Bulacan State University, Malolos

ACCTG MISC

1)Financial statements that are prepared when the reporting entity comprises two or more entities that are not linked by a parent and subsidiary relationship.

1. 1. Consolidated financial statements           c.     Unconsolidated financial statements
   2. Combined financial statements                 d.    Uncombined financial statements

2. Financial statements that are designed to provide information about the parent’s assets, liabilities, income and expenses and not about those of the subsidiaries.
   1. Consolidated financial statements           c.     Unconsolidated financial statements
   2. Combined financial statements                 d.   Uncombined financial statements

3. Financial statements that provide information about the assets, liabilities, equity, income and expenses of both the parent and its subsidiaries as a single reporting entity.
   1. Consolidated financial statements           c.     Unconsolidated financial statements
   2. Combined financial statements                 d.   Uncombined financial statements

4. S1. A reporting entity is an entity that is not required or chooses to prepare financial statements. S2. A reporting entity is necessarily a legal entity.
   1. True, True                                                           c. False, True
   2. True, False                                                          d.    False, False

5. The reporting entity can be a single entity or a portion of an entity, or can comprise more than one entity. Accordingly, the following can be considered a reporting entity:

1. Individual corporation, partnership or proprietorship
2. The parent alone
3. The parent and its subsidiaries as single reporting entity
4. Two or more entities without parent and subsidiary relationship as a single reporting entity
5. A reportable business segment of an entity
   1. I and II only                                                         c.   I, II, III and IV only
   2. I, II and III only                                                  d.    I, II, III, IV and V

6. S1. Financial statements cannot include information about transactions and other events that occurred after the end of reporting period if the information is necessary to meet the general objective of financial statements.

S2. Interim financial statements are prepared on an interim basis, e.g. three months, six months or nine months, are not optional but required.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.    False, False

7. Financial statements are prepared for a specified period of time and generally provide information about:

1. Assets during the reporting period
2. Liabilities during the reporting period
3. Equity during the reporting period
4. Income at the end of the reporting period
5. Expenses at the end of the reporting period
   1. I, II, III, IV, and V                                               c. IV and V only
   2. I, II, and III only                                                 d.    none of the choices

8. The basic notions or fundamental premises on which the accounting process is based.
   1. Conceptual Framework                                 c.     International Financial Reporting Standards
   2. Accounting Assumptions                              d. International Accounting Standards

9. S1. The Conceptual Framework for Financial Reporting mentions three assumptions – accounting entity, time period and monetary unit.

S2. Implicit in accounting, the only one assumption – going concern.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.    False, False

10. Which of the following statements is/are false regarding the Conceptual Framework of Financial Reporting?

1. The Conceptual Framework does not in any way assist preparers of financial statements in applying PFRS and in dealing with topics that have yet to form the subject of PFRS.
2. The Conceptual Framework is not a PFRS, and nothing in it overrides any specific PFRS, including PFRS that is in some respect in conflict with the Conceptual Framework.
3. The Conceptual Framework serves as a guide in developing future financial reporting standards and in reviewing existing ones.
4. The Conceptual Framework is a source of guidance for determining an accounting treatment where a standard does not provide specific guidance.
   1. I only                                                                     c.   I, II and III only
   2. I and II only                                                         d. All of these are correct statements

11. Identify the pervasive constraint and underlying assumption mentioned in the Conceptual Framework.                                                                                                                                                                                                       

12. S1. An economic resource is a right that has the potential to produce economic benefits. S2. An obligation is a duty or responsibility that the entity has no practical ability to avoid.
    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

13. S1. Under accounting entity assumption, the entity is separate from the owners, managers, and employees who constitute the entity.

S2. When parent and subsidiary relationship exists, consolidated statements for the affiliates are usually made because for practical and economic purposes the parent and the subsidiary are a “single economic entity”.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.   False, False

14. S1. The time period assumption requires that the indefinite life of an entity is subdivided into accounting periods which are usually of equal length for the purpose of preparing financial reports on financial position, performance, and cash flows.

S2. A natural business year is a twelve-month period that ends on any month when the business is at the highest and experiencing slack season.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.   False, False

15. S1. The monetary unit assumption has two aspect, namely quantifiability and stability of the peso. Quantifiability aspect means that the purchasing power is constant and that consistency is insignificant therefore may be ignored.

S2. Stability of the peso assumption means that assets, liabilities, equity, income and expenses should be stated in terms of unit of measure.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.    False, False

16. S1. The elements of financial statements refer to the quantitative and qualitative information reported in the statement of financial position and income statement.

S2. The Conceptual Framework identifies elements that are unique to the statement of changes in equity.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.    False, False

17. The following are elements of financial statements

1. Assets
2. Liability
3. Equity
4. Income
5. Expense
   1. I, II and III only                                  c.   I, II, III, IV and V
   2. IV and V only                                     d. I, II, III, IV and V are not elements of financial statements

18. S1. Under the Old Conceptual Framework, an asset is defined as a present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits.

S2. Under the Revised Conceptual Framework, an asset is defined as a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.   False, False

19. Under the Revised Conceptual Framework, the following are essential characteristic of asset:

1. The asset is a present economic resource.
2. The economic resource is a right that has the potential to produce economic benefits.
3. The economic resource is controlled by the entity as a result of past events
4. The potential economic benefits are expected to flow to the entity.
   1. I only                                                                     c. I, II and III only
   2. I and II only                                                         d.   I, II, III and IV

20. Rights that have the potential to produce economic benefits may take the following forms:

1. Right that correspond to an obligation of another entity
2. Rights that do not correspond to an obligation of another entity
3. Rights established by contract or legislation
4. Rights to allow others from controlling economic benefits from the asset.
   1. I only                                                                     c. I, II and III only
   2. I and II only                                                         d.   I, II, III and IV

21. An economic resource could produce economic benefits if an entity is entitled to the following:

1. To receive contractual cash flows
2. To exchange economic resources with another party on favorable terms
3. To produce cash inflows or avoid cash outflows
4. To receive cash by selling the economic resource
5. To extinguish a liability by transferring an economic resource
   1. I, II, III, IV and V                                                c.     I, II and III only
   2. I, II, III and IV only                                            d. I and II only

22. Which of the following is true about control of an economic resource?
    1. Control includes the ability to prevent others from using asset and preventing others from obtaining the economic benefits from the asset.
    2. If there are no legal rights, control is absolutely cannot exist if an entity has other means of ensuring that no other party can benefit from an asset.
    3. An entity controls an asset if it has past ability to indirectly use of asset and obtain economic outflow from it.
    4. All of the statements are false.

23. S1. Under the Revised Conceptual Framework, a liability is defined as a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

S2. Under the Old Conceptual Framework, a liability is defined as a present obligation of the entity to transfer an economic resource as a result of past events. An obligation is a duty or responsibility that the entity has no practical ability to avoid.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.   False, False

24. Under the Revised Conceptual Framework, the following are essential characteristics of liability:

1. The entity has an obligation.
2. The obligation is to transfer an economic resource.
3. The obligation is a present obligation that exists as a result of past event
   1. I only                                                                     c. I and II only
   2. II only                                                                    d.    I, II and III

25. S1. An obligation is a duty or responsibility that an entity has no practical ability to avoid. S2. Obligations can either be legal or constructive.
    1. True, True                                                           c.     False, True
    2. True, False                                                          d.    False, False

26. S1. Legal obligations arise from normal business practice, custom and a desire to maintain good business relations or act in an equitable manner.

S2. Obligations may be constructively enforceable as a consequence of a binding contract or statutory requirement.

1. 1. True, True                                                           c.     False, True
   2. True, False                                                          d.    False, False

27. Obligations to transfer economic resource includes the following:

1. Obligation to pay cash
2. Obligation to deliver goods or noncash resources
3. Obligation to provide services at some future time
4. Obligation to exchange economic resources with another party on unfavorable terms
5. Obligation to transfer an economic resource if specified uncertain future event occurs
   1. I, II, III, IV and V                                                c.     I, II and III only
   2. I, II, III and IV only                                            d. I and II only

28. The Revised Conceptual Framework discusses how the ‘no practical ability to avoid’ criterion is applied in the following:

1. If a duty or responsibility arises from the entity’s customary practices, published policies or specific statements—the entity has an obligation if it has no practical ability to act in a manner inconsistent with those practices, policies or statements.
2. If a duty or responsibility is conditional on a particular future action that the entity itself may take—the entity has an obligation if it has no practical ability to avoid taking that action.
   1. I only                                                                     c. I and II
   2. II only                                                                    d. none of the choices

29. S1. Under the Revised Conceptual Framework, expense is defined as increases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims.

S2. Under the Revised Conceptual Framework, income is defined as decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.   False, False

30. Under the Revised Conceptual Framework, this statement refers to the statement of profit or loss and a statement presenting other comprehensive income.
    1. Statement of Financial Position
    2. Income Statement
    3. Statement of Comprehensive Income
    4. Statement of Financial Performance

31. Under the Revised Conceptual Framework, this is the process of capturing for inclusion in the statement of financial position or the statement(s) of financial performance an item that meets the definition of an asset, a liability, equity, income or expenses.
    1. Recording                                                            c. Pre-recognition
    2. Recognition                                                        d.   Preinclusion

32. S1. Recognition of an item results in relevant information may be affected by low probability of a low economic benefits and existence uncertainty.

S2. Recognition of an item results in a faithful representation may be affected by measurement uncertainty, recognition inconsistency, and presentation and disclosure.

1. 1. True, True                                                           c.     False, True
   2. True, False                                                          d.    False, False

33. S1. The expense recognition principle is the application of the matching principle.

S2. The matching principle requires that those costs and expenses incurred in earning a revenue shall be reported in the same period.

1. 1. True, True                                                           c.     False, True
   2. True, False                                                          d.    False, False

34. The following are applications of matching principle, except:
    1. Cause and effect association
    2. Systematic and rational allocation
    3. Immediate recognition
    4. Derecognition

35. Under the application of matching principle, this involves the simultaneous or combined recognition of revenue and expenses that result directly and jointly from the same transactions or events.
    1. Cause and effect association
    2. Systematic and rational allocation
    3. Immediate recognition
    4. Derecognition

36. Under the application of matching principle, the cost incurred is expense outright because of uncertainty of future economic benefits or difficulty of reliably associating certain costs with future revenue.
    1. Cause and effect association
    2. Systematic and rational allocation
    3. Immediate recognition
    4. Derecognition

37. Under the application of matching principle, the reason is that the cost incurred will benefit future periods and there is an absence of direct or clear association of the expense with specific revenue.
    1. Cause and effect association
    2. Systematic and rational allocation
    3. Immediate recognition
    4. Derecognition

38. The following are historical costs bases:

1. historical cost provides information derived, at least in part, from the price of the transaction or other event that gave rise to the item being measured
2. historical cost of assets is reduced if they become impaired and historical cost of liabilities is increased if they become onerous
3. one way to apply a historical cost measurement basis to financial assets and financial liabilities is to measure them at amortized cost
   1. I only                                                                     c.   III only
   2. II only                                                                    d.    I, II and III

39. The following are current value measurement bases:

1. current value provides information updated to reflect conditions at the measurement date
2. current value measurement bases include fair value, value in use (assets) fulfillment value (for liabilities and current cost.
   1. I only                                                                     c.    I and II
   2. II only                                                                    d. none of the choices

40. Adding together of assets, liabilities, equity, income and expenses that have similar or shared characteristics and are included in the same classification is called
    1. Classification                                                      c. Duplication
    2. Segregation                                                        d.    Aggregation

41. S1. Return of capital is the amount in excess of their original investment S2. Return on Capital is an erosion of the capital invested in the entity

S3. Capital maintenance approach means that net income occurs only after the capital used from the beginning of the period is maintained

1. 1. True, True, True                                                               c.     False, True, False
   2. True, False, False                                                             d.    False, False, True

42. This is the monetary amount of the net assets contributed by shareholders and the amount of the increase in net assets resulting from earnings retained by the entity.
    1. Shareholders’ Equity                                                      c. Legal Capital
    2. Financial Capital                                                                d. Physical Capital

43. Which of the following statements is incorrect in relation to fair presentation?
    1. An entity shall not describe financial statements as complying with PFRS unless they comply with all the requirements of PFRS.
    2. An entity whose financial statements comply with PFRS shall make an explicit and unreserved statement of such compliance in the notes.
    3. An entity can rectify inappropriate accounting policies either by disclosure of the accounting policies used by notes or explanatory material.
    4. Fair presentation requires the faithful representation of the effects of transactions in accordance with the definition criteria for assets, liabilities, income and expenses.

44. Which of the following is not an acceptable major asset classification?
    1. Current assets                                                                   c. Investments
    2. Deferred charges                                                             d. Property, plant and equipment

45. The basis for classifying assets as current or noncurrent is conversion to cash within the
    1. operating cycle or one year, whichever is longer.
    2. operating cycle or one year, whichever is shorter.
    3. accounting cycle or one year, whichever is longer.
    4. accounting cycle or one year, whichever is shorter.

46. “To provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions,” is the objective of
    1. Statement of financial performance                        c.     Financial statements
    2. Statement of cash flows                                               d.   Financial Reporting

47. S1. Financial statements shall be presented at most annually.

S2. Financial statements show the result of the management stewardship of the resources entrusted to it.

1. 1. True, True                                                           c.     False, True
   2. True, False                                                          d.    False, False

48. When an entity’s end of reporting period changes and financial statements are presented for a period longer or shorter than one year, an entity shall disclose:

1. The period covered by the financial statements.
2. The reason for using a longer or shorter period.
3. The fact that amounts presented in the financial statements are not entirely comparable.
4. The value of amounts affected by the change.
   1. I only                                                                     c. I, II and III only
   2. I and II only                                                         d.   I, II, III and IV

49. S1. When an entity is functioning with a clearly identifiable operating cycle, the separate classification of current and noncurrent assets is useful information by distinguishing between net assets that are continuously circulating as working capital from the net assets, used in long-term operations.

S2. When the entity’s normal operating cycle is clearly identifiable, the duration is presumed to be twelve months.

1. 1. True, True                                                           c.     False, True
   2. True, False                                                          d.   False, False

50. The asset restricted to settle a liability for more than twelve months after the reporting period is
    1. Cash                                                                      c. Current Asset
    2. Cash Equivalent                                                d.    Other Noncurrent Asset

51. S1. A statement of financial performance is a formal statement showing the following three elements: assets, liabilities and equity.

S2. Investor, creditors and other statement users analyze the statement of financial performance to evaluate such factors as liquidity, solvency and the need of the entity for additional financing.

1. 1. True, True                                                           c.     False, True
   2. True, False                                                          d.    False, False

52. S1. PAS 1 does not apply to the structure and content of condensed interim financial statements prepared in accordance with PAS 34 Interim Financial Reporting.

S2. If entities with not-for-profit activities in the private sector or the public sector apply PAS 1, they may need to amend the descriptions used for particular line items in the financial statements and for the financial statements themselves.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.   False, False

53. S1. Under PAS 1 paragraph 66, simply states that “an entity shall classify all other assets not classified

as current as either current or noncurrent depending on its life expectancy”.

S2. Property, plant and equipment are tangible assets which are held by an entity for use in production, or supply of goods and services, for rental to others, administrative, purposes and are expected to be used during more than on period.

1. 1. True, True                                                           c.   False, True
   2. True, False                                                          d.   False, False

54. S1. IASC defines long-term investment as “an asset held by an entity for the accretion of wealth through capital distribution, such as interest, royalties, dividends and rentals, for capital appreciation or for other benefits to the investing entity such as those obtained through trading relationship”.

S2. Intangible asset is an identifiable nonmonetary asset without substance. Identifiable asset includes patent, franchise, copyright, lease right, goodwill, trademark and computer software.

1. 1. True, True                                                           c.     False, True
   2. True, False                                                          d.    False, False

55. An entity must normally present a classified statement of financial position, separating current and non-current assets and liabilities, unless presentation based on liquidity provides information that is reliable. Current assets are assets that are:

1. expected to be realized in the entity's normal operating cycle
2. held primarily for the purpose of trading
3. expected to be realized within 12 months after the reporting period
4. cash and cash equivalents (unless restricted).
   1. I only                                                                     c.   I, II and III only
   2. I and II only                                                         d.    I, II, III and IV

56. An entity must normally present a classified statement of financial position, separating current and non-current assets and liabilities, unless presentation based on liquidity provides information that is reliable. Current liabilities are those:

1. expected to be settled within the entity's normal operating cycle
2. held for purpose of trading
3. due to be settled within 12 months
4. for which the entity does not have an unconditional right to defer settlement beyond 12 months (settlement by the issue of equity instruments does not impact classification).
   1. I only                                                                     c.   I, II and III only
   2. I and II only                                                         d.    I, II, III and IV

57. PAS 1, paragraph 54, provides that as minimum, the line items under current assets are:

1. Cash and cash equivalents
2. Financial assets at fair value such as trading securities and other investments in quoted equity instruments
3. Trade and other receivables
4. Inventories
5. Prepaid expenses
   1. I and II only                                                         c.   I, II, III and IV only
   2. I, II and III only                                                  d.    I, II, III, IV and V

58. PAS 1, paragraph 54, provides that as minimum, the line items under current liabilities are:

1. Trade and other payables
2. Current provisions
3. Short-term borrowing
4. Current portion of long-term debt
5. Current tax liability
   1. I and II only                                                         c.   I, II, III and IV only
   2. I, II and III only                                                  d.    I, II, III, IV and V

59. S1. The term “trade and other payables” is a line item for accounts payable, notes payable, accrued interest on notes payable, dividends payable and accrued expenses. Trade accounts and notes payable shall not be separately presented.

S2. Under PAS 1, paragraph 69, provides that noncurrent liabilities that not classified as current are classified as noncurrent.

1. 1. True, True                                                           c.     False, True
   2. True, False                                                          d.   False, False

60. A liability which is due to be settled within twelve months after the reporting period is classified as current liabilities, even if:

1. The original term was for a period longer than twelve months.
2. An agreement to refinance or to reschedule payment on a long-term basis is completed before the reporting period and after the financial statements are authorized for issue.
   1. I                                                                               c.   I and II
   2. II                                                                             d. none of the choices

61. If the refinancing on a long-term basis is completed on or before the end of reporting period, the refinancing is an adjusting event and therefore the obligation is classified as
    1. current                                                                 c. either current or noncurrent
    2. noncurrent                                                         d. current and noncurrent

62. S1. If the entity has the discretion to refinance or roll over an obligation for at least twelve months after the reporting period under an existing loan facility, the obligation is classified as current liability. S2. If the refinancing or rolling over is not at the discretion of the entity, the obligation is classified as noncurrent liability.
    1. True, True                                                           c. False, True
    2. True, False                                                          d.   False, False

63. S1. As to effect of breach of covenants, PAS 1, paragraph 74 provides that the liability is classified as noncurrent even if the lender has agreed, after the reporting period and before the statements are authorized for issue, not to demand payment as a consequence of the breach.

S2. As to effect of breach of covenants, PAS 1, paragraph 75 provides that the liability is classified as current if the lender has agreed on or before the end of the reporting period to provide a grace period ending at least twelve months after the end of the reporting period.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.   False, False

64. S1. Owners are the holders of instruments classified as equity. The term equity may simply be used for all business entities.

S2. Shareholders’ equity is the residual interest in the assets of the entity after deducting all of its liabilities

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.   False, False

65. S1. The IASB concluded that “statement of financial position” better reflects the function of the statement and is consistent with the conceptual framework.

S2. The IASB concluded that “balance sheet” simply reflected the convention that double-entry bookkeeping requires all debits to equal credits, and did not identify the content or purpose of the statement.

1. 1. True, True                                                           c. False, True
   2. True, False                                                          d.   False, False

66. The following are elements which are always to be displayed in the heading of a statement of financial position:

1. The entity whose financial position is being presented
2. The address of the entity whose financial position is being presented
3. The title of the statement
4. The date of the statement
   1. I and II only                                                                         c.   I, III and IV only
   2. I and III only                                                                       d. I, II and IV only

67. The notes to the financial statement must:

1. present information about the basis of preparation of the financial statements and the specific accounting policies used.
2. disclose any information required by IFRSs that is not presented elsewhere in the financial statements.
3. provide additional information that is not presented elsewhere in the financial statements but is relevant to an understanding of any of them.
   1. I only                                                                                     c.   I and II only
   2. II only                                                                                    d.    I, II and III

68. PAS 1 suggests that noted should normally be presented in the following order:

1. a statement of compliance with PFRSs.
2. a summary of significant accounting policies applied, including the measurement basis (or bases) used in preparing the financial statements the other accounting policies used that are relevant to an understanding of the financial statements.
3. supporting information for items presented on the face of the statement of financial position (balance sheet), statement(s) of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows, in the order in which each statement and each line item is presented.
4. other disclosures, including contingent liabilities and unrecognized contractual commitments non-financial disclosures, such as the entity's financial risk management objectives and policies.
   1. I, II, III, IV                                                                             c.     I, IV, II, III
   2. I, III, II, IV                                                                             d.    II, III, IV, I

69. In the Philippines, the common practice is to present in the statement of financial position
    1. Current assets before noncurrent assets, noncurrent liabilities before current liabilities and equity after liabilities.
    2. Noncurrent assets before current assets, noncurrent liabilities before current liabilities and equity after liabilities
    3. Current assets before noncurrent assets, current liabilities before noncurrent liabilities and equity after liabilities
    4. Current assets before noncurrent assets, noncurrent liabilities before current liabilities and equity after liabilities

70. Which statement about the statement of financial position is not true?
    1. Biological assets should be reported in the statement of financial position
    2. Provisions should be recognized in the statement of financial position
    3. A revaluation surplus on a noncurrent asset in the current year should be recognize in the income statement
    4. The number of shares authorized for issue should be reported in the statement of financial position or the statement of changes in equity or in the notes.

71. Under PAS 1, paragraph 79, An entity shall disclose the following, either in the statement of financial position or the statement of changes in equity, or in the notes:

1. for each class of share capital – the number of shares authorized, issued and fully paid, and issued but not fully paid
2. for each class of share capital – par value per share, or that the shares have no par value
3. for each class of share capital – a reconciliation of the number of shares outstanding at the beginning and at the end of the period
4. for each class of share capital – the rights, preferences and restrictions attaching to that class including restrictions on the distribution of dividends and the repayment of capital
5. for each class of share capital – shares in the entity held by the entity or by its subsidiaries or associates
6. for each class of share capital – shares reserved for issue under options and contracts for the sale of shares, including terms and amounts
7. a description of the nature and purpose of each reserve within equity

1. I, II, III, IV, V, VI and VII                                                 c.     I, II, III, IV and V only
2. I, II, III, IV, V and VI only                                                d.   I, II, III and IV only

72. PAS 1 refers to it as changes in equity other than introduction and return of capital to owners.
    1. Net income                                                                        c. Profit
    2. Other comprehensive income                                   d.    Total comprehensive income

73. The presence of “cost of sales” account in the income statement signifies that an entity classifies expenses according to
    1. amounts                                                                              c.   maturity
    2. function                                                                               d.    nature

74. An entity classified expenses by logistics quality control, manufacturing plant engineering, sales and marketing, research and development, finance and administration. The classification basis is by
    1. area of responsibility                                                      c. nature of expense
    2. function performed                                                        d.    object of expenditure

75. If the classification of expenses by function method is used for the presentation of an income statement, additional information on the following items must be disclosed.
    1. Revenue                                                                              c.     Gains on revaluation of assets
    2. Gains on disposal of assets                                          d. Depreciation and amortization expense

76. Under PAS 1, which of the following item is not included in the computation of profit?
    1. Finance cost
    2. Post-tax gain or loss on discontinued operations
    3. Unrealized gain in change in value of biological assets
    4. Unrealized gain in change in value of available-for-sale securities

77. The following are items recognized as other comprehensive income:

1. Changes in revaluation surplus where the revaluation method is used under PAS 16 Property, Plant and Equipment and PAS 38 Intangible Assets
2. Remeasurements of a net defined benefit liability or asset recognized in accordance with PAS 19 Employee Benefits
3. Exchange differences from translating functional currencies into presentation currency in accordance with PAS 21 The Effects of Changes in Foreign Exchange Rates
4. Gains and losses on remeasuring available-for-sale financial assets in accordance with PAS 39 Financial Instruments: Recognition and Measurement
5. The effective portion of gains and losses on hedging instruments in a cash flow hedge under PAS 39 or PFRS 9 Financial Instruments
6. Gains and losses on remeasuring an investment in equity instruments where the entity has elected to present them in other comprehensive income in accordance with PFRS 9
7. The effects of changes in the credit risk of a financial liability designated as at fair value through profit and loss under PFRS 9

1. I, II, III, IV, V, VI and VII                                                 c.     I, II, III, IV and V only
2. I, II, III, IV, V and VI only                                                d.   I, II, III and IV only

78. S1. An entity can apply the two ways of presenting comprehensive income simultaneously, namely: two statements and single statement of comprehensive income.

S2. Two statement is the combined statement showing the components of profit or loss and components of other comprehensive income in a single statement.

1. 1. True, True                                                           c.     False, True
   2. True, False                                                          d.    False, False

79. Under PAS 1, which of the following should be classified as extraordinary item in reporting results of operations?
    1. Losses resulting from unusual major flashflood in the Visayas region
    2. Gain resulting from the national government expropriation of a corporate property
    3. Foreign exchange losses arising from appreciation of Japanese yen relative to the Philippine peso.
    4. None, all are ordinary gains and losses.

80. PAS 1 requires the allocation of profit and loss for the period between or among

1. Profit or loss attributable to owner of the parent.
2. Profit or loss attributable to subsidiaries of the parent.
3. Profit or loss attributable to non-controlling interests.
   1. I and II only                                                                         c.     II and III only
   2. I and III only                                                                       d.   I, II and III only

81. PAS 1 requires the allocation of total comprehensive income for the period between or among

1. Total comprehensive income attributable to owners of the parent.
2. Total comprehensive income attributable to subsidiaries of the parent.

IV.       Total comprehensive income attributable to non-controlling interests.

1. 1. I and II only                                                                         c.     II and III only
   2. I and III only                                                                       d.   No such required

82. The following are statements relating to presentation of the statement of changes in equity:

S1. The amounts of dividends shown as distribution to owners and the amounts of dividends per share should be shown in the notes only.

S2. Components of equity include each class of contributed equity, the accumulated balance of each class of other comprehensive income and retained earnings.

1. 1. True, True                                                           c.     False, True
   2. True, False                                                          d.   False, False

83. What is the purpose of reporting comprehensive income?
    1. To replace net income with a better measure.
    2. To report a measure of overall entity performance.
    3. To report changes in equity due to transactions with owners.
    4. To combine income from continuing operations with income from discontinued operations.

84. Which is not acceptable in reporting other comprehensive income?
    1. Note to financial statements
    2. Statement of changes in equity
    3. Single statement of comprehensive income
    4. Separate statement of comprehensive income

85. Which of the following OCI will be classified to profit or loss:

1. Unrealized gain or loss on equity investment measured at fair value through other comprehensive income.
2. Unrealized gain or loss on debt instrument measured at fair value through other comprehensive income.
3. Revaluation surplus during the year.
4. Gain or loss from translating financial statements of a foreign operation.
5. Remeasurements of defined benefit plan including actuarial gain or loss.
6. Unrealized gain or loss on derivative contracts designated as cash flow hedge.
7. Change in fair value attributable to credit risk of a financial liability designated at fair value through profit or loss.

1. I, II, III, IV, V, VI and VII                                                 c.   II, IV and VI only
2. I, III, V and VII only                                                          d.   I, II, III, IV and V only

86. PAS 1, paragraph 85, states that an entity shall present additional line items, headings and subtotals in the statement(s) presenting profit or loss and other comprehensive income when such presentation is relevant to an understanding of the entity’s financial performance. In accordance to this those subtotals shall:

1. be comprised of line items made up of amounts recognized and measured in accordance with PFRS
2. be presented and labelled in a manner that makes the line items that constitute the subtotal clear and understandable
3. be consistent from period to period
4. not be displayed with more prominence than the subtotals and totals required in IFRS for the statement(s) presenting profit or loss and other comprehensive income
   1. I only                                                                                     c.   I, II and III only
   2. I and II only                                                                         d.    I, II, III and IV

87. The following are sources of income but not limited to:

1. Sales of merchandise to customers
2. Rendering of services
3. Use of entity resources
4. Disposal of resources other than products
   1. I only                                                                                     c.   I, II and III only
   2. I and II only                                                                         d.    I, II, III and IV

88. In which section of the statement of financial performance should employment taxes that are due for settlement in 15 months’ time be presented?
    1. Current liabilities                                                              c. Noncurrent liabilities
    2. Current assets                                                                   d.    None of the choices

89. Assets to be sold, consumed or realized as part of normal operating cycle are
    1. Revenue                                                                              c.     Selling expense
    2. Finance cost                                                                       d.    None of the choices

90. Conceptually, net income/loss is a measure of
    1. Wealth                                                                                 c.     Capital maintenance
    2. Change of wealth                                                            d.   Cash flow

MAE Company provided the following account balances on December 31, 2019 (all amounts in Philippine peso: (PROBLEM 8-2)

91. MAE Company should report “Trade and other receivables” in the face of its statement of financial position as

a.   Php 630,000                                                                        c.    Php 650,000

b.   Php 640,000                                                                        d.   Php 660,000

92. MAE Company should report “Property, plant and equipment” in the face of its statement of financial position as

a.   Php 7,500,000                                                                    c.     Php 5,300,000

b.   Php 6,000,000                                                                    d.    Php 3,800,000

93. MAE Company should report “Long-term investments” in the face of its statement of financial position as

a.   Php 1,250,000                                                                    c.     Php 1,310,000

b.   Php     910,000                                                                   d.    Php   900,000

94. MAE Company should report “Intangible assets” in the face of its statement of financial position as a.   Php 3,250,000                                                                            c.     Php 3,350,000

b.   Php 3,150,000                                                                    d.    Php   100,000

95. MAE Company should report “Other noncurrent assets” in the face of its statement of financial position as

a.   Php 150,000                                                                        c.    Php 200,000

b.   Php 100,000                                                                        d.    Php 50,000