1.Agricultural activity includes all of the following, except

A. Ocean fishing.

B. Annual perennial cropping.

C. Floricultural and aquaculture, including fishing.

D. Raising livestock.

2. It is the present value of the future cash flows expected to be derived from an asset or cash-generating unit.

A. Entity specific value.

B. Cash generating unit.

C. Fair value less cost to sell.

D. Value in use.

3. Which of the following states the importance of proof of cash?

A. Discovering cash receipts that have been recorded but have not been deposited.

B. Discovering cash receipts that have not been recorded in the journal.

C. Discovering the time lag in making deposits.

D. Both a and b.

4. X owns 60% of the voting rights of Y, Z owns 19% of the voting rights of Y, and the remainder are dispersed among the public. Z also is the sole supplier of raw materials to Y and has a contract to supply certain expertise regarding the maintenance of Y's equipment. Which of the following statements is correct?

A. Y is an associate of Z.

B. Y and Z are affiliated entities since both are subsidiaries of X.

C. Y is considered a subsidiary of Z.

D. Y and Z have no business relationship.

5. Which of the following is correct?

A. Selling costs are product costs.

B. Manufacturing overhead costs are product costs.

C. Interest costs for routine inventories are product costs.

D. All of these statements are correct.

6. When there is a revision of depletion rate

A. The revision is treated as change in accounting estimate.

B. The revision is treated as change in accounting policy.

C. The entity shall record any gain or loss from revision.

D. The entity shall directly adjust retained earnings as a result of the revision.

7. Which of the following accounts is credited upon the initial recognition of the cash surrender value? *

A. Cash surrender value of life insurance policy.

B. Life insurance expense.

C. Cash.

D. Prepaid life insurance.

8. ABC Inc. bought a private jet for the use of its top-ranking officials. The cost of the private jet is 15 million and can be depreciated either using a composite useful life or useful lives of its major components. It is expected to be used over a period of seven years. The engine of the jet has a useful life of five years. The private jet's tires are replaced every two years. The private jet will be depreciated using the straight-line method over

A. Two years useful life based on conservatism (the lowest useful life of all the parts of the jet)

B. Seven years composite useful life.

C. Five years useful life of the engine, two years useful life of the tires, and seven years useful life applied to the balance cost of the jet.

D. Five years useful life based on a simple average of the useful lives of all major components of the jet.

9. All of the following are characteristics of financial assets classified as loan receivables, except

A. Holder has demonstrated positive intention and ability to hold them to maturity.

B. Not quoted in an active market.

C. Holder does not have the financial resources available to continue until maturity.

D. Have fixed or determinable payments.