previously been measured at cost.
c. A change "s made in the meihocl rtt'crilculeting, the pio',iisiott jbr uncoilectible accounts
rece ir a'olc estimate 'to
C. Investnrent properties are now measured ai fair' .,'alue wltereas ihev had been previously
mea:-,urei1 at ;,-,st.

35. An entity deals extensivery with tbreign entil,ies. ar:ci the frnanciai statemer,ts reflect these tbreign

Non-adjustingcurrenc)'transactions. Subsequent to the er,r.! oireporting pet'iod, and before the the issuance of the
event 'to, financial srarements, there rvbre abnornral t'luctua.ticn:: in l-r,-eign cun'ency rates. How should the
pero NOT
entity account for ti-ris event?
totally
Ac.iurst the i'trreign exchange year-end baiances io reflcci the abnorrnal adlerse fluctuations in
ignore,
16; c'i6ln ex;ha,ige rate.
iDISCLOSE mo
,\cijuit the lbreign exchan5te year-end hirlances r.o reflect all the aLrnormal flr-rctuations in
sya
lbrcign exchange rates and rrct"f r,tst ad'rerse tnc;','enicnts.

a.

t,.

(r,

Disclose the post-rei;crtinlr perioii event as r nonadjustirig i:vent.

11. ignore the post-reponing pericd r"1en1-.

36. Ail of tlre iitllowing musi l:c ,-Ji,r:l,i::rrj Si.)i.rlr.r:tir-'ir. c'r*{'l}i

'['l-re
tax ba:;es olnra.J()t itelns on r^.,nicL oei:r,,]"1 i:ti]i irali cc,:n caicttiated
I lr.- autount oi'deduc:tible teiripclary di{-.feicrlc:s tlri r,r,hich no deferrcci iax ass!'t is r"ecognized
Ihe antount of taxal:,le terrrporar-v- ciifteren,;es associated ,vith invc'strnents in subsidiaries and
associates tirr v,,hrch no cieferreti tax iiabiliti, ts rei:cgnized.
d. Th* arnount of inccme iax reiating to each compcnent r:f oiher ,:omprel-iensive income

DTA is
already
|,)
calculated, (i
i.e nasa
F/S mo na sya

37 All oI'iirc iollori,ing would result to def'el'rec tax a!!..-i ^y.'.:;i

a. il,teiest e):pen:,e is accrurc, bui iirc'iuced itr ru.0il:. J ,iii J;] a c:sit ursis.
b i'he accurnulateii depreoiation on,jrrr,1SS,:rt is g:eaiel t,lan acc.r.-nriulated tar depreciilliorl.
r-. Developrnent cost!-. have been capi'ti;iizeii nnii amo{ized hiit v/r're deducted in determining

d.

taxable profit in the perictri int.ut,','ir,.t"

The'tax base fur a machinc, is iireatcr tirarr .ii,:, cetrrving allloilr,t.

-I'he
engine of the jet
18, An entrt\ bought a prir.,ate -tet cxprecfecj to tre uir:(i .it,er a pr'iici1 oi ,' yeirrs.
jet will
Depreciate has a llsefu! iif-e c''i 5 years. i'l-re pri'",ate jr:t.s t.r:es :iyr t'glila,rciJ e,,'er) 2. years. fhe piivate
significant deirreciated using the straight-line method *','cr
a. 7 yeais ccnrpr,rsite usetul iift.
parts
b. .5 years useful life oi'the engiire.2. yeais usefLri iii..: oi thr lire s. arr,J 7 years useflul life applied to
the balance ccst trf the "iet.
c. 2 years useful iife basecl on i')onseli'aListn.
d. 5 y'ears rrseful liie based cu a si;upit'ri.i'r;g?:ri tlil; r:-reiui li't,e s :rf'ali rlaior compcnents.

3g.Anentiryinstall:ciane\!proclictior-lle.;rilii:l<iirr-t-ti:c,.iaiti:rttierofr:xp',snsesatthepointof
installatiorr r:yhich inc.luded initial operatin;i lo.,iir:r '['lu, in::ia] ,-'p,:ra;iitg loss;s should be
a. Defbried an{J anloniz,ed c'r.qr r r-;3strliat',[: ptricti !\i- ir-n'1.
b. Expinserl anci clrarged to the incorne itlaiet(leitt.
c. Capitalized as part c1'the cost clpl:l'it as ir.iliiecti'" ;it:iilttt",bi'.r cost.
d. Cha,"rled t: ret,rinec.l earn,rg.l.

40. An entit),o\,vn:i a fieet of cars ;rnr.j ,,hri:s 11-:e r:r,tit;. licc;r:i,',1 :rtr ;tvatu(, lrie properll', plant and
equiprneni. Which option shor-rld bc,;eier:ti.:ci ii: r.:l;,,iioti io th.:,,r',r.1;,2.1ir-rit?
All PPEs
a. R.evaiui: only or:e-l-raiioi'caclt class o.l Drt-,pi:,1r,. ; lr.:ri 3ri!i aqr-,;pme nt'
are
b. Revaiue an cn!ii'e class o-+ profr;t"I!. piar,t :.t-t,., elLriiril j(i1,1,
revalued c. Rerialue one ship at a tirxe as it is easirr lii.li, ie',,eiuirg ali sirins altr-,i;eiher.
d. Since asset:r are being revaiu;ci iedulai]','" i;r';i'e ir li-) i1,,'t](i .t clepi'eciate.

to avoid bias

yage
A

41. Which of the following statements is correet?

a" Assets are depreciated even if the fairralue exceeds carrying amount.
b. Land and building are not ascounted ibr separately,, rvhen acquired together.
c. A noncurrent asset acquired as the resr.ilt cian exchange of assets is not recognized.
d, A gain on disposal of a noncurrent assef is classitied as revenue.

42-.

Which of the following disclosures is not '*,r,-,iiet'i lor troperty. plant and equipment?

a. Tl-re existence and anlounts of restrictior:: orr iiric

b. A narrative discrission of f'uture capitai experrditure plans

c. The depreciation

d.
D

rnetl-rod useci
The measurement bases used for determining the gross carrying amount

4i. Which of the following

situations woulcl prirno {acie leadto a lease being classified as an operating

lease?

a.
b.

Transf.er o.{''orvnership to the lessee at the end of ihe lease term.

(r;,t-:,n to purchase at a valLle below tl,e rail vaiur oi'the asset,

d.

ihe lease term is for a major parl olti,e asset's iiri.

The present value of the minimum iease pa1'n.rents is

c.
C

5Aoh

of the fair value of the asset.

44. Wher:e thc-re is a lease cf land and building and the title to the land is not transferred. generally
the lease is treated as if
a. The land is finance lease and the builciirrg is a finance lease.
h, 'fhe land is a flnarrce lease and the buiiding is an ofrt-.rsii11g lease.
c. fhe land is an operating lease and the building is a ilnance lease
d. The land is an operating lease and the builriing !s an operating lease.

45. l'he prot'rt on a finance lease for iessors w'ho ar,,'rnanui'acturers or dealers should
a. Not be recognized separateiy from fiiiance incoinc
Sales type!
b. Be recognized in the normal way on the trnnsa,.:tion
c. Only be recognized at the end of the lease tei'm
d. Be allocated on a straight iine basis over tl'ie life of the lease

46. '"tlill and hold" sales" in which delivery' is delayed ai the buyer's request but the buyer assumes tItle
and accef)rs invoicing. shoirld br: recognizeci ia,hen Bill & hold sales is not layaway sales
a. The '0u1,,j1 makes a-n order,
h. The seller starts manufacturing the goocis.
c. The title has been transferred but the goods are kept on the seller's premises.
d. It is probable that the delivery will be nrade" payment terms have been established" and the
buyer has acknowledged the delivery instnrctions.

47 .

48. An entity has decided to improve its defincd henr:fil pension scheme. The benefit payable will be
detennir-red b,"- ref'erence to 60 years of ag: rati:er titan 65 ,r-ears oi age, As a'result^ there is an
increase in the det'ined beneflt pension liabilit.,. j-{ow should the increase in the pension liability be
treated in the trnancial statentents?
a. fhe past scrvice cost shor-rld be chargecl aga;n.st retained earnings.
b. The prrs: se tvice cost should be charged againsi profit or loss for the year.
c. The past service cosr should be ailocc"ted over the remaining service period.
d. The past service cost should not be recognized.

A new entity has come out with an of'fer to ref'unc the cost of purchase within one month of sale if
the customer is not satisfied with the product. "'01herr should the entity recognize the revenue?
a. When goods are sold to the customers, Sa sales-or-return, revenue agad..
t,. After one month of sale.
pero sa sales on trial, NO revenue muna.
c. Only if goods are not returned by the cusaomcrs after the period of one month.
d. At the time of sale along with an offset to re'venue of the liability of the same amount for the
possibility of the rerurn.

49. Which of the fbllowing is taken intcr acco,-rni .,,/hen detei'ntining the rJiscolint raie in a defilned
benefit plan?
a. N4arket yields at the end of reporting period on high-quality corporate bonds.,
b. ,nr'.r1rnent or dctuarial rislt.
c. Specific risk associated r.vith th,j erltity's b,usiness.
. d. Risk that tuture experiences may cliffer from actuarial assurnptions.
;

50. Which of the tbllowing statNments best clescriL*s othc{ long-ferm em1:io.*'pg henefits?
a. ltJenefits not falling ciue wholly within tvrelve months ol the end of ihe peririd in which the
Other Long-term benefit
service is rendered
b. Benefits which lall due within t',relvc mi,nths of the end of the perioC in rvhich the service is
l

c.
d.

Short-term
rendered

benefit

'

Benetits payable as a result o1'an enritr''s ciecision to end an emplol'ee's enpioyrnent before the
normai retirement date Termination benefit
Beneflts which are pal,able ;,iii:r cor.rnietion o1'ernr,loi,r,rclil Post-employment benefit

51. Which ol'the lbllowing is not specilir:ail1, ex,-:iuded lrom gc;';ernrnent grant uncler PAS 20?
a. Covernmenr particioation in ou,rlersnip ol lh,': *;riir"',
b, Covernment grant ccvered by PAS 41 on agricr.il,ure.
c. Gor,'ernment assistance providerl in the fbrm of ta.:;. bene fits. may PAS for Tax
d. Forgivable loan froni the govei:nment,

52.

At the beginning of the cumerrt year" an entitv recei.,eci two gcvernrient grants, namely Grant One
as financial assislance t-ol:-iart-ir.j co;its llr:t,acl:, in::rrn,ll.,,Lrici G'ant Two as s,,bsidi'f,ol cost o1purchasirrg colxplitirr soiiivale. .:r,er ,i ),u'r,rrs Iv\ irieir r:l t.lr,-' i;iic',v,ng statL'merlts is true'.)
a. Crant One an.i Lii'ai--rt -iu'cr .iiroulli !s l'sgligiliz*c u-t i-,..,1i in lhe cun'eni yea.r"
b. Grant One and Grant i'wo shciuld be recogrrrzed over ) )'Ears
u. Grant One shoLrld be recognized in l-ull il ttre currei..t ye*r irrr'i Crant Twr' should be r:ecognized

d.

Orer 5 years.
Grant One shor-rid be recogrrizeri in fuli iit ilie crlrl-ir:nt
at the end of -5 years.

ri?:

.titui

Ciaitl T',io sirr:uld be recogr-rized

53. Which of the following rvould no{ be relevant in rielrrniniirg iit.' lrr,r,cljritlai cttrrency?
a. The currency that intluences the ccsts oithc er-rliit,
b. The currency in which tin;rnce or fund is ge,relatecl.
c. 'l'he currency' ir-r which receipts fi-oirr ,:pt-,r;riirrs :.*:ii..'ities: a'': .'r--t.,lrt..1
d. 'lhe currency that is the n-rost internationaill :iccetr,tabje ti,r lte,:1irg.

54. At which rate shoulel n(iilolrrrenr a:as;'.-q ite'rransla.leci when ih.'' f,.t:rc'i,:nai c-rrrency rigures are being
transiated into a differerll orc:-gr-jiati,,it cr.;r,'r-rl'i( V1 current rate method
a. l-he historical exchiinge raie
b. The ciosing rate
c. The average rate
d. The spo't erchange rate

55. Which of the tblior,'.ing:siatenrents rbout tire capitalizlti{:t:^^ ,f i:,r.:r,-,',itt'ctsts as paft oi'the cost of
a qualiil'ing asset is l.rue?
a. If tiinas ccmt tl'ont:lsiteiSi bi-rro,.r'ir,,i,'- 1ii": atrilr llI ir) r]i.: c;rt-,it.,lizc,l is based on the w'eighted
average cosi {ii' i-r,rrrr.'r... i i.r-:.
h Capitaliz:tlor ai,+a),s conlittt,cs untii tlte assei is bro,lghi ir,lt.r il:,e capitalization ceases.
c. Capitaiizatron always comlrlences ?S Soorr a.s i:xpcndirure cithr; ir!:;I i.-. irt,']riti",.t(i
d. Capitalization always ccmmences as soon a:, int.:rest cn le ie';a;rt Lia'ircni',,rgs ts being irrcurred

56. Wi-ren computing interest cosi to be capitalrzeiJ. the conriepr oi"ir,.ld,rble intcrest" ref-ers to
a" The total interest cost actuali,v incurred,
b. A rr-rst of capiral charge for equity,
c. 'lhat poition of total interest cost whicl-r vio,;lcl not hiive t:ee,r incuirred if expenditures for
asset constmciion had not been rnade,
d. That portion of a'terage accumulateci expenditu;:es on vvhich nc interesl. cost was incurred.

r aiic

incurred in, financing the

57. which of the following is the recomrnencled approach to handiing interest
construction of property. plant and equipn:ent'i
borrowing
a. Capitalize only the actual interest costs incurred dr.ring construction' specific
_
b. Charge construction with all costs of funds employed, whether identifiable or not'
c. Capitalize no interest during construction.
d. Capitalize interest costs equal to the prime interesf rate times the estimated cost of the asset'
58. Which of the following is not a related paity:'
a. A director of the entity.
b. The parent of the entitY.
c. A shareholder of the entity that holds 19'b stake in the entity.
d. The son of the chief executive officer of tht enti!v'

paid part of this

A
59. During the current y,ear. the parent sold lroods to the surbsidiary. The subsidiary
Related- debt and then encountered flnancial diificirlti,:s. Aclministration costs are incurred as a result of the
relation to
credit controllers chasing the debt. All o1'the fbllowing are required to be disclosed in
party
this arrangement, except
tranx
il. The costs of the credit control department incurred in pursuing the debt

b.
c.

cl.

Details of any guarantees received in relation to the outstanding balance

The provision in relation to the debt being uncollectible
The amount of the transaction and otitstandinq balance

investment within
60, An entity acquired an investment in a subsidiary v,,ith the view to clispose of this
should the
six mcnths. The investment in the subsidiary l-,as been classified as held for sale. How
investment in the subsidiary be treated in the t-ir,atrcial statements?
a. Purchase accounting should be used.
h, Iiquity' accounting should be used'
c. The subsidiary should not be consoiid;ited but FFRS 5 should be used'
d. The subsidiary should remain off statement of tlnancial position'

to transf-er funds
61. An entity controls an overseas entity. Because ct'exchange controls. it is.ditflcult
power
of the overseas
out of the country to the parent entity. The parent ouns 100% of the voting
entity. How should the overseas entity be accounted tbr'?
a. It shouid be exclucleci from consoiidation and the equity method should be i"ised'
b. It should be excluded from consolidation and siated at cost.
c. lt should be excluded from consolidation an<i a.ccounted for in accordance with PAS 39'
d. it is not permitted to be excluded from cor,solidation because control is not lost.

62. How is the impairment test carried out for an inrrestment in associate?
a. T'he goodwill is separated from the rest of the investineni arrc rs impairmenttested individually'
b. 'fhe entire carrying amount of the investment is tested for impairment by comparing its
recoverable amount with the carrying amollllt.
c. The carry,ing amount of the investmertr slrorriti be cortrpared rvith its market value'
d. The recoveiable amounts of all invesinienr:; in associates shoulci be assessed together to
determine whether there has been an impairinent on all investments.

63. Delrt investments held for collection arc reported ai

a. Amortized cost
b. Fair value
c. The lower of amortized cost or thir valuc
d. Net realizable value

64. Which of the following is not generally correct a.bout recordirrg a sale of a debt investment betbre
maturity date?
a. Accrued interest will be received by tlie seller er,en though it is not an interest payment date'
b. An entry must be nrade to amortize a discount to the date of sale.
XXX to Cebt investment' credit
(.. The entry to amortize a premium to thr: dat.: oisale includes a debit
d. A gairr on the saie is the excess of the seiting price over the cartying arnount of the debt'

held-for-collection ex. is A/R

rage
C

65. lnvestments in tradir-rg deht investments are generaily reported at

a. Amortized cosi
b. Face value

d.

i
l

Marurity value
i

66. Under the fair value optionl entities report all changesiin lair valLte in

a. fi,rnrprlhensiveincome
h. Irrcornc'

c.

d.

67.

If

Equin
Othr:r corrprehensive i,rr:cnre

the investor owns 60% of

the investee's outstanding

generall-v account for this investn:ent under the
Cost method
b. Fair value rnethod

oroinery shares, the investor shbuld

rr

c.

C.

Consolidation equity method

Consolidation method

68. An entiiy declares and distributes a cash diviileni', ihat is a rt':,,.rli rf cu"rert eamings. How will the
receiprt of those dividends affect lhr inr,,r:sll'i,J;ti :-r.1-r,j,)!lrt ol'tirc ii:r'eslor ur:d*r each of the following
accounting methods?
' a. No eilbct under f.air value method and de :reasi under eqr,rity' raethoC
b, Increarse under tair value nietirod and dccr"e.'se r,ir-rder equity method
c. No i:lt'ect untJer both fair vaiue metlroi-l anrl, ,:ril-riiy method.
d. I)eclease under'fair value lretiic{i ;ir'd:ro,:fibct un'ler equitv methoci.

69.

All of tl-ie tbllou,ing

a.
ir,
c"
d"

are characteristics of a cleril,a,tive f'lnancial in.-tmmtnt. excep'

'fhe instrument has iJle uf iiii)ic rir,r'i:l 11i:;r: r'rnri rli i,lentilled payment
l)rLr\ ision.
'l'he
instrurnent requires a iarg* rr.,'ec.nlcni::ri 1r,: i:rlci;tior nf tle rr.rnt;'acl small investment lang
fhe ir-rstnrmett requiires oi pelii;t: ;tct se1Ller',*,ii.
AII of these a.re characteristics.

70. All of the fbllowing arc ntoirciit;'', lten,:., r';rcrpt

a. Trade payables
Asset or liab lang ang monetary items

b.'I'rade

c.
d.

recei.u,abir:s

Adn-rinistration costs paid in calh expense account

Loan repayable at par vrlue

71

72. What are the conditions

An entity is reporting in a hyperintlationary errcncfrl). Which of tlre follor.l'ing statelx.ents is true'?

a, There is a loss on the net n:onetary'position ii'rhc tronetar)'assetJ exceed nronetar)'liabilities.
b. l'liere is a gain on the net rnonetarr posilion iithc mrneta"r;,'liahilities excec'd nronetary assets.
c. Ttrre gain or lcss in the net monetar.y position is recognized in profit or loss.
d. All of these statements are true

lbr oi'lseiirn:r ci-financial assets ancl fiiranr:ial iiabiiities'/

a. A legal right of set-oi].

b. A legal right r-rf set-otf and an intention to scrtle net or simultaneousiy.

c.

d.
C

The existence of a clearing mechanism or other miirket i-rrechanisrn lor net -settlement and an
expectation of net settlement.
,A riettirrg agri:emerrt anr, an erpect:tir-.r c I n':t sel,tle-r,eyir.

73. For what items is f'air vair-re requilrrl to be rii:i.-ll:,J,i rru;ler PAS 32'l arti
.:.
' ,iifu
a. All flnancial irrstnrmenrs
b. All tlrrancial instruments. excepl. Lrnilur-rled r:qliit,v instrrrrn'i:r,t.s alr,: derivaiives linked thereto
c. All tlnancial assets and linancial liabtlilies. txr:iJilL ior ii",v.,1s1ments in unqtiuted instruments and
delivatives linlied therero.
L:
d. All ilnanciai assets. except for invesiire".]t lr u,rcluotllirir,rr:1runen1s and derivatives linked

thereto.

74^

7_(.

is true?
Which of the following statements in relllicn to financial instruments
a, Treasury shares are recognized as fina:rcial assets'
in profit or loss
b. Any gain or loss on tr.ur=,rry share transactions is recognized against
c. Transactions costs of issuing equity instruments are charged classifiedincome'
separately in accordance
d. The components of a compound finarcial instrument aie
with their substance.

Dividends in respect of redeemable prefcrence shares aie

a. Not recognized
b. Recognized in profit or loss as compontnt of fi'nance cost
c. Recognized directlY in equitY
d. Recognized directly in other comprehensive income

which of the follorving items?

76. Earnings per shai'e is calcr.rlatecl before accortnting, for
a. Pret'erence dividend tlli the peric'<!
b. OrclinarY dividend
c. Taxation
d. MinoritY interest
are included in EPS fiom
77. Ordinary shares issued as part of a business ccmbination
e. fhe beginning of the Period
b. l'he date of acquisition
c. The end of the Period
d. The n'ridpoint of the Period

78.

lf

a. botrus issue

tlnarlcial statements are

occurs between the yt:ar-enci a'nci the date that the
Bonus issue = stock dividends

authorized
a. EPS both fbr the current and the pret,i:,trs vear ,3re adjustcd. is an adjusting event..
b. EPS fbr the current year only is adjusted'
c. No adjustment is made to EPS.
d. Diiuted EPS onlY is adjusted.
per share' excepf
79. Ail olthe tbllowing items must be disclo-qe:] ,n reiationto earnings
a. Forecast earnings per share for the follow'ing linancial year
iuture but
b. Instrurnent thaicould potentiallv dilute Lraiic earnings per share in the
period
current
included in the diluted EPS becaisc they are antidilutive in ttte
earnings per share
calculate
to
used
weighted average number of ordir,ar"y shares
c. The
'fhe earnings tigureJused in calcula:ing't',:isic and diluted earnings per share
d.

reports
80. Prlblicly traded entities are encouraged tr.l pro'"ide interim t.inancial
period'
interim
of
end
a. At least ar rhe end of half year ani within 6C days ol the
b. Within a month of the half year-end.
c. 0n a quarterlY basis'
d. Whenever the entitY wishes.
reports would
81. There is a presumption that anyone reaCing i:rterim financial
a. Understand ali enllippine Financial Renortrng Standards'
l.Iave access to the records of the entity'

b.
t;.

cl.
C

were not

Have access to the most recent annual reF'ort'

Not make decisions based on the report'

g2. which of the following statements in relation to inteiim {inancial reporting is not true?
sratements'
a. An interirn financiil report mav cons'si rria r;cndensed set of financiaistatements'
b. An interim financial report rnay consisl of a r:<;:nplele set of financialperiod'
c. It is necessary to count inventories in full at the errd of each interim the interim date'
d. The NRV of inventories is determined by refbrence to selling prices at
not
g3. When deciding on the discount rate to tre tiseci in caiculating value in use. which factor shouid
be taken into account'J
a. The time value of moriey
adjusted' dapat NOT
b. Risk specific to the asset fbr which firtr.rre cash flow estimates have not been
adjusted'
adjusted ang
c. Risk specific to the asset for which future cash flow estimates have been
d. Pretax ra.te
CFs

g4. An impairment loss lirat relates to an asset that has been revalued shor"rld be recognized in
a. Profit or Ioss
b. Revaluation surplus that relates to the revalued asset
c. Openir-rg retained eamings
85. Which of the following impaimrent losses should never be reversed?
a. i.oss on property. plant and equipment
t,. l,oss on good'rvill
c. I-oss on business segment
d. Loss iitr inventorY
86. For

a.
b,
c.
d.

which of the following should

'

provision be rei'.ognized?

Future operating losses

Obligaticlns under insurance contracts IFRS 4
Reductions in tair value of f-rnancial instruments PFRS 9
Ohligations tbr plant decommissioning costs

87. Provisions shall be recognized fbr all of the following. except

a. Cleaning-up costs oi corrtaminated land wheir an oil entity has a published policy that it will
un<Jertake ttr clean up all contamination that it cattses'
b. Restructuring costs after a binding sale a-ureement has been signed
c. Rectit.icatii,,i.nrt- relating to detietive piotlucts already solcl
r'1. Future refurbishment costs due to introduction of a new computer system => no present

88. Which of the following disclosures is not required with respect to intangible

a. Usefirl lives of the intangible assets.

b. Reconciliation of carrying amount at the beginning

c.

d.

obligation yet..

assets?

and the end of the year.

C-'onrractual commitments for the acquisition of intangible assets,

Fair value of similar intangible assets used by competitors.

89. Which o1'the following statements in relation to research and development is true?
a. '['he product being*developed should have already been put into commercial proCuctitln or use'an
b. Expenditures duiing the research phase of a project lla) s,rmctimes til capitalized as
irrtangible asset.
c. Expenditures dr-rrilg rhe development phase ol a plo.iect may sometimes be capitalized as an
intangible asset.

d. All of these statements

are true,

D
90. Which of the follou,ing -statements in relation to intangible assets is true?
If may
a. Intangible assets with a finite useful lif'e should be measured at cost and tested annually for
FINITE useful impairment
lntangible assets acquired in a business combination should only recognized if they have
b.
life, test
already been recognized by the acquiree'
only for
c, Intangible assets acquired-in a business combination should not be recognized separateiy fiom
goodrvill
impairment
d.
Atl of thes.. statentents are not trLle.
if may indication
C
91. What is rhe etfectir,e interest rate ot-a debt instrument measured at amortized cost?
a. The stated rate of the debt instrument.
b. 'l'he ipterest rate currently charged by the entity or by others ior similar debt instrument'
c. Ihe ipterest rate that exactly iir"ornt, estimated future cash payments through the expected
tif-e of the debt instrument to the net carrying anlounl- of the instrument.
'i'he basic" risk-fiee interest rate that is derived fiorn observable price.
d.
C

92.

what amount is a financial asset or financial liability measured on initial recognition?

a, The consideratir:n paid or received for the financial asset or financial liability
tl. Acquisition cost
c. Fair vaiue
d. 7.ero

\t

93.

Which oi the fbllowing additional disclosures mr:st be made when an entity chooses the cost
model as the accounting policy tbr investmei-rt properly?
a. The tair value of the ProPertY
b. The present value of the propert)
c. The value in use of tire ProPertY
cl. The net realizable value of the propertv

usually, kaya ka nag-cocost model

kasi wala FV na available..

94. Which of the following ciisclosures shoulcl be rnade when the

for investmen'. prope;'i.r .'
a. Depreciation method usecl
b. The amount of impairmetrt ioss recognized
c, LJseful lif'e or d'^preciation rare ttsed
d. Net gains or iosses iiom fair vah-re adiustments

fair value model has been

adopted

The income
95. Ap entity l-rad a plantation forest that is likely to be harvested and sold in 30 years.
should be accounted tbr in which of the fbllowing way?
Biological a, N-o income should reported annually until first harvest and sate in 30 years'
b. lnco6e should be measured annuaily and reported using a t-air value approach that recognizes
asset is
ahd nteasures biological growth.
FV approach
c. The e\/entual sale pr,r..idr should be estimated and matched to the profit and loss account
o';er iire 30-year period.
d. The plantaiion ibrest should be valued every 5 years and the increase in value should be
shown in the statement of comprehensive in.otn. as component of other comprehensive
B

income.

96. Where there is a production cycle of more than one year for a biological asset" separate discl'rsure
is encouraged ibr
a. Physical change only
b. Price change only
c. 'fotal cirange in value
d. Physical change and price change
97. Man1, shai'es ancl most share options are not :r;r.clecl in an active market. Which o1'the following
in the
option valuatiorr *.echniques shoulct nof be lised iis a rneasure of fair value of share options

first instance'?

a.
b.
c.
d.

Black-Sholes model
Binomiai ,nodel
Mont':-Carlo model
Intrinsic value

a, b, c are all valuation method

assets'
98. The "excess of the acquirer's interest in the net fair vah-re of the acquiree's identifiable
Iiabilities and contingent tiabilities should bt:
a. r'\mortized over the lif-e of the assets acquirec:
b. Reassessed as to accuracy of measurement aniJ then recogniz.ed immediately in profit or loss'
c. Reassessed as to accuracy of measurement and then recognized in retained earnings
d. Carried as a capital reser\/e indefinitely.

"'highly probable"
99. In ordei"lor a noncLlrrent asset to Lre classified as held for sale. the sale rnust be
which means ihat
a. The fr,rtr-rre sale is likely to r.rccrir' possible
b. The tuture sale is more likel,v than nct to occrtr, probable
c. The sale is cerlain.
d" The probability is higher than more likelv thari t.ti,-t, highly probable

100. Exploration and evaluation asset should

a. Not Lre recognized in the flnancial statements,
b. Be classified as tangible asset
c, Be ciassitred as intangible asset
d. Be classified as either tangible asset or intangible asset

trND