Exercise 2.

Conceptual Framework for Financial Reporting

Duration: October 18 - October 31, 2020
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1.What is the authoritative status of the Conceptual Framework?. Single choice.
(1 Point)
The Conceptual Framework applies only when the International Accounting
Standard Board develops new or revised standards.
The Conceptual Framework has the highest level of authority.
In the absence of a standard or interpretation that specifically applies to a
transaction, the Conceptual Framework shall be followed.
In the absence of a standard or an interpretation that specifically applies to a
transaction, management shall consider the applicability of the conceptual Framework in
developing and applying an accounting policy that results in information that is relevant
and reliable.
2.Which of the following is a valid statement regarding the status of the Conceptual
Framework?. Single choice.
(1 Point)
The Conceptual Framework is an IFRS
The Conceptual Framework is a PFRS
In case of conflict between the IFRs and Conceptual Framework, the IFRS shall
prevail.
In case of conflict between the IFRs and Conceptual Framework, the Conceptual
Framework shall prevail.
3.The Conceptual Framework deals with all of the following, except. Single choice.
(1 Point)
The qualitative characteristics of useful financial information
The definition, recognition and measurement of the elements of financial statements
The objective of financial reporting
Supplementary information
4.The IASB’s Conceptual Framework deals with the I objective of the financial statements
II qualitative characteristics that make the financial statement useful to users III concepts
of capital and capital maintenance IV generally accepted accounting principles. Single
choice.
(1 Point)
I, II, III, IV
 I, II, III
I, II
II, III
5.Which is a purpose of the Conceptual Framework?. Single choice.
(1 Point)
To assist prepares to develop consistent accounting policy when no standard applies
to a particular transaction or when Standard allows a choice of accounting policy
To assist all parties to understand and interpret the Standards
All of these can be considered a purpose of the Conceptual Framework
To assist the IASB to develop IFRS based on consistent concepts.
6.Which is not a purpose of the Conceptual Framework?. Single choice.
(1 Point)
To provide definitions of key terms and concepts
To assist IASB in the standard-setting process
To provide specific guidelines for resolving situations not covered by existing
accounting standards
To assist accountants in selecting among alternative accounting and reporting
methods
7.Which among the following is not a purpose of the IASB’s Conceptual Framework for
Financial Reporting?. Single choice.
(1 Point)
To assist the users interpreting the information presented on the financial
statements
To assist the local standard setting bodies, such as the Financial Reporting Standards
Council in the adoption of the IFRS.
To assist the Board of Accountancy in the regulation of the accounting profession in
the Philippines.
To assist the auditors in forming an opinion as to the fairness of the presentation of
the financial statements.
8.The underlying theme of the Conceptual Framework is. Single choice.
(1 Point)
Timeliness
Decision usefulness
Understandability
 Comparability
9.The Conceptual Framework provides the foundation for Standards that. Single choice.
(1 Point)
All of these are the result of Standards developed based on consistent concepts
Contribute to transparency by enhancing international comparability and quality of
financial information
Contribute to economic efficiency by helping investors to identify opportunities and
risk across the world
Strengthen accountability of the people entrusted with the entity
10.Which statement is not true concerning the Conceptual Framework?. Single choice.
(1 Point)
The Conceptual Framework should be a basis for standard setting.
The Conceptual Framework should allow practical problems to be solved more
quickly.
The Conceptual Framework should be based on fundamental truth derived from the
law of nature.
The Conceptual Framework should increase users'
11.Which is an objective of financial reporting?. Single choice.
(1 Point)
To provide information that is useful to those making investing and credit decisions.
To provide information about prospective investors.
To provide information that is useful to management.
To provide information about ways to solve internal and external conflicts about the
entity.
12.An objective of financial reporting is to provide. Single choice.
(1 Point)
Information about the liquidation value of the resources held by the entity.
Information that is useful in assessing cash flow prospects.
Information that will attract new investors.
Information about the investors in the entity.
13."Assessing cash flow prospects'' as an objective of financial reporting is interpreted to
mean. Single choice.
(1 Point)
 Over the long run, trends in revenue and expenses are generally more meaningful
than trends in cash receipts and disbursements.
All of the choices are correct regarding "assessing cash flow prospects".
Information about the financial effects of cash receipts and cash payments is
generally considered the best indicator of present and continuing ability to generate
favorable cash flows.
Cash basis accounting is preferred over accrual basis accounting.
14.Which of the following is not listed as an objective of financial reporting?. Single
choice.
(1 Point)
Financial reporting shall provide information about entity resources, claims against
those resources and changes in them.
Financial reporting shall provide information useful in evaluating management
stewardship of the entity’s human resources.
Financial reporting shall provide information useful in investment, credit and similar
decisions.
Financial reporting shall provide information useful in assessing cash flow prospects.
15.Which of the following is not an objective of financial statements?. Single choice.
(1 Point)
To provide information about the financial position of an enterprise
To provide information about the changes in financial position of an enterprise
To provide information about the performance of an enterprise
To provide information about the economic decisions of the enterprise
16.What are the qualitative characteristics of financial statements?. Single choice.
(1 Point)
Qualitative characteristics measure the extent to which an entity has complied with
all relevant standards and interpretations
Qualitative characteristics are nonqualitative aspects of financial position and
financial performance
Qualitative characteristics are broad classes of financial effects of transactions and
other events
Qualitative characteristics are the attributes that make the information provided in
the financial statements useful to users
17.The overriding qualitative characteristic of accounting information is. Single choice.
(1 Point)
 Relevance
Decision usefulness
Faithful representation
Understandability
18.The fundamental qualitative characteristics are. Single choice.
(1 Point)
Faithful representation and materiality
Relevance, faithful representation and materiality
Relevance and reliability
Relevance and faithful representation
19.Accounting information is considered relevant when it. Single choice.
(1 Point)
is verifiable and neutral.
Is capable of making a difference in a decision
can be depended upon to represent the economic conditions and events that it is
intended to represent.
Is understandable by reasonably informed users.
20.What is the quality of information that enables users to better forecast future
operations?. Single choice.
(1 Point)
Comparability
Relevance
Materiality
Faithful representation
21.Which of the following relates to relevance?. Single choice.
(1 Point)
Comparability
Confirmatory value
Representational faithfulness
Neutrality
22.Exception to the application of accounting theory are permitted if the amount involve
is not material; financial reporting is concerned only with information that is significant
enough to affect evaluations or decisions. This convention is called. Single choice.
(1 Point)
 Objectivity
Conservatism
Materiality
Consistency
23.Which statement about materiality is not correct?. Single choice.
(1 Point)
Materiality is a matter of absolute size.
Materiality is a subquality of relevance.
An item is material if the inclusion or omission would influence or change the
judgment of a reasonable person.
An item must make a difference, or it need not be disclosed
24.An item would be considered material and therefore, should be disclosed in the
financial statements of. Single choice.
(1 Point)
The amount is deemed large enough to make a difference in the decision or
evaluation of the user
The FRSC’s definition of materiality is met
The effect on earnings is more than 10%
The expected benefits of disclosure exceed the additional costs to provide the
information
25.Adequate disclosure in financial statements to meet the needs and purpose of their
users is a means of attaining the quality of. Single choice.
(1 Point)
Faithful representation
Neutrality
Understandability
Verifiability
26.When there is an agreement between a measure or description and the phenomenon
it purports to represent, the information possesses which characteristics?. Single choice.
(1 Point)
Free from error
Neutrality
Completeness
Faithful representation
27.Which of the following does not necessarily contribute to representational
faithfulness of accounting information?. Single choice.
(1 Point)
Providing information that are free from bias
Informing the users of the accounting policies and changes in accounting polices
employed in the preparation of the financial statements
Providing information that possess confirmatory value
Providing complete information within the bounds of materiality and cost
28.An information is representationally faithful if it. Single choice.
(1 Point)
Is presented the same way period after period
Is complete, neutral and free from error
Allows users to make comparisons across financial statements
Is current, so users of financial statement can use it to make decisions
29.The financial accounting information is directed toward the common needs of users
and is independent of presumptions about particular needs and desires of specific
users.. Single choice.
(1 Point)
Relevance
Neutrality
Verifiability
Completeness
30.Which of the following are among the four enhancing characteristics of financial
information? A Comparability B Timeliness C Relevance D Materiality E Neutrality. Single
choice.
(1 Point)
A, B
B, E
B, D
A, C
31.Under the Conceptual Framework, the qualitative characteristic that enables the users
to compare the financial statements of an enterprise through time to identify trends in
its financial position and performance is. Single choice.
(1 Point)
Verifiability
 Comparability
Understandability
Completeness
32.Which concept of accounting holds that, to the maximum extent possible, financial
statements shall be based on arm’s length transactions?. Single choice.
(1 Point)
Revenue realization
Verifiability
Monetary unit
Matching
33.An entity issuing the annual financial reports within one month at the end of
reporting period is an example of which enhancing the quality of accounting
information.. Single choice.
(1 Point)
Predictive value
Timeliness
Representational faithfulness
Neutrality
34.Allowing entities to estimate rather than physically count inventory at an interim
period is an example of a tradeoff between. Single choice.
(1 Point)
Timeliness and verifiability
Neutrality and consistency
Timeliness and comparability
Verifiability and comparability
35.Which statement is true in relation to the enhancing qualitative characteristic of
understandability of financial information?. Single choice.
(1 Point)
Users have a reasonable knowledge of business and economic activities and review
the information with reasonable diligence
Financial statements shall be free from material error
Users are expected to have significant business knowledge.
Financial statements shall exclude complex matters
36.This enhancing characteristic requires that users be well-informed and diligent for
information to be useful.. Single choice.
(1 Point)
Reliability
Relevance
Understandability
Comparability
37.The characteristics of consistency in financial information is best depicted when.
Single choice.
(1 Point)
Expenses are deducted from revenue in the same accounting period
Accounting procedures are adopted that give a consistent rate of return for the
entity
The reported income is consistent from period to period
The entity gives accountable events the same accounting treatment from period to
period
38.Which of the following situations violates the concept of faithful representation?.
Single choice.
(1 Point)
Financial statements included an item of property plant and equipment with
carrying amount increased to management estimate of market value.
Management reports refer to new projects undertaken but the financial statements
never report project results.
Data on segments having th!? same expected risks and growth rate~ are reported to
analysts estimating future profits.
Financial statements were issued nine months late.
39.What is the underlying concept that supports the recognition of impairment in value
of non-monetary asset held by the enterprise?. Single choice.
(1 Point)
Substance over form
Consistency
Prudence
Neutrality
40.Which of the following is not an enhancing qualitative characteristic?. Single choice.
(1 Point)
 Profit-oriented
Comparability
Understandability
Timeliness
41.The Conceptual Framework includes which of the following constraints?. Single
choice.
(1 Point)
All of the choices are constraints
Substance over form
Prudence
Cost
42.Which statement best describes the cost and benefit constraint?. Single choice.
(1 Point)
All of the choices are correct.
The benefit of the information must be greater than the cost of providing it.
Cost of providing financial information is not always evident or measurable but must
be considered.
Financial information should be free from cost to users of the information.
43.Prudence. Single choice.
(1 Point)
allows for the understatement of assets or income or the overstatement of liabilities
or expenses.
is the exercise of caution when making judgements under conditions of uncertainty
means when in doubt, choose the solution that will be least likely to understate
liabilities and expenses.
means when in doubt, choose the solution that will be least likely to overstate assets
and income.
44.What is the only underlying assumption mentioned in the Conceptual Framework for
Financial Reporting?. Single choice.
(1 Point)
Going concern
Monetary unit
Time period
Accounting entity
45.Which is not an important characteristic of the financial statements that accountants
currently prepare.. Single choice.
(1 Point)
The information in financial statements is expressed in units of money adjusted for
changing purchasing power.
Financial statements articulate with one another because measuring financial
position is related to measuring changes in financial position.
The information in financial statements is summarized and classified to help meet
users' needs.
Financial statements can be justified only if the benefits exceed the costs.
46.Information about enterprise earnings and its components measure under accrual
basis provides a better measure of an enterprise’s performance than an information
about cash receipts and payments because. Single choice.
(1 Point)
Accrual basis recognizes that events affecting enterprise operations during a period
often do not coincide with cash receipts and payments
Accrual basis relates accomplishments and efforts in measuring and reporting
enterprise’s earnings and its components
Cash receipts and cash payments information cannot adequately indicate whether
an enterprise’s performance is successful.
Accrual basis provides estimates of future earnings
47.Which of the following is not a valid statement relating to the accrual basis of
accounting?. Single choice.
(1 Point)
Revenues are recorded in the period that they are earned rather than in the period
in which cash is collected
Expenses are recorded in the period that they are incurred rather than in the period
in which cash is paid
Accrual basis results to more complete financial information compared to the cash
basis
Accrual basis emphasizes the timing of cash receipts and cash disbursements in the
recognition of income and expenses.
48.Under a lease where the lessee acquires the benefits of ownership of an asset, the
lessee often recognizes the present value of future rental payments as an asset even
though legal title to the property is not acquired. This is an example of the application
of. Single choice.
(1 Point)
Prudence
Consistency
Substance over form
Form over substance
49.The elements directly related to the measurement of financial position are. Single
choice.
(1 Point)
Assets, liabilities, equity, income and expense
Assets and liabilities
Assets, liabilities and equity
Income and expense
50.The elements directly related to the measurement of financial performance are.
Single choice.
(1 Point)
Income and expense
Assets, liabilities, equity, income and expense
Assets, liabilities and equity
51.It is a present economic resource controlled by the entity as a result of past events..
Single choice.
(1 Point)
Equity
Liability
Income
Asset
52.It is a present obligation of the entity to transfer an economic resource as a result of
past events.. Single choice.
(1 Point)
Asset
Liability
Equity
Expense
53.It is the residual interest in the assets of the entity after deducting all of the liabilities..
Single choice.
(1 Point)
Net income
Expense
Equity
Income
54.This refers to increases in assets, or decreases in liabilities, that result in increases in
equity, other than those relating to contributions from holders of equity claims.. Single
choice.
(1 Point)
Income
Expense
Liability
Asset
55.This refers to decreases in assets, or increases in liabilities, that result in decreases in
equity, other than those relating to distributions to holders of equity claims.. Single
choice.
(1 Point)
Asset
Liability
Income
Expense
56.It is the process of incorporating in the statement of financial position or statement
of comprehensive income an item that meets the definition of an element of the
financial statements.. Single choice.
(1 Point)
Measurement
Recognition
Realization
Allocation
57.What is the recognition principle under the Revised Conceptual Framework?. Single
choice.
(1 Point)
It is probably that any future economic benefit will flow to or from the entity and the
elements can be measured reliably
 The item has a cost of value that can be measured reliably
Only items that meet the definition of an asset, liability, income, and expense are
recognized.
It is probable that any future economic benefit associated with the item will flow to
or from the entity
58.An asset is recognized when. Single choice.
(1 Point)
It is probable that future economic benefit will flow to the entity
The cost or value of the asset can be measured reliably
It is a present economic resource controlled by the entity as a result of past events
and has a cost or value can be measured reliably.
The entity obtains control of the rights associated with the asset
59.A liability is recognized when. Single choice.
(1 Point)
It is probable that an outflow of future economics benefit will be required to settle
the obligation:
When the entity obtains control of the obligation.
It is a present obligation of the entity to transfer an economic resource as a result of
past events and the amount of the obligation can be measured reliably
The amount of the obligation can be measured reliably
60.An income is recognized when. Single choice.
(1 Point)
The future economic benefit can be measure reliably
It is possible that future economic benefit will flow to the entity and the economic
benefit can be measured reliably
The entity obtains control of the future economic benefit
There is an increase in assets other than those relating to equity transactions and
the increase in asset can be measured reliably.
61.An expense is recognized when. Single choice.
(1 Point)
There is a increase in liabilities that results in decreases in equity other than those
relating to distributions to holders of equity claims and such increase in liabilities can be
measured reliably.
It is probable that a decrease in future economic benefit has occurred.
 The decrease in future economic benefit can be measured reliably.
It is probable that an increase in future economic benefit has occurred and the
increase in future economic benefit can be measured reliably.
62.Which principle best describes the conceptual rationale for the method of matching
depreciation with revenue?. Single choice.
(1 Point)
Immediate recognition
Partial recognition
Systematic and rational allocation
Associating cause and effect
63.Which of the following is an application of the principle of systematic and rational
allocation?. Single choice.
(1 Point)
Sales commissions
Amortization of intangible asset
Research and development cost
Officers' salaries
64.Which of the following is not a theoretical basis for the allocation of expense?. Single
choice.
(1 Point)
Immediate recognition
Systematic and Rational Allocation
Profit maximization
Cause and Effect Association
65.What is an example of cost that cannot be directly related to particular revenue but
incurred to obtain benefits that are exhausted in the period when the cost is incurred?.
Single choice.
(1 Point)
Sales salary
Prepaid insurance
Freight in
Sales commission
66.Which of the following is not an acceptable basis for the recognition of expense?.
Single choice.
(1 Point)
Cause and effect association
Cash disbursement
Systematic and rational allocation
Immediate recognition
67.Bad debt expense is recognized according to which expense recognition principle?.
Single choice.
(1 Point)
Direct matching
Immediate recognition
Systematic and rational allocation
Critical event recognition
68.An example of direct matching of an expense with revenue would be. Single choice.
(1 Point)
Advertising expense
Direct labor cost incurred to produce inventory sold during a period
Office salaries expense
Depreciation expense
69.What is the general approach as to when product costs are recognized as expenses?.
Single choice.
(1 Point)
In the period when the related revenue is recognized.
In the period when the expenses are incurred
In the period when the expenses are paid.
In the period when the vendor invoice is received.
70.When should an expenditure be recorded as an asset rather than an expense?. Single
choice.
(1 Point)
When future benefit exists
If the amount is material
Never
Always
71.Which statement is not true about derecognition?. Single choice.
(1 Point)
 Derecognition is the removal of a recognized income or expenses from the income
statement
Derecognition for a liability normally occurs when the entity no longer has a present
obligation for the recognized liability.
Derecognition is the removal of a recognized asset or liability from the statement of
financial position.
Derecognition for an asset normally occurs when the entity losses control of the
recognized asset.
72.It is the process of determining the monetary amounts at which the elements of the
financial statements are recognized in the financial statement.. Single choice.
(1 Point)
Measurement
Presentation
Recognition
Recording
73.Under the Revised Conceptual Framework, the measurement bases include. Single
choice.
(1 Point)
Assessed value
Historical cost
Historical cost and current value
Current value
74.The measurement basis that is most commonly used in practice because of its
objectivity, verifiability, and therefore, fairness is the. Single choice.
(1 Point)
Current cost
Fulfillment value
Fair value
Historical cost
75.Which statement is true about current value measurement?. Single choice.
(1 Point)
Fair value of an asset is the price that would be received to sell an asset in an orderly
transaction between market participant at the measurement date
All of these statements are true about current value measurement.
 Value in use is the present value of the cash flows expected to be derived from the
use and ultimate disposal of an asset
Fulfillment value is the present value of the cash expected to be transferred for the
payment of liability
76.Fair value may be observed. Single choice.
(1 Point)
Directly
Indirectly
Neither directly or indirectly
Either directly or indirectly
77.Under the 2018 Conceptual Framework, this is defined as the present value of the
cash inflows or other economic benefits that an entity expects to derive from the use
and eventual disposal of an asset.. Single choice.
(1 Point)
Realizable value
Present value
Current cost
Value in use
78.Which measurement is not currently used in practice?. Single choice.
(1 Point)
Inflation-adjusted cost
Net realizable value
Present value
Current replacement cost
79.Which measurement attribute is the most relevant?. Single choice.
(1 Point)
Historical cost
Exit value
Present value
Current cost
80.Is the amount of cash that would have to be paid if asset was acquired currently..
Single choice.
(1 Point)
Current cost
 Present value
Historical cost
Realizable value
81.The primary measurement basis is. Single choice.
(1 Point)
The current market pi-ice if the asset currently held was sold on the open market.
The market price at the date the asset was acquired.
The current market price if the asset held was purchased on the open market.
The present value of the cash flows that the asset is expected to generate
82.Which of the following is an exit value?. Single choice.
(1 Point)
Amortized cost
Current cost
Fair value
Historical cost
83.Which of the following is an entry value?. Single choice.
(1 Point)
Fulfillment value
Value in use
Fair value
Current cost
84.Fulfillment value is associated with measuring _______________ at _________________..
Single choice.
(1 Point)
Asset, historical cost
Liability, current value
Liability, historical cost
Asset, current value
85.Which of the following statement relating to initial measurement is not correct?.
Single choice.
(1 Point)
When an asset is acquired through donation, the fair value of that asset at the date
of donation is its deemed cost.
 The choice of the initial measurement basis is affected by the nature of the
information that the measurement basis will produce and the characteristics of the asset
or liability as well as their contributions to the entity’s cash flows.
When an asset or liability is measure at cost, transaction costs are included in the
initial measurement basis to arrive at historical cost.
When an asset or liability is initially measured at fair value, transaction costs
increases the initial measurement basis for that asset or liability
86.Financial statements must effectively convey to the users of financial information that
possess relevance and faithful representation. Which of the following must an enterprise
observe to achieve this purpose? I Focus on presentation and disclosure objective rather
than on rules II Classify information that groups similar items and separates dissimilar
items III Offset an item from another to simplify and present the net IV Aggregate
financial statement elements that share the same characteristics so as not to obscure the
financial statements with large volume of details.. Single choice.
(1 Point)
I, III, IV
II, III, IV
s I, II, IV
I, II, III
87.Under this concept, capital is regarded as the net assets or equity of an enterprise.
Single choice.
(1 Point)
All-inclusive concept
Financial concept
Physical concept
Physical concept
88.Financial capital is defined as the. Single choice.
(1 Point)
Net asset or equity of an entity in monetary terms
Legal capital
Net assets or equity of an entity in terms of physical productive capacity
Share capital issued and outstanding
89.Which measurement basis is adopted by the physical capital maintenance concept?.
Single choice.
(1 Point)
 Realizable value
Present value
Current cost
Historical cost
90.The physical concept requires that productive assets shall be measure at. Single
choice.
(1 Point)
Net realizable value
Current cost
Lower of current cost and net realizable value
Historical cost
91.Under this concept, a profit is earned when the amount of the capital at the end of
the period exceeds the amount of capital at the beginning of the period, after excluding
the effects of transactions with owners.. Single choice.
(1 Point)
Capital maintenance concept
Transaction approach
Entity concept
Going concern concept
92.Which capital maintenance concept is applied to net income and other
comprehensive income?. Single choice.
(1 Point)
Financial capital for net income and physical capital for other comprehensive income
Physical capital
Financial capital
Physical capital for net income and financial capital for other comprehensive income
93.Under the financial capital concept, net income occurs when. Single choice.
(1 Point)
When the physical productive capital at year-end exceeds the physical productive
capital at the beginning after excluding any distributions to and contributions from
owners
When the nominal amount of net assets at year-end exceeds the nominal amount of
net assets at the beginning after excluding distributions to and contributions from
owners
 When the physical productive capital at year-end exceeds the physical productive
capital at the beginning
When the nominal amount of net asset at year-end exceeds the nominal amount of
net assets at the beginning
94.On March 29, 2020, Jjamppong purchased 1,000 shares of stock of AMP Inc. for P20
per share. In addition, he paid his broker P1 per share for facilitating the sale. On
October 5, 2020, before he joined his online class, he visited the PSE website and found
out that the AMP’s stock price went up by P5 per share and is expected to go up by
another P3 by end of October 2020. As of October 12, 2020, how much is the historical
cost of AMP’s stock that should appear in Jjamppong’s financial report?. Single choice.
(1 Point)
P21,000
P20,000
P28,000
P25,000
95.A stock is currently traded at P51/share. If the stock is expected to provide a P2
dividend per share every year. Compute the fair value of the stock if you require a 5%
return over your investment.. Single choice.
(1 Point)
P40/share
P51/share
P1,000/share
P12.75/share
96.Compute the fair value of a 12%, 5-year bonds with a face amount of P1,000
assuming the effective interest is 10%.. Single choice.
(1 Point)
P1,000
P1,086
P2,416
P1,075
97.Compute the value-in-use of machinery that generates P100,000 a year for five years
assuming that cost of capital is 10%. The market value of similar machinery is P110,000..
Single choice.
(1 Point)
P610,510
 P110,000
P379,079
P90,909
98.Equipment purchased 5 years ago for P100,000 currently has a book value of
P60,000. If similar equipment can be acquired at P245,000 today. How much is the
current cost of the equipment?. Single choice.
(1 Point)
98,000
P147,000
P245,000
P205,000
99.ASD Inc.’s beginning net assets amounted to P120,000. During the year, its net assets
increased by P10,000 even if the inflation rate was 5%. Under the financial capital
maintenance concept, compute the profit if the capital is measured in terms of nominal
monetary value.. Single choice.
(1 Point)
P6,000
P10,000
P14,000
P4,000
100.ASD Inc.’s beginning net assets amounted to P150,000. During the year, its net
assets increased by P20,000 even if the inflation rate was 5%. Under the financial capital
maintenance concept, compute the profit if the capital is measured in terms of current
purchasing power units.. Single choice.
(1 Point)
P7,500
P12,500
P20,000
P27,500
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