False - Equity pertains to present economic resource controlled by the entity as a

result of past events.

False - One of the purpose of the Conceptual Framework is to assist the preparers of
financial statements in interpreting the information contained in financial
statements prepared in compliance with IFRS.

False - A reporting entity can be a single entity or can comprise more than one entity
but not a portion of an entity.

True - Generally,both quantitative and qualitative bases will be used in assessing the
cost and benefit whether a certain information will be provided,use and reported.

True - An asset or liability can exist even if the probability of an inflow or outflow of
economic benefits is low

True - Obligations that arise from an entity’s customary practices,if the entity has no
practical ability to act in a manner inconsistent with those practices is referred to as
a constructive obligation.

False - An economic resource is considered to have potential if it is likely that the it

will produce economic benefits.

False - Financial information is capable of making a difference in decisions should

have both predictive and confirmatory value.

True -The Conceptual Framework is not an IFRS and hence does not define standards
for any particular measurement or disclosure issue.

True - An entity cannot have a right to obtain economic benefits from itself.

True - Not all of an entity’s rights are assets of that entity.

True - The general purpose financial reports are not designed to show the value of a
reporting entity but they provide information that help estimate the value of the
reporting entity.

False - A liability is a future obligation of the entity to transfer an economic resource

as a result of past events

True - The potential to produce economic benefits to which an asset pertains is the
present right that contains that potential,not the future economic benefits that the
right may produce.

The financial statements of the business entity are separate and distinct from the
financial statements of the owners. Economic entity assumption
True - Forward looking information can be included in the financial statements.

The elements directly related to the measurement of financial position are:

assets,liabilities and equity

False - General purpose financial statements is a broader term than general purpose
financial reports.

Which underlying assumption assumption serves as the basis for preparing financial
statements at regular arbitrary or artificial points in time?Time period

False - Financial statements provide information about transactions and other

events viewed from the perspective of the entity’s existing or potential
investors,lenders or other creditors.

What is the only underlying assumption mentioned in the Conceptual

Framework?Going Concern

Which of the following statements is incorrect?

an entity that has control over another entity is referred to as a parent.
A reporting entity can be a single entity or a portion of an entity or can comprise
more than one entity.
A reporting entity is an entity that is required, or chooses, to prepare financial
statements.
A reporting entity should be a legal entity

The elements directly related to the measurement of financial performance are-

income and expenses

Which of the following statements is incorrect?

Consolidated financial statements are designed to provide separate information
about the assets,liabilities,equity,income and expenses of any particular subsidiary
If a reporting entity comprises two or more entities that are not all linked by a
parent-subsidiary relationship, the reporting entity’s financial statements are
referred to as ‘combined financial statements
If a reporting entity comprises both the parent and its subsidiaries, the reporting
entity’s financial statements are referred to as ‘consolidated financial statements’
If a reporting entity is the parent alone, the reporting entity’s financial statements
are referred to as ‘unconsolidated financial statements’

Which statement best describes the term going concern? - the ability of the entity
to continue in operation for the foreseeable future-

Which basic accounting assumption is threatened by the existence of severe inflation

in an economy? Monetary unit assumption
Which of the following statements is true?
The IASB cannot specify a uniform quantitative threshold for materiality or
predetermine what could be material in a particular situation
Information that has predictive value often does not have confirmatory value.
Financial information has predictive value if it provides feedback about (confirms or
changes) previous evaluations.
The predictive value and confirmatory value of financial information are not
interrelated.

Which of the following statements is false?

Free from error means there are no errors or omissions in the description of the
phenomenon, and the process used to produce the reported information has been selected
and applied with no errors in the process.
A representation of an estimate of an unobservable price or value can be faithful if the
amount is described clearly and accurately as being an estimate, the nature and limitations
of the estimating process are explained, and no errors have been made in selecting and
applying an appropriate process for developing the estimate
The free from error requirement for financial information means perfectly accurate in all
respects.
Even a high level of measurement uncertainty does not necessarily prevent such an estimate
from providing useful information

It describes the objective of,and the concepts for,general purpose financial

reporting- Conceptual Framework for Financial Reporting

It means checking the inputs to a model,formula or other technique and

recalculating the outputs using the same methodology - Indirect verification

Which of the following is an enhancing qualitative characteristic? Comparability

Which of the following is not always needed in order for there to be a complete
depiction of a group of assets - explanations of significant facts about the quality
and nature of the items

Which is not a purpose of the Conceptual Framework?

prescribe the basis for presentation of general purpose financial reports to ensure
comparability both with the entity’s financial reports of previous periods and with
the financial reports of other entities.
assist all parties to understand and interpret the Standards
assist preparers to develop consistent accounting policies when no Standard applies
to a particular transaction or other event,or when a Standard allows a choice of
accounting policy
assist the International Accounting Standards Board(Board)to develop IFRS
Standards(Standards)that are based on consistent concepts
Based on the latest Framework,what are the fundamental qualitative characteristics
of financial information? Relevance and Faithful representation

It is an entity-specific aspect of relevance based on the nature or magnitude,or

both,of the items to which the information relates in the context of an individual
entity’s financial report. Materiality

It is the qualitative characteristic that enables users to identify and understand

similarities in,and differences among,items - Comparability

Which of the following statements is false?

The enhancing qualitative characteristics,either individually or as a group,can make
information useful even if that information is irrelevant or does not provide a
faithful representation of what it purports to represent.
Trade-off between the fundamental qualitative characteristics may need to be made
in order to meet the objective of financial reporting,which is to provide useful
information about economic phenomena.
One enhancing qualitative characteristic may have to be diminished to maximize
another qualitative characteristic.
A relevant financial information that is a highly uncertain estimate can still be
considered useful.

Which of the following statements is not true?

To meet the objective of general purpose financial reporting,the Board may
sometimes specify requirements that depart from aspects of the Conceptual
Framework.
Revisions of the Conceptual Framework will automatically lead to changes to the
Standards.
Nothing in the Conceptual Framework overrides any Standard or any requirement in
a Standard.
The Conceptual Framework is not a Standard.

Which of the following statements is true?

Information may be capable of making a difference in a decision even if some users
choose not to take advantage of it or are already aware of it from other sources.
Financial information has confirmatory value if it can be used as an input to
processes employed by users to predict future outcomes.
Financial information need to be a prediction or forecast to have predictive value.
Financial information is capable of making a difference in decisions if it has predictive
value,confirmatory value,but not both.

The Conceptual Framework provides the foundation for Standards that:(choose the
incorrect one)
contribute to economic efficiency by helping investors to identify opportunities and
risks across the world,thus improving capital allocation.
strengthen accountability by reducing the information gap between the providers of
capital and the people to whom they have entrusted their money.
provide all of the information that existing and potential investors,lenders and
other creditors need and show the value of a reporting entity.
contribute to transparency by enhancing the international comparability and quality
of financial information,enabling investors and other market participants to make
informed economic decisions

True - An entity shall present,either in the statement of changes in equity or in the

notes,the amount of dividends recognized as distributions to owners during the
period,and the related amount per share
True - An item that is not sufficiently material to warrant a separate presentation in
the financial statements may warrant separate presentation in the notes.
True - It is the functional presentation that is used when expenses are classified as
cost of sales,distribution cost,administrative cost and other expense.

True - PAS 1 does not require the presentation of all assets and liabilities in the order
of liquidity.

False - Retrospective adjustments and retrospective restatements are changes in

equity

False - An entity shall at all times not offset assets and liabilities or income and
expenses. -

False - PAS 1 provides for an elaborate definition of non-current assets and liabilities.

True - An entity shall classify an asset as current when it expects to realize the
asset,or intends to sell or consume it,in its normal operating cycle.

True - An entity shall not present any items of income or expense as extraordinary
items anywhere in the financial statements.

True - Under the natural presentation,an entity aggregates expenses within profit or
loss according to their nature and does not reallocate them among functions within
the entity.

False - PAS 1 will not apply when a subsidiary prepares its separate financial
statements.

False - Since PAS 1 is designed for profit-oriented entities,it cannot be applied to

non-profit-oriented organizations or entities.

False - When an entity decides to prepare interim financial statements,it must

comply with the structure and content requirements of PAS 1.
False - PAS 1 prohibits the practice of preparing financial statements for periods
other than a one-year period.

True - An entity shall classify a liability as current when the entity does not have an
unconditional right to defer settlement of the liability for at least twelve months
after the reporting period.

False - Entities are precluded from using terminologies that are different from the
terminologies used in PAS 1.

True - As a general rule,offsetting an asset with a liability,and income with an

expense is not allowed by PAS 1

False - An entity shall not be considered as a going concern if the SEC suspends the
trading of the entity's stocks

False An entity is precluded from presenting additional line items,headings and

subtotals in the statement of comprehensive income and the separate income
statement(if presented)

False - Out of the basic financial statements,the notes to the financial statements is
presented with the least prominence

Which of the following is not an objective of PAS 1?

Sets out guidelines for the structure of financial statements
Sets out minimum requirements for the content of financial statements
Sets out the recognition,measurement and disclosure requirements for all
transactions and events
Sets out overall requirements for the presentation of financial statements

Which of the following statements is not true?

PAS 1 applies to the structure and content of condensed interim financial
statements prepared in accordance with PAS 34,Interim Financial Reporting.
PAS 1 uses terminology that is suitable for profit-oriented entities,including public
sector business entities.
PAS 1 applies to entities that present separate financial statements in accordance
with PAS 27,Separate Financial Statements.
PAS 1 applies to entities that present consolidated financial statements in
accordance with PFRS 10,Consolidated Financial Statements.

Which of the following is not a component of other comprehensive income?

net interest cost of defined benefit plan
changes in revaluation surplus
translation gains and losses
gains and losses from investments in equity instruments designated at fair value
through other comprehensive income

A complete set of financial statements includes the following components,except:

Reports and statements such as environmental reports and value added

statements
Statement of changes in equity
Statement of financial position,statement of comprehensive income and statement
of cash flows.
Notes,comprising a summary of significant accounting policies and other explanatory
information

Which of the following is not a component of other comprehensive income?

impairment losses arising from the excess of the recoverable amount over an
asset’s carrying amount.
change in fair value that is attributable to changes in the liability’s credit risk for
liabilities designated as at fair value through profit or loss
the effective portion of gains and losses on hedging instruments in a cash flow hedge
changes in the value of the time value of options

In analyzing a company’s financial statements,which financial statement would a

potential investor primarily use to assess the company’s liquidity and financial
flexibility?
Balance sheet

Which of the following is required to be disclosed regarding the risks and

uncertainties that exist?
A description of the operations both within and outside of the home country
Factors causing an estimate to be sensitive.
The potential impact of estimates about values of assets and liabilities when it is remotely
possible that the estimate will change in the near future.
The potential impact of estimates about values of assets and liabilities when it is
reasonably possible that the estimate will change in the near future.

Distribution Cost includes the following items,except

Expenses of general executives
Freight out
Salesmen’s salaries
Depreciation of delivery equipment and store equipment
All of the items below,except one,give rise to reclassification adjustment.Which is
the exception?
When a hedged forecast transaction affects profit or loss
Derecognition of investments measure at fair value through Other Comprehensive
Income
Disposal of foreign operation
Changes in revaluation surplus

Which of the following statements is false?

Measuring assets net of valuation allowances—for example,obsolescence
allowances on inventories and doubtful debts allowances on receivables—is an
example of offsetting.
An entity shall not offset assets and liabilities or income and expenses,unless
required or permitted by an PFRS.
Offsetting is generally disallowed since it detracts from the ability of users both to
understand the transactions,other events and conditions that have occurred and to
assess the entity’s future cash flows
An entity shall present a complete set of financial statements(including comparative
information)at least annually.

Financial statements must be prepared at least -Annually

Which of the following should be classified as non-current?

A liability with an acceleration clause and the entity violated a contract provision but
the lender agreed,after the reporting period and before the authorization of the
financial statements for issue,not to demand payment as a consequence of the
breach.
A liability with an acceleration clause and the entity violated a contract provision
but the lender agreed by the end of the reporting period to provide a period of
grace ending at least twelve months after the reporting period.
A liability with an acceleration clause and the entity violated a contract provision but
the lender agreed,after the reporting period and after the authorization of the
financial statements for issue,not to demand payment as a consequence of the
breach.
A liability with an acceleration clause and the entity violated a contract provision.

Which of the following is true?

If the refinancing on a long-term basis is completed on or before the end of the
reporting period,the obligation is going to be classified as noncurrent liability.
If the refinancing on a long-term basis is completed on or before the end of the
reporting period,the obligation is going to be classified as a current liability.
If the entity has the discretion to refinance the obligation for at least 12 months after
the reporting period under an existing loan facility,the obligation is classified as
current liability.
If the refinancing or rolling over is not at the discretion of the entity,the obligation is
classified as a noncurrent liability.
An entity shall classify an asset as non-current when:
it expect to realize the asset, or intends to sell or consume it, in its normal operating
cycle
it holds the asset primarily for the purpose of trading
the asset is cash or a cash equivalent (as defined in PAS 7) unless the asset is
restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period
it expects to realize the asset beyond twelve months after the reporting period

Which of the following statements is required to be disclosed in the financial

statements?
An entity whose financial statements comply with PFRSs shall make an explicit and
unreserved statement of such compliance in the notes.
Uncertainties on the entity’s ability to continue as a going concern when
management is aware,in making its assessment,of material uncertainties related to
events or conditions that may cast significant doubt upon the entity’s ability to
continue as a going concern.
An entity’s ability to continue as a going concern
1, 2 and 3
1 and 2 only
2 and 3 only
1 and 3 only

A complete set of financial statements includes:

I.notes,comprising a summary of significant accounting policies and other
explanatory information;and
II.a statement of financial position as at the beginning of the earliest comparative
period when an entity applies an accounting policy retrospectively or makes a
retrospective restatement of items in its financial statements,or when it reclassifies
items in its financial statements.

I and II
I only
Neither I nor II
II only

Which of the following is classified as current liabilities?

Long-term obligations to company officers

A currently maturing long-term debt
Long-term deferred revenue
Non-current portion of the long term debt

How should cash that is restricted for settlement of a liability that is due 18 months
from the reporting period be presented? noncurrent assets
What must be disclosed in case management concludes that compliance with a
requirement in an IFRS would be so misleading that it would conflict with the
objective of financial statements set out in the Framework and the relevant
regulatory framework allows a departure?(choose the incorrect one.)
that management has concluded that the financial statements present fairly the
entity’s financial position,financial performance and cash flows
the treatment adopted;and for each period presented,the financial effect of the
departure on each item in the financial statements that would have been reported in
complying with the requirement.
the title of the IFRS from which the entity has departed,the nature of the
departure,including the treatment that the IFRS would require,the reason why that
treatment would be so misleading in the circumstances that it would conflict with
the objective of financial statements set out in the Framework
an explicit and unreserved statement that the entity’s financial statements have
complied with all the requirements of the IFRSs

Which of the following statements is false?

An entity shall present,either in the statement of changes in equity or in the
notes,the amount of dividends recognized as distributions to owners during the
period,and the related amount per share.
Changing the presentation and classification of items in the financial statements
from one period to the next is not allowed.
When an entity presents current and non-current assets,and current and non-
current liabilities,as separate classifications in its statement of financial position,it
shall not classify deferred tax assets(liabilities)as current assets(liabilities).
PFRSs apply only to financial statements,and not necessarily to other information
presented in an annual report,a regulatory filing,or another document.