1.The statement of financial position of ABC Co.

as of
10 July 20X8
January 1, 20x4 included an allowance for bad debts
4.Many shares and most share options are not traded in
computed using the “aging of accounts receivable”
an active market. Therefore, it is often difficult to arrive
method. The “over 120 days” category in the aging
at a fair value of the equity instruments being issued.
schedule included a ₱200,000 receivable which was
Which of the following option valuation techniques
actually written off on January 5, 20x4 (the 20x3
should not be used as a measure of fair value in the first
financial statements were authorized for issue on
instance?
March 1, 20x4). ABC Co. could not have foreseen this
(1/1 Points)
event on December 31, 20x3. Does ABC Co. need to
revise its previous estimate of bad debts as of January 1, Intrinsic value.
20x4 (date of transition) on December 31, 20x5 (end of
Monte-Carlo model.
first PFRS reporting period)?
(0/1 Points) Binomial model.
No. The event should be ignored because it is Black-Scholes model.
within the scope of the previous GAAP and not the 5.Where it is impracticable to determine the period-
PFRSs. specific effect of the change on comparative
information for one or more prior periods presented,
Yes. The receipt of the information on January 5,
the retrospective application or restatement is applied
20x4 is accounted for retrospectively as an adjusting
(1/1 Points)
event after the reporting period.
Retrospectively only to the extent that it is
No. The receipt of the information on January 5,
practicable
20x4 is accounted for prospectively as a non-adjusting
event after the reporting period. Prospectively to the extent that estimates can be
made
Yes. Although, PFRS 1 does not require the
adjustment, other PFRSs do. Prospectively only to the extent that it is
2.When the provision arises from a single obligation, practicable
the estimate of the amount
Retrospectively to the extent that estimates can be
(1/1 Points)
made
midpoint of the possible outcomes 6.In accounting for share appreciation rights,
compensation expense is generally
is the individual most likely outcome adjusted for
(0/1 Points)
the effect of other possible outcomes
Allocated over the service period of employees
reflects the weighting of all possible outcomes by
their associated probabilities Recognized on the date of grant
is determined as the individual most likely outcome Recognized on the date of exercise
3.The Sarin Company's financial statements for the year
Not recognized
ended 30 April 20X8 were approved by its finance
7.How should the effect of a change in accounting
director on 7 July 20X8 and a public announcement of
estimate be accounted for?
its profit for the year was made on 10 July 20X8. The
(1/1 Points)
board of directors authorised the financial statements
for issue on 15 July 20X8 and they were approved by By restating amounts reported in financial
the shareholders on 20 July 20X8. Under PAS 10, after statements of prior periods
what date should consideration no longer be given as to
In the period of change and future periods if the
whether the financial statements to 30 April 20X8 need
change affects both
to reflect adjusting and non-adjusting events?
(0/1 Points) By reporting proforma amounts for prior periods
20 July 20X8 As a prior period adjustment to beginning retained
earnings
7 July 20X8
8.In computing basic loss per share, the annual
15 July 20X8 preference dividend on cumulative preference shares
should be
(0/1 Points)
Treated as component other comprehensive
Added to the net loss whether declared or not income
Ignore Not recognized
Deducted from the net loss whether declared or Included in profit or loss
not 13.Which statement is incorrect concerning a
contingent liability?
Added to the net loss only when declared
(0/1 Points)
9.The return on plan assets
(1/1 Points) If the contingent liability is remote, no disclosure is
required
includes interests, dividends and change in the fair
value of the plan assets during the year A contingent liability is disclosed only
is equal to the discount rate times the fair value of A contingent liability is not recognized in the
the plan assets at the beginning of the period financial statements
is equal to the change in fair value of the plan A contingent liability is both probable and
assets during the year measurable
14.The date to transition to PFRSs is
is equal to the expected rate of return times the
(0/1 Points)
fair value of plan assets at the beginning of the period
10.These arise from misapplication of accounting the beginning of the earliest period for which an
policies, mathematical mistakes, oversights or entity presents full comparative information under
misinterpretations of facts, or fraud. PFRSs in its first PFRS financial statements.
(1/1 Points)
the end of the earliest period for which an entity
Impracticable application presents full comparative information under PFRSs in its
first PFRS financial statements.
Change in accounting estimate
the beginning of the first PFRS reporting period.
Change in accounting policy
the end of the first PFRS reporting period.
Error
15.Which statement in relation to share options granted
11.An entity is preparing interim financial statements
to employees in exchange for services is true?
for six months ended June 30, 2018. In th interim
(0/1 Points)
financial statements for six month, a statement of
financial position on June 30, 2018 and a statement of Fair value shall be measured at the date the
comprehensive income for six months ended June 30, options vest.
2018 shall be presented. In addition, all of the following
Fair value shall be measured at the date of exercise
shall be presented, except
(0/1 Points) The services received shall be measured at the fair
value of the employee's services
Statement of comprehensive income for six months
ended June 30, 2017 All of these statements are not true
16.Under the treasury share method, the number of
Statement of financial position on June 30, 2017
potential ordinary share is equal to
Statement of financial position on December 31, (0/1 Points)
2017
assumed treasury shares acquired
Statement of cash flows for six months ended June
option shares
30, 2017
12.For cash settled share-based payment transaction, option shares actually issued during the year
any change in fair value of the liability is
option shares minus assumed treasury shares
(1/1 Points)
acquired
Included in retained earnings 17.One of Entity A’s delivery trucks had an accident on
February 14, 20x2. The truck is totally wrecked and is
uninsured. Entity A’s December 31, 20x1 current-period
financial statements were authorized for issue on
an item-by-item basis.
March 31, 20x2. Entity A asked you if it can write-off the
carrying amount of the destroyed truck from its a or b, as matter of accounting policy choice.
December 31, 20x1 statement of financial position.
a year-to-date basis.
What will you tell Entity A?
22.An entity shall offset a deferred tax asset and
(1/1 Points)
deferred tax liability
Yes, go ahead. I will support you. (1/1 Points)
No. Don’t write-off the truck because the event is a When income taxes are levied by different taxing
non-adjusting event. You should, however, disclose the authority
event if you deem it to be material.
Under all circumstances
No. Don’t write-off the truck because the event is a
When the entity has no legal enforceable right to
non-adjusting event.
offset
Yes, go ahead. Write-off the truck because the
When income taxes are levied by the same taxing
event is an adjusting event.
authority and the entity has a legal enforceable right to
18.The process of funding a defined benefit plan refers
offset a current tax asset against a current tax liability
to
23.Which statement is true regarding interim financial
(1/1 Points)
statements?
Making the periodic contributions to a funding (0/1 Points)
agency to ensure that funds are available to meet
If interim financial statements are presented, four
retirees' claims
basic financial statements are required
Determining the accumulated benefit obligation
If interim financial statements are presented, only a
Determining the amount that might be reported for statement of financial position and a statement of
pension expense comprehensive income are required
Determining the defined benefit obligation Interim financial statements must be presented
19.According to PAS 37, provisions are (choose the with the most recent annual financial statements
incorrect statement)
Interim financial statements are required
(0/1 Points)
24.Earnings per share should be computed on the basis
necessarily estimated because their settlement of
amount is not certain. (0/1 Points)
presented in the statement of financial position voting ordinary shares and participating preference
separately from other types of liabilities. shares
disclosed only, unless their expected occurrence is preference shares
remote.
voting ordinary shares
recognized and disclosed.
voting and nonvoting ordinary shares
20.According to PAS 37, a present obligation that is
25.The deferred tax expense is equal to
possible and can be measured reliably is
(0/1 Points)
(0/1 Points)
Increase in deferred tax asset less the increase in
ignored.
deferred tax liability
recognized.
Increase in deferred tax liability less the increase in
disclosed only. deferred tax asset
recognized and disclosed. Increase in deferred tax liability
21.According to PAS 34, measurements in the interim
Increase in deferred tax asset
period are made on
26.Earnings per share shall be reported for all of the
(1/1 Points)
following except
a discrete basis. (1/1 Points)
 Discontinued operations Cumulative other comprehensive income exceeds
the fair value of the plan assets
Continuing operations
31.Interest cost included in the net pension cost
Net income recognized under a defined benefit plan represents the
(0/1 Points)
Net cash provided by operating activities
27.Deferred tax assets and deferred tax liabilities do not Increase in the projected benefit obligation due to
alter the tax to be paid in the current period. However, the passage of time
they cause tax payments to either increase or decrease
Increase in the fair value of plan assets due to the
when they reverse in a future period. The reversal of
passage of time
which of the following will cause an increase in tax
payment? Shortage between the expected and actual returns
(0/1 Points) on plan assets
Deferred tax benefit Change in the nature of benefits
32.An item that would create a permanent difference in
Deferred tax expense
pretax financial income and taxable income would be
Deferred tax asset (0/1 Points)
Deferred tax liability Using the percentage of completion method on
28.A provision shall be recognized as liability when long-term construction contracts
(0/1 Points)
Using accelerated depreciation for tax purposes
The amount of the obligation can be measured and straight line depreciation for book purposes
reliably
Purchasing equipment previously leased under an
All of these are required for the recognition of a operating lease in prior years
provision as liability
Paying fines for violation of laws
An entity has a present obligation as a result of a 33.Which of the following is correct regarding the
past event provisions of PAS 34?
(0/1 Points)
It is probable that an outflow of resources
embodying economic benefits will be required to settle PAS 34 encourages publicly listed entities to
the obligation prepare at least a semi-annual financial report to be
29.Justification for the method of determining periodic issued not later than 60 days after the end of the
deferred tax expense is based on the concept of interim period.
(1/1 Points)
PAS 34 encourages publicly listed entities to
Recognition of asset and liability prepare at least three quarterly financial reports to be
issued not later than 45 days after the end of each
Consistency of tax expense measurement with
interim period.
actual tax planning strategies
PAS 34 requires both publicly and non-publicly
Matching of period expense to periodic revenue
listed entities to prepare at least a semi-annual financial
Objectively in the calculation of periodic expense report to be issued not later than 60 days after the end
30.A pension liability is reported when of the interim period.
(0/1 Points)
PAS 34 requires publicly listed entities to prepare at
The accumulated benefit obligation is less that the least a semi-annual financial report to be issued not
fair value of the plan assets later than 60 days after the end of the interim period.
34.The vested benefits in a pension plan represent
The defined benefit obligation exceeds the fair
(0/1 Points)
value of plan assets
Benefits to be paid to the retired employee
The pension expense for the period is greater than
the funding amount for the same period Benefits to be paid to the retired employee in the
current year
 Benefits accumulated in the hands of trustee required for all public and non-public entities
Benefits that are not contingent on the employee's encouraged for public entities and required for
continuing in the service of the employer non-public entities
35.Imagine you are an employer. When should you 40.You are employed as an accountant. Your company’s
recognize short-term employee benefits? retirement plan states that, upon retirement, an
(1/1 Points) employee (not less than 60 years but not more than 65
years of age) is entitled to a lump sum payment equal to
When the employees have rendered service in
the employee’s final monthly salary level multiplied by
exchange for the employee benefits.
the number of years in service (not less than 10 years).
Never! At the end of month following the month of retirement
and every month thereafter, the retired employee is
Every 1st day of the month
entitled to a monthly pension equal to one-eighth (1/8)
Every 15th and 30th of the month. of the final monthly salary level. The monthly pensions
36.Under PFRS 1, the early application of PFRSs that cease upon death of the retired employee. However, if
have not yet become effective as of the current the employee has immediate dependent(s) with age of
reporting period less than 18 years, the dependent(s) will be entitled to
(0/1 Points) the monthly pensions, which will cease when the
dependent(s) reaches 18 years of age. What type of
is required.
post-employment benefit plan does your company
is prohibited. have?
(0/1 Points)
is permitted, but not required.
Defined contribution plan
is required, but not permitted.
37.When issuing share options to employees, which of Defined pension plan
the following factors is most relevant in determining the
Cannot be determined; insufficient information
accounting treatment?
(0/1 Points) Defined benefits plan
The authorized number of shares
The market value of the shares issued
The par value of the shares issued
Whether the share options are issued in lieu of
salary
38.Under IFRS, where ordinary shares are issued but not
fully paid, the ordinary shares are treated in the
calculation of basic EPS
(1/1 Points)
are ignored
in the same way as fully paid ordinary shares
as a fraction of an ordinary share to the extent that
the shares are entitled to participate in dividends
in the same way as warrants or options and are
included only in diluted EPS
39.EPS Disclosures are
(0/1 Points)
required for public entities and encouraged for
nonpublic entities
encouraged for all entities