WRITTEN REVALIDA CAE6

1. It is the information accumulation, processing and communication system designed to

satisfy the investment and credit decision making information needs of external users.  
a. Managerial Accounting
b. Tax Accounting
c. Government Accounting
d. Financial Accounting

2. It sets out overall considerations for the presentation of financial statements, guidelines
for their structure and minimum requirements for the contents of financial statements.  
a. PAS 32
b. PFRS 7
c. PAS 1
d. PFRS 9

3. PICPA stands for

a. Philippine Institutional Certification for Public Accountants
b. Philippine Institute of Certified Public Accountants
c. Philippine Institute of Certified Private Accountants
d. Philippine Institutional Certification for Private Accountants

4. It defines a financial instrument as any contract that gives rise to a financial asset of one
entity and a financial liability or equity instrument of another entity.  
a. PAS 1
b. PFRS 9
c. PFRS 7
d. PAS 32

5. An entity makes the judgment about whether to present additional items separately on
the basis of an assessment of 
 a. the function of assets within the entity
b. the nature and liquidity of assets
c. the amounts, nature and timing of liabilities
d. all of the listed choices

6. This is included in the cost of inventories if the inventories are considered qualifying
assets because they require a substantial period of time to bring them to a saleable
condition.
a. Purchase Cost
b. Incremental Cost
c. Transaction Cost
d. Borrowing Cost

7. The disclosures of what management has made in the process of applying the entity's
accounting policies and that have the most significant effect on the amounts recognized
in the financial statements should be found on the 
a. Notes to financial statements
b. Statement of changes in equity
c. Statement of profit or loss
d. Statement of financial position

8. An asset shall be classified as a current asset when 

a. it expects to realize the asset within twenty months after the reporting period
b. the asset is cash or a cash equivalent unless the asset is restricted from being
exchanged or used to settle a liability for at least twelve months after the reporting
period
c. it holds the asset secondarily for the purpose of trading
d. it expects to realize the asset, or intends to sell or consume it, beyond its normal
operating cycle

9. They are responsible for managing efficiently and effectively, and who have the power
 and authority to obtain whatever economic information they need.
a. External decision makers
b. Governments and their agencies
c. Internal decision makers
d. Investors
10. Dividends are recognized in profit or loss only when 
a. the amount of the dividend cannot be measured reliably
b. the entity's right to receive payment of the dividend is not established
c. it is probable that the economic benefits associated with the dividend will flow to
the entity
d. it is probable that the economic benefits associated with the cost of the investment
will flow to the entity

11. All of the following financial assets shall be measured at fair value through profit or
loss, except 
a. Financial assets at amortized cost.
b. Investments in quoted equity instruments.
c. Financial assets designated on initial recognition as at fair value through profit or
loss.
d. Financial assets held for trading.

12. Transaction costs include 

a. Fees and commissions paid employees acting as agents
b. Debt premiums or discounts
c. Financing costs
d. Internal administrative costs

 
13. PFRS 9 requires an entity to derecognize a financial asset when, and only when 
a. the contractual rights to the cash flows from the financial asset expire
b. it transfers the financial asset and the transfer qualifies for derecognition
c. any of the listed conditions
 d. none of the listed conditions

14. A financial asset as any asset that is a contractual right 

a. to exchange financial assets or financial liabilities with another entity under
conditions that are potentially favorable to the entity;
b. to exchange financial assets or financial liabilities with another entity under
conditions that are potentially unfavorable to the entity;
c. to receive cash or another financial asset within the entity
d. to pay cash or another financial asset from another entity

15. It requires an entity to classify financial assets on the basis of both the entity's business
model for managing the financial assets and the contractual cash flow characteristics of
the financial asset 
a. FRS 9
b. PAS 32
c. PAS 1
d. PFRS 7

16. Transaction costs do not include 

a. Fees and commissions paid to agents
b. Levies by regulatory agencies and securities exchanges
c. Transfer taxes and duties
d. Internal administrative costs

17. A liability shall be classified as a current liability in the following conditions except
one 
a. it has an unconditional right to defer settlement of the liability for at least twelve
months after the reporting period.
b. it holds the liability primarily for the purpose of trading
c. it expects to settle the liability in its normal operating cycle
d. the liability is due to be settled within twelve months after the reporting period
 
18. Financial assets include 
a. Patent
b. Property, plant and equipment
c. Inventories
d. Favorable interest rate swap
 

19. It provides users of financial statements with a basis to assess the ability of the entity to
generate cash and cash equivalents
a. Equity information
b. Financial position information
c. Cash flows information
d. Financial performance information

 
20. A company records revenues in the accounting period in which they are earned and
realized (or realizable) and records (matches) expenses in the accounting period in
which they are incurred, regardless of the inflow or outflow of cash. 
a. Accrual basis
b. Materiality
c. Going concern assumption
d. Cash basis

 
21. It is the amount at which the financial asset is measured at initial recognition minus
principal repayments, plus or minus the cumulative amortization using the effective
interest method of any difference between that initial amount and the maturity amount,
and adjusted for any loss allowance. 
a. Acquisition cost of financial assets
b. Transaction cost of financial assets
c. Fair value of financial assets
d. Amortized cost of financial assets
22. Plays a vital role in the development of new standards and in the revision of previously
issued standards.
a. Conceptual framework
b. Hypothesis
c. PAS
d. IASB

23. When the most recent revision of the Conceptual Framework was approved by the IASB?
a. March 9, 2018
b. March 29, 2018
c. March 19, 2018
d. March 10, 2018

24. It refers to the ability of a company to use its financial resources to adapt to change. It
comes from a quick access to cash generated from more "liquid economic resources.
a. Liquidity
b. Solvency
c. Financial Flexibility
d. Operating Capability
25. It means that the numbers and descriptions match what really existed or happened.
a. Materiality
b. Completeness
c. Faithful representation
d. Neutrality

26. These statements provide a company's history quantified in money terms. They are a
particular form of financial reports that provide information about the reporting entity's
assets, liabilities, equity, income and expenses.
a. Financial statements
b. Consolidated financial statements
 c. Unconsolidated financial statements
d. Combined financial statements

27. This statement shows the resources of a company (the assets), the company's obligations
(the liabilities), and the net difference between its assets and liabilities, which represents
the equity of the owners.
a. The statement of changes in equity.
b. The statement of profit or loss and other comprehensive income for the period or for a
certain interval.
c. The statement of cash flows reports, for a certain interval.
d. The statement of financial position as at a certain point in time.

28. In compliance with statutory requirements, financial statements and accompanying notes
presented to external users (particularly corporations as well as registered partnerships)
are audited by
a. an independent certified public accountant
b. a dependent certified public accountant
c. a financial manager
d. an assistant financial manager

29. Current value measurement bases includes all except:

a. Fair value
b. Value in use
c. Historical cost
d. Current cost

30. Under this concept, a profit is earned only if the financial (or money) amount of the net
assets at the end of the period exceeds the financial (or money) amount of net assets at
the beginning of the period, after excluding any distributions to, and contributions from,
owners during the period.
 a. Physical Capital Maintenance
b. Financial Capital Maintenance
c. Working Capital Maintenance
d. Capital Maintenance

31. Under this accounting method, a company records revenues in the accounting period in
which they are earned and realized (or realizable) and records (matches) expenses in the
accounting period in which they are incurred, regardless of the inflow or outflow of cash.
a. Cash accounting
b. Accrual accounting
c. Expense method
d. Asset method

32. An entity makes the judgment about whether to present additional items separately on the
basis of an assessment of all except:
a. the value of an asset
b. the nature and liquidity of assets
c. the function of assets within the entity
d. the amounts, nature and timing of liabilities

33. Those indirect costs of production that vary directly, or nearly directly, with the volume
of production 
a. Fixed manufacturing overhead
b. Direct Materials
c. Variable manufacturing overhead
d. Direct Labor

34. The entity is required to test whether there is an impairment in an intangible asset,  
a. When there is no indication of impairment
b. Annually
c. Every 3 years
 d. Semi annually

35. These are instruments that represent ownership in a company or rights to acquire
ownership interests as agreed upon or determinable price. 
a. Debt Instruments
b. Equity Instruments
c. Accounts Receivable
d. Inventories

36. Goodwill is an 

a. Unidentifiable Intangible Asset
b. Any of the choices.
c. Identifiable Intangible Asset
d. Intangible Asset with Finite Useful Life

37. An identifiable non-monetary asset without physical substance. 

a. Intangible
b. Accounts Receivable
c. Investment
d. Inventory

38. These contracts exchange fixed interest payments for floating rate payments or vice
versa, without exchanging the underlying principal amounts. 
a. Forward Contract
b. Interest Rate Swap
c. Futures Contract
d. Interest Rate Swab

39. Applicable for those companies which manufacture high value items such as cars.  
a. Special Identification
b. Weighted Average
 c. Last In, First Out
d. First In, First Out

40. These are short-term and highly liquid investments that are readily convertible into cash
and so near their maturity that they present insignificant risk of changes in value
because of changes in interest rates. 
a. Investments
b. Cash Equivalents
c. Intangibles
d. Cash

41. It serves the same purpose as futures in that respect but are fundamentally different.
The holder has no obligation to exercise.
a. Forward Contract
b. Options
c. Foreign Currency Futures
d. Interest Rate Swaps

42. A note receivable not renewed or not collected at maturity is considered as a  

a. Post-dated note
b. deposited note
c. dishonored note
d. honored note

43. An asset shall be classified as a current asset in the following conditions, except one  
a. it holds the asset primarily for the purpose of trading
b. it expects to realize the asset, or intends to sell or consume it, in its normal
operating cycle
c. the asset is cash or a cash equivalent that is restricted from being exchanged or
used to settle a liability for at least twelve months after the reporting period
d. it expects to realize the asset within twelve months after the reporting period
44. The process of providing accounting information to internal decision makers is called
a. Financial Accounting
b. Tax auditing
c. Managerial accounting
d. Management accounting
45. The International Accounting Standards Board (IASB) was formed in this year to develop
worldwide accounting standards in an attempt to harmonize conflicting national
standards.
a. 1963
b. 1973
c. 1983
d. 1993

46. In this year, the International Accounting Standards Committee was reorganized into the
International Accounting Standards Board.
a. 2000
b. 2001
c. 2002
d. 2003

47. Philippine Accountancy Act of 2004 also known as the

a. Republic Act No. 9892
b. Republic Act No. 9288
c. Republic Act No. 9298
d. Republic Act No. 9229

48. It has the legal authority to prescribe accounting principles and practices for usually all
companies issuing publicly traded securities.
a. Securities and Exchange Commission (SEC)
b. Philippine Institute of Certified Public Accountants (PICPA)
 c. Bureau of Internal Revenue (BIR)
d. Financial Executives Institute (FINEX)
49. This is a set of accounting principles, standards, interpretation and pronouncements that
must be adopted in the preparation and submission of the annual financial statements of a
particular class of entities.
a. Conceptual Framework
b. Revised Conceptual Framework
c. Financial Reporting Framework
d. Financial framework

50. Companies only prepare financial statements quarterly and provide audited financial
statements annually. Little to no real-time financial statement information is available.
a. Non-financial measurements
b. Forward-looking information
c. Soft assets
d. Timeliness

51. These are the amounts paid to acquire the rights to explore for undiscovered natural
resources or extract proven natural resources 
a. Development cost
b. Acquisition cost
c. Exploration cost
d. Point-of-sale cost

 
52. They can be distinguished from other assets by the fact that their benefits are derived
from their physical consumption. 
a. Natural resources
a. Land Improvements
b. Biological assets
c. Leasehold Improvements
 53. These are incurred after the resource has been discovered but before production has
begun. 
a. Exploration cost
b. Development cost
c. Acquisition cost
d. Point-of-sale cost

 
54. It includes brokers and dealers' commissions, any levis by regulatory authorities and
commodity exchanges and any transfer taxes and duties. They exclude transport and
other costs necessary to get the assets to a market.
a. Historical cost
b. Acquisition cost
c. Point-of-sale cost
d. Fair market value

55. It is a broad term that encompasses machinery used in manufacturing, computers and
vehicles, furniture, and fixtures.
a. Machinery
b. Equipment
c. Property
d. Plant

56. These are expenditures expected to yield benefits beyond current accounting period.  
a. Accounting expenditures
b. Capital expenditures
c. Current expenditures
d. Revenue expenditures

 
57. Biological assets that meet the criteria of bearer plants will be subject to all of the
recognition in 
 a. Investment property
b. Property, plant and equipment
c. Inventory
d. Agriculture

58. Agricultural produce is recognized upon 

a. upon sale
b. purchase or birth of an animal
c. upon harvest
d. upon transaction

59. Bearer animals held solely for the produce that they bear shall be accounted for as  
a. Investment property
b. Inventory
c. Agriculture
d. Property, plant and equipment

60. Biological asset is recognized upon 

a. upon sale
b. purchase or birth of an animal
c. upon harvest
d. upon transaction

61. These are expenditures such as drilling a well or excavating a mine as well as any other
cost of searching for natural resources. 
a. Development cost
b. Acquisition cost
c. Exploration cost
d. Point-of-sale cost

62. A short-term note payable may include all of the following except:  
 a. non trade notes payable
b. trade notes payable
c. a current maturity of a long-term liability
d. unearned revenue

63. An investment property should be measured initially at 

a. Cost less accumulated impairment losses
b. Fair value less accumulated impairment losses
c. Depreciable cost less accumulated impairment losses
d. Cost

64. In case of property held under an operating lease and classified investment property
a. The entity has to use the fair value model only.
b. The entity needs only to disclose the fair value and can use the model under PAS
38. 
c. The entity has the choice between the cost model and the fair value model.
d. The entity has to account for the investment property under the cost model only.

65. Derecognition of investment property will not be required when 

a. it becomes the subject of an operating lease
b. it is sold
c. it becomes the subject of a sale and leaseback deal
d. it becomes the subject of a finance lease

66. Are similar financial instruments to bank drafts but are drawn generally from authorized
post offices or other financial institutions.
a. Time deposits
b. Bank drafts
c. Money orders
d. Undeposited checks
67. In accordance with PFRS 9, cash being a financial asset should be recognized at
a. Par value
b. Fair value
c. Book value
d. Market value

68. Unconditional written agreements to receive a certain sum of money on a specific date.
a. Accounts receivables
b. Trade receivables
c. Notes receivables
d. Non-trade receivables

69. Defines fair value as the price that would be received to sell an asset in an orderly
transaction between market participants at the measurement date.
a. PFRS 13
b. PFRS 9
c. PFRS 7
d. PAS 2

70. One that would not have been incurred if the entity had not acquired, issued or disposed
of the financial instrument.
a. Transaction cost
b. Historical cost
c. Incremental cost
d. Opportunity cost

71. Property held by the owner or by the lessee under a finance lease for use in the
production or supply of goods or services or for administrative purposes.
a. Owner-occupied property
b. Managed property
c. Occupied property
 d. Operating property

72. Allows an entity to choose as its accounting policy either the fair value model or the cost
model and shall apply that policy to all of its investment property.
a. PAS 2
b. PAS 40
c. PAS 41
d. PAS 43

73. Under this method all costs incurred in acquiring, exploring, and developing within a
broadly defined cost center are capitalized and amortized
a. Successful effort method
b. Amortization method
c. Full-cost method
d. Capitalized method

74. The following do not constitute part of capitalized cost of an investment property, except:
a. Start-up costs
b. Operating losses incurred before the investment property achieves the planned level
of occupancy.
c. Abnormal amounts of wasted material, labor or other resources incurred in
constructing or developing the property.
d. Technical feasibility and commercial viability of extracting a mineral resource.

75. Two common accounting methods in the oil and gas industry are the
a. General and administrative cost method
b. Full-cost method and the Successful efforts method
c. Capitalized and amortized cost method
d. Amortization and depletion method

76. These are assets that include amounts expected to be recovered more than twelve months
 after the reporting period (classification according to a liquidity presentation).
a. Non-current assets
b. Tangible assets
c. Intangible assets
d. Fungible assets

77. Refers to the carrying amount of a noncurrent asset which is expected to be recovered
mainly through selling the asset rather than through usage.
a. Current assets
b. Held for sale
c. Trade assets
d. Disposal group

78. Refers to a group of assets and possibly some liabilities that an entity intends to dispose
of in a single transaction. Such a disposal group may be a group of cash-generating units,
a single cash-generating unit or part of a cash-generating unit.
a. Current assets
b. Held for sale
c. Trade assets
d. Disposal group

79. For a noncurrent asset or disposal group to be classified as held for sale, the asset must
be
a. sale must be highly probable
b. available for immediate sale in its present condition
c. available for immediate distribution in their present condition\
d. held for distribution to owners

80. Such liabilities are associated with the future delivery of goods or services. They do not
give rise to a contractual obligation to pay cash or another financial asset.
a. Deferred revenue
 b. Warranty liability
c. Current and deferred tax liabilities
d. Constructive obligations
81. Such liabilities are associated with the future delivery of goods or services. They do not
give rise to a contractual obligation to pay cash or another financial asset.
a. Deferred revenue
b. Warranty liability
c. Current and deferred tax liabilities
d. Constructive obligations

82. The price that would be paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
a. Present value
b. Transaction cost
c. Market value
d. Fair value

83. An entity shall classify a liability as current when:

a. It expects to settle the liability in its normal operating cycle
b. It holds the liability primarily for the purpose of trading
c. It does not have an unconditional right to defer settlement of the liability for at least
twelve months after the reporting period. Terms of a liability that could at the option
of the counterparty, result in its settlement by the issue of equity instruments do not
affect its classification.
d. All of the following

84. It is the elapsing between the acquisition of goods and services involved in the
manufacturing process and the final cash realization resulting from sales and subsequent
collections.
a. Acquisition cycle
b. Operating cycle
 c. Transaction cycle
d. Subsequent cycle

85. Represent balances owed to others for goods, services or supplies purchased on open
account arise because of the lag between the receipt of services or acquisition of title to
assets and the payment for them.
a. Accounts payable
b. Trade accounts payable
c. Both a or b
d. None of the given choices

86. Written promises to pay a certain sum of money on a specified future date.
a. Accounts payable
b. Notes payable
c. Commercial paper
d. Trade accounts payable

87. The measure of the liability should consider

a. Relevant laws and regulations
b. Technology to be used in the remediation effort
c. An estimate of the cost of the effort at the time the work will be performed
d. All of the following

88. One wherein the unavoidable costs of meeting the obligations under the contract exceed
the economic benefits under it.
a. Written contract
b. Oral contract
c. Onerous contract
d. Any of the given choices

89. It represent the least net costs of exiting from the contract and measured at the lower of
 the cost of fulfilling the contract or any compensation or penalties arising from failure to
fulfill the contract.
a. Avoidable cost under a contract
b. Unavoidable cost under a contract
c. Transaction cost under a contract
d. Agreed cost

90. Paragraph 14 of PAS 37 provides that a provision should be recognized when:

a. an entity has a present obligation (legal or constructive) as a result past event
b. it is probable that a transfer of economic resource will be required settle the
obligation
c. a reliable estimate can be made of the amount of the obligation
d. all of the following

91. It is a debt security issued by companies and government units to obtain a large amount
of capital on a long-term basis.
a. Bond
b. Marketable securities
c. Interests
d. Advances

92. The owner of each bond has the right to exchange it for a predetermined number of
shares of the company. Thus, upon conversion, the bondholder becomes a shareholder of
the company.
a. Callable bonds
b. Convertible bonds
c. Coupon bonds
d. Debenture bonds

93. Bonds that are secured by a lien against specific property of the company. If the company
becomes bankrupt and is liquidated, the holders of these bonds have first claim against
 the proceeds of the sale of the assets that secured their debt.
a. Registered bonds
b. Mortgage bonds
c. Subordinated Debenture
d. Serial bonds

94. Also called deep-discount bonds. These are bonds on which the interest is not paid until
the maturity.
a. Zero-coupon bonds
b. Coupon bonds
c. Debenture bonds
d. Callable bonds

95. A bond entitles the investor to two different types of cash flows, what are those?
a. principal and interest
b. premium and discount
c. principal and maturity
d. premium and interest

96. Represents the amount invested by shareholders when they purchase shares ordinary or
preferred at par value or, stated value or other diagnostic value.
a. Share capital
b. Paid-in capital
c. Additional paid-in capital
d. Contributed capital

97. Refers to capital contributions from shareholders to the corporation other than the par
value or stated value of shares.
a. Share capital
b. Paid-in capital
c. Additional paid-in capital
 d. Contributed capital

98. When share issue costs are incurred, what happens to the additional paid-in capital?
a. Reduced
b. Debited
c. Credited
d. Both a and b

99. A change in the number of shares outstanding accompanied by an offsetting change in

the par or stated value per share.
a. Share issue
b. Share split
c. Share cut
d. Share issue cost

100. The motivations for a share split are the following, what is the exception?
a. To increase the number of shares outstanding and decrease the market price per share.
Reduced per share market price increases the share's marketability by making it attractive
to a large number of potential investors particularly the budget-conscious investors.
b. Issuing the additional split shares and notifying the shareholders of the change in par or
stated value per share of all shares.
c. The split makes it easier for the price to rise again.
d. Share splits generally reduce share volatility and presage cash dividend increases.