The irrevocable election to present subsequent changes in the fair value in other comprehensive income is applicable to*

Financial asset measured at amortized cost.

Investment in equity instrument that is not held for trading.

Financial asset measured at fair value.

Investment in equity instrument that is held for trading.

How should sales staff commission be dealt with when valuing inventories at LCNRV?*

Ignored

Deducted in arriving at NRV

Deducted from cost

Added to cost

When share dividends of a different class are received*

A new investment account is debited and dividend income is credited

A new investment account is debited and the original investment account is credited

No formal entry is made but only a memorandum

Cash is debited and dividend income is credited

If there is evidence that an impairment loss on loan receivable has been incurred, the loss is equal to the*

Excess of the principal amount of the loan over its carrying amount.

Excess of the carrying amount of the loan receivable over the present value of the cash flows related to the loan

Excess of the present value of cash flows related to the loan, over the carrying amount of the loan receivable

Excess of the carrying amount of the loan over the principal amount of the loan.

[S1] When cash is received in lieu of stock dividends, there may be a gain on sale of the financial asset. [S2] When dividends were distributed using stocks from another corporation, it is appropriately called as a property dividend.*

Only S1 is true.

Only S2 is true.

Both S1 and S2 are true.

Both S1 and S2 are false.

Subsequent to initial recognition, loans and receivables shall be measured at*

2 points

Amortized cost using the effective interest method

Cost

Amortized cost using the straight-line method

Fair value

The use of the gross profit method assumes*

2 points

The amount of gross profit is the same as in prior years.

Sales and cost of goods sold have not changed from previous years.

The relationship between selling price and cost of goods sold is similar to prior years.

Inventory values have not increased from previous years.

The use of a discount lost account implies that cost of a purchased inventory is*

2 points

Invoice price

Invoice price less the purchase discount allowable whether taken or not

List price

Invoice price less purchase discount taken

Which of the following should be EXCLUDED in the computation of Trade and Other Current Receivables?*

2 points

Advances from customers which are immaterial

Collectible from an officer without an agreed settlement date

Special deposits on contract bids that is collectible in nine months' time

Accrued income on rent and royalties

[S1] The direct write-off method of bad debts requires a journal entry when the receivables become doubtful of collection. [S2] An aging of accounts receivable makes use of the income statement approach of estimating bad debts expense.*

2 points

Only S1 is true.

Only S2 is true.

Both S1 and S2 are true.

Both S1 and S2 are false.

[S1] A share split increases the number, par value and market value of the shares. [S2] From the point of view of the investor, redemption of the shares is an impairment of the investment.*

2 points

a. Only S1 is true.

b. Only S2 is true.

c. Both S1 and S2 are true.

d. Both S1 and S2 are false.

Loans and receivables are*

2 points

Nonderivative financial assets without fixed or determinable payments that are not quoted in an active market

Nonderivative financial assets with fixed or determinable payments that are not quoted in an active market

Nonderivative financial assets with fixed or determinable payments that are quoted in an active market

Nonderivative financial assets without fixed or determinable payments that are quoted in an active market

[S1] Animals in zoos are accounted for as biological assets because they are living animals. [S2] Bearer plants and the fruits growing on them are accounted as biological assets if they are available for sale.*

2 points

Only S1 is true.

Only S2 is true.

Both S1 and S2 are true.

Both S1 and S2 are false.

A financial assets include all of the following, EXCEPT*

2 points

Prepaid expenses

Cash in bank

Loans receivable

Trade accounts receivable

A major advantage of the retail inventory method is that it*

2 points

Provides a method for inventory control and facilitates determination of the periodic inventory.

Hides costs from customers and employees.

Permits companies which use it to avoid taking an annual physical inventory.

Gives a more accurate statement of inventory cost than other methods.

What is the effect of share split-up?*

2 points

Decrease in number of shares and increase in cost per share

Increase in number of shares and decrease in cost per share

Decrease in number of shares and decrease in cost per share

Increase in number of shares and increase in cost per share

During periods of rising prices, when the FIFO method is used, a perpetual inventory system would*

2 points

Not be permitted

Result in a lower ending inventory than a periodic inventory system

Result in the same ending inventory as a periodic inventory system

Result in higher ending inventory than a periodic inventory system

Transaction costs include*

2 points

Fees and commission paid to agent, levies by regulatory authorities, transfer taxes and duties

Debt premiums or discounts

Financing costs

Internal administrative costs

If purchases were made under terms of (a) trade discount of 20%, (b) credit terms of 2/10, n/30, and (c) shipping terms of FOB shipping point, freight collect, which of the following sentences are FALSE?*

2 points

The entity will pay for its freight-in on the purchase.

The invoice price is only 80% of the list price.

If the entity uses the perpetual inventory method, shipping cost would be recorded as a debit to Freight-in and a credit to cash.

If the entity paid on the tenth day, it would only pay 98% of the invoice price.

Which of the following is not a financial instrument?*

2 points

Cash deposited in bank

Ordinary share capital issued by the entity.

Gold bullion deposited in bank

A perpetual debt instrument, meaning no maturity date that pays interest annually extending into the indefinite future.