University of Perpetual Help System DALTA – Calamba

INFORMA 123

PAS 8 - Accounting changes

1)It is and adjustment of the carrying amount of an asset or a liability or the amount of the periodic consumption of an asset that result from the assessment of  the  present status and expected future benefit and obligation associated with the asset and liability

1. 1. 1. Change in accounting estimate
      2. Change in accounting policy
      3. Correction of a prior period error
      4. Change in reporting entity

0. 2. The effect of a change in accounting estimate shall be recognized currently and prospectively be including it in income or loss of
1. The period of change if the change effects that period only
2. The period of change if the and future if the change affects both.
   1. I only                                     c. II only
   2. Both I and II                   d. Neither I nor II

1. 3. Prospective recognition of the effect of a change in an accounting estimate means that change is applied to transactions from the
      1. Date of the change in estimate
      2. End of the current reporting period
      3. Beginning of the year of change
      4. Date of issuance of financial statements

1. 4. A change in the measurement basis is
      1. A change in accounting estimate
      2. A change in accounting policy
      3. A correction of an error
      4. Not an accounting change

0. 5. Prior period errors are omission from and misstatement in the financial statements or one more periods arising from a failure to use or misuse of reliable information that
1. Was available when expected statements for those periods were authorized for issue
2. Could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements
   1. I only                                     c. II only
   2. Either I or II                         d. Both I and II

1. 6. Prior period errors include all of the following, except
      1. Effects of mathematical mistakes
      2. Mistakes in applying accounting policies
      3. Oversights or misinterpretation of facts and fraud
      4. Effects of a change in the estimated useful life of an asset

0. 7. An entity shall correct material prior errors retrospectively in the first set of financial statements after  their discovery by
1. Restating the comparative amounts for the prior period presented in which the error occurred
2. Restating the opening balances of asset, liability and equity for the earliest period presented if the error occurred before the earliest prior period presented
   1. I only                                     c. II only
   2. Either I or II                    d. Neither I nor II

0. 8. A change in accounting policy includes
1. Adoption of an accounting policy for events or transactions that differ in substance from previously occurring events or transactions
2. The adoption of a new accounting policy for events or transactions which did not occur previously or that were immaterial
   1. I only                                     c. II only
   2. Both I and II                     d. Neither I nor II

1. 9. A change in accounting policy includes all of the following except
      1. The initial adoption of a policy to carry assets at revalued amount

1. 1. 2. The change from expensing to capitalizing borrowing costs
      3. The change from in inventory valuation from FIFO to weighted average method
      4. The change in depreciation method from sum of years digits to straight line

0. 10. A change in accounting policy shall be made when
1. Required by an accounting standard or an interpretation of the standard
2. The change will result in more relevant or reliable information about the financial position, financial performed and cash flows of the entity
   1. I only                                     c. II only
   2. Either I or II                    d. Neither I nor II

1. 11. Prospective application of a change in accounting policy is required
       1. Anytime
       2. When the amount of adjustment to the opening balance of retained earnings can be reasonable determined
       3. When the amount of adjustment to the opening balance or retained earnings cannot be reasonable determined
       4. When ordered by management

1. 12. The initial application of a policy to revalue asset is
       1. A change in accounting policy
       2. A change in accounting estimate
       3. Correction of a prior period error
       4. Nor an accounting change

1. 13. This means “applying a new accounting policy to transactions, other events and conditions as if that policy had always been applied”.
       1. Retrospective application     c. Retrospective restatement
       2. Prospective application     d.                   Prospective restatement

1. 14. This means “correcting the recognition, measurement and disclosure of amount of elements of financial statements as if a prior period error had never occurred”.
       1. Retrospective application  c.           Retrospective restatement
       2. Prospective application     d.                   Prospective restatement

1. 15. Which of the following is the proper time period in which to record a change in accounting estimate?
       1. Current period and future periods
       2. Current period and retroactively
       3. Retroactively only
       4. Current period only

1. 16. A change from the straight line method of depreciation to an accelerated method shall be accounted for as
       1. Change in an accounting policy
       2. Change in an accounting estimate
       3. Prior period error
       4. Accounting error

1. 17. A change from the straight line method of depreciation to an accelerated method shall be accounted for as
       1. Change in an accounting policy
       2. Change in an accounting estimates
       3. Prior period error
       4. Accounting error

1. 18. Which of the following is not a justification for a change in depreciation method?
       1. A change in the estimate useful life of an asset as a result of unexpected obsolescence
       2. A change in the pattern of receiving the estimated future benefits from an asset
       3. To conform with the depreciation method prevalent in a particular industry

1. 1. 4. A change in the estimated future benefits from the asset

1. 19. A change in the unit depletion rate would be accounted for as a
       1. Correction of an accounting error
       2. Change in accounting policy
       3. Change in accounting estimate
       4. Change in accounting estimated effected through a change in accounting policy

1. 20. When a public shareholding entity changes an accounting policy voluntarily, it has to
       1. Inform shareholders prior to taking the decision
       2. Account for it retrospectively
       3. Treat the effect of the change as a component of other comprehensive income
       4. Treat it prospectively and adjust the effect of the change in the current period and future periods

1. 21. An entity changes its method of inventory valuation from weighted average to FIFO. The entity shall account for this change as
       1. A    change    in   estimated  and   account   for it prospectively
       2. A change in accounting policy and account for prospectively
       3. A change in accounting policy and account for it retrospectively
       4. A correction of an error and account for it retrospectively

1. 22. Are the following statements in relation to a change in accounting estimate true or false?

S1     Changes in accounting estimate are accounted for retrospectively

S2 Changes in accounting estimate result from new information or new development

Statement 1   Statement 2

1. 1. 1. False                    False
      2. False                    True
      3. True                       False
      4. True                       False

1. 23. Which of the following terms best describes applying a new accounting policy to transactions as if that policy had always been applied?
       1. Retrospective application     c. Retrospective restatement
       2. Prospective application     d.                   Prospective restatement

0. 24. An entity changes its accounting policy if
1. It is required to do so by law
2. The change will result in providing reliable and more relevant information
   1. I only                                    c. II only
   2. Both I and II                        d. Neither I nor II

0. 25. How should the following changes be treated?
1. A change is to be made in the method of calculating the provision for uncollectible receivables
2. Investment properties are now measured at fair value, having previously been measured at cost Change in               Change in
   1. Acctg. policy                       Acctg. policy
   2. Acctg. Policy                       Acctg. estimate
   3. Acctg. estimate                            Acctg. Policy
   4. Acctg. estimate                 Acctg. Estimate

1. 26. Which of the following is characteristic of a change in an accounting estimate?
       1. It usually need not be disclosed
       2. It does not affect the financial statements of prior period
       3. It should b reported through the restatement of the financial statements
       4. It makes necessary the reporting of pro forma amounts for prior periods

1. 27. A change in the periods benefits by a deferred cost because additional information has been obtained is
       1. An accounting change that should be reported in the period of change and future periods if the change affects both
       2. An accounting change that should be reported by restating the financial statements of all prior periods presented
       3. A correction of an error
       4. Not an accounting change

1. 28. A change in the residual value of an asset arising because additional information has been obtained is
       1. An accounting change that should be reported in the period of change and future periods if the change affects both
       2. An accounting change that should be reported by restating the financial statements of all prior periods presented
       3. A correction of an error
       4. Not an accounting change

1. 29. During the current year, an entity  increased  the estimated quantity of copper recoverable from its mine. The entity uses the units of production depletion method. As a result of the change, which of the following should be reported in the entity’s financial statements?
       1. Prior period error
       2. Change in accounting policy
       3. Change in accounting estimated
       4. Not reported

1. 30. When an entity changed from the straight line method depreciation for previously recorded assets to the double declining balance method, which of the following should be reported?
       1. Cumulative effect of change in accounting polity
       2. Proforma effect of retroactive application
       3. Change in accounting estimate
       4. Prior period error

1. 31. When an entity changed the expected service life of an asset because additional information has been obtained, when of the following should be reported?
       1. Cumulative effect of change in accounting policy
       2. Pro-forma effect of retroactive application
       3. Period error
       4. An accounting changed that should be reported in the period of change and future periods if the change effect both

1. 32. Where financial statements for a single year are being presented, a period error recognized in the current year ordinary would
       1. Be shown as an adjustment of the balance of retained earnings at the start of the current year
       2. Affect net income of the current year
       3. Be shown in current year’s statement of changes in equity
       4. Be included in the statement of recognized gains and losses

1. 33. An  entity  changed from the cash basis of accounting to the accrual basis of accounting during the current year. The cumulative effect of this change shall be reported in the financial statement as a
       1. Prior period adjustment resulting from the correction of an error
       2. Prior period adjustment resulting from the change in accounting principle
       3. Component of income from continuing operations
       4. Component of income from discontinued operations

1. 34. A change in reporting entity is actually a change accounting
       1. Policy                                    c. Estimate
       2. Method                               d. Concept