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1)An entity shall measure initially a financial liability not designated at fair value through profit loss at a

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1)An entity shall measure initially a financial liability not designated at fair value through profit loss at

a.      Fair value

b.      Fair value plus directly attributable transaction costs

c.      Fair value minus directly attributable transaction costs

d.      Face amount

2.      Which of the following statements is true in relation to the fair value option of measuring a financial liability?

a.      At initial recognition, an entity may irrevocably designate a financial liability at fair value through profit or loss.

b.      The financial liability is measured at fair value at every year-end and any change in fair value is generally recognized in profit or loss

c.      The interest expense on the financial liability is recognized using the nominal interest rate.

d.      All of these statements are true about the fair value option of measuring financial liability

3.      Which of the following does not meet the definition of a liability?

a.      The signing of a three-year employment contract at a fixed annual salary

b.      An obligation to provide goods or services in the future

c.      A note payable with no specified maturity date

d.      An obligation that is estimated in amount

4.      Which of the following is a current liability?

a.      Bond payable due in two years for which there is an adequate sinking fund

b.      Bond payable due in three years expected to be refinanced

c.      Bond payable due in eleven months for which there is an appropriation of retained earnings

d.      Bond payable due in eight months and refinanced on a long-term basis at the end of reporting period

5.      When an entity has a continuing policy of guaranteeing new products against defects for three years, the liability arising from the warranty

a.      Should be reported as noncurrent

b.      Should be reported as current

c.      Should be reported as part current and part noncurrent

d.      Need not to be disclosed

6.      Which of the following is the correct definition of provision?

a.      A possible obligation arising from past event

b.      A liability of uncertain timing or amount

c.      A liability which cannot be easily measured

d.      An obligation to transfer funds to an entity

7.      This is defined as "a structured program that is planned and controlled by the management that materially changes either the scope of a business of an entity or the manner in which the business is conducted".

a.      Restructuring

b.      Liquidation

c.      Recapitalization

d.      Corporate revamp

8.      It is a possible asset that arises from past event and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the entity

a.      Contingent asset

b.      Other asset

c.      Suspense account

d.      Current asset

9.      Which of the following statements is incorrect concerning a contingent liability?

a.      A contingent liability is not recognized in the financial statements

b.      A contingent liability is disclosed only.

c.      If the contingent liability is remote, no disclosure is required

d.      A contingent liability is both probable and measurable

10.  Bonds payable not designated at fair value through profit loss shall be measured initially at

a.      Fair value

b.      Fair value plus bond issue costs

c.      Fair value minus bond issue costs

d.      Face amount