Homework answers / question archive / Rizal Technological University CBET 01-502A Chapter 3 1)Which of the following is not a purpose of notes to financial statements?   To present information about the basis of preparation of the financial statements and the specific accounting policies used To disclose the information required by Philippine Financial Reporting Standards that is not presented elsewhere in the financial statements To provide additional information which is not presented in the financial statements but that is necessary for a fair presentation To provide information about the financial position, financial performance and cash flows of an entity that is useful to wide range of users in making economic decisions   What is the proper order of presenting the notes to financial statements?   Statement of compliance with PFRS Other disclosures, such as contingent liabilities, unrecognized contractual commitments and other nonfinancial disclosures Supporting information for items presented on the face of the financial statements Summary of significant accounting policies   I, II, III and IV I, IV, III and II I, III, IV and II I, IV, II and III   Which of the following statements is true concerning compliance with PFRS?   An entity whose financial statements comply with Philippine Financial reporting Standards shall make an explicit and unreserved statement of such compliance in the notes

Rizal Technological University CBET 01-502A Chapter 3 1)Which of the following is not a purpose of notes to financial statements?   To present information about the basis of preparation of the financial statements and the specific accounting policies used To disclose the information required by Philippine Financial Reporting Standards that is not presented elsewhere in the financial statements To provide additional information which is not presented in the financial statements but that is necessary for a fair presentation To provide information about the financial position, financial performance and cash flows of an entity that is useful to wide range of users in making economic decisions   What is the proper order of presenting the notes to financial statements?   Statement of compliance with PFRS Other disclosures, such as contingent liabilities, unrecognized contractual commitments and other nonfinancial disclosures Supporting information for items presented on the face of the financial statements Summary of significant accounting policies   I, II, III and IV I, IV, III and II I, III, IV and II I, IV, II and III   Which of the following statements is true concerning compliance with PFRS?   An entity whose financial statements comply with Philippine Financial reporting Standards shall make an explicit and unreserved statement of such compliance in the notes

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1. 4. All of the choices are correct regarding notes to financial statements

 

13. Which of the following is not a method of disclosing pertinent information?

 

1. 1. Supporting schedule
   2. Parenthetical explanation
   3. Cross reference and contra item
   4. All of these are methods of disclosing pertinent information

 

14. The disclosure of accounting policies is important to financial statement readers in determining

 

1. 1. Net income for the year
   2. Whether accounting policies are consistently applied from year to year
   3. The value of obsolete goods included in ending inventory
   4. Whether the working capital position is adequate for future operations

 

15. Accounting policies disclosed in the notes to financial statements typically include all of the following, except

 

1. 1. The cost flow assumption
   2. The depreciation method
   3. Significant estimates
   4. Significant inventory purchasing policies

 

16. Significant accounting policies may not be

 

1. 1. Selected on the basis of judgment
   2. Selected from existing acceptable alternatives
   3. Unusual or innovative in application
   4. Omitted from financial statement disclosure

 

17. Which of the following should be defined as intentional distortion of financial statement?

 

1. 1. Error
   2. Fraud
   3. Error and fraud
   4. Neither error nor fraud

 

18. An example of an inventory accounting policy that should be disclosed in a summary of significant account policies is

 

1. 1. Composition of inventory into raw materials, work in process and finished goods
   2. Major backlog of inventory orders
   3. Method used for pricing inventory
   4. All of these should be disclosed in the summary of significant accounting policies

 

19. The standard of adequate disclosure is best described by which of the following?

 

1. 1. All information related to the business of an entity and operating objective is required to be disclosed in the financial statements
   2. Information about each account balance appearing in the financial statements is to be included in the notes to financial statements
   3. Enough information should be disclosed in the financial statements so a person wishing to invest in the entity can make a wise decision

 

1. 4. Disclosure of any financial facts significant enough to influence the judgment of an informed user

 

20. Application of the standard of adequate disclosure

 

1. 1. Is theoretically desirable nut not practical because the cause of complete disclosure exceeds the benefit
   2. Is violated when important financial information is buried in the notes to financial statements
   3. Is demonstrated by the use of supplementary information presenting the effects of changing prices
   4. Requires that the financial statements should be consistent and comparable

 

21. What is the purpose of information presented in the notes to financial statements?

 

1. 1. To provide disclosures required by generally accepted accounting principles
   2. To correct improper presentation in the financial statements
   3. To provide recognition of amounts not included in the total of the financial statements
   4. To present management response to auditor comments

 

22. Which of the following information should be disclosed in the summary of significant accounting policies?

 

1. 1. Refinancing of debt subsequent to the reporting period
   2. Guarantee of indebtedness of other
   3. Criteria for determining which investments are treated as cash equivalents
   4. Adequacy of pension plan assets relative to the defined benefit obligation

 

23. Which of the following should be disclosed in a summary of significant accounting policies?

 

1. 1. Type of executor contract
   2. Amount for cumulative effect of change in accounting policy
   3. Claims of equity holders
   4. Depreciation method followed

 

24. Which of the following is not a required disclosure of accounting policies?

 

1. 1. The measurement basis used
   2. Key management personnel involved in drafting the summary of significant accounting policies
   3. Disclosures required by standards
   4. The nature of operations and the policies that the users of the financial statements would expect to be disclosed