MULTIPLE CHOICE:

1.Comprehensive income excludes which of the following

a. Revaluation surplus

b. Gains and losses from investments measured at fair value through profit or loss

c. Income tax expense

d. Distributions to owners

2.Entity A needs guidance in accounting for its inventories. Entity A should refer to which of the following?

a. PAS 1

b. PAS 2

c. PAS 7

d. PAS 8

3.Entity A needs guidance in preparing its statement of changes in equity. Entity A should refer to which of the following?

a. PAS 1

b. PAS 2

c. PAS 7

d. PAS 8

4.Entity A buys and sells artifacts. Each artifact is unique and not ordinarily interchangeable. According to PAS 2, the cost formula that Entity A should use is

a. Specific identification.

b. Weighted Average.

c. FIFO.

d. Any of these.

5.Entity A acquires inventories and incurs the following costs:

Purchase price, gross of trade discount

100,000

Trade discount

20,000

Non-refundable purchase tax, not included

in the purchase price above

5,000

Freight-in (Transportation costs)

15,000

Commission to broker

2,000

Advertisement costs

10,000

How much is the cost of the inventories purchased?

a. 102,000

b. 122,000

c. 97,000

d. 100,000

6.Which of the following is presented in the activities section of the statement of cash flows?

a. Purchase of a treasury bill three months before its maturity date.

b. Dividends paid this year although declared in a prior year.

c. Acquisition of equipment through issuance of note payable.

d. Bank overdrafts that can be offset.

7.In the statement of cash flows of a non-financial institution, interest income received is presented under

a. operating activities.

b. financing activities.

c. investing activities.

d. A or C

8.An entity makes a change in accounting estimate. How does the entity recognize the effects of the change in profit or loss?

a. Prospectively in the current period

b. Prospectively in the current and future periods

c. Retrospectively starting from the earliest period presented

d. A or B

9.Materiality does not make any difference with regard to

a. the separate presentation of items in the financial statements.

b. the disclosure of additional information in the notes.

c. intentional errors.

d. the level of rounding-off of amounts in the financial statements.

10.According to PAS 10, dividends declared after the reporting period, but before the financial statements are authorized for issue, are

a. recognized as liability at the end of reporting period.

b. not recognized as liability at the end of reporting period.

c. disclosed only as an adjusting event.

d. any of these.

11.At the end of the period, Entity A has deductible temporary difference of 100,000. Entity A's income tax rate is 30%. Entity A's statement of financial position would report which of the following?

a. 30,000 deferred tax asset

b. 30,000 deferred tax liability

c. 30,000 deferred tax expense

d. 30,000 income tax expense

12.You are a business manager. During the period, you have authorized the acquisition of a machine that will be used in your company's manufacturing activities in the next 5 years. In your selection of an appropriate accounting policy for the recognition and measurement of the machine, which of the following reporting standards is most relevant?

a. PAS 1

b. PAS 2

c. PAS 16

d. PAS 32

13.Which of the following is not one of the principal issues in the accounting for PPE?

a. Recognition.

b. Initial measurement as asset.

c. Allocation of carrying amount over the period of use.

d. Recognition of carrying amount as expense when the related revenue is recognized.

14.You are the General Manager of Entity A. You have received the actuarial report for your company's defined benefit plan. The report shows the following information:

PV of DBO - Jan. 1, 20x1

1,500,000

FVPA - Jan. 1, 20x1

1,200,000

PV of DBO - Dec. 31, 20x1

1,800,000

FVPA, end. - Dec. 31, 20x1

1,310,000

Actuarial gain

100,000

Return on plan assets

110,000

Discount rate

5%

When reporting on your company's year-end highlights of financial summary, which of the following will you report to the Board of Directors (the 'big bosses')?

a. Your company's net liability for retirement benefits has increased by 490,000.

b. Your company's net liability for retirement benefits has decreased by 300,000.

c. Your company's net liability for retirement benefits has increased by 190,000.

d. I will tell them nothing.

15.Entity A has 20 employees who are each entitled to one day paid vacation leave for each month of service rendered. Unused vacation leaves are carried forward and can be used in future periods if the current period's entitlement is not used in full. However, unutilized entitlements are forfeited when employees leave the entity. All the employees have rendered service throughout the current year and have taken a total of 150 days of vacation leaves. The average daily rate of the employees in the current period is 1,000. However, a 5% increase in the rate is expected to take into effect in the following year. Based on Entity A's past experience, the average annual employee turnover rate is 20%. How much will Entity A accrue at the end of the current year for unused entitlements?

a. 0

b. 90,000

c. 75,600

d. 94,500

16.Under a profit-sharing plan, Entity A agrees to pay its employees 5% of its annual profit. The bonus shall be divided among the employees currently employed as at year-end. Relevant information follows:

Profit for the year8,000,000

Employees at the beginning of the year8

Average employees during the year7

Employees at the end of the year6

If you are an alumnus of Entity A, how much bonus do you expect to receive?

a. 66,667

b. 50,000

c. 57,143

d. 0

17.The transfer of resources from the government to an entity in exchange for past or future compliance with certain conditions is called

a. Government grant.

b. Government assistance.

c. Government financial assistance.

d. Government asset transfer.

18.Entity A receives land from the government conditioned that the land will only be used in Entity A's primary business activities and should never be sold. If in case, Entity A decides not to use the land in its primary business activities, it shall return the land to the government. Which of the following standards is least likely to be relevant in accounting for the land?

a. PAS 2

b. PAS 16

c. PAS 20

d. All of these are relevant

19.On December 1, 20x1, you imported a machine from a foreign supplier for $100,000, due for settlement on January 6, 20x2. Your functional currency is the Philippine peso.The relevant exchange rates are as follows:

Dec. 1, 20x1

Dec. 31, 20x1

Jan. 6, 20x2

50:$1

52:$1

47:$1

The cost of the machine that will be disclosed in your December 31, 20x1 financial statements is

a. $100,000.

b. 5,000,000.

c. 5,200,000.

d. 4,700,000.

20.On January 1, 20x1, Entity A started the construction of a qualifying asset. The qualifying asset is financed through general borrowings. The average expenditures during the year amounted to 9,500,000. The capitalization rate is 11%. The actual borrowing costs incurred during the period were 1,990,000. How much are the borrowing costs eligible for capitalization?

a.1,990,000

b.1,045,000

c.1,090,000

d.990,000