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91. How is the single cost of acquiring land and an unusable old building accounted for? a. Charged to the land only b. Allocated between land and building based on relative fair value c. Allocated between land and building based on carrying amount d. None of the above

a. Charged to the land only

42. The following are classifications of financial assets, except a. FVPL b. FVNRV c. FVOCI d. Amortized Cost

b. FVNRV

86. If an entity owns and manages a hotel, services provided to guests are a significant component of the arrangement as a whole. As such, the hotel is classified as a. Investment property b. Owner-occupied property c. Partly investment property and partly owner-occupied property d. Neither investment property nor owner-occupied property

b. Owner-occupied property

85. Depreciation expense is recognized for investment property measured a. Using the fair value model b. Using the cost model c. Using the either the cost model or fair value model d. Using the either the cost model or revaluation model

b. Using the cost model

35. In accounting for a business combination, which of the following intangibles should not be recognized as an asset apart from goodwill? a. Trademarks b. Lease agreements c. Employee quality d. Patents

c. Employee quality

75. Discount on Notes Payable is charged to interest expense a. equally over the life of the note. b. only in the year the note is issued. c. using the effective-interest method. d. only in the year the note matures.

c. using the effective-interest method.

53. The accounting method applied to investments in associates,: a. entity method of consolidation; b. cost method of consolidation; c. multiple line consolidation method; d. equity method.

d. equity method.

39. Investment property is initially measured at cost, including transaction costs. Such cost includes a. Start-up costs c. Property transfer taxes b. Abnormal waste d. Initial operating losses

.c Property transfer taxes

4. The theory which viewed the assets of a business as belonging to the owner or proprietor, the liabilities as debts of the owner, and the income of the business as an increase in the owner's net worth or capital. a. Equity theory b. Entity theory c. Proprietary theory d. Funds theory

Proprietary theory

45. A biological asset shall be measured on initial recognition and at the end of each reporting period at a. Cost b. Cost less cost of disposal c. Fair value d. Fair value less cost to sell

d. Fair value less cost to sell

54. For the purposes of equity accounting for an investment in an associate, it is presumed that the investor has significant influence over the other entity where the investor holds: a. 20% or more of the voting power of the investee; b. between 1% and 5% of the voting power of the investee; c. between 5% and 10% of the voting power of the investee. d. 50% or more of the voting power of the investee;

a. 20% or more of the voting power of the investee;

1. Which accounting definition is provided by the Accounting Standards Council? a. Accounting is a service activity. Its function is to provide quantititatvie information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision. b. Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events, which are in part at least of a financial character and interpreting the results thereof. c. Accounting is the process of identifying, measuring and communicating economic information to permit informed judgment and decision by users of the information. d. Accounting is the language of business.

a. Accounting is a service activity. Its function is to provide quantititatvie information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision.

27. The residual value of an intangible asset should be presumed zero, unless I. There is a commitment by a third party to purchase the asset at the end of its useful life. II. There is an active market for the asset and residual value can be determined by reference to that market and it is probable that such market will exist at the end of the asset's useful life. a. Both I and II b. Neither I nor II c. II only d. I only

a. Both I and II

3. What is the pervasive constraint in providing useful information? a. Cost b. Going concern c. Materiality d. Prudence

a. Cost

19. The residual value of an intangible asset with a finite life shall be assumed zero, unless I. There is a commitment by a third party to purchase the asset at the end of its useful life. II. There is an active market for the asset and the residual value can be determined by reference to that market and it is probable that such market will exist at the end of the asset's useful life. a. Either I or II b. Neither I nor II c. I only d. II only

a. Either I or II

44. Agricultural activity covers a range of diverse activities and the following are common features of such diversity except a. Further processing the produce b. Capability to change c. Management of change d. Measurement of change

a. Further processing the produce

82. Which of the following statements is not true concerning significant influence? I. Significant influence is the power to direct or govern the financial and operating policies of the investee so as to obtain benefits from the activities II. If an investor holds, directly or indirectly, 20% or more of the voting power of the investee, it is presumed that the investor does have significant influence, unless it can be clearly demonstrated that this is not the case a. I only b. II only c. Both I and II d. Neither I nor II

a. I only

98. The deduction from capitalized borrowing cost of investment income from temporary investment of funds is allowed a. If the funds pertain to specific borrowing b. If the funds pertain to general borrowing c. Regardless whether the funds pertain to specific or general borrowing d. Under no circumstance

a. If the funds pertain to specific borrowing

83. Goodwill arising from an investment in associate is a. Included in the carrying amount of the investment and not amortized b. Reported separately as an intangible asset and not amortized c. Not reported in the statement of financial position but disclosed in the notes to financial statements d. Neither reported in the statement of financial position nor disclosed in the notes to financial statements

a. Included in the carrying amount of the investment and not amortized

10. Which form of receivables financing is least complex? a. Pledging b. Assignment c. Factoring d. Discounting

a. Pledging

51. The interest income reported for a debt investment at amortized cost initially acquired at a premium is equal to a. The effective interest rate multiplied by the carrying amount of the bond investment at the beginning of the year b. The effective interest rate multiplied by the face of the bond investment c. The stated interest rate multiplied by the face of the bond investment d. The stated interest rate multiplied by the carrying amount of the bond investment at the beginning of the year

a. The effective interest rate multiplied by the carrying amount of the bond investment at the beginning of the year

11. Which of the following is true when accounts receivable are factored without recourse a. The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables. b. The transaction may be accounted for either as a secured borrowing or as a sale, depending upon the substance of the transaction. c. The receivables are used as collateral for a promissory note issued to the factor by the owner of the receivables. d. The financing cost (interest expense) should be recognized ratably over the collection period of the receivables.

a. The factor assumes the risk of collectibility and absorbs any credit losses in collecting the receivables.

26. The appropriate method of amortizing intangible asset is best described by which of the following? a. The straight line method, unless the pattern in which the asset's economic benefits are consumed by the enterprise can be determined reliably. b. The double declining balance in all circumstances c. Management can make a subjective amount of periodic amortization without regard to any particular method d. The straight line method in all circumstances

a. The straight line method, unless the pattern in which the asset's economic benefits are consumed by the enterprise can be determined reliably.

50. No amortization of premium or discount is required for this class of debt investment a. at fair value through profit or loss b. fair value through other comprehensive income c. at amortized cost d. neither at amortize cost nor at fair value through profit or loss

a. at fair value through profit or loss

67. Stock dividends distributable should be classified on the a. balance sheet as an item of stockholders' equity. b. income statement as an expense. c. balance sheet as an asset. d. balance sheet as a liability.

a. balance sheet as an item of stockholders' equity.

52. Which of the following is true about the effective interest method of amortization? a. The effective interest rate method applied to investments in debt securities is different from that applied to bonds payable. b. The amortization of discount decreases from period to period. c. Amortization of premium decreases from period to period. d. The effective interest rate produces a constant rate of return on the carrying amount of the investment from period to period.

c. Amortization of premium decreases from period to period.

65. Which of the following statements is false? a. A company April exclude a short-term obligation from current liabilities if the firm intends to refinance the obligation on a long-term basis and demonstrates an ability to complete the refinancing. b. Taxes withheld from employees' payroll checks should never be recorded as a liability since the employer will eventually remit the amounts withheld to the appropriate taxing authority. c. Cash dividends should be recorded as a liability when they are declared by the board of directors. d. Under the cash basis method, warranty costs are charged to expense as they are paid.

b. Taxes withheld from employees' payroll checks should never be recorded as a liability since the employer will eventually remit the amounts withheld to the appropriate taxing authority.

69. Which of the following is not true about the discount on short-term notes payable? a. The Discount on Notes Payable account has a debit balance. b. The Discount on Notes Payable account should be reported as an asset on the balance sheet. c. When there is a discount on a note payable, the effective interest rate is higher than the stated discount rate. d. All of these are true.

b. The Discount on Notes Payable account should be reported as an asset on the balance sheet.

12. Which is not true? a. The account title purchase is used under periodic system of inventory. b. The account title freight in is used under perpetual system of inventory. c. Periodic system calls for physical counting of goods on hand at the end of the accounting period. d. Perpetual system allows the recording of the cost of goods sold.

b. The account title freight in is used under perpetual system of inventory.

96. When there is no evidence of fair value because of the specialized nature of the property, plant, and equipment, a. The entity should use the present value of cash inflows from the use of the asset as the estimate of fair value b. The entity should use depreciated replacement cost as the estimate of fair value c. The entity should use the fair value less cost of disposal as the estimate of fair value d. The entity is precluded from using the revaluation model and must use the cost model instead

b. The entity should use depreciated replacement cost as the estimate of fair value

62. Information available prior to the issuance of the financial statements indicates that it is probable that, at the date of the financial statements, a liability has been incurred for obligations related to product warranties. The amount of the loss involved can be reasonably estimated. Based on the above facts, an estimated loss contingency should be a. disclosed but not accrued. b. accrued. c. classified as an appropriation of retained earnings. d. neither accrued nor disclosed.

b. accrued.

76. The printing costs and legal fees associated with the issuance of bonds should a. be expensed when incurred. b. be accumulated in a deferred charge account and amortized over the life of the bonds. c. be reported as a deduction from the face amount of bonds payable. d. not be reported as an expense until the period the bonds mature or are retired.

b. be accumulated in a deferred charge account and amortized over the life of the bonds.

88. Investment property includes all of the following, except a. Land held for long-term capital appreciation b. Property being constructed or developed for future use as investment property c. Building held by the entity under a finance lease and leased out under one or more operating leases c. Machinery held for a currently undetermined use

c. Machinery held for a currently undetermined use

72. In a troubled debt restructuring in which the debt is continued with modified terms and the carrying amount of the debt is less than the total future cash flows, the creditor should a. compute a new effective-interest rate. b. calculate its loss using the current effective rate of the loan. c. not recognize a loss. d. calculate its loss using the historical effective rate of the loan.

b. calculate its loss using the current effective rate of the loan.

60. Use of the accrual method in accounting for product warranty costs a. is required for income tax purposes. b. represents accepted practice and should be used whenever the warranty is an integral and inseparable part of the sale. c. is frequently justified on the basis of expediency when warranty costs are immaterial. d. finds the expense account being charged when the seller performs in compliance with the warranty.

b. represents accepted practice and should be used whenever the warranty is an integral and inseparable part of the sale.

79. Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to a. the stated (nominal) rate of interest multiplied by the face value of the bonds. b. the market rate multiplied by the beginning-of-period carrying amount of the bonds. c. the market rate of interest multiplied by the face value of the bonds. d. the stated rate multiplied by the beginning-of-period carrying amount of the bonds.

b. the market rate multiplied by the beginning-of-period carrying amount of the bonds.

80. Co Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. a. 10 periods and 10% from the present value of 1 table. b. 20 periods and 5% from the present value of 1 table. c. 20 periods and 4% from the present value of 1 table. d. 10 periods and 8% from the present value of 1 table.

c. 20 periods and 4% from the present value of 1 table.

22. A change in the estimated useful life of a building a. Is not allowed by generally accepted accounting principles b. Must be handled as a retroactive adjustment to all accounts affected, back to the year of the acquisition of the building c. Affects the depreciation on the building beginning with the year of the change d. Creates a new account to be recognized on the income statement reflecting the difference in net income up to the beginning of the year of the change

c. Affects the depreciation on the building beginning with the year of the change

84. The equity method is not applicable under all of the following circumstances, except a. The investor is a wholly-owned subsidiary b. The investor's debt and equity instruments are not traded c. The investor operates under severe long-term restrictions d. The ultimate parent of the investor produces consolidated financial statements

c. The investor operates under severe long-term restrictions

30. The period of time during which capitalization of interest begins and when capitalization of interest ends is a. From the time funds are borrowed until the asset is substantially complete and ready for its intended use. b. From the time the first expenditures are incurred and funds have been borrowed until the asset is substantially complete and ready for its intended use. c. From the time the first expenditures are incurred until no further interest cost is being incurred d. From the time the first expenditures are incurred until activities necessary to get the asset for its intended use have begun.

b. From the time the first expenditures are incurred and funds have been borrowed until the asset is substantially complete and ready for its intended use.

87. Which of the following statements is not true if there is an inability to determine the fair value of an investment property reliably? I. The entity shall measure such investment property using the cost model until the disposal of the investment property II. The entity shall not be permitted to use the fair value model in measuring its other investment property. a. I only b. II only c. Both I and II d. Neither I nor II

b. II only

47. The best reference of fair value for a biological asset or agricultural produce a. Is the contract price b. Quoted price in the active market c. The contract price or the quoted price in the active market d. None of the above

b. Quoted price in the active market

29. After initial measurement, an entity shall measure its intangibles using a. Cost model or fair value model b. Cost model only c. Cost model or current replacement cost model d. Cost model of revaluation model

d. Cost model of revaluation model

81. If an associate has outstanding non-cumulative preference shares held by outside interests, the investor computes share of profit or loss a. After adjusting for preference dividends which were actually paid during the year b. Without regard for preference dividends c. After adjusting for preference dividends declared during the year d. After adjusting for preference dividends, whether or not declared

c. After adjusting for preference dividends declared during the year

55. Which statement is incorrect regarding identification of significant influence? a. A holding of 20% or more of the voting power (directly or through subsidiaries) will indicate significant influence unless it can be clearly demonstrated otherwise. b. A substantial or majority ownership by another investor does necessarily preclude an investor from having significant influence. c. If the holding is less than 20%, the investor will be presumed not to have significant influence unless such influence can be clearly demonstrated. d. Potential voting rights are a factor to be considered in deciding whether significant influence exists.

b. A substantial or majority ownership by another investor does necessarily preclude an investor from having significant influence.

37. A lessee incurred costs to construct office space in a leased warehouse. The estimated useful life of the office is 10 years. The remaining term of the nonrenewable lease is 15 years. The cost should be a. Capitalized as leasehold improvement and expensed in the year in which the lease expires b. Capitalized as leasehold improvement and depreciated over 10 years. c. Capitalized as leasehold improvement and depreciated over 15 years. d. Expensed as incurred

b. Capitalized as leasehold improvement and depreciated over 10 years.

23. If the exchange transaction lacks commercial substance, the acquired item of property, plant and equipment is measured at a. Fair value of asset given plus cash payment b. Carrying amount of asset given plus cash payment c. Fair value of asset received plus cash payment d. Carrying amount of asset received plus cash payment

b. Carrying amount of asset given plus cash payment

46. Agricultural produce harvested from an entity's biological assets shall be measured at the point of harvest at a. Fair value b. Fair value less cost to sell c. Cost d. Cost less cost of disposal

b. Fair value less cost to sell

40. Which of the following rules is incorrect regarding accounting for transfers (to or from investment property) between categories? a. For a transfer from investment property carried at fair value to owner- occupied property or inventories, the fair value at the change of use is the 'cost' of the property under its new classification. b. For a transfer from owner-occupied property to investment property carried at fair value, PAS 16 should be applied up to the date of reclassification. Any difference arising between the carrying amount under PAS 16 at that date and the fair value should be recognized in net profit or loss for the period. c. For a transfer from inventories to investment property at fair value, any difference between the fair value at the date of transfer and it previous carrying amount should be recognized in net profit or loss for the period. d. When an entity completes construction/development of an investment property that will be carried at fair value, any difference between the fair value at the date of transfer and the previous carrying amount should be recognized in net profit or loss for the period.

b. For a transfer from owner-occupied property to investment property carried at fair value, PAS 16 should be applied up to the date of reclassification. Any difference arising between the carrying amount under PAS 16 at that date and the fair value should be recognized in net profit or loss for the period.

68. Which of the following items is a current liability? a. Bonds (for which there is an adequate sinking fund properly classified as a long-term investment) due in three months. b. Bonds due in three years. c. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months. d. Bonds to be refunded when due in eight months, there being no doubt about the marketability of the refunding issue.

c. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months.

38. Which statement is correct concerning property leased to an affiliate? I. From the perspective of the individual enterprise that owns it, the property leased to an affiliate is considered an investment property. II. From the perspective of the affiliates as a group and for purposes of consolidated financial statements, the property is treated as owner-occupied property. a. I only b. II only c. Both I and II d. Neither I nor II

c. Both I and II

100. Which of the following is correct regarding the determination of the maximum dividend for a wasting asset corporation a. Accumulated depletion is deducted from retained earnings b. Unrealized depletion in ending inventory is added to retained earnings c. Capital liquidated in prior years is deducted from retained earnings d. Both a and b are correct

c. Capital liquidated in prior years is deducted from retained earnings

17. If the fair value of an investment property cannot be determined on a continuing basis a. Cost model will be used until fair value become available b. Fair value will be used until disposal c. Cost model will be used until disposal d. Net realizable value will be used

c. Cost model will be used until disposal

21. The cost of land does not include a. Special assessments b. Costs of grading, filling, draining, and clearing c. Costs of improvements with limited lives d. All of the above form part of land cost

c. Costs of improvements with limited lives

9. Sales discount forfeited is used when a. Credit sales are not recorded b. Credit sales are recorded using the gross method c. Credit sales are recorded using the net method d. Either b or c

c. Credit sales are recorded using the net method

6. Which statement is incorrect about cash equivalents? a. Three-month time deposits are cash equivalents b. Only highly liquid investments that are acquired three months before maturity can qualify as cash equivalents c. Equity securities are also cash equivalents d. Preference share with specified redemption dates and acquire three months before redemption date can qualify as cash equivalents.

c. Equity securities are also cash equivalents

99. Which of the following expenditures would never qualify as an exploration and evaluation asset a. Expenditure for acquisition of rights to explore b. Expenditure for exploratory drilling c. Expenditures related to the development of mineral resources d. Expenditures for activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource

c. Expenditures related to the development of mineral resources

49. Interest revenue for debt investments at fair value through profit or loss is computed based on the instruments' a. Carrying amount using effective interest rate b. Carrying amount using the nominal interest rate c. Face value using the nominal interest rate d. Face value using the effective interest rate

c. Face value using the nominal interest rate

24. The cost of an item of property, plant and equipment acquired in exchange for a nonmonetary asset or a combination of monetary and nonmonetary asset is measured at a. Fair value of asset received plus cash payment b. Book value of asset given plus cash payment c. Fair value of asset given plus cash payment d. Book value of asset received plus cash payment

c. Fair value of asset given plus cash payment

92. An asset acquired on 01 July 2016 has a twelve-year useful life and is to be depreciated using the sum of years' digits method. The annual depreciation expense would be the same as that under the straight line method a. For the year ended 31 December 2020 b. For the year ended 31 December 2021 c. For the year ended 31 December 2022 d. For the year ended 31 December 2023

c. For the year ended 31 December 2022

93. An entity imported machinery to be installed in the new factory premises before year-end. What is the proper treatment of freight and interest on the loan to fund the cost of machinery? a. Both freight and interest are capitalized b. Interest may be capitalized but freight is expensed c. Freight is capitalized but interest cannot be capitalized d. Both freight and interest are expensed

c. Freight is capitalized but interest cannot be capitalized

20. Which of the following statements is/are correct concerning internally generated intangible asset? I. To assess whether an internally generated intangible asset meets the criteria for recognition, an enterprise classifies the generation of the asset into a research phase and a development phase. II. The cost of an internally generated asset comprises all directly attributable costs necessary to create, produce and prepare the asset for its intended use. III. Internally generated brands, mastheads, Publishing titles, customer lists and items similar in substance should not be recognized as intangible assets. IV. Internally generated goodwill may be recognized as an intangible asset. a. I only b. I, II, III and IV c. I, II and III d. IV only

c. I, II and III

90. Which of the following is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset? a. Interest is being incurred b. Expenditures for the asset have been made c. Interest rate is equal to or greater than the cost of capital d. Activities that are necessary to get the asset ready for the intended use are in progress

c. Interest rate is equal to or greater than the cost of capital

97. An asset acquired in 01 March 2016 has a five-year useful life and is to be depreciated using the double-declining method. The carrying amount as of 31 December 2017 a. Is between 60% to 70% of the cost b. Is between 50% to 60% of the cost c. Is between 40% to 50% of the cost d. Is between 30% to 40% of the cost

c. Is between 40% to 50% of the cost

63. A contingent liability a. definitely exists as a liability but its amount and due date are indeterminable. b. is accrued even though not reasonably estimated. c. Is disclosed in the financial statements unless remote. d. Is not the result of a loss contingency.

c. Is disclosed in the financial statements unless remote.

56. Which statement is incorrect concerning presentation of investments in associates? a. Equity method investments must be classified as non-current assets. b. The investor's share of the profit or loss of equity method investments, and the carrying amount of those investments, must be separately disclosed. c. The investor's share of any discontinuing operations of such associates need not be disclosed separately. d. The investor's share of changes recognized directly in the associate's equity are also recognized directly in equity by the investor, with disclosure in the statement of changes in equity.

c. The investor's share of any discontinuing operations of such associates need not be disclosed separately.

15. Which is not true about a forward contract? a. It is agreement between a buyer (long) and a seller (short) to exchange a specified amount of commodity, security or foreign currency in the future at a price specified today. b. In a forward contract, both parties are legally bound to execute the transaction in the future at the agreed-upon price, but no money changes hands at the inception of the contract. c. They have standardized contract terms and are traded on organized exchanges. d. None of the above

c. They have standardized contract terms and are traded on organized exchanges.

18. Which statement is incorrect regarding measurement of investment property subsequent to initial recognition using the fair value model? a. Change to the cost method is permitted only if this results in a more appropriate presentation. b. Fair value should reflect the actual market state and circumstances as of the balance sheet date. c. Where a property has previously been measured at fair value, it should cease to be measured at fair value, if comparable market transactions become less frequent or market prices become less readily available. d. Gains or losses arising from changes in the fair value of investment property must be included in net profit or loss for the period in which it arises.

c. Where a property has previously been measured at fair value, it should cease to be measured at fair value, if comparable market transactions become less frequent or market prices become less readily available.

57. Accrued liabilities are disclosed in financial statements by a. showing the amount among the liabilities but not extending it to the liability total. b. a footnote to the statements. c. appropriately classifying them as regular liabilities in the balance sheet. d. an appropriation of retained earnings.

c. appropriately classifying them as regular liabilities in the balance sheet.

58. The ratio of current assets to current liabilities is called the a. current liability turnover ratio. b. acid-test ratio. c. current ratio. d. current asset turnover ratio.

c. current ratio.

73. A troubled debt restructuring will generally result in a a. loss by both the debtor and the creditor. b. loss by the debtor and a gain by the creditor. c. gain by the debtor and a loss by the creditor. d. gain by both the debtor and the creditor.

c. gain by the debtor and a loss by the creditor.

77. When the interest payment dates of a bond are April 1 and October 1, and a bond issue is sold on May 1, the amount of cash received by the issuer will be a. decreased by accrued interest from May 1 to October 1. b. increased by accrued interest from May 1 to October 1. c. increased by accrued interest from April 1 to May 1. d. decreased by accrued interest from April 1 to May 1.

c. increased by accrued interest from April 1 to May 1.

74. Note disclosures for long-term debt generally include all of the following except a. call provisions and conversion privileges. b. assets pledged as security. c. names of specific creditors. d. restrictions imposed by the creditor.

c. names of specific creditors.

33. Purchased goodwill should a. be written off as soon as possible against retained earnings. b. be written off as soon as possible as an extraordinary item. c. not be amortized but tested for impairment. d. be written off by systematic charges as a regular operating expense over the period benefited.

c. not be amortized but tested for impairment.

71. Liabilities are a. any accounts having credit balances after closing entries are made. b. deferred credits that are recognized and measured in conformity with generally accepted accounting principles. c. obligations arising from past transactions and payable in assets or services in the future. d. obligations to transfer ownership shares to other entities in the future.

c. obligations arising from past transactions and payable in assets or services in the future.

28. Which one of the following is not a component of the cost of internally generated intangible asset? a. Cost of materials and services used or consumed in generating the intangible asset. b. Cost of employee benefits arising from the generation of the intangible asset. c. Fees to register a legal right d. Expenditure on training staff to operate the asset.

d. Expenditure on training staff to operate the asset.

7. Under the imprest fund system, if there was no replenishment of the petty cash fund which journal entry must be prepared? a. Petty cash fund xx Cash in bank xx b. Cash in bank xx Petty cash fund xx c. Expenses xx Cash in Bank xx d. Expenses xx Petty cash fund xx

d. Expenses xx Petty cash fund xx

5. Which statement is incorrect about cash? a. Cash comprises cash on hand and demand deposits. b. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. c. Cash is measured at face value. d. All cash in bank shall at all times be presented as part of the line item cash and cash equivalents.

d. All cash in bank shall at all times be presented as part of the line item cash and cash equivalents.

16. Which statement describes futures contract? a. They are similar to forward contracts except futures have standardized contract terms and are traded on organized exchanges. b. There are clearinghouse that guarantees performance. c. Virtually no default risk. d. All of the above

d. All of the above

8. Net realizable value of receivables requires that which of the following items be deducted? I. Allowance for bad debts II. Allowance for freight charge III. Allowance for sales discount IV. Allowance for sales returns a. I only b. Three of the above c. I and II only d. All of the above

d. All of the above

64. Which of the following contingencies need not be disclosed in the financial statements or the notes thereto? a. Guarantees of indebtedness of others b. Probable losses not reasonably estimable c. Environmental liabilities that cannot be reasonably estimated d. All of these must be disclosed.

d. All of these must be disclosed.

The term "betterment" refers to a. An expenditure made for new facilities which increase capacity b. An expenditure made to restore capacity after abandonment or retirement c. An expenditure made to ensure continuity of service capacity d. An expenditure made to improve existing facilities by increasing capacity

d. An expenditure made to improve existing facilities by increasing capacity

48. Under IFRS 9, the classification of debt investments shall be made on the basis of a. The business model for managing the financial asset. b. The contractual cash flow characteristics of the financial asset. c. Management's intention of holding the debt instrument. d. Both the business model for managing the financial asset and the contractual cash flow characteristics of the financial asset.

d. Both the business model for managing the financial asset and the contractual cash flow characteristics of the financial asset.

94. If an exchange transaction lacks commercial substance, how should the cost of the acquired item be measured at? a. Fair value of property received plus cash payment, if any b. Fair value of property given plus cash payment, if any c. Carrying amount of property received plus cash payment, if any d. Carrying amount of property given plus cash payment, if any

d. Carrying amount of property given plus cash payment, if any

34. In accordance with the new international accounting standard, which statement is correct? I. Intangible assets with finite life are amortized over their useful life. II. Intangible assets with infinite life are not amortized but tested for impairment at least annually. a. Both I and II b. Neither I nor II c. II only d. I only

d. I only

43. These investments are initially measured at purchase price plus transaction costs. I. Financial assets at fair value through profit or loss II. Financial assets at fair value through other comprehensive income III. Financial assets at amortized cost. a. I only b. II only c. I and II d. II and III

d. II and III

2. Which is not true about the conceptual framework? a. It is a summary of the terms and concepts that underlie the preparation and presentation of financial statements for external users. b. It is concerned with general purpose financial statements. c. One of the purposes of the conceptual framework is to assists the FRSC in developing accounting standards. d. It is an accounting standard.

d. It is an accounting standard.

89. Which of the following statements is true regarding the cost of property, plant, and equipment? I. If the property is acquired on credit or on account, any purchase discount is deducted from the invoice price only if paid within the discount period. II. Similar to acquiring property by issuing share capital, the first priority in the measurement of property acquired by issuing bonds payable is the fair value of the property received. a. I only b. II only c. Both I and II d. Neither I nor II

d. Neither I nor II

36. Which of the following is incorrect if the enterprise provides ancillary services to the occupants of a property held by the enterprise? a. The appropriateness of classification as investment property is determined by the significance of the services provided. b. If the services provided are relatively insignificant component of the arrangement as a whole (for instance, the building owner supplies security and maintenance services to the lessees), then the enterprise may treat the property as investment property. c. Where the services provided are more significant (such as in the case of an owner-managed hotel), the property should be classified as owner-occupied. d. None of the above.

d. None of the above.

59. Which of the following is not acceptable treatment for the presentation of current liabilities? a. Listing current liabilities in order of maturity b. Listing current liabilities according to amount c. Showing current liabilities immediately below current assets to obtain a presentation of working capital d. Offsetting current liabilities against assets that are to be applied to their liquidation

d. Offsetting current liabilities against assets that are to be applied to their liquidation

25. Which is incorrect concerning self-constructed asset? a. The cost of self-constructed asset is determined using the same principles as for an acquired asset. b. Any internal profits from construction are eliminated in arriving at the cost of self- constructed asset. c. The cost of normal amounts of wasted material, labor or other resources incurred in the production of a self-constructed asset is included in the cost of the asset. d. The cost of abnormal amounts of wasted material, labor or other resources incurred in the production of a self- constructed asset is included in the cost of asset.

d. The cost of abnormal amounts of wasted material, labor or other resources incurred in the production of a self- constructed asset is included in the cost of asset.

41. Which statement is incorrect regarding measurement of investment property subsequent to initial recognition using the fair value model? a. Change to the cost method is permitted only if this results in a more appropriate presentation. b. Gains or losses arising from changes in the fair value of investment property must be included in net profit or loss for the period in which it arises. c. Fair value should reflect the actual market state and circumstances as of the balance sheet date. d. Where a property has previously been measured at fair value, it should cease to be measured at fair value, if comparable market transactions become less frequent or market prices become less readily available.

d. Where a property has previously been measured at fair value, it should cease to be measured at fair value, if comparable market transactions become less frequent or market prices become less readily available.

66. The ability to consummate the refinancing of a short-term obligation April be demonstrated by a. actually refinancing the obligation by issuing a long-term obligation after the date of the balance sheet but before it is issued. b. entering into a financing agreement that permits the enterprise to refinance the debt on a long-term basis. c. actually refinancing the obligation by issuing equity securities after the date of the balance sheet but before it is issued. d. all of these.

d. all of these.

14. A financial asset is held for trading when a. is acquired or incurred principally for the purpose of selling or repurchasing it in the near term; b. on initial recognition is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or c. is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) d. all the above statements are true

d. all the above statements are true

70. Among the short-term obligations of Steve Company as of December 31, the balance sheet date, are notes payable totaling P250,000 with the Knight National Bank. These are 90-day notes, renewable for another 90-day period. These notes should be classified on the balance sheet of Steve Company as a. long-term liabilities. b. deferred charges. c. intermediate debt. d. current liabilities.

d. current liabilities.

78. When the effective-interest method is used to amortize bond premium or discount, the periodic amortization will a. increase if the bonds were issued at a discount. b. decrease if the bonds were issued at a premium. c. increase if the bonds were issued at a premium. d. increase if the bonds were issued at either a discount or a premium.

d. increase if the bonds were issued at either a discount or a premium.

61. Correo Company becomes aware of a lawsuit after the date of the financial statements, but before they are issued. A loss and related liability should be reported in the financial statements if the amount can be reasonably estimated, an unfavorable outcome is highly probable, and a. the damages appear to be material. b. the Correo Company admits guilt. c. the court will decide the case within one year. d. the cause for action occurred during the accounting period covered by the financial statements.

d. the cause for action occurred during the accounting period covered by the financial statements.