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A.Y. 2021-2022

BSA 1ST YEAR

FINAL EXAM
[ CONCEPTUAL FRAMEWORK AND ACCOUNTING
STANDARDS – CFAS ]

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Final Examination
CONCEPTUAL FRAMEWORK AND ACCOUNTING STANDARDS (CC CFAS)
A.Y. 2021-2022

Direction: Read the items carefully and answer them the best way you can. Select your answer from the choices and
select the letter corresponds to your answer on the google form provided. Shade E if your answer is not on the
given choices.

ACCOUNTING STANDARDS AND ACCOUNTING PROFESSION ( 4 ITEMS )

1. Which of the following represents the definition of accounting?
i. A service activity and its function is to provide quantitative information, primarily financial
in nature, about economic activities, that is intended to be useful in making economic
decisions.
ii. 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 financial character and
interpreting the results thereof.
iii. The process of identifying, measuring and communicating economic information to permit
informed judgment and decision by users of information.
a. i, ii, and iii. c. ii only.
b. i only. d. iii only.
2. The currently functioning body responsible for the promulgation of the International Financial Reporting
Standards is the
a. Accounting Standards Council. c. International Accounting Standards Committee.
b. Financial Reporting Standards Council. d. International Accounting Standards Board.
3. Proper application of accounting principles is most dependent upon the
a. Existence of specific guidelines. c. External audit function.
b. Oversight of regulatory bodies. d. Professional judgment of the accountant.
4. Which of the following relate(s) to the Stable Monetary Unit Concept?
i. Assets, liabilities, equity, revenues and expenses should be stated in terms of a unit of
measure which is the peso in the Philippines.
ii. The purchasing power of the peso is stable or constant and that its instability is insignificant
and therefore ignored.
a. i only. c. i and ii.
b. ii only. d. None.
CONCEPTUAL FRAMEWORK ( 4 ITEMS )
5. This refers to financial statements that are intended to meet the needs of users who are not in a position to
require an entity to prepare reports tailored to their particular information needs.
a. All-purpose financial statements. c. Special purpose financial statements.
b. General purpose financial statements. d. Managerial reports.
6. Which of the following is not within the scope of the Conceptual Framework?
a. Objectives of the financial statements.
b. Nature and definition of the elements of financial statements.
c. Form of presentation of financial statements.
d. Qualitative characteristics that make financial statements useful to the users.
7. Entity A is making a materiality judgment. Entity A considers the size of the impact of an item to be material if it
exceeds 5% of total assets. What type of materiality assessment is this?
a. Quantitative. c. Requirement of a Standard.
b. Qualitative. d. Relevance.
8. It is the process of incorporating in the financial statements an item that meets the definition of an element.
a. Recognition. c. Realization.
b. Allocation. d. Summarization.
PAS 1 – PRESENTATION OF FINANCIAL STATEMENTS ( 4 ITEMS )
9. Which of the following is not included among the general features of financial statement presentation?
a. Growing concern c. Frequency of reporting
b. Accrual basis d. Comparative information
10. Which of the following is not a component of a complete set of financial statements?
a. Statement of financial position.
b. Statement of changes in equity.
c. Notes, comprising a summary of significant accounting policies and explanatory notes.
d. Additional statements such as environmental reports and value added statements.
11. Which of the following financial statements would not be dated as covering a certain reporting period?
a. Statement of financial position
b. Statement of profit or loss and other comprehensive income
c. Statement of cash flows
d. Statement of changes in equity
12. According to PAS 1, the judgments and estimates embodied in the financial statements, for example, materiality
judgments, assessments of uncertainty and risk, and the like, are the responsibility of the entity’s

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a. management. c. auditor.
b. accountant. d. janitor.
PAS 7 – STATEMENT OF CASH FLOWS ( 2 ITEMS )
13. This method of presenting cash flows from (used in) operating activities shows each major class of gross cash
receipts and gross cash payments.
a. Direct method. c. Indirect method.
b. Inverse method. d. Straight method.
14. Interest income of a non-financial institution that is received in cash is presented in the statement of cash flows
under
a. operating activities. c. financing activities
b. investing activities d. a or c
PAS 8 – CHANGES IN ACCOUNTING POLICIES, ACCOUNTING ESTIMATES, & ACCOUNTING ERRORS (2 ITEMS)
15. When it is difficult to distinguish a change in accounting policy from a change in accounting estimate, the change is
treated as
a. a change in an accounting estimate. c. a correction of prior period error.
b. a change in an accounting policy. d. not accounted for.
16. These arise from misapplication of accounting policies, mathematical mistakes, oversights or misinterpretations of
facts, or fraud.
a. Accounting Errors c. Change in accounting policy.
b. Change in accounting estimate. d. Impracticable application.
PAS 10 – EVENTS AFTER THE REPORTING PERIOD ( 2 ITEMS )
17. According to PAS 10, this is the date when management authorizes the financial statements for issue regardless
of whether such authorization is final or subject to further approval.
a. Date of authorization of the financial statements. c. Date of events after the reporting period.
b. Date of declaration. d. Adjustment date.
18. ABC Co. completes the draft of its December 31, 20x1 year-end financial statements on January 31, 20x2. On February
5, 20x2, the board of directors reviews the financial statements and authorizes them for issue. The entity announces
its profit and selected other financial information on February 23, 20x2. The financial statements are made available
to shareholders and others on March 1, 20x2. The shareholders approve the financial statements at their annual
meeting on March 18, 20x2 and the approved financial statements are then filed with a regulatory body on April 1,
20x2. Events after the reporting period are those occurring
a. from December 31, 20x1 to February 5, 20x2. c. from January 1, 20x2 to February 23, 20x2.
b. from January 1, 20x2 to February 5, 20x2. d. from January 1, 20x2 to March 18, 20x2.
PAS 24 – RELATED PARTY DISCLOSURES ( 2 ITEMS )
19. Which of the following is not a related party?
a. Entities with joint control or significant influence over the entity.
b. The parent company of the entity.
c. An entity that has a common director with the entity.
d. Joint ventures in which the entity is a venturer.
20. Control is a necessary element of an asset. Control means
a. the entity has the exclusive right over the benefits of an asset, including the ability to prevent others from
accessing those benefits.
b. that the entity can ensure that the resource will produce economic benefits in all circumstances.
c. the entity has the exclusive right over the entire economic resource, and not only a portion of it.
d. a legally enforceable right conferred to the entity by a law or other operation of law.
PFRS 8 – OPERATING SEGMENTS ( 2 ITEMS )
21. Hanskeeyah Company is a multidivisional corporation, which has both intersegment sales and sales to unaffiliated
customers. Hanskeeyah should report segment financial information for each division meeting which of the
following criteria?
a. Segment operating profit or loss is 10% or more of consolidated profit and loss.
b. Segment operating profit or loss is 10% or more of combined operating profit or loss of all company segments.
c. Segment revenue is 10% or more of combined revenue of all the company segments.
d. Segment revenue is 10% or more of consolidated revenue.
22. The following amounts is not included in the measurement of profit or loss of a reportable segment?
a. Depreciation and amortization.
b. The entity’s interest in the profit and loss of associates and joint ventures accounted for by the equity
method.
c. Income tax expense.
d. General corporate expenses.
PAS 2 – INVENTORIES ( 4 ITEMS )
23. Which of the following may be included in the cost of inventories?
a. Storage costs of part-finished goods.
b. Abnormal amount of wasted materials, labor and factory overhead.
c. Recoverable purchase taxes.
d. Administrative costs.
24. Which of the following cost formulas is not allowed under PAS 2?
a. FIFO c. Specific identification
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b. Weighted average d. LIFO

25. When an item of inventory that was written down to net realizable value in a prior period subsequently
recovers,
a. It is not appropriate to adjust the carrying amount of inventory.
b. The previous amount of the write down may be reversed and taken to retained earnings.
c. The previous amount of the write down may be reversed and taken to profit or loss.
d. The previous amount of the write down may be reversed and taken to other comprehensive income.
26. Which of the following statements is incorrect regarding net realizable value?
a. The cost of inventories may not be recoverable if those inventories are damaged, if they have become
wholly or partially obsolete or their selling prices have declined.
b. Inventories are usually written down to net realizable on an item-by-item basis.
c. It is appropriate to write down inventories on the basis of a classification of inventory, for example,
finished goods, or all the inventories in a particular industry or geographical segment.
d. The amount of any write down of inventories to net realizable value and all losses of inventories shall be
recognized as an expense in the period the write down or loss occurs.
PAS 34 – INTERIM REPORTING ( 2 ITEMS )
27. Interim financial report means a financial report containing
a. A complete set of financial statements.
b. A condensed set of financial statements.
c. Either a complete set or condensed set of financial statements.
d. Neither a complete set nor condensed set of financial statements.
28. Interim financial reports shall be published
a. Once a year at any time in that year. c. On a quarterly basis.
b. Within a month of the half-year end. d. Whenever the entity wishes.
PAS 16 – PROPERTY, PLANT AND EQUIPMENT ( 4 ITEMS )
29. Which of the following is not within the definition of PAS 16?
a. Tangible items.
b. Expected to be used during more than one period.
c. For capital appreciation or to earn rentals.
d. Held for use in the production or supply of goods or services, for rental to others, or for administrative
purposes.
30. When a corporation issue shares for land, the land should be recorded at the
a. Total par value of the shares issued. c. Fair value of the land.
b. Total book value of the shares issued. d. Total liquidating value of the shares issued.
31. Gain or loss from disposal of an item of property, plant and equipment is equal to the difference between
a. Fair value of the asset on balance sheet and its carrying amount.
b. Net realizable value on balance sheet date and its carrying amount.
c. Net proceeds from disposal and the cost of asset.
d. Net proceeds from disposal and the carrying amount of the asset.
32. If an entity is able to determine reliably the fair value of both the asset received and the asset given up, which is
used in measuring the cost of the asset received?
a. Fair value of the asset given up. c. Carrying amount of the asset given up.
b. Fair value of the asset received. d. Replacement cost of the asset given up.
PAS 23 – BORROWING COSTS ( 2 ITEMS )
33. The period of time during which interest must be capitalized ends when
a. The asset is substantially complete and ready for its intended use.
b. No further interest cost is incurred.
c. The asset is abandoned, sold or fully depreciated.
d. The activities that are necessary to get the asset for its intended use have begun.
PFRS 6 – EXPLORATION FOR AND EVALUATION OF MINERAL RESOURCES ( 2 ITEMS )
34. Exploration and evaluation expenditures are those incurred by an entity in connection with the exploration
for and evaluation of mineral resources
a. Before technical feasibility and commercial viability of extracting are demonstrable.
b. After technical feasibility and commercial viability if extracting mineral resources are demonstrable.
c. Before the entity has obtained legal rights to explore a specific area for extraction of mineral resources.
d. After the entity has obtained legal rights to explore a specific area and after technical feasibility and
commercial viability of extracting a mineral resources are demonstrable.
35. Exploration and evaluation of assets shall initially be recognized at
a. Cost.
b. Cost plus all other costs incurred for the development of the assets.
c. A nominal amount plus all other costs incurred for the development of the assets.
d. Fair value.
PAS 20 – ACCTG. FOR GOVERNMENT GRANTS & DISCLOSURE OF GOVERNMENT ASSISTANCE (2 ITEMS)
36. Which of the following is considered a government grant under PAS 20?
a. Award of major government contracts c. Free technical advice.
b. Cancellation of an existing loan from the government d. Public improvements.
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37. The main concept used in recognizing income from government grants is
a. Capital approach. c. Matching.
b. Historical cost . d. Materiality.
PAS 40 –INVESTMENT PROPERTY ( 3 ITEMS )
38. Which of the following qualifies for classification as an investment property?
a. Property that is currently being developed for future use as investment property.
b. Investment property that is currently being developed for future use as owner-occupied property.
c. Property that is leased out to another entity under a finance lease.
d. Building being rented from another entity and leased out under various operating sub-leases.
39. The distinguishing characteristic that identifies an investment property from the other assets of an entity is
a. Changes in fair value of the asset is recognized in profit or loss.
b. The property does not derive cash flows separate from the other assets of the entity.
c. It generates separately identifiable cash flows from the other assets of the entity.
d. It earns rental as part of the ordinary operations of the entity.
40. Under this model, an investment property is measured at cost less accumulated depreciation and accumulated
impairment losses.
a. Revaluation model. c. Fair value model.
b. Cost model. d. Gorgeous model.
IFRS 5 – NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS ( 3 ITEMS )
41. Non-current assets held for sale shall be presented in the statement of financial position as
a. Current assets. c. Non-current assets.
b. Neither current assets nor non-current assets. d. Excluded from the assets sections but disclosed.
42. An entity shall classify a non-current asset or disposal group as “held for sale” when the
a. Carrying amount of the asset or disposal group will be recovered through a sale transaction.
b. Carrying amount of the asset or disposal group will be recovered through continuing use.
c. Non-current asset or disposal group is to be disclosed.
d. Non-current asset or disposal group is idle or retired from active use.
43. An entity shall measure a non-current asset or discontinued operation classified as held for sale at
a. Carrying amount. c. Lower of carrying amount and fair value less cost to sell.
b. Fair value less cost to sell. d. Higher of carrying amount and fair value less cost to sell.
PAS 38 – INTANGIBLE ASSETS ( 5 ITEMS )
44. The essential elements of an intangible asset do not include
a. Identifiability. c. Control.
b. Probable outflow of resources embodying economic benefits. d. Future economic benefits.
45. According to PAS 38, which of the following may be recognized as cost of intangible asset?
a. Research costs incurred in self-generating an intangible asset.
b. Costs of an internally generated customer lists.
c. Purchase cost of an externally acquired publishing title.
d. Abnormal amount of wasted labor in self-generating an intangible asset.
46. Which of the following intangible assets does not have the characteristic of exchangeability?
a. Patent. c. Copyright.
b. Goodwill. d. Franchise.
47. What term is generally used to refer the systematic allocation of the cost of an intangible asset less any residual
value as an expense over the asset’s useful life?
a. Depreciation. c. Depletion.
b. Realization. d. Amortization.
48. A research and development activity for which the cost should be expensed as incurred is
a. Engineering follow-through in early phase of commercial production.
b. Design, construction, and testing of pre-production prototypes and models.
c. Troubleshooting in connection with breakdowns during commercial production.
d. Periodic design changes to existing product.
PAS 41 – AGRICULTURE ( 5 ITEMS )
49. Which of the following statements is incorrect regarding the accounting for biological assets?
a. Agricultural land used in growing agricultural produce can never qualify for recognition as biological asset.
b. Biological asset is living animal or plant.
c. Agricultural produce is harvested product from a biological asset before any processing.
d. PAS 41 is used to account for both consumable and bearer plants.
50. Agricultural produce is measured at
a. Fair value. c. Net realizable value.
b. Fair value less cost to sell at the point of harvest. d. Net realizable value less normal profit margin.
51. Where the fair value of the biological asset cannot be determined reliably, the biological asset should be
measured at
a. Cost.
b. Cost less accumulated depreciation.
c. Cost less accumulated depreciation and accumulated impairment losses.
d. Net realizable value.

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52. Which of the following is accounted for under PAS 41?

a. Sausages, cured hams. c. Apples.
b. Processed fruits. d. Sugar.
53. Which of the following is not considered as an agricultural activity?
a. Raising livestock. c. Floriculture and aquaculture, including fishing.
b. Annual perennial cropping. d. Deforestation.
PAS 37 – PROVISION, CONTINGENT LIABILITY AND CONTINGENT ASSETS ( 7 ITEMS )
54. A provision is
a. An event which is not recognized because it is not probable or cannot e measured reliably.
b. An event which is probable and measurable.
c. An event which is probable, possible or remote and measurable.
d. An event which is probable but not measurable.
55. Which of the following would not be considered a provision?
a. Warranty liability. c. Tax payable.
b. Bad debt. d. Notes payable
56. An entity received notification of legal action against the entity. The attorneys determined that it is probable
the entity will lose the suit and the loss can be estimated reliably. How should the estimated loss be reported?
a. As a loss recorded in other comprehensive income.
b. As a contingent liability reported in the statement of financial position and a loss in the income statement.
c. As a loss in the income statement and a provision in the statement of financial position.
d. In the notes to financial statements as a contingency.
57. When the provision involves a large population of items, the estimate of the amount
a. Reflects the weighting of all possible outcomes by their associated possibilities.
b. Is determined as the individual most likely outcome.
c. May be the individual most likely outcome adjusted for the effect of other possible outcomes.
d. Midpoint of the possible outcomes.
58. A contingent asset is
a. Disclosed where an inflow of economic benefits is probable.
b. Disclosed where an inflow of economic benefits is possible.
c. Recognized in the financial statements because this represents the recognition of income that has been
realized.
d. Contingent if the realization of income is virtually certain.
59. A contract in which the unavoidable cost of meeting the obligations under the contract exceed the economic
benefits to be received under the contract is called a/an
a. Unenforceable contract. c. Onerous contract.
b. Loss contract. d. Executory contract.
60. A competitor has sued our entity for the unauthorized use of its patented technology. The amount that the
entity may be required to pay to the competitor if the competitor succeeds in the lawsuit is determinable
with reliability, and according to the legal counsel, it is the less than probable but more than remote that an
outflow of the resources would be needed to meet the obligation.

The entity that was sued should, at year-end,
a. Recognize a provision for this possible obligation.
b. Make a disclosure of the possible obligation in the footnotes to the financial statements.
c. Make no provision or disclosure and wait until the lawsuit is finally decided and then expense the amount
paid on settlement, if any.
d. Set aside, as an appropriation, a contingency reserve, an amount based on the best estimate of the possible
liability.
PAS 12 – INCOME TAXES ( 3 ITEMS )
61. It is the excess of taxable revenues over tax-deductible expenses and exemptions for the year as defined by
the Bureau of Internal Revenue (BIR).
a. Pretax financial income. c. Gross income.
b. Financial income subject to tax. d. Taxable income.
62. It is the amount of income tax payable in the future periods in respect of taxable temporary difference.
a. Deferred tax liability. c. Deferred tax equity.
b. Deferred tax asset. d. Tax income.
63. It is the amount of income tax recoverable in future periods in respect of deductible temporary difference
and the carry forward of unused tax credits.
a. Deferred tax liability. c. Deferred tax equity.
b. Deferred tax asset. d. Tax income.
PAS 19 – EMPLOYEE BENEFITS ( 3 ITEMS )
64. These are all forms of consideration given by an entity in exchange for service rendered by employees.
a. Salaries and wages. c. Employee compensation.
b. Fringe benefits. d. Employee benefits.

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65. These are short-term compensated absences that are carried forward and can be used in future periods if
the current period’s entitlement is not used in full and the employees are entitled to a cash payment for
unused entitlement on leaving the entity.
a. Accumulating and vesting. c. Non-accumulating and vesting.
b. Accumulating and non-vesting. d. Non-accumulating and non-vesting.
66. When a company adopts a pension plan, the past service costs should be charged to
a. Operations of current and future periods.
b. Other comprehensive income in the periods of adoption of the plan.
c. Profit or loss in the period of adoption of the plan.
d. Retained earnings.
PFRS 16 – LEASES ( 3 ITEMS )
67. Which of the following is not one of the criteria when determining whether a contract is or contains a lease?
a. Identified asset.
b. Identified liability.
c. Right to obtain substantially all of the economic benefits from use of an identified asset throughout the
period of use.
d. Right to direct the use of identified asset throughout the period of use.
68. Which of the following is correct regarding the accounting for leases?
a. The lessor depreciates the leased asset under a finance lease.
b. The lessee depreciates the leased asset under a “short term” or “low-valued assets” lease.
c. When discounting lease payments the lessor and the lessee use the interest rate implicit in the lease.
d. An entity can never be both a lessor and a lessee of a same leased asset.
69. According to PFRS 16, the right-of-use assets are presented in the lessee’s statement of financial position
a. Separately from the other assets of the lessee.
b. Together with other assets as if they were owned, with disclosure of the line items that include the right-
of-use assets.
c. a or b.
d. Not presented in the lessee’s financial statements but only in the lessor’s financial statements.
PAS 36 – IMPAIRMENT OF ASSETS ( 3 ITEMS )
70. The recoverable amount of an impaired asset is equal to its
a. Fair value less cost to sell.
b. Fair value less cost to sell or value in use, whichever is lower.
c. Value in use.
d. Fair value less cost to sell or value in use, whichever is higher.
71. It is the present value of the future cash flows expected to be derived from an asset or cash generating unit.
a. Cash generating unit. c. Value in use.
b. Fair value less cost to sell. d. Entity specific value.
72. It is the smallest identifiable group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows from other assets or group of assets.
a. Foreign operation. c. Foreign entity.
b. Corporate asset. d. Cash generating unit (CGU)
PFRS 9 – FINANCIAL INSTRUMENTS ( 2 ITEMS )
73. The classification of debt investments shall be made in the basis of
a. The business model for managing the financial asset.
b. Contractual cash flow characteristics of the financial asset.
c. Management’s intention of holding the debt instruments.
d. Both the business model for managing the financial asset and the contractual cash flow characteristics of
the financial asset.
74. Interest revenue for debt investments at fair value through profit or loss (FVTPL) is computed based on the
instruments’
a. Carrying amount using the effective interest rate. c. Face value using the effective interest rate.
b. Carrying amount using the nominal interest rate. d. Face value using the nominal interest rate.
75. SELECT LETTER A ON YOUR ANSWER SHEET.



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