Question 1

0 / 1 pts
Which of the following events is not considered an exchange or reciprocal
transfer?

Lending money to another entity

Correct Answer

Purchase of inventory on account

Payment of a loan payable

You Answered

Payment of taxes

Question 2
1 / 1 pts
Entity A values its fixed assets at their historical costs and does not restate them for changes in the purchasing power of
the Philippine peso due to inflation. Entity A is applying which of the following accounting concepts?
Correct!

Stable monetary unit

Time period

Accrual basis

Prudence

Question 3
1 / 1 pts
Preparing financial statements at least annually is an application of which of the following accounting concepts?

Stable monetary unit

Correct!

Time period

Historical concepts

Accrual basis

Question 4
1 / 1 pts
On Day 1, a customer buys goods from Entity A and promises to pay the sale price on Day 30. Entity A recognizes sales
revenue on Day 1 rather than on Day 30. This an application of which of the following accounting concepts?

Prudence

Consistency

Correct!

Accrual basis

Materiality

Question 5
1 / 1 pts
Which of the following is considered an internal user of Entity A’s financial reports?
Correct!

Mr. X, a member of Entity A’s board of directors, uses financial reports to make decisions regarding the financial and
operational affairs of Entity A.

Ms. S, a shareholder of Entity A, is deciding whether to hold or sell her shareholdings in Entity A. Ms. S uses Entity A’s
financial statements in making its “hold or sell” analysis.

Mr. I is deciding whether to invest in Entity A. Mr. I uses Entity A’s financial statements in making its investment analysis.

Entity B, a bank, requires Entity A to submit audited financial statements in conjunction to a loan being applied for by
Entity A.

Question 6
1 / 1 pts
Which of the following statements is correct?

Accounting provides quantitative information only.

Qualitative information can be found only in the notes in the financial statements.

The only acceptable measurement basis in accounting is historical cost.

Correct!

Accounting is considered an art because it requires the use of creative skills and judgment.

Question 7
1 / 1 pts
Which of the following statements is incorrect regarding accounting concepts?

Under the Accrual Basis of accounting, revenues are recognized when earned and expenses are recognized when
incurred, not when cash id received and disbursed.

Under the Business entity/ Separate entity/ Entity/ Accounting entity concept, the business is treated separately from
its owners.

Under the Time period/ Periodicity/ Accounting Period concept, the life of the business is divided into series of
reporting periods.

Under the Going concern concept, the business entity is assumed to carry on its operations for an indefinite period of
time.

Correct!

Under the Cost- benefit concept, the cost of processing and communicating information should exceed the benefits
derived from it.

Question 8
1 / 1 pts
Mr. John Doe, CPA, is a professor in a university where he teaches mainly accounting for business economics major and
some night classes financial management subject for Accountancy majors, music and physical education. Those
subjects require that the teacher must be awesome. Mr. Doe is also frequently invited as a judge in beauty pageants and
singing contests and as a referee in mixed martial arts competitions. Mr. Doe is considered to be practicing accountancy
in which of the following sectors?
Correct!

Academe

Public accounting

None of these

Commerce and Industry

Question 9
Original Score: 1 / 1 pts Regraded Score: 1 / 1 pts
This question has been regraded.
Which of the following is not one of the several measurement bases used in accounting?

Historical cost

Fair value
Present value

Correct!

All of the above

Question 10
1 / 1 pts
The Philippine Financial Reporting Standards (PFRSs) comprise:
I. Philippine Financial Reporting Standards
II. Philippine Accounting Standards
III. Interpretations
IV. Accounting Practice Statements and Implementation Guidance

I and III

I, II,III and IV

I and II

Correct!

I, II and III

Question 11
1 / 1 pts
Which of the following does not provide evidence of future economic benefits from a resource?

The resource can be used to pay liabilities.

The resource can be used in combination with other resources to produce goods for sale.

Correct!

The resource has no resale value and is very costly to use in the entity’s operations.

The resource can be distributed to the owners.

Question 12
1 / 1 pts
Which of the following does not meet the definition of an asset?

A publishing title for a college textbook. The publishing title has no physical substance, meaning you cannot see or
touch it.

Inventories purchased and received but not yet paid.

Land received from a donation.

Correct!

Equipment which the entity intends, and very certain, to acquire in the future.

Question 13
1 / 1 pts
Which of the following could result to the recognition of income?
Correct!

Decrease in liability

Increase in liability

Decrease in asset

Decrease in equity

Question 14
0 / 1 pts
Information that is capable of making a difference in the decisions made by users has this qualitative characteristic.
Correct Answer

Relevance

You Answered

Verifiability

Timeliness

Faithful representation

Question 15
0 / 1 pts
Information that is capable of making a difference in the decisions made by users has this qualitative characteristic.
You Answered

Verifiability

Faithful representation

Correct Answer
Relevance

Timeliness

Question 16
1 / 1 pts
Which of the following is considered a qualitative factor in making materiality judgments?

Correct!

The context of an item in relation to a current crisis in the banking and insurance industry.

10% of total revenues

5% of total assets

₱25, 000 or mored.

Question 17
1 / 1 pts
Entity A deliberately overstated its liabilities from 1M to 1.2M. What qualitative characteristic is violated?

Relevance

Correct!

Faithful representation

Understandability

Timeliness

Question 18
1 / 1 pts
Two primary users are using the financial information of Entity A. If User #1 concludes that Entity A’s sales has
increased while User #2 concludes that it has decreased, Entity A’s financial information is not

Faithfully represented.

Comparable.

Relevant.
Correct!

Verifiable.

Question 19
Original Score: 0 / 1 pts Regraded Score: 1 / 1 pts
This question has been regraded.
Which of the following would not result to the recognition of liability?

Receipt of the proceeds of a bank loan.

Receipt of delivery of equipment purchased on credit.

A future commitment becomes burdensome.

Correct!

Paying in advance the purchase price of inventories for future delivery.

Question 20
1 / 1 pts
Under this concept of capital maintenance, profit is earned if net assets increased during the period after excluding the
effects of transactions with the owners.

Physical capital maintenance

Building maintenance

Repairs and maintenance

Correct!

Financial capital maintenance

Question 21
1 / 1 pts
Which users need financial information to enable them to determine whether their loans and the related interest will be
paid when due?

Customers

Correct!

Lenders

Investors
Suppliers

Question 22
1 / 1 pts
The entity concept means that

None of the above

Correct!

The financial affairs of a firm and its owners are always kept separate for the purpose of preparing accounts

Because a firm is separate and distinct from its owners, those owners cannot have access to its assets unless the firm
ceases to trade.

Accounts must be prepared for every firm

Question 23
Original Score: 0 / 1 pts Regraded Score: 1 / 1 pts
This question has been regraded.
If a business is not being sold or closed, the amounts reported in the accounts for assets used in the business
operations are based on the cost of the assets. This practice is justified by

Accounting entity

Correct!

Going concern

Time period

Accrual

Question 24
1 / 1 pts
The effects of transactions and other events are recognized when they occur and not as cash or its equivalent is
received or paid, and they are recorded and reported in the financial statements of the periods to which they relate.
Correct!

Accrual

Going concern

Time period
Monetary unit

Question 25
1 / 1 pts
Those who lend money or deliver goods and services before being paid are called

Underwriters

Correct!

Creditors

Investors

Debtors

Question 26
1 / 1 pts
Expenses can be defined as

Decreases in owner’s equity

Inflows of assets from delivering or producing goods or rendering services

Correct!

Decreases in economic benefits in the form of outflows or depletions of assets or incurrences of liabilities that result in
decreases in equity

Increases in owner’s equity

Question 27
1 / 1 pts
Inventories are assets which are

Held for sale in the ordinary course of business

Correct!

All of the above

In the process of production for later sale

None of the above

In the form of materials or supplies to be consumed in the production process or in the rendering of services

Question 28
1 / 1 pts
Obligations which are expected to be liquidated through the use of existing current assets or the creation of other
current liabilities are called

Long-term liabilities

Unearned revenues

Current assets

Correct!

Current liabilities

Question 29
1 / 1 pts
A revenue
Correct!

Increases assets and owner’s equity

Increases assets and increases liabilities

Increases assets and liabilities

Leaves total assets unchanged

Question 30
0 / 1 pts
Which of the following enhances the comparability of information?
You Answered

Using the same technologies used by other entities in the same industry where the reporting entity belongs.

Making unlike things look alike.

Correct Answer

Using different methods to account for similar transactions from period to period.
Making like things look different.

Question 31
1 / 1 pts
Which of the following statements is incorrect in relation to fair presentation?

Fair presentation requires the faithful representation of the effects of transactions in accordance with the definition
criteria for assets, liabilities, income and expenses

Correct!

An entity can rectify inappropriate accounting polices either by disclosure of the accounting policies used or by notes or
explanatory material

An entity whose financial statements comply with PFRS shall make an explicit and unreserved statement of such
compliance in the notes

An entity shall not describe financial statements as complying with PFRS unless they comply with all the requirements
of PFRS.

Question 32
1 / 1 pts
When classifying assets as current and noncurrent
Correct!

Assets are classified as current if they are reasonably expected to be realized in cash or consumed during the normal
operating cycle

The time period by which current asset are distinguished from noncurrent assets is determined by the seasonal nature
of the business

The amount at which current assets are carried and reported must reflect net realizable value

Prepayments are included in other assets rather than as current assets

Question 33
1 / 1 pts
What is the purpose of the “notes to financial statements”?

To present management response to auditor comments

To provide recognition of amounts not included in the total of the financial statements

Correct!

To provide disclosures required by GAAP

To correct improper presentation in financial statements

Question 34
1 / 1 pts
Upon first adoption of PFRS, an entity may elect to use fair value as deemed cost for

Biological asset related to agricultural activity for which there is no active market

Correct!

Any individual item of property, plant and equipment

Financial liability not held for trading

Intangible asset for which there is no active market

Question 35
1 / 1 pts
Under PFRS 1, how should a first-time adopter of PFRS recognize the adjustments required to present the opening
PFRS statement of financial position?
Correct!

All of the adjustments should be recognized directly in retained earnings or, if appropriate, in another category of equity

All of the adjustments should be recognized in profit or loss

Adjustments that are capital in nature should be recognized in retained earnings and adjustments that are revenue in
nature should be recognized in profit or loss

Current adjustments should be recognized in profit or loss and noncurrent adjustments should be recognized in retained
earnings

Question 36
1 / 1 pts
Which of the following is an assumption used in fair value measurements?
Correct!

The asset is in its higher and best use

The asset must be in-use

The most conservative estimate must be used

The asset must be considered in-exchange

Question 37
1 / 1 pts
Which of the following describes a principal market for establishing fair value of an asset?

Any broker or dealer market that buys or sells the asset

The market in which the amount received would be maximized

The most observable market in which the price of the asset is minimized

Correct!

The market that has the greatest volume and level of activity for the asset

Question 38
1 / 1 pts
It is defined as a market in which transactions for the asset or liability take place with sufficient frequency and volume
to provide pricing information on an ongoing basis

Stock market

Principal market

Correct!

Active market

Global market

Question 39
1 / 1 pts
Under PFRS 13, the fair value of an asset or a liability is measured as

The cost of the asset less accumulated depreciation or the carrying amount of the liability on the date of sale

The price that would be paid to acquire the asset or received to assume the liability in an orderly transaction between
market participants

Correct!

The price that would be received when selling an asset or paid when transferring a liability in an orderly transaction
between market participants
The appraised value of the lease or liability

Question 40
1 / 1 pts
The fair value at initial recognition is

The carrying amount of the asset acquired

The price paid to acquire the asset less transaction cost

Correct!

The price paid to acquire the asset

The price paid to transfer or sell the asset

Question 41
1 / 1 pts
One of the benefits of the statement of cash flows is that it helps users evaluate financial flexibility. Which of the
following explanations is a description of financial flexibility?

The nearness to cash of assets and liabilities

Correct!

The entity’s ability to pay debts on maturity

The entity’s ability to invest in a number of projects with different objectives and costs

The entity’s ability to respond and adapt to financial adversity and unexpected needs and opportunities

Question 42
1 / 1 pts
Cash advances and loans from bank overdrafts should be reported as

Other significant noncash activities

Investing activities

Financing activities

Correct!

Operating activities
Question 43
1 / 1 pts
To arrive at net cash provided by operating activities, it is necessary to report revenue and expenses on a cash basis.
This is done by

Eliminating all transactions that have not current in future effect on cash, such as depreciation, from the net income
computation

Correct!

Eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in
cash

Estimating the percentage of income statement transactions that were originally reported in a cash basis and projecting
this amount to the entire array of income statement transactions.

Re-recording all income statement transactions that directly affect cash in a separate cash flow journal

Question 44
1 / 1 pts
How should an unrealized gain on foreign currency transaction be presented in a statement of cash flows?

It should be disclosed in the notes to the financial statements by way of abundant precaution

As an inflow under “financing activities” because it arises from a foreign currency transaction

It should be ignored as it is an unrealized gain

Correct!

As an adjustment to the net income under “operating activities”

Question 45
1 / 1 pts
An entity other than a financial institution receives dividends from investment in shares. How should it disclose the
dividends received in the statement of cash flows?

As an adjustment in the “operating activities” section of the cash flow because it is included in the net income for the
year and as a cash inflows in the “financing activities” section of the statement of cash flows

Operating cash inflow

Correct!

Either as operating cash inflow or as investing cash inflow

Either as operating cash inflow or as financing cash inflow

Question 46
1 / 1 pts
An entity carried out the following transactions during the current year. All of the following are related party
transaction, except

Sold an asset to an associate.

Sold an entity car to the wife of the managing director.

Correct!

Took out at huge bank loan.

Transferred goods from inventory to a shareholder owning 40% of the entity’s ordinary shares.

Question 47
1 / 1 pts
Which of the following statements is true in relation to events after reporting period?
I. A decline in the market value of investments should normally be classified as an adjusting event.
II. The settlement of a long-running court case should normally be classified as a nonadjusting event.

II only

Correct!

Neither I nor II

Both I and II

I only

Question 48
1 / 1 pts
If the fair value less cost of disposal is lower than the carrying amount of a noncurrent asset classified as held for sale,
the difference is

Debited to retained earnings

Charged to depreciation

Correct!

Accounted for as an impairment loss

Not accounted
Question 49
1 / 1 pts
Which of the following is characteristics of a change in an accounting estimate?

It usually need not be disclosed

It makes necessary the reporting of proforma amounts for prior periods

It should be reported through the restatement of the financial statements

Correct!

It does not effect the financial statements of prior period

Question 50
1 / 1 pts
If it is impracticable to determine the cumulative effect of an accounting change to any of the prior periods, the
accounting change should be accounted for

As a cumulative effect change on the income statement

As a prior adjustment

Correct!

On a prospective basis

As an adjustment to retained earnings in the first period presented

Question 51
1 / 1 pts
Interim financial report means a financial report containing

A condensed set of financial statements

Correct!

Either a complete set or condensed set of financial statements

A complete set of financial statements

Neither a complete set or condensed set of financial statements

Question 52
0 / 1 pts
Which of the following statements is incorrect regarding interim financial reporting?

Use of the gross margin method for computing cost of goods sold must be disclosed.

You Answered

Costs and expense not directly associated with interim revenue must be allocated to interim periods on a reasonable
basis.

Gains and losses that arise in an interim period shall be recognized in the interim period in which they arise if they
would not normally be deferred at year end.

Correct Answer

Decline in inventory shall be deferred to future interim periods.

Question 53
1 / 1 pts
The major customer disclosure includes all of the following, except

The identity of the segment reporting the revenue from major customers.

Correct!

The identity of the major customer.

The fact of the entity’s reliance on major customers.

The total amount of revenue from major customers.

Question 54
1 / 1 pts
An entity must disclose all of the following about each reportable segment if the amounts are used by the chief
operating decision maker, except
Correct!

Allocated expense

Interest expense

Income tax expense

Depreciation expense

Question 55
1 / 1 pts
The statement of profit or loss includes which of the following?
Correct!

Discontinued operations.

Other comprehensive income.

Revenue, cost of goods sold, distribution costs, general and administrative expenses and extraordinary items.

Gains and losses arising from treasury share transactions.

Question 56
1 / 1 pts
Assets that are classified as held for sale under PFRS 5 are

amortized over a period not exceeding 5 years.

depreciated.

required under PAS 36 to be tested for impairment annually.

Correct!

not depreciated.

Question 57
1 / 1 pts
According to PFRS 5, gains and losses on remeasurement of assets held for sale are

recognized in other comprehensive income.

not recognized.

Correct!

recognized in profit or loss.

recognized only for impairment losses.

Question 58
1 / 1 pts
Which of the following is incorrect regarding the accounting for a change in accounting estimate?

No adjustments are made to the beginning balance of retained earnings or to previously presented financial statements.
Previous financial statements need not be adjusted to apply the changed estimate in prior periods.

The effect of a change in accounting estimate affects profit or loss in the current period or future periods, or both.

Correct!

The effect of a change in accounting estimate affects profit or loss in the current period only.

Question 59
0 / 1 pts
A correction of prior period error is accounted for by (Item #1) while a change in accounting policy is accounted for
by (Item #2)
You Answered

Prospective application, Retrospective restatement

Retrospective application, Retrospective restatement

None of these

Correct Answer

Retrospective restatement, Retrospective application

Question 60
Original Score: 0 / 1 pts Regraded Score: 0 / 1 pts
This question has been regraded.
If an entity adjusts the beginning balance of its retained earnings, then there must be a
You Answered

change in accounting policy

correction of prior period error

Correct Answer

change in accounting estimate

change in accounting policy or correction of prior period error

Question 61
1 / 1 pts
Which of the following is not a related party as envisaged by PAS 24?

A director of the entity.

The parent company of the entity.

The son of the chief executive officer of the entity.

Correct!

A shareholder of the entity that holds 1% stake in the entity.

Question 62
1 / 1 pts
PAS 24 requires disclosure of compensation of key management personnel. Which of the following would not be
considered “compensation” for this purpose?

Short-term benefits.

Correct!

Reimbursement of out-of-pocket

Termination benefits.

Share-based payments.

Question 63
1 / 1 pts
Operating segments that may be aggregated are those which exhibit similar economic characteristics and are similar in
the following, except

the nature of the products and services, their production processes, and distribution methods

regulatory environment

Correct!

their financial position, financial performance, and cash flows

the type or class of customer for their products and services

Question 64
1 / 1 pts
According to PFRS 8, the quantitative thresholds are
I. at least 10% of total revenues (external and internal),
II. at least 10% of the higher of total profits of segments reporting profits and total losses of segments reporting losses,
in absolute amount (i.e., disregarding negative amounts.
III. at least 10% of total assets (inclusive of intersegment receivables).

I only

Correct!

I, II and III

II only

III only

Question 65
1 / 1 pts
According to PFRS 8, external revenue reported by reportable operating segments must be at least

10% of the total external revenue of the entity

Correct!

75% of the total external revenue of the entity

a majority of the total revenue of the entity including both internal and external revenues

75% of the total revenue of the entity including both internal and external revenues

Question 66
1 / 1 pts
Which of the following statements is incorrect?

Users of interim financial statements are assumed to have access to the most recent annual financial report.

Correct!

An entity shall not provide a complete set of financial statements in its interim financial reporting. Only condensed
financial statements shall be provided.

Only information that is significant to the understanding of changes in financial position and performance of an entity
since the end of the last annual reporting are included in the interim financial report.

In the interest of relevance and timeliness, less information is normally provided in a condensed set of interim financial
statements.

Question 67
1 / 1 pts
Income tax expenses during interim periods are recognized based on
the effective income tax rate during the current quarter.

Correct!

the best estimate of the weighted average annual income tax rate expected for the full financial year.

the substantially enacted future income tax rate if different from the current income tax rate

the best estimate of the weighted average income tax rate in effect during the quarter.

Question 68
1 / 1 pts
A corporation issues quarterly interim financial statements and uses the lower of cost or net realizable value to measure
its inventory in its annual financial statements. Which of the following statements is correct regarding how the
corporation should value its inventory in its interim financial statements?

Only the cost method of valuation should be used.

Gains from valuations in previous interim periods should be fully recognized

Correct!

Inventory losses should be recognized in the interim statements.

Inventory write-downs should be made only in the annual financial statements.

Question 69
1 / 1 pts
Under PFRS 5, how should assets and liabilities of a disposal group classified as held for sale be reported in the
statement of financial position?

There should be no separate disclosure of assets and liabilities of a disposal group

Correct!

The assets of a disposal group should be reported separately from other assets and the liabilities of the disposal group
should be reported separately from other liabilities

The assets and liabilities should be presented as a noncurrent single amount

The assets and liabilities should be offset and presented as a single amount

Question 70
1 / 1 pts
The major financial statements include all of the following, except
Correct!

Statement of changes in financial position

Statement of comprehensive income

Statement of changes in equity

Statement of financial position

Question 71
1 / 1 pts
Which of the following does not appear in a statement of retained earnings?

Preference share dividend

Net loss

Correct!

Other comprehensive income

Prior period adjustment

Question 72
1 / 1 pts
Which of the following must be included in the component of the financial statements?

An auditor’s report

A directors’ report

Correct!

Accounting policies

A statement of retained earnings

Question 73
1 / 1 pts
A third statement of financial position at the beginning of the earliest comparative period is required

When an entity applies an accounting policy retrospectively.

When an entity makes a retrospective restatement of items in the financial statements.

Correct!

In all of the above cases

When an entity reclassifies items in the financial statements.

Question 74
1 / 1 pts
“Fair presentation” is achieved by all of the following, except

To comply with applicable PFRS.

To present information, including accounting policies, in a manner that provides relevant, reliable, comparable, and
understandable information.

To provide additional disclosures when compliance with the requirements in PFRS is insufficient to enable users to
understand the entity’s financial position and financial performance.

Correct!

To rectify inappropriate accounting policies used either by disclosure or by note.

Question 75
1 / 1 pts
Which of the following statements is incorrect concerning the rule on “offsetting”?

Gains and losses arising from a group of similar transactions are reported on a net basis.

Gains and losses on disposal of noncurrent assets are reported by deducting from the proceeds on disposal the carrying
amount of the asset and related selling expenses.

Correct!

Measuring assets net of valuation allowance is offsetting.

An entity shall not offset assets and liabilities, and income and expenses, unless required or permitted by PFRS.

Question 76
1 / 1 pts
The basis for classifying assets as current or noncurrent is the period of time normally required by to convert cash
invested in

Inventory back into cash, or 12 months, whichever is shorter.

Tangible fixed assets back into cash, or 12 months, whichever is longer.

Receivables back into cash, or 12 months, whichever is longer.

Correct!

Inventory back into cash, or 12 months, whichever is longer.

Question 77
1 / 1 pts
Under PAS 8, which of the following is the first step within the hierarchy of guidance when selecting accounting
policies?

Consider the most recent pronouncements of other standard setting bodies

Apply the requirements in PFRS dealing with similar and related issues

Consider the applicability of the definitions, recognition criteria and measurement concepts in the Conceptual
Framework

Correct!

Apply a standard from PFRS if it specifically relates to the transaction, other event or condition

Question 78
1 / 1 pts
A voluntary change in accounting policy may only be made if
Correct!

The new policy provides reliable and more relevant information

A new standard mandates change in policy

There is on prohibition for the change

Management prefers the new policy

Question 79
1 / 1 pts
An entity changed the method of valuation of inventories from weighted-average method to first-in, first-out method.
The entity should account for this changes as

A change in accounting policy and account for it prospectively

A correction of an error and account for it retrospectively

Correct!

A change in accounting policy and account for it retrospectively

A change in estimate and account for it prospectively

Question 80
1 / 1 pts
Which of the following is not a retrospective-type accounting change?

Cost recovery method to the FIFO method for inventory valuation

Full cost method to successful effort method in the extractive industry

Correct!

Sum of years’ digits method to the straight-line method

Cost recovery method to the percentage of completion method for long-term contracts

Question 81
1 / 1 pts
Cash receipts from royalties, fees, commissions and other revenue are
Correct!

Cash inflow for operating activities

Cash inflow from investing activities

Cash outflow for financing activities

Cash outflow for operating activities

Question 82
1 / 1 pts
Under the direct method of preparing the statement of cash flows, which of the following would represent cash paid?

Loss on sale of plant asset

Depreciation expense, adjusted for change in depreciation method.

Gain on sale of plant asset

Correct!

Interest expense, adjusted for changes in interest payable and amortization of bond premium or discount.

Question 83
1 / 1 pts
An entity purchased a building and the seller accepted payment partly in equity shares and partly in debentures of the
entity. Under PAS 7, this transaction should be treated in the statement of cash flows as which of the following?

The purchase of the building should be investing cash outflow and the issuance of shares and the debentures financing
cash outflows

Ignore the transaction totally since it is a noncash transaction

Correct!

The transaction does not belong in a statement of cash flows and should be disclosed only in the notes to the financial
statements

The purchase of the building should be investing cash outflow and the issuance of debentures financing cash outflow
while the issuance of shares investing cash outflow

Question 84
1 / 1 pts
Most entities interpret that significant noncash investing and financing transactions should be reported

In the statement of financial position

In the statement of cash flows

Correct!

In the notes to the financial statements

In a separate schedule which is part of the statement of cash flows

Question 85
1 / 1 pts
Which of the following statements is true concerning the statement of cash flows?

Correct!

The IASB requires entities to classify all income taxes paid as operating ash outflows unless the taxes can be specifically
identified with financing and investing activities
When pension expense exceeds cash funding, the difference is deducted from investing activities in the statement of
cash flows

Under IFRS, the purchase of land by issuing ordinary shares will be shown as cash outflow under investing activities and
a cash inflow under financing activities

All of these are true concerning the statement of cash flows

Question 86
1 / 1 pts
Entities considered as holders of secondary licenses issued by a regulatory agency are not considered as SMEs. Which
of the following is not among this type of entities?
Correct!

Public utility companies

Insurance and pre-need companies

Security dealer/broker and mutual fund companies

Commercial banks, investment houses and finance companies

Question 87
1 / 1 pts
All of the following are considered line items in the statement of financial position of an SME, except

Equity attributable to the owners of parent

Correct!

Revaluation surplus

Provisions

Noncontrolling interest

Question 88
1 / 1 pts
Which of the following gain and loss should be recognized in OCI of an SME?

Extraordinary gain and loss

Gain and loss from discontinued operations

Correct!

Gain and loss arising on translating the financial statements of a foreign operation

Gain on remeasuring equity investments at FVOCI

Question 89
1 / 1 pts
Which is not considered as Other Comprehensive Income for SMEs?

Some foreign exchange translation gains and losses

Correct!

Some gains and losses on available-for-sale securities

Some changes in fair values of hedging instruments

Some actuarial gains and losses

Question 90
1 / 1 pts
Which gain and loss can an SME elect to recognize in OCI or in profit or loss?

Revaluation surplus of PPE

Gain and loss on hedging instrument

Correct!

Actuarial gain and loss of defined benefit plan

Gain and loss arising on translating the financial statements of a foreign operation

Question 91
1 / 1 pts
Which of the following statements reflects the accounting for financial instruments under IFRS for SMEs?

Correct!

All amortized cost instruments must be tested for impairment.

Reversal of an impairment loss is not allowed.

All financial instruments must be measured at amortized cost.

All financial instruments must be measured at fair value.

Question 92
1 / 1 pts
Which of the following is a disclosure requirement in relation to borrowing cost under IFRS for SMEs?

Borrowing cost capitalized during the period

Correct!

Total finance cost recognized as expense

Capitalization rate for borrowing cost capitalization

Segregation of qualifying asset from other assets

Question 93
1 / 1 pts
What is considered “significant” change in the size criteria that requires transition to or from the PFRS for SMEs?
Correct!

20% or more of the total assets or total liabilities

No quantitative thresholds can be made

50% or more of the total assets or total liabilities

10% or more of the total assets or total liabilities

Question 94
1 / 1 pts
An SME can recognize which of the following either as component of profit or loss or component of other
comprehensive income?

Revaluation surplus

Correct!

Actuarial gain or loss

Change in fair value of hedging instrument

Translation gain or loss

Question 95
1 / 1 pts
Which of the following statements is true in relation to an SME?

All intangible assets have finite useful life and must be amortized

Correct!

All of these statements are true

Investment property is measured at fair value if the fair value can be measured reliably without undue cost or effort on
an ongoing basis

Investment in associate shall be accounted for using any of the cost model, fair value model and equity model and using
the same accounting policy for all investments in associate

Question 96
1 / 1 pts
An entity that is not publicly accountable must make an explicit and unreserved statement of compliance with the PFRS
for SMEs
Correct!

If the entity complies with all the requirements of PFRS for SMEs.

If the entity complies with full PFRS.

If the entity complies with the vast majority of the requirements of PFRS for SMEs.

If the entity complies with the national GAAP based on PFRS for SMEs with some specific differences.

Question 97
1 / 1 pts
According to PFRS for SMEs, which of the following is not a related party of an entity?

A shareholder of the entity owning thirty percent of the ordinary shares.

An associate of the entity.

Correct!

An entity providing banking facilities to the entity.

Key management personnel of the entity.

Question 98
1 / 1 pts
An SME may use techniques for measuring cost of inventories if the results approximate cost. Accepted techniques
include all the following, except

Retail method

Standard cost

Correct!

Gross profit method

Most recent purchase price

Question 99
1 / 1 pts
An SME measures a provision at the best estimate of the amount required to settle the obligation at the reporting date.
When the provision involves a large population of items, the estimate of the amount
Correct!

Reflects the weighting of all possible outcomes by their associated probabilities.

Midpoint of the possible outcomes.

May be the individual most likely outcome adjusted for the effect of other possible outcomes.

Is determined as the individual most likely outcomes.

Question 100
1 / 1 pts
An SME entered, as lessee, into a 5 days noncancelable lease of a motor vehicle that has an economic life of 5 years and
nil residual value. Lease payments are on a daily basis. At the end of the lease term, the lessee returns the motor
vehicle to the lessor. The lease is accounted for

As a finance lease

Either as a finance lease or an operating lease

Correct!

As an operating lease

Neither as a finance lease or an operating lease