Instructions: Encircle the letter of the best answer to each questions. 1. Which of the following is not included in a complete set of financial statements according to PAS 1 - Presentation of Financial Statements? a. A profit or loss statement. b. A balance sheet statement. c Details of accounting policies adopted. d. Directors report 2. Which of the following about the selection of accounting policies according to PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors is the most correct? a. Where no specific PFRS requirements exist, management should rely on the IFRIC for guidance. b. After management has selected their appropriate accounting policies, they should link these to applicable Ss. c Management can refer to the implementation guidance associated with the relevant PFRS, however this is not mandatory d. Management should first determine the applicability of PFRSs before selecting accounting policies appropriate for their entity. 3. Which of the following about changes in accounting policies is correct? a. Changes can be made at any time provided they are adequately disclosed according to the requirements of PAS 8. b. An entity can make a change at any time provided it improves the results reported is the financial statemente of the entity Changes are permitted when the change will result in more relevant and reliable information about the entity d. Accounting policies must be consistoritly applied and no changes e permissible unless transitional provisions for new PFRSs are available 4. IMO Ltd's (LMO) reporting period ended on 30 June 2011 and the financial statements were issued on 15 September 20X1. Which of the following is an adjusting event? a. The fair value of land was $750 000 at 30 June 20X1. On 31 July this valuation was reduced to 5650 000 due to council re-zoning b. The construction of new office premises was in progress at the end of the reporting period and was completed on 15 August 20x1. On 25 July 20X1. LMO signed a contract to sell its existing office premises for 51 500 000 for which settlement is expected to be on 25 September 20X1 d. A court case was in progress at the end of the reporting period which was finalised on 13 September 20X1 and damages were awarded against the entity. 5. Onus Lids (Onus) reporting period ends on 31 December and the truncal stats are issued on 31 March Which of the following is a non-adjusting event A major customer owing $200 000 filed for bankruptcy on 24 January b. On 15 March the entity had damages of 525 000 awarded against it after a year-long court tame with a supplier. The auditor attended the stock count and on 29 Match requested that the entity adjusts this value by 513 000 due to a valuation error d. Onus 20% stake in XYZ Ltd was recorded at $550 000 in the financial statements, but this value had decreased to 5450 000 as at 31 March 6 Inventories are measured at a Lower of cost and fair value b. Lower of cast and net realizable value Lower of cost and nominal value di Lower of cost and net selling price e. Choices band.d. 7. Which of the following costs of conversion cannot be included in cost of inventory? a. Cost of direct labor b. Factory rent and utilities c Salaries of sales staff (sales department shares the building with factory supervisor). d. Factory overheads based on normal capacity Use the following information for the next three questions Entity A a trading entity, buys and sells Product Z Movements in the inventory of Product Z during the period are as follows Date Transaction Units Unit cost Total cost Feb. 1 Beginning inventory P15 91.500 Feb: 7 Purchase 300 P18 95 400 Feb. 12 Sale 320 Feb. 21 Purchase 200 P21 P4,200 100 8. How much is the ending inventory under the FIFO cost formula? a 6,540 b. 5,840 C. 5.640 d. 4.860 1 9. How much is the ending inventory under the weighted Average cost formula? (The average is calculated on a periodic basis.) a. 5,180 b. 5,280 C. 5,460 d. 5.580 10. How much is the ending inventory under the weighted Average cost formula? (The average is calculated as each additional purchase is made, i.e., 'moving average') a. 5,860 b. 5,680 c. 5,580 d. 5,380 Instructions: Encircle the letter of the best answer to each questions. 1. Which of the following is not included in a complete set of financial statements according to PAS 1 - Presentation of Financial Statements? a. A profit or loss statement. b. A balance sheet statement. c Details of accounting policies adopted. d. Directors report 2. Which of the following about the selection of accounting policies according to PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors is the most correct? a. Where no specific PFRS requirements exist, management should rely on the IFRIC for guidance. b. After management has selected their appropriate accounting policies, they should link these to applicable Ss. c Management can refer to the implementation guidance associated with the relevant PFRS, however this is not mandatory d. Management should first determine the applicability of PFRSs before selecting accounting policies appropriate for their entity. 3. Which of the following about changes in accounting policies is correct? a. Changes can be made at any time provided they are adequately disclosed according to the requirements of PAS 8. b. An entity can make a change at any time provided it improves the results reported is the financial statemente of the entity Changes are permitted when the change will result in more relevant and reliable information about the entity d. Accounting policies must be consistoritly applied and no changes e permissible unless transitional provisions for new PFRSs are available 4. IMO Ltd's (LMO) reporting period ended on 30 June 2011 and the financial statements were issued on 15 September 20X1. Which of the following is an adjusting event? a. The fair value of land was $750 000 at 30 June 20X1. On 31 July this valuation was reduced to 5650 000 due to council re-zoning b. The construction of new office premises was in progress at the end of the reporting period and was completed on 15 August 20x1. On 25 July 20X1. LMO signed a contract to sell its existing office premises for 51 500 000 for which settlement is expected to be on 25 September 20X1 d. A court case was in progress at the end of the reporting period which was finalised on 13 September 20X1 and damages were awarded against the entity. 5. Onus Lids (Onus) reporting period ends on 31 December and the truncal stats are issued on 31 March Which of the following is a non-adjusting event A major customer owing $200 000 filed for bankruptcy on 24 January b. On 15 March the entity had damages of 525 000 awarded against it after a year-long court tame with a supplier. The auditor attended the stock count and on 29 Match requested that the entity adjusts this value by 513 000 due to a valuation error d. Onus 20% stake in XYZ Ltd was recorded at $550 000 in the financial statements, but this value had decreased to 5450 000 as at 31 March 6 Inventories are measured at a Lower of cost and fair value b. Lower of cast and net realizable value Lower of cost and nominal value di Lower of cost and net selling price e. Choices band.d. 7. Which of the following costs of conversion cannot be included in cost of inventory? a. Cost of direct labor b. Factory rent and utilities c Salaries of sales staff (sales department shares the building with factory supervisor). d. Factory overheads based on normal capacity Use the following information for the next three questions Entity A a trading entity, buys and sells Product Z Movements in the inventory of Product Z during the period are as follows Date Transaction Units Unit cost Total cost Feb. 1 Beginning inventory P15 91.500 Feb: 7 Purchase 300 P18 95 400 Feb. 12 Sale 320 Feb. 21 Purchase 200 P21 P4,200 100 8. How much is the ending inventory under the FIFO cost formula? a 6,540 b. 5,840 C. 5.640 d. 4.860 1 9. How much is the ending inventory under the weighted Average cost formula? (The average is calculated on a periodic basis.) a. 5,180 b. 5,280 C. 5,460 d. 5.580 10. How much is the ending inventory under the weighted Average cost formula? (The average is calculated as each additional purchase is made, i.e., 'moving average') a. 5,860 b. 5,680 c. 5,580 d. 5,380