1. The objective of PAS 1 Presentation of Financial Statements is to prescribe the basis for presentation

of general purpose financial statements, to ensure a. intra-comparability c. faithful representation b. inter-comparability d. a and b

2. General purpose financial statements cater to what type of needs of users?

a. common needs c. a and b b. specific needs d. loving and caring needs

3. The ledger of COPIOUS RICH Co. as of December 31, 20x1 includes the following:

15% Note payable 50,000 16% Bonds payable 100,000 18% Serial bonds 200,000 Interest payable -

Additional information: COPIOUS Co.'s financial statements were authorized for issue on April 15, 20x2. - The 15% note payable was issued on January 1, 20x1 and is due on January 1, 20x5. The note pays annual interest every year-end. The agreement with the lender provides that COPIOUS Co. shall maintain an average current ratio of 2:1. If at any time the current ratio falls below the agreement, the note payable will become due on demand. As of the 3rd quarter in 20x1, COPIOUS's average current ratio is 0.50:1. Immediately, COPIOUS informed the lender of the breach of the agreement. On December 31, 20x1, the lender gave COPIOUS a grace period ending on December 31, 20x2 to rectify the deficiency in the current ratio. COPIOUS promised the creditor to liquidate some of its long-term investments in 20x2 to increase its current ratio. - The 16% bonds are 10-year bonds issued on December 31, 1992. The bonds pay annual interest every

year-end. - The 18% serial bonds are issued at face amount and are due in semi-annual installments of 20,000 every April 1 and September 30. Interests on the bonds are also due semi-annually. The last installment on the bonds is due on September 30, 20x7.

How much is the total current liabilities?

a. 9,000 b. 100,000 c. 109,000 d. 120,000

4. Entity B has the following information:

Inventory, beg. 120,000 Inventory, end. 192,000

Purchases 480,000 Freight-in 24,000 Purchase returns 12,000 Purchase discounts 16,800

How much is Entity B's the cost of sales?

a. 402,300 b. 416,300 c. 420,300 d. 422,300

Use the following information for the next four questions: The nominal accounts of Hazel Lee Co. on December 31, 20x1 have the following balances:

Accounts Dr. Cr. Sales 1,045,000 Interest income 80,000 Gains 30,000 Inventory, beg. 80,000 Purchases 300,000 Freight-in 30,000 Purchase returns 15,000 Purchase discounts 27,000 Freight-out 25,000 Sales commission 60,000 Advertising expense 35,000 Salaries expense 350,000 Rent expense 60,000 Depreciation expense 80,000 Utilities expense 40,000 Supplies expense 30,000 Transportation and travel expense 25,000 Insurance expense 10,000 Taxes and licenses 50,000 Interest expense 5,000 Miscellaneous expense 2,000 Loss on the sale of equipment 15,000

Additional information: a. Ending inventory is 100,000. b. Three-fourths of the salaries, rent, and depreciation expenses pertain to the sales department. The

sales department does not share in the other expenses.

5. In a statement of comprehensive income prepared using the single-step approach (nature of

expense method), how much is presented as 'change in inventory'? (increase)/decrease a. (288,000)

b. 288,000 c. (20,000) d. 20,000

6. In a statement of comprehensive income prepared using the single-step approach (nature of

expense method), how much is presented as total expenses? a. 1,055,000 b. 1,075,000 c. 787,000 d. 772,000

7. In a statement of comprehensive income prepared using the multi-step approach (function of

expense method), how much is presented as distribution costs? a. 398,500 b. 487,500 c. 467,500 d. 512,500

8. In a statement of comprehensive income prepared using the multi-step approach (function of

expense method), how much is presented as administrative expenses? a. 297,500 b. 302,500 c. 287,500 d. 279,500

Use the following information for the next two questions: DEMOTIC POPULAR Co. acquires through foreclosure a property comprising land and buildings that it intends to sell. The fair value of the land and buildings is 6,000,000 and costs to sell are 200,000. The related defaulted receivables have a carrying amount of 5,000,000.

9. The entity does not intend to transfer the property to a buyer until after it completes renovations to increase the property's sales value. How should DEMOTIC Co. classify the land and buildings? a. Included under property, plant and equipment at 5,000,000. b. Included under investment property at 5,000,000. c. Included under investment property at 5,800,000. d. Classified as held for sale at 5,800,000

10. After the renovations are completed and the property is classified as held for sale but before a firm purchase commitment is obtained, the entity becomes aware of environmental damage requiring remediation. The entity still intends to sell the property. However, the entity does not have the ability to transfer the property to a buyer until after the remediation is completed. The costs of renovations made totaled 200,000. The estimated costs of remediation are 100,000. How should DEMOTIC Co. classify the land and buildings? a. Included under property, plant and equipment at 5,700,000. b. Included under investment property at 6,000,000. c. Included under investment property at 5,700,000. d. Classified as held for sale at 5,700,000

11. An entity is committed to a plan to sell a manufacturing facility in its present condition and classifies the facility as held for sale at that date. After a firm purchase commitment is obtained, the buyer's inspection of the property identifies environmental damage not previously known to exist. The entity is required by the buyer to make good the damage, which will extend the period required to complete the sale beyond one year. However, the entity has initiated actions to make good the damage, and satisfactory rectification of the damage is highly probable. The manufacturing facility has a carrying amount of 10,000,000 and fair value less costs to sell of 10,600,000. How should the entity classify the manufacturing facility? a. Held for sale, 10.6M c. PPE, 10M b. Held for sale, 10M d. PPE, 10.6M

12. Under the indirect method, the cash flow from operating activities is determined by adjusting the

reported profit by (choose the incorrect statement) a. adding back non-cash expenses b. adding back decreases in operating assets c. deducting decreases in operating liabilities d. adding back increases in operating assets

13. Under the indirect method, the cash flow from operating activities is determined by adjusting the

reported profit by (choose the incorrect statement) a. deducting non-cash income b. deducting increases in operating assets c. deducting decreases in nonoperating liabilities d. deducting gains on sale of nonoperating assets

14. When preparing a statement of cash flows using the direct method, amortization of patent is

a. shown as an increase in cash flows from operating activities. b. shown as a reduction in cash flows from operating activities. c. included with supplemental disclosures of noncash transactions. d. not reported in the statement of cash flows or related disclosures.

15. Which of the following statements regarding cash equivalents is correct? a. A one-year Treasury note could not qualify as a cash equivalent. b. All investments meeting the PFRS 9 Financial Instruments criteria must be reported as cash

equivalents. c. The date a security is purchased determines its "original maturity" for cash equivalent

classification purposes. d. Once established, management's policy for classifying items as cash equivalents cannot be

changed.

16. Using the indirect method, cash flows from operating activities would be increased by which of

the following? a. Gain on sale of investments b. Increase in prepaid expenses c. Decrease in accounts payable d. Decrease in accounts receivable

Use the following information for the next three questions:

The movements in the cash account of DEADLOCK STANDSTILL Co. during 20x2 are shown below.

Cash beg. 400 Sales 12,000 7,600 Purchases Interest income 40 2,400 Operating expenses Rent income 540 60 Interest expense Dividend income 80 140 Income taxes Sale of held for trading securities 1,600 200 Investment in FVOCI Sale of old building 1,040 2,200 Purchase of equipment Collection of non-trade note 120 260 Loan granted to employee Proceeds from loan with a bank 3,200 480 Payment of loan borrowed Issuance of shares 1,940 400 Reacquisition of shares

180 Dividends 7,040 end.

17. How much is the cash flows from operating activities?

a. 4,600 b. 4,840 c. 5,040 d. 4,060

18. How much is the cash flows from investing activities?

a. (1,500) b. 1,500 c. 1,240 d. (1,240)

19. How much is the cash flows from financing activities?

a. 4,800 b. (4,800) c. 4,240 d. 4,080

Use the following information for the next four questions: BLITHE JOYFUL Co. had the following information during 20x2: Accounts receivable, January 1, 20x2 2,400 Accounts receivable, December 31, 20x2 1,600 Sales on account and cash sales 32,000 Bad debts expense 800 Accounts payable, January 1, 20x2 1,400 Accounts payable, December 31, 20x2 800 Cost of sales 16,000 Increase in inventory 3,600

Operating expenses on accrual basis 4,880 Increase in accrued payables for operating expenses 1,640 Decrease in prepaid operating expenses 1,560

Property, plant, and equipment, January 1, 20x2 7,200 Property, plant, and equipment, December 31, 20x2 10,800

Additional information:

There were no write-offs of accounts receivable during the year.

Equipment with an accumulated depreciation of 800 was sold during the year for 480 resulting to a gain on sale of 60.

20. How much is the cash receipts from customers?

a. 38,200 b. 37,400 c. 35,400 d. 32,800

21. How much is the cash payments to suppliers?

a. 19,000 b. 20,200 c. 22,000 d. 23,400

22. How much is the cash payments for operating expenses?

a. 1,680 b. 4,800 c. 4,960 d. 8,080

23. How much is the cash payments for acquisition of property, plant, and equipment?

a. 3,600 b. 4,820 c. 4,080 d. 4,940

24. ABC Co. has the following information as of December 31, 20x1:

Jan. 1 Dec. 31 Accounts receivable 100,000 250,000 Allowance for bad debts 15,000 20,000 Net credit sales 850,000 Bad debt expense 60,000 Recoveries 20,000

How much is the total cash receipts from customers during the period?

a. 970,000 b. 879,000 c. 907,000 d. 897,000

25. BLUFF DECEIVE Co. has the following information as of December 31, 20x2:

Jan. 1 Dec. 31

Accounts receivable 16,000 20,000 Allowance for bad debts (400) (1,000) Prepaid rent 3,840 3,200 Accounts payable 6,800 8,800

BLUFF reported profit of 8,800 for the year, after depreciation expense of 200, gain on sale of equipment of 240, and restructuring and other provisions of 400. None of the provisions recognized during the period affected cash.

How much is the cash flows from operating activities? a. 4,800 b. 5,600 c. 8,800 d. 8,400

Use the following information for the next two questions: INORDINATE EXCESSIVE Co. had the following information for 20x2:

Acquired 3-month treasury bills for 200,000.

Acquired equipment with a purchase price of 4,000,000 by paying 20% in cash and issuing a note payable for the balance. There were no payments made on the note during the year.

Acquired land with fair value of 3,200,000 by issuing shares with aggregate par value of 2,400,000. The excess is credited to share premium.

Extended a 1,600,000 loan to a director.

Borrowed 1,280,000 from a bank. Used the cash proceeds as follows: 800,000 for additional working capital and 480,000 to settle scrip dividends declared in 20x1.

Settled an outstanding note payable by issuing shares with aggregate par value of 800,000. Share premium resulted from the transaction amounted to 280,000.

26. How much is the net cash flows from (used in) investing activities?

a. (2,400,000) b. 2,400,000 c. 800,000 d. (800,000)

27. How much is the net cash flows from (used in) financing activities?

a. (800,000) b. 800,000 c. (2,400,000) d. 2,400,000

Use the following information for the next three questions: Information on LA-DI-DA SHOWY Co.'s financial position and performance as of December 31, 20x2 and 20x1 are presented below.

LA-DI-DA SHOWY Company Statement of financial position As of December 31, 20x2 ASSETS 20x2 20x1

Current assets Cash and cash equivalents 1,000,000 600,000 Held for trading securities 480,000 - Accounts receivable - net 1,520,000 1,240,000 Rent receivable 100,000 40,000 Inventory 2,000,000 3,600,000 Prepaid insurance 200,000 160,000 Total current assets 5,300,000 5,640,000 Noncurrent assets Investment in bonds 360,000 340,000 Buildings 10,000,000 4,000,000 Accumulated depreciation (800,000) (800,000) Goodwill 360,000 400,000 Total noncurrent assets 9,920,000 3,940,000 TOTAL ASSETS 15,220,000 9,580,000 LIABILITIES AND EQUITY Current liabilities Accounts payable 480,000 320,000 Unearned rent 80,000 120,000 Insurance payable 240,000 180,000 Dividends payable 920,000 480,000 Income tax payable 60,000 140,000 Short-term loan payable - 200,000 Total current liabilities 1,780,000 1,440,000 Noncurrent liabilities Bonds payable 4,000,000 4,000,000 Discount on bonds (380,000) (400,000) Deferred tax liability 60,000 40,000 Total noncurrent liabilities 3,680,000 3,640,000 TOTAL LIABILITIES 5,460,000 5,080,000 Equity Share capital 8,000,000 4,000,000 Retained earnings 1,760,000 500,000 TOTAL EQUITY 9,760,000 4,500,000 TOTAL LIABILITIES AND EQUITY 15,220,000 9,580,000

LA-DI-DA SHOWY Company Statement of profit or loss For the year ended December 31, 20x2 Sales 20,000,000 Cost of sales (12,000,000) Gross income 8,000,000 Rent income 1,800,000 Interest income 80,000 Insurance expense (400,000)

Bad debts expense (60,000) Interest expense (400,000) Loss on sale of building (160,000) Unrealized gain on investment 80,000 Other expenses (4,800,000) Profit before tax 4,140,000 Income tax expense (1,200,000) Profit for the year 2,940,000

Additional information:

During 20x2, LA-DI-DA purchased held for trading securities for 400,000. The fair value of the shares on December 31, 20x2 is 480,000.

The allowance for doubtful accounts has balances of 80,000 and 40,000 as of December 31, 20x2 and 20x1, respectively.

During 20x2, LA-DI-DA sold an old building with historical cost of 3,200,000 for 1,040,000.

LA-DI-DA inadvertently included depreciation expense in the "Other expenses" line item.

There were no acquisitions or disposals of investment in bonds during the period.

During 20x2, LA-DI-DA issued shares with an aggregate par value of 4,000,000 for 4,000,000 cash.

28. How much is the net cash flows from (used in) operating activities?

a. (6,000,000) b. 6,000,000 c. 6,600,000 d. (7,600,000)

29. How much is the net cash flows from (used in) investing activities?

a. (8,160,000) b. 8,460,000 c. (9,200,000) d. 8,160,000

30. How much is the net cash flows from (used in) financing activities?

a. (2,560,000) b. 2,560,000 c. (2,960,000) d. 2,960,000