5.

This type of presentation of statement of financial

position does not show distinctions between current
PAS 1 REVIEWER and non current items

A. classified presentation
1. PAS 1 requires an assesment of the entity’s ability to
continue as a going concern each time financial B. unclassified presentation-
statemnt are prepared. Who is responsible in making
this assessment? C. Non- discriminating presentation

A. accountant D. awesome presentation

B. auditor 6. In making an economic decision, investor needs

information on the amount of an entity’s economic
C. management resources and claims to those resources. That investor
would most likely refer to which of the following
D. government financial statements?
2. These are the end product of the fiancial reporting A. statement of financial position-
process and the means by which information gathered
and processed is periodically coomunicated to users. B. statement of comprehensive income

A. financial reporting C. statement of cash flows

B. financial statements D. statement of changes in equity

C. financial products 7. Which of the following financial statements would be

dated as at a certain date?
D. accounting statements
A. statement of financial position-
3.Which of the following is not one of the general
features of financial statements under PAS 1? B. statement of profit or loss and other comprehensive
income
A. fair presentation and compliance with PFRS’s
C. statement of cash flows
B. going concern
D. all of these
C. cash basis
8. Imagine you are a business manager. You would be
D. Materiality and aggregation most awesome as a manager in which of the following
4. Who is responsible for the preparation and the fair independent scenarios?
presentation of an entity’s financial statements in c. you changed your company’s method of allocating
accordance with the PFRSs? costs from an accelerated method to a straight-line
A. any account method. The change met the requirements of the
PFRSs. This ed to the smoothing of expenses, which
B. Certified Public Accountant increased your company’s profit during the period by
12% above the industry average.
C. auditor

D. management-
9. this comprises all “non owner changes in equity”. It C. An appropriate balance is achieved
excludes owner changes in equity, such as subcription, between the relevance and the reliability.
issuance, and reacquisition of share capital and of information that has been included.
declaration of dividends
D. Information is provided to users within
A. other comprehensive income the time period in which it is most likely to
bear on their decisions.
B. changes in equity
4. An item cannot be recognized in the
C. total comprehensive income- balance sheet or the income statement
D. Profit or loss unless it meets the two criteria of:

10. materiality judgement least likely to be applied in A. Materiality: Relevance to the users
which of the following? B. Completeness; Measurement reliability
c. in determining whether the cost of processing and C. Neutrality; Representational faithfulness
communicating information exceeds the benefits
expected to derived from it. D. Probable economic benefits:
Measurement reliability
CONCEPTUAL FRAMEWORK AND PAS 1
QUIZBOWL 5. The operating cycle

1. The Conceptual Framework outlines one A. Measure the time elapsed between cash
underlying assumption of financial disbursement for inventory and cash
statements. This is: Answer: Going concern collections of the sales price
assumption
B. Refers to the seasonal variations
2. If financial information that is presented experienced by business enterprise
in a balance sheet or income statement is
C. Should be used to classify assets and
misstated, and it influences the economic
liabilities as current if it is less than one
decisions of users, that information is
year
described as:
D. Cannot exceed one year
A. Reliable
6. In classifying the elements of financial
B. Material
statements, the primary distinction
C. Prudent between revenues and gains is

D. Faithful A. The materiality of the amounts involved

3. In respect to information included in B. The likelihood that the transactions

financial statements, the accounting involved will recur in the future
concept of 'prudence' ensures that:
C. The nature of the activities that gave
A. The financial statements report what rise to the transactions involved
they purport to report.
7. Which of the following statements is not
B. A degree of caution in the exercise of an objective of financial reporting?
judgements about estimates is made.
A. Provide information that is useful in C. Company constitution
investment and credit decisions
D. Prospectus
B. Provide information about enterprise
resources, claims to those resources, and 11. Which statement is incorrect concerning financial
changes to them statements?

C. Provide information on the liquidation A. Financial statements do not show the results of
value of an enterprise management's stewardship of resources entrusted to it.

D. Provide information that is useful in B. Financial statements are prepared at least annually
assessing cash flow prospects and are directed toward the common information
needs of a wide range of users.
8. Financial accounting can be broadly
defined as the area of accounting that C. The objective of general-purpose financial statements
prepares is to provide information about the financial position,
performance and cash flows of an enterprise that is
A. General purpose financial statements to useful to a wide range of users in making economic
be used by parties internal to the business decisions.
enterprise only
D. The management of an enterprise has the primary
B. Financial statements to be used by responsibility for the preparation and presentation of
investor only financial statements.

C. General purpose financial statements to 12.Which is correct regarding the overall considerations
be used by parties both internal and in preparation and presentation of financial
external to the business enterprise statements?

D. Financial statements to be used A. Assets and liabilities, and income and expenses, when
primarily by management material should be offset against each other.

9. Preparation of consolidated financial B. Financial statements should be prepared on liquidity

statements when a parent-subsidiary concern basis.
relationship exist is an example of the
C. Each material item should be presented separately in
A. Economic entity assumption the financial statements. Immaterial amounts of similar
nature and function should be grouped or condensed as
B. Relevance characteristic
one line item in the financial statements.
C. Comparability characteristic
D. The presentation and classification of financial
D. Neutrality characteristic statement items should not be uniform from one
accounting period to the next.
10.A document that contains disclosures
including financial statements, that is 13. Which of the following information should be
issued to potential investors, by companies disclosed in the summary of significant accounting
seeking capital, is known as a: policies?

A. Securities statement A. Criteria for determining which investments are

treated as cash equivalents.
B. Trust deed
B. Guarantee of indebtedness of others.
C. Business combination after balance sheet date D. Information is material if its nondisclosure could
influence the economic decisions of users taken on the
D. Refinancing of debt subsequent to the balance sheet basis of the financial statements.
date
17.An entity decided to extend its reporting period from
14. Financial information does not demonstrate a year (12-month period) to a 15-month period. Which
comparability and consistency when of the following is not required under PAS 1 in case of
l. Firms in the same industry use different accounting change in reporting period?
methods to account for the same type of transaction A. The entity should disclose the reason for using a
II. A company changes its estimate of the salvage value longer period than a period of 12 months.
of fixed assets B. The entity should change the reporting period only if
III. A company fails to adjust its financial statements for other similar entities in the geographical area in which it
changes in value of the measuring unit generally operates have done so in the current year.

A. I only C. The entity should disclose that comparative amounts

used in the financial statements are not entirely
B. I and II only comparable.

C. I and III only D. The entity should disclose the period covered by the
financial statements..
D. I, II and III
18.What is disclosed when departing from an
15. When the presentation or classification of items in
international accounting standard?
the financial statements is amended
l. The Title of the Standard or Interpretation from which
A. Comparative amounts for comparative reporting
it has departed
need not be reclassified
II. The nature of the departure, and the treatment the
B. Comparative amounts for comparative reporting
Standard or Interpretation would require
should be reclassified in all cases
III. The reason why that treatment would be so
C. Comparative amounts for comparative reporting
misleading
should be reclassified unless it is impracticable to do so
IV. The treatment adopted
D. Nothing should be done
V. The financial impact of the departure on the financial
16. Which is incorrect concerning the concept of
statements (for each period presented)
materiality and aggregation?
A. I and II only
A. Materiality depends on the size and nature of the
item judged in the particular circumstances of its C. I, II and III only
omission or misstatement.
B. I, II III and V only
B. Materiality provides that the specific disclosure
requirements of a PFRS must be met even if the D. All of the above
resulting information is not material. 19.Which statement is incorrect concerning the
C. Items of a dissimilar nature or function shall be Conceptual Framework?
presented separately unless they are immaterial.
A. Nothing in the framework overrides any specific D. The amount at which equity is shown in the balance
PFRS. sheet is dependent on the measurement of assets and
liabilities.
B. The framework deals with the objectives of the
financial statements, the qualitative characteristics that 22. According to the conceptual framework, which of
determine the usefulness of the information in financial the following statements conforms to the realization
statements, the definition, recognition and concept?
measurement of the elements of the financial
statements and concepts of capital maintenance, A. Cash was collected on accounts receivable.

C. The framework sets out the concepts that underlie B. Product unit costs were assigned to cost of goods
the preparation and presentation of financial sold when the units were sold.
statements for internal and external users. C. An impaired asset was sold for cash.
D. The framework is concerned with general purpose D. Equipment depreciation was assigned to a
financial statements including consolidated financial production department and then. to product unit costs.
statements.
23.Per PAS 1, in the absence of a Standard or
20. What is the primary difference in the treatment Interpretation that specifically applies. to a transaction
between the two concepts of capital maintenance? or event, management shall develop and apply
A. The treatment of the effects of changes in the prices accounting policy that results in relevant and faithfully
of assets and liabilities of the entity. represented information. Which of following is the least
likely source of such alternative?
B. The treatment of the effects of changes in the prices
of expense and revenue of the entity A. The requirements and guidance on Standards
/Interpretations on similar and related issues
C. The treatment of the effects of changes in foreign
exchange rates B. The definition, recognition criteria and measurement
concepts for assets, liabilities, income and expenses in
D. The treatment of the effect of changes in foreign the Framework.
subsidiary
C. Most recent pronouncements of other standard
21. Which of the following statements concerning setting bodies that use a similar conceptual framework
equity is incorrect? to develop accounting standards and accepted practice.

A. Although equity is defined as a residual, it may be D. Textbooks and other accounting literature to the
sub-classified in the balance sheet. extent that these do not conflict with existing Standards
and Interpretations
B. The creation of reserves is sometimes required by
statute or other laws in. order to give the entity and its 24.Which is incorrect concerning the accounting
creditors an added measure of protection from the constraints on relevant and faithfully represented
effects of losses . information?

C. The existence and size of legal, statutory and tax A. It may often be necessary to report before all aspects
reserves are information that can be relevant to the of a transaction or other event are known, thus
decision-making needs of users, transfer from reserves impairing f.r..
are expense rather than appropriation of retained
earnings. B. The benefits derived from the information should
exceed the cost of providing it
C. In achieving a balance between relevance and f.r., the B. Receipt of services by subsidiary from a
overriding consideration is how best to satisfy the principal without charge or without record
economic decision-making needs of users. of receipt of services.

D. If there is undue delay in the reporting of information C. Possibility of strike

it may lose its relevance and f.r..
D. Guarantees for indebtedness of others if
25. Which one of the following bodies is responsible for the possibility of loss is remote
reviewing accounting issues that are likely to receive
29.In which section of the statement of
divergent or unacceptable treatment in the absence of
financial position should employment taxes
authoritative guidance, with a view to reaching
that are due for settlement in 15 months'
consensus as to the appropriate accounting treatment?
time be presented according to PAS 1?
A. International Financial Reporting Interpretations
Committee (IFRIC) A. Current liabilities
B. Standards Advisory Council (SAC) C. Non-current liabilities
C. International Accounting Standards Board (IASB) B. Current assets
D. International Accounting Standards Committee D. Non-current assets.
Foundation (IASCF)
30. This revenue recognition method is
26. Which of the following is an application of the allowed when a sale is assured under a
science aspect of accounting? forward contract or government guarantee
or when a homogenous market exists. and
A. Exercise of creative skill and judgment
there is negligible risk of failure to sell.
B. Interpreting the information presented in the
A. Percentage of completion method
financial statements through ratio and trend analysis
C. Cash method
C. Applying the rules of debit and credit
B. Production method
D. Attesting to the fairness of presentation of financial
condition and operating results D. Accrual method
27. Which is not included in the category of 31. Which of the following bases of
comprehensive income of an accounting entity? revenue recognition reflects the greatest
uncertainty about future events?
A. Net income for the period
A. Sales method applied to sales of a
B. Revaluation surplus
department store.
C. Gain on sale of treasury stock
B. Cost recovery method applied to an
D.None of the above instalment sales contract.

28. Disclosure in the financial statements is C. Production method for a gold mining
not required for which of the following? operation.

A. Use of property by lease between a D. Percentage of completion on a

parent company and its subsidiary construction contract.
32. The most useful information to existing A. The historical cost principle is credible.
and potential investors, lenders and other
creditors in predicting future cash flows is: B. Depreciation and amortization policies are justifiable
and appropriate.
A. Information about current cash flows
C. The current and noncurrent classification of assets
B. Current earnings based on accrual and liabilities is justifiable and significant.
accounting
D. All of these.
C. Information regarding the accounting
policies used by management 36. Which of the following statements pertaining to the
"Framework for the Preparation and Presentation of
D. Information regarding the results Financial Statements" is correct?
obtained by using a wide variety of
accounting policies. A. Financial statements, if properly prepared, can
provide all o all of the information needs of all types of
33. What is meant by comparability when users.
discussing financial accounting
information? B. The extemal auditor hired by an enterprise has the
primary responsibility for the preparation and
A. Information has predictive and presentation of the financial statements of the
confirmatory value. enterprise.

B. Information is reasonably free from C. Management has the ability to determine the form
error. and content of additional information in order to meet
its own needs, but the reporting of such information is
C. Information is measured and reported in
beyond the scope of the framework.
a similar fashion across entities.
D. Both A and C
D. Information is timely.
37. Which of the following statements in relation to the
34. Which of the following statements is
going concern assumption is incorrect?
true in relation to the enhancing qualitative
characteristic of understandability of A. The going concem concept assumes that the business
financial information? enterprise will never be liquidated.

A. Users have a reasonable knowledge of B. The going concern assumption serves as the basis for
business and economic activities and classifying liabilities as current and non-current.
review the information with reasonable
diligence. C. The going concern assumption is generally applicable
to most business situations whether or not liquidation
B. Users are expected to have significant business appears imminent.
knowledge.
D. If there is an intention or need to liquidate or curtail
C. Financial statements shall exclude complex matters. materially the scale of an enterprise's operations, the
financial statements may have to be prepared on a basis
D. Financial statements shall be free from material
other than a going concern and the basis used is
error.
disclosed.
35. Which of the following is an implication of the going
38. Under the accrual basis of accounting, cash receipts
concern assumption?
and disbursements may
A. Only coincide with the period in which revenues and
expenses are recognized.

B. Coincide with or follow, but never precede the period

in which revenues and expenses are recognized.

C. Precede, coincide with, but never follow the period in

which revenues and expenses are recognized.

D. Precede, coincide with or follow the period in which

revenues and expenses are recognized.

39. The information provided by financial reporting

pertains to

A. Individual business enterprises, rather than to

industries or an economy as a whole or to members of
society as consumers

B. Individual business enterprises and industries, rather

than to an economy as a whole or to members of
society as consumers

C. Individual business enterprises and an economy as a

whole, rather than industries or to members of society
as consumers

D. Individual business enterprises and an economy as a

whole, rather than to members of society as consumers

40. Which of the following statements in relation to the

accounting entity. assumption is incorrectly stated?

A. In financial accounting the accounting entity is the

specific business enterprise which is identified in the
financial statements

B. An accounting entity may exist as a sole

proprietorship, a partnership, a corporation, an
individual, a group of individuals or any other form of
organization

C. Under the accounting entity assumption, the business

enterprise is separate and distinct from its owners,
managers and employees that constitute the firm.

D. The boundaries of accounting entity is always the

same as those of the legal entity