1. Construction of a qualifying asset is started on April 1 and finished on December 31. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is

A.8/12.

B. 9/12.

C. 11/12.

D. 8/8.

2. ABC Co. buys and sells antiques. Each product is unique. If the entity adopts PAS 2 Inventories, the company

A. Has the option of using either FIFO or specific identification.

B. Is required to use average method.

C. Is required to use specific identification method.

D. Is required to use FIFO method.

3. In relation to the amortization of intangible assets, if an asset has a finite useful life,

A. It must be amortized over a period not exceeding 5 years.

B. It must be amortized over that life.

C. It is not subject to an annual amortization charge.

D. It must be amortized over a period not exceeding 40 years.

4. Theoretically, the amount of estimated future returns and allowances on credit sales should be recorded during the period of the sale so as not to overstate sales and ending accounts receivable. In practice, these estimates are rarely recorded because

A. The amount of such returns and allowances tends to fluctuate too greatly from period to period.

B. There is too much uncertainty surrounding such estimates.

C. The amount of such returns and allowances is usually not material.

D. Such estimates are not allowed according to generally accepted accounting principles.

5. The accumulated depreciation account on the revaluation date is

A. Restated proportionately with the change in the carrying amount of the asset.

B. Eliminated against the gross carrying amount of the asset.

C. Not adjusted.

D. a or b.

6. ABC, Inc. placed 5 million in the money market for 60 days subject to pre-termination. The 5 million may be

A. Considered as part of its trading securities with the appropriate disclosure in the notes to the financial statements.

B. Included as part of cash and cash equivalents with appropriate disclosure in the notes to the financial statements.

C. Treated as short-term receivable with the appropriate disclosure in the notes to the financial statements.

D. Recorded as part of its trading securities without need of any disclosure.

7. Which of these disclosures is not required by PAS 20?

A. The accounting policy adopted for government grants, including methods of presentation adopted in the financial statements.

B. Unfulfilled conditions and other contingencies attached to government assistance.

C. The nature and extent of government grants recognized in the financial statements and an indication of other forms of government assistance from which the entity has directly benefited.

D. The names of the government agencies that gave the grants along with the dates of sanction of the grants by these government agencies and the dates when cash was received in the case of monetary grants.

8. How is the premium or discount on debt investments at fair value through profit or loss accounted for?

A. As part of the cost until the disposal of the asset.

B. As part of amortized cost and amortized over the life of the bonds.

C. As expense or revenue in the period the bonds are purchased.

D. All of the above.

9. Which of the following statements concerning the suspension of capitalization of borrowing costs is true?

A. Capitalization of borrowing costs shall be suspended during extended periods in which active development of a qualifying asset is suspended.

B. Capitalization of borrowing costs can be suspended when a temporary delay is a necessary part of the process of getting an asset ready for its intended use or sale, depending on the circumstances.

C. Capitalization of borrowing costs shall never be suspended.

D. Capitalization of borrowing costs may be suspended, depending on the accounting policy of the entity.