HOLY TRINITY COLLEGE OF GENERAL SANTOS CITY

COLLEGE OF BUSINESS MANAGEMENT & ACCOUNTANCY

I. Multiple Choice. Write the Capital letter of A. An entity may present the
your answer in ½ lengthwise. components of profit or loss as part
of a single statement of
1. The user-approach to financial reporting comprehensive income
focuses on which users? B. An entity may present the
A. Wide range of users components of profit or loss in a
B. Regulatory bodies separate income statement
C. Management C. When prepared, an income
D. Providers of finances or capital statement must be immediately
2. Which of the following is not a decision presented before the statement of
that external users of a company’s comprehensive income
financial information would make? D. When a separate income statement
A. Whether or not to extend credit to is prepared, it is not considered a
the company part of complete set of financial
B. Whether or not to hold the statements
company’s stock 7. Which of the following is not a
C. Whether or not the company should component of the financial statements?
add new product line A. Statement of financial position
D. Whether or not to ask for an B. Director’s report
increase in employee’s benefits C. Statement of changes in equity
during union contract negotiations D. Notes to financial statements
3. They are a structured representation of 8. An entity shall present a complete set of
the financial position and financial financial statements at least
performance of an entity. A. Annually
A. Statement of financial position B. Every three to five years
B. Financial statements C. Every two years
C. Statement of changes in equity D. Every quarter
D. Notes to financial statements 9. The operating cycle of an entity
4. Which of the following is correct A. Is usually assumed to be more than
concerning PAS 1 Presentation of 12 months due to business cycles
Financial Statements? B. Has maximum period of twelve
A. It prescribes the basis for months
presentation of general and special C. Is the time between the acquisition
purpose financial statements. of assets for processing and their
B. It sets out the recognition, realization in cash or cash
measurement and disclosure equivalents
requirements for specific D. Is the same as the operating cycle of
transactions and other events. other entities
C. It uses terminology that is suitable 10. An entity shall present the following in
for profit-oriented entities and if not- the other comprehensive income (choose
for-profit entities apply this the exception)
Standard, they need not amend the A. Remeasurement gain or loss
descriptions used for particular line B. Revaluation surplus
items in the financial statements C. Cash flow hedge (the ineffective
because it also applies to them. portion)
D. It applies equally to all entities, D. Translation adjustment
separate financial statements, 11. When options and warrants are
individual financial statements and considered as potential shares in
consolidated financial statements. computing diluted earnings per share,
5. The financial statement that presents an which specific characteristics is
entity’s assets, liabilities and equity at a achieved?
point in time A. Completeness
A. Must be titled the statement of B. Reliability
financial position C. Relevance
B. Must be titled balance sheet D. Substance over form
C. Could be titled the statement of 12. The basic accounting concept that refers
financial position or the balance to the tendency of accountants to resolve
sheet uncertainty in favor of understating
D. Could be titled the statement of assets and revenues and overstating
financial position, the balance sheet liabilities and expenses is known as the
or any other title that is not A. Conservatism constraint
misleading B. Materiality constraint
6. Which is incorrect regarding an income C. Substance over form principle
statement? D. Industry practices constraint
 HOLY TRINITY COLLEGE OF GENERAL SANTOS CITY
COLLEGE OF BUSINESS MANAGEMENT & ACCOUNTANCY
FINANANCIAL MANAGEMENT QUIZ 2

13. Per Framework, these are the broad 20. Decreases in economic benefits from
classes of events or transactions that are incidental/peripheral transactions other
grouped according to their economic than distributions to equity participants
characteristics A. Expenses
A. Elements of financial statements B. Losses
B. Economic transactions C. Casualties
C. Accountable events D. Drawings
D. Financial statements 21. An entity’s revenue may result from
14. The elements directly related to the A. Decrease in an asset-primary
measurement of financial position are operations
A. Assets, liabilities and equity B. Increase in an asset-incidental
B. Revenue and expenses transactions
C. Assets, liabilities, equity, revenue C. Increase in liability-incidental
and expenses transactions
D. Assets, liabilities, equity and revenue D. Decrease in liability-primary
15. Which of the following does not operations
constitute a separate major element of 22. An entity shall classify a liability as
financial statement? current when (choose the exception)
A. Income a. It expects to settle the liability in its
B. Expenses normal operating cycle
C. Gain b. It holds the liability primarily for the
D. Liability purpose of trading
16. The process of incorporating in the c. The liability is due to be settled
statement of financial position or within twelve months after the
comprehensive income an item that reporting period
meets the definition of an element and d. The entity has an unconditional
satisfies the following criteria for right to defer settlement of the
recognition liability for at least twelve months
A. Journalizing after the reporting period.
B. Recognition 23. In preparing a statement of
C. Retirement comprehensive income in two
D. Disposal statements, the second statement shall
17. Per Framework, the removal of an start with what line item?
account balance from the books of A. Profit or loss
account B. Gain presented as other
A. Write-off comprehensive income
B. Derecognition C. Income from continuing operations
C. Retirement D. Revaluation surplus
D. Disposal 24. 1st statement: The Conceptual
18. Among the following, which is not Framework is not a standard.
considered “revenue” 2nd statement: In the event of conflict
A. Sales between a standard and the framework,
B. Royalties the framework should be followed.
C. Interest A. True, true
D. Gain from sale of building B. True, false
19. The following statements pertain to the C. False, false
concept of income and expenses. Which D. False, true
statement is incorrect? 25. Separate line items in an analysis of
A. The definition of expenses expenses by nature include
encompasses losses as well as those A. Purchases of materials, transport
expenses that arise in the course of cost, employee benefits, depreciation,
the ordinary activities of the extraordinary items
enterprise. B. Purchases of materials, distribution
B. Losses represent other items that cost, administrative costs, employee
meet the definition of expenses and benefits
may or may not arise in the course of C. Depreciation, purchases of materials,
the ordinary activities of the employee benefits and advertising
enterprise costs
C. The definition of revenue D. Cost of sales, administrative costs,
encompasses both income and gains transport costs and distribution
D. Gains represent other items that costs
meet the definition of income and
may or may not arise in the course of
the ordinary activities of an
enterprise