You correctly answered 54 out of 98 questions with an accuracy of 55.1%.

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Question 1
Minimum lease payments may include a
any of these
bargain purchase option

penalty for failure to renew

guaranteed residual value

Theory of Accounts - Finance Lease - Lessee (Easy)

Question 2
Which of the following is usually considered cash?
Postdated check
Money market savings certificates

Certificates of deposit

Checking accounts
Theory of Accounts - Cash and Cash Equivalents (Easy)

Question 3
Limitations of the income statement include all of the following, except
Only actual amounts are reported in determining net income.
Items that cannot
be measured reliably are not reported.
accounting methods employed.

Income numbers are affected by the

Income measurement involves judgment.

Theory of Accounts - Statement of Comprehensive Income (Average)

Question 4
Which of the following entities must not describe its financial statements as being
incompliance with the PFRS for SMEs even if it is allowed by law to prepare its financial
statements in accordance with PFRS for SMEs?
I

An entity whose shares are traded in a public market

II
III

An entity whose debt instruments(but nit its shares) are traded in a public market
An entity that is in the process of issuing its debt instruments (but not its shares) fro trading
in a public market
I and III only
I and II only
I, II and III
II and III only

Theory of Accounts - SME (Average)

Question 5
Goods on consignment should be included in the inventory of
The consignor but not the consignee
The consignee but not the consignor
Both the consignor and the consignee

Neither the consignor nor the consignee

Theory of Accounts - Inventory Valuation (Average)

Question 6
Which of the following assets generally is required to be tested at least annually for
impairment?
Copyright

Renewable broadcast license

Patent

Machinery

Theory of Accounts - Impairment of Assets (Average)

Question 7
A consignee paid the freight costs for goods shipped form a consignor. These freight
costs are to be deducted from the consignees payment to the consignor when the
consignment goods are sold. Until the consignee sells the goods, the freight costs
should be included in the consignees
Accounts receivable
Freight out

Cost of goods sold

Selling expenses

Theory of Accounts - Inventory Valuation (Easy)

Question 8
Net assets restricted by the governing board of a non-government, not-for-profit
organization are reported as part of:

Temporarily restricted net assets

restricted net assets

Permanently

Unrestricted net assets

Any of these, depending on the terms

Theory of Accounts - Not for Profit Organizations (Average)

Question 9
Which of the following is not considered investment property?
Land to be leased out under a finance lease.
Building held for undetermined use
Building being constructed for use as Investment property

Land held for capital

gains
Theory of Accounts - Investment Property (Average)

Question 10
Which two of the following statements are correct per PAS 16 Property, plant and
equipment?
A
B

Assets are depreciated even if their fair value exceeds their carrying amount.
Land and buildings are accounted for separately, even when acquired
together.
C
A non-current asset acquired as the result of an exchange of assets is not
recognized
D
A gain on disposal of a non-current asset is classified as revenue
A and B
A and C
B and D
A and D
Theory of Accounts - Property, Plant and Equipment (Easy)

Question 11
A national budget designed wherein total estimated revenue is more than total estimate
expenditures.
Balanced budget

Line item budget

Supplemental budget

Theory of Accounts - Government Accounting (Easy)

Special budget

Question 12
Which dividend when declared does not create a liability?
Scrip dividend
Property dividend
Cash dividend

Share dividend

Theory of Accounts - Retained Earnings (Easy)

Question 13
The overriding qualitative characteristic of accounting information is
Relevance
Freedom from bias
Comparability
Usefulness for decision
making
Theory of Accounts - Conceptual Framework (Average)

Question 14
An entity sold its headquarters building at a gain and simultaneously leased back the
building. The lease was reported as a finance lease. At the time of sale, the gain should
be reported as
Operating income
comprehensive income

An asset valuation allowance

Component of other

Component of shareholders' equity

Theory of Accounts - Sale and Leaseback (Average)

Question 15
A adjusting entry that debits an expense and credits a liability is which type?
Cash expense
Accrued expense
Prepaid expense
Depreciation expense
Theory of Accounts - Financial Statements (Easy)

Question 16
For which of the following products is it appropriate to recognize revenue at the
completion of production even though no sale has been made?

Single family residential units

Large appliances

Automobiles

Precious

metals
Theory of Accounts - Revenue Recognition (Average)

Question 17
In determining diluted earnings per share, dividends on nonconvertible cumulative
preferred stock should be
added back to net income whether declared or not
only if declared

disregarded

deducted from net income

deducted from net income whether declared or not

Theory of Accounts - Diluted Earnings Per Share (Average)

Question 18
To compute basic EPS, the amount of preferred dividends on noncumulative preferred
stock should be
Added to net income, only when declared
income, whether declared or not

Disregarded

Deducted from net

Deducted from net income, only when declared

Theory of Accounts - Basic Earnings Per Share (Easy)

Question 19
Contingent assets are usually recognized when
Occurrence is reasonably possible and the amount can be measured reliably
The amount can be measured reliably

Realized

Occurrence is reasonably

probable and the amount can be measured reliably

Theory of Accounts - Provision and Contingent Liability (Average)

Question 20

Ian Company is authorized to issue 50,000 shares of P25 par ordinary share. On May
30, 2014, Ian issued 20,000 shares at P45 per share. Ians journal entry to record these
facts should include a
both a and c
credit to ordinary share of P500,000
Excess of Par for P900,000

credit to Paid-in Capital in

debit to ordinary shares for P900,000

SOLUTION:
(20,000 shares x P25 = P500,000)
Theory of Accounts - Shareholders' Equity (Easy)

Question 21
An example of an item which is not an element of working capital is
goods in process.
goodwill.
temporary investments.
accrued interest on
notes receivable.
Theory of Accounts - Statement of Financial Position (Easy)

Question 22
An SME shall capitalize all of the following as cost of property, plant and equipment,
except
Transport cost

Loan raising cost

Installation cost

Nonrefundable purchase

tax
Theory of Accounts - SME (Average)

Question 23
A new entity has come out with an offer to refund the cost of purchase within one month
after the sale if the customer is not satisfied with the product. When should the entity
recognize the revenue?

After one month of sale

When goods are sold to the customers

are not returned by the customers after the period of one month

Only if goods

At the time of sale

along with an offset to revenue of the liability of the same amount for the possibility of
the return.
Theory of Accounts - Statement of Comprehensive Income (Average)

Question 24
On December 31, 2013, special insurance costs, incurred but unpaid, were not
recorded. If these insurance costs were related to work in process, what is the effect of
the omission on accrued liabilities and retained earnings in the December 31, 2013
balance sheet?
Accrued Liabilities (No effect); Retained Earnings (No effect)
(Understated); Retained Earnings (Overstated)
Retained Earnings (No effect)

Accrued Liabilities

Accrued Liabilities (Understated);

Accrued Liabilities (No effect); Retained Earnings

(Overstated)
Theory of Accounts - Error Correction (Average)

Question 25
The income statement reveals
Resources and equities of an entity at a point in time
point in time

Net earnings an entity for a period of time

Net earnings an entity at a

Resources and equities of

an entity for a period of time

Theory of Accounts - Statement of Comprehensive Income (Easy)

Question 26

Under PAS 28, what accounting method should be used for an investment in an
associate where it is operating under severe long-term restrictions, for example, where
the government of the entity has temporary control over the associate?
The associate should be shown at cost
The equity method should be applied if
significant influence can be exerted

PAS 39 should be applied

Consolidation

method should be used

Theory of Accounts - Investment In Associate (Average)

Question 27
Which of the following terms best describes the removal of an asset from an entitys
statement of financial position?
Depreciation
Derecognition

Impairment

Write-off

Theory of Accounts - Property, Plant and Equipment (Average)

Question 28
Prior period errors
Do not cause misstatements in current period FS
the future in all circumstances

Do not reverse themselves in

Are corrected through current profit or loss

Are

corrected through accumulated profit or loss

Theory of Accounts - Error Correction (Average)

Question 29
How should import duties be dealt with when valuing inventories at the lower of cost and
net realizable value (NRV) according to PAS 2 Inventories?
Ignored
Added to cost
Deducted in arriving at NRV
Theory of Accounts - Inventory Valuation (Easy)

Deducted from cost

Question 30
Antidilutive securities
are those whose inclusion in earnings per share computations would cause basic
earnings per share to exceed diluted earnings per share

should be included in the

computation of diluted earnings per share but not basic earnings per share

include

stock options and warrants whose exercise price is less than the average market price
of common stock
should be ignored in all earnings per share calculations
Theory of Accounts - Diluted Earnings Per Share (Average)

Question 31
This is defined in PFRS 1 as the "first annual financial statements in which an entity
adopts Philippine Financial Reporting Standards (PFRS) by an explicit and unreserved
statement of compliance with PFRS"
First PFRS financial statements

Opening PFRS statement of financial position

First audited PFRS financial statements

PFRS financial statements

Theory of Accounts - Conceptual Framework (Average)

Question 32
A voluntary health and welfare organization received a cash donation in the prior year
which contained a donor-imposed restriction which stipulated that the donation could not
be spent until the current year. The organization spent the donation in the current year
for fund raising activities. In the statement of activities for the current year, the expiration
of the time restriction would result in reporting
Increase in temporarily restricted net assets
temporarily restricted net assets

Expense which decreased

Increase in unrestricted net assets

Reclassification which decreased temporarily restricted net assets

Theory of Accounts - Not for Profit Organizations (Difficult)

Question 33
The balance in Common Stock Dividend Distributable should be reported as a(n)
contra current asset.
deduction from common stock issued.
current liability.
addition to capital stock.
Theory of Accounts - Retained Earnings (Average)

Question 34
Which of the following best describes the net effect on retained earnings of the purchase
and subsequent sale of treasury stock?
Retained earnings may never be increased but sometimes decreased
earnings is always affected unless the reissue price is exactly equal to cost
earnings may never be decreased but sometimes increased

Retained
Retained

Retained earnings may

never be increased or decreased

Theory of Accounts - Shareholders' Equity (Easy)

Question 35
Where there is a production cycle of more than one year, PAS 41 encourages separate
disclosure of the
Price change only

Physical change and price change

Physical change only

Theory of Accounts - Biological Assets (Average)

Question 36

Total change in value

At the end of the current reporting period, an entity carried a receivable from a major
customer. The customer declared bankruptcy after the end of reporting period but prior
to authorization of financial statements. How should the entity account for this event?
Ignore the event
Make a provision for this post-reporting period event
Disclose
in the notes the fact that the customer declared bankruptcy

Reverse the sale

pertaining to this receivable in the comparative statement for the prior period and treat
this as an error.
Theory of Accounts - Provision and Contingent Liability (Average)

Question 37
The statement of the financial position of non-profit organization displays the
organizations
Assets, liability and fund balance
liability and equity

Excess of assets over liabilities

Assets,

Assets, liability and net assets

Theory of Accounts - Conceptual Framework (Easy)

Question 38
Which of the following is the dollar amount recorded when bonds are purchased?
The cost of the bonds is recorded.
The amortized cost is recorded.
The
maturity value of the bonds is recorded.

All of the above terms are the same amount.

Theory of Accounts - Investments (Average)

Question 39
The amount of receivables that are hypothecated or pledged against borrowings should
be

Included in total receivables without disclosure

disclosure

Included in total receivables with

Excluded from total receivables without disclosure

Excluded from total

receivables with disclosure

Theory of Accounts - Receivable Financing (Average)

Question 40
Which method of recording bad debt loss is consistent with the accrual accounting?
Direct write-off method
Percent of accounts receivable method
Percent of
sales method

Allowance method

Theory of Accounts - Accounts Receivable (Average)

Question 41
Josh Company's December 31 year-end financial statements contained the following
errors:
Ending inventory
Depreciation expense

Dec. 31, 2010

P7,500 understated

Dec. 31, 2011

P11,000 overstated

2,000 understated

An insurance premium of P18,000 was prepaid in 2010 covering the years 2010, 2011,
and 2012. The prepayment was recorded with a debit to insurance expense. In addition,
on December 31, 2011, fully depreciated machinery was sold for P9,500 cash, but the
sale was not recorded until 2012. There were no other errors during 2011 or 2012 and
no corrections have been made for any of the errors. Ignore income tax considerations.
What is the total net effect of the errors on Josh's 2011 net income?
Net income understated by P14,500
Net income overstated by P13,000
income overstated by P7,500

Net income overstated by P15,000

SOLUTION:
P7,500 (o) + P11,000 (o) + P6,000 (o) P9,500 (u) = P15,000 (o)

Net

Theory of Accounts - Error Correction (Easy)

Question 42
The cost of land typically includes the purchase price and all of the following costs,
except
Street light, sewer and drainage system cost
on the property

Assumption of any lien or mortgage

Grading, filling, draining and

Private driveway and parking lot

clearing cost
Theory of Accounts - Property, Plant and Equipment (Average)

Question 43
Which of the following disclosures should be made when the fair value model has been
adopted for investment property?
Net gain or loss from fair value adjustments
of impairment loss recognized

Useful life of property

The amount

Depreciation method used

Theory of Accounts - Investment Property (Average)

Question 44
If the foreign operation reports in the currency of a hyperinflationary economy, assets,
liabilities income and expenses shall be translated at
Average rate
Exchange rate on the date of transaction

Forward rate

Closing rate
Theory of Accounts - Foreign Currency Transactions and Translations (Easy)

Question 45
Which of the following statements is true with regard to the accountants concept of
Materiality?

Relevant items are always material

Materiality judgments are made only by

accounting standard setters, not by management

Materiality judgments generally

may be based solely on the magnitude of the item

Materiality is the threshold of

recognition as to what accountable events will be recognized in the balance sheet and
which will be recognized in the income statement.
Theory of Accounts - Conceptual Framework (Average)

Question 46
In an entitys April 30, 2013 statement of financial position, a note receivable was
reported as a noncurrent asset and its accrued interest for eight months was reported
as a current asset. Which of the following terms would fit the entitys note receivable?
Principal is due August 31, 2013, and interest is due August 31, 2013 and August
31, 2013

Both principal and interest amounts are payable on August 31, 2013 and

August 31, 2013

Principal and interest are due December 31, 2013

Both principal

and interest amounts are payable on December 31, 2013 and December 31, 2013
Theory of Accounts - Notes Receivable (Average)

Question 47
Are each of the following factors relevant, according to PAS 38 Intangible assets, in
determining the annual amortization expense on an intangible asset?
Cost method (Not relevant); Amortization method (Not relevant)
Cost method
(Relevant); Amortization method (Relevant)
method (Not Relevant)

Cost method (Relevant); Amortization

Cost method (Not relevant); Amortization method (Relevant)

Theory of Accounts - Intangible Assets (Average)

Question 48

An example of an inventory accounting policy that should be disclosed is the

Classification of inventory into raw materials, work in process and finished goods
Identification of major suppliers

Method used for inventory costing

Effect of

inventory profit caused by inflation

Theory of Accounts - Inventory Valuation (Average)

Question 49
Which of the following will not require an adjusting entry on the depositor's books?
Collection from a customer amounting to P90,000 recorded by depositor as
P900,000.
depositor

Deposit of another entity credited by the bank to the account of the

Loan proceeds credited to the depositor's account

DAIF check from a

customer
Theory of Accounts - Audit of Cash (Average)

Question 50
Depending on the business model for managing financial assets, an entity shall classify
financial assets subsequent to initial recognition at
Amortized cost
Either fair value or amortized cost
amortized cost

Neither fair value nor

Fair value

Theory of Accounts - Financial Instruments (Average)

Question 51
At the end of the fiscal year, Jane Airlines has an outstanding purchase commitment for
the purchase of 1 million gallons of jet fuel at a price of P4.60 per gallon for delivery
during the coming summer. The company prices its inventory at the lower of cost or
market. If the market price for jet fuel at the end of the year is P4.25, how would this
situation be reflected in the annual financial statements?

Disclose the existence of the purchase commitment

Record unrealized losses of

P350,000 and disclose the existence of the purchase commitment

No impact

Record unrealized gains of P350,000 and disclose the existence of the purchase
commitment
Theory of Accounts - Inventory Valuation (Average)

Question 52
Net realizable value is
Estimated selling price less estimated cost to complete

Current replacement cost

Estimated selling price less estimated cost to complete and estimated cost to sell
Estimated selling price
Theory of Accounts - Inventory Valuation (Average)

Question 53
The usual ordering of accounts in the general ledger is
assets, liabilities, owner's capital, drawings, revenues, and expenses
capital, assets, liabilities, drawings, expenses, and revenues
owner's capital, revenues, expenses, and drawings

owners

liabilities, assets,

assets, liabilities, drawings,

owner's capital, expenses, and revenues

Theory of Accounts - Financial Statements (Easy)

Question 54
If an entity does not prepare interim financial reports, then
Interim financial reports should be included in the year-end FS
compliance with PFRS is not affected

The year-end FS

The year-end FS will not be acceptable under

local legislation

The year-end financial statements (FS) are deemed not to comply

with PFRS
Theory of Accounts - Interim Financial Reporting (Average)

Question 55
It is the present value of the cash flows an entity expects to arise from the continuing
use of an asset and from its disposal at the end of its useful life or expects to incur when
settling a liability.
Entity-specific value

Value in use

Fair value

Discounted value

Theory of Accounts - Property, Plant and Equipment (Average)

Question 56
One of the accepted methods of accounting for by-product is to recognize the value of
the by-product as it is produced. Under this method, inventory costs for the by-product
would be based on
Neither an allocation of some portion of joint costs plus any subsequent processing
costs

An allocation of some portion of joint costs plus any subsequent processing

costs

Neither an allocation of some portion of joint costs plus any subsequent

processing costs

An allocation of some portion of joint costs but not any subsequent

processing costs
Theory of Accounts - Joint and by-Product Costing (Difficult)

Question 57
Adjusting events are those that
Are indicative of conditions that arose after the end of the reporting period.
Provide for conditions that existed after the date the financial statements were

authorized for issue.

reporting period.

Provide evidence of conditions that existed at the end of the

Are favorable or unfavorable and indicative of conditions that arose

after the end of the reporting period.

Theory of Accounts - Notes to Financial Statements (Average)

Question 58
Which of the following costs would be capitalized?
Salaries of research staff
Acquisition cost of equipment to be used on current
research project only
exists.

Cost of research to determine whether a market for the product

Engineering costs incurred to advance the product to the full production stage

Theory of Accounts - R & D Expense (Average)

Question 59
The amount of time that is expected to elapse until an asset is realized or otherwise
converted into cash is referred to as
Financial flexibility
Solvency

Liquidity

Exchangeability

Theory of Accounts - Statement of Financial Position (Average)

Question 60
All of the following are minimum line items for current liabilities, except
Current provisions
Accounts payable
Trade and other payables
liability
Theory of Accounts - Statement of Financial Position (Average)

Question 61
Use of the sum-of-the-years'-digits method

Current tax

results in salvage value being ignored

reduced below salvage value
beginning of the year

means the book value should not be

means the denominator is the years remaining at the

all of these

Theory of Accounts - Depreciation (Average)

Question 62
Which of the following adjusting entries cannot be subject to reversing entries
Deferral of expense under the asset method
Accrual of expense
Accrual of
income

Deferral of income under the income method

Theory of Accounts - Financial Statements (Easy)

Question 63
Which of the following statements about property retained earnings is not true?
A property dividend is also called a dividend in kind.
The accounting for a
property dividend should be based on the carrying value (book value) of the
nonmonetary assets transferred.
A property dividend is usually in the form of
securities of other companies.

All of these statements are true.

Theory of Accounts - Retained Earnings (Average)

Question 64
Under PAS 40, which of the following best describes owner-occupied property?
Property held for capital appreciation
Property held to earn rentals
Property
held for use in the production of goods and for administrative purposes
for sale in the ordinary course of business
Theory of Accounts - Investments (Average)

Property held

Question 65
If an SME is unable to make a reliable estimate of the useful life of an intangible asset,
the life is presumed to be
Twenty years
Five years

Ten years

Indefinite

Theory of Accounts - SME (Easy)

Question 66
Santiago Corporation signs an agreement to lease land a building for 20 years. At the
end of the lease, the property will not transfer to Santiago. The life of the building is
estimated to be 20 years. Santiago prepares its financial statement in accordance with
PFRS. How should Santiago account for the lease?
The lease is recorded as a finance lease and the building is recorded as an
operating lease

The lease is recorded as a finance lease

The lease is recorded

as an operating lease and the building is recorded as a finance lease

The lease is

recorded as an operating lease

Theory of Accounts - Finance Lease - Lessee (Average)

Question 67
The fair value option
Reports all gains and losses in income

May be selected as a valuation method

by the entity at any time during the first two years of ownership
instruments the entity holds

All of the choices are correct.

Theory of Accounts - Financial Asset at Fair Value (Average)

Question 68
Ignoring tax effects, accelerated depreciation methods

Must be applied to all

Increase funds provided by operations

and maintenance costs

Tend to offset steadily increasing repair

Provide funds for the earlier replacement of fixed assets

Tend to decrease the fixed assets turnover ratio

Theory of Accounts - Depreciation (Average)

Question 69
The basic accounting issue for a lessor is
Revenue recognition during the lease term
lease term

Computing depreciation over the

Expense recognition during the lease term

Determination of the cost of

the leased asset

Theory of Accounts - Direct Financing Lease - Lessor (Easy)

Question 70
At the commencement of the lease, the lessee shall recognize a finance lease as asset
and liability at an amount equal to the
Present value of the minimum lease payments

Fair value at the leased asset

Fair value of the leased asset or present value of the minimum lease payments,
whichever is higher
Fair value of the leased asset or present value of the minimum
lease payments, whichever is lower
Theory of Accounts - Finance Lease - Lessee (Easy)

Question 71
Gomez Company received P7,200 on April 1, 2014 for one year's rent in advance and
recorded the transaction with a credit to a nominal account. The December 31, 2014
adjusting entry is

debit Unearned Rent and credit Rent Revenue, P1,800

credit Rent Revenue, P5,400

debit Unearned Rent and

debit Rent Revenue and credit Unearned Rent, P5,400

debit Rent Revenue and credit Unearned Rent, P1,800

Theory of Accounts - Financial Statements (Average)

Question 72
An entity owns 2% of another entity. A property dividend distributed by the other entity
consisted of merchandise with a fair value lower than the listed retail price. The entity in
turn gave the merchandise to its employees as a holiday bonus. Hoe should the entity
report the receipt and distribution of the merchandise in its statement of cash flows?
As an inflow for investing activities and outflow for operating activities
As both an
inflow and outflow for operating activities
activities

As both an inflow and outflow for investing

As a noncash activity

Theory of Accounts - Statement of Cash Flows (Average)

Question 73
Under PAS 33, contingent ordinary shares are treated as outstanding and included in
the computation of both basic and diluted earnings per share if the conditions are
satisfied. Which of the following statements is true?
I

Contingent ordinary shares are included in the calculation of basic

earnings per share from the date the condition is satisfied
II Contingent ordinary shares are included in the calculation of diluted
earnings per share from the beginning of the period or from the date of
contingent agreement, lf later
I only
Neither I nor II
II only
Both I and II
Theory of Accounts - Diluted Earnings Per Share (Average)

Question 74

Factory overhead includes

All manufacturing costs

All manufacturing costs which may be variable or fixed,

except direct materials and direct labor

Indirect labor but not indirect materials

Indirect materials but not indirect labor

Theory of Accounts - Cost Concepts (Easy)

Question 75
How would you describe fixed cost?
It is constant per unit of change in production

It may change in total where such

change depends on production within the relevant range.

It may change in total

where such change is unrelated to changes in production

It may change in total

where such change is related to changes in production.

Theory of Accounts - Cost Concepts (Average)

Question 76
To value a stock initially going public, which of the following processes would not be an
effective pricing tool?
liquidity value approach

IPO approach

calculate NPV of cash flows

book

value approach
Theory of Accounts - Shareholders' Equity (Average)

Question 77
A pension asset is reported when
the accumulated benefit obligation exceeds the fair value of pension plan assets
the accumulated benefit obligation exceeds the fair value of pension plan assets, but a
prior service cost exists
pension plan assets at fair value exceed the accumulated

benefit obligation

pension plan assets at fair value exceed the projected benefit

obligation
Theory of Accounts - Retirement Benefits (Average)

Question 78
A statement of cash flows typically would not disclose the effects of
capital stock issued at an amount greater than par value
stock dividends
declared

a purchase and immediate retirement of treasury stock

cash dividends

paid
Theory of Accounts - Statement of Cash Flows (Average)

Question 79
A debit balance in the allowance for doubtful accounts
Should never occur
May occur before year-end adjustment for uncollectibles
Is always the result of management not providing a large enough allowance in order to
manage earnings
May exist even after year-end adjustment of uncollectibles
Theory of Accounts - Accounts Receivable (Average)

Question 80
Under the allowance method, the entries at the time of collection of an account
previously written off would
Decrease the allowance for doubtful accounts
for doubtful accounts

Have no effect on the allowance

Have no effect on net income

Increase net income

Theory of Accounts - Accounts Receivable (Average)

Question 81
To compute the price to pay for a bond, what present value concept is used?

Neither the present value of 1 concept 'nor the present value of annuity of 1 concept
Both the present value of I concept and present value of an annuity of 1 concept
Only the present value Of 1 concept

Only the present value of an annuity of 1

concept
Theory of Accounts - Bonds Payable (Average)

Question 82
The warrants time value is equal to
(market price - exercise value)/number of shares

market price/exercise value

the market price of the warrant minus its exercise value

exercise value/market price

Theory of Accounts - Shareholders' Equity (Average)

Question 83
Significant change in the market value of trading securities occurring after the balance
sheet date should
Be treated as a prior period error in next years financial statements

Result in an

adjustment of the market value used in the lower of cost or market valuation at balance
sheet date
Not be considered in the valuation of the securities at the balance sheet
date but disclosed in the notes to the financial statements

Be considered in the

valuation of securities at balance sheet date and disclosed in the notes to the financial
statements
Theory of Accounts - Financial Asset at Fair Value (Difficult)

Question 84
All of the following can be classified as cash and cash equivalents, except

Bank overdraft
and due in 60 days

Equity investments

Redeemable preference shares acquired

Loan notes held due for repayment in 90 days

Theory of Accounts - Cash and Cash Equivalents (Easy)

Question 85
Which of the following is a correct statement of one of the capitalization criteria?
The lease contains a purchase option
The minimum lease payments (excluding
executory costs) equal or exceed 90% of the fair value of the leased property

The

lease term is equal to or more than 75% of the estimated economic life of the leased
property
The lease transfers ownership of the property to the lessor
Theory of Accounts - Finance Lease - Lessee (Average)

Question 86
On the basis of the Conceptual Framework, revenues + gains =
Income
No meaningful amount
Cash receipts
Sales and earned fees
Theory of Accounts - Conceptual Framework (Average)

Question 87
All appropriations, revenue or tariff bills, bills authorizing increase of the public debt, bills
of local application and private bills shall originate exclusively in the
House of Representatives
House of Representatives but the Senate may
propose or concur with amendments.

Senate

Senate but the House of

Representatives may propose or concur with amendments.

Theory of Accounts - Government Accounting (Average)

Question 88

An entity issue rights to its existing shareholders to purchase unissued ordinary shares
at more than par value. Share premium would be recorded when the rights
Are not exercised
Are issued
Are exercisable
Are exercised
Theory of Accounts - Shareholders' Equity (Average)

Question 89
Under PFRS 2, if the fair value of the share options cannot be estimated reliably, then
share options are measured based on
Theoretical parity value
Appraised Value

Intrinsic Value

Par Value

Theory of Accounts - Share Options (Easy)

Question 90
The primary purpose of a quasi-reorganization is to give the entity the opportunity to
Eliminate a deficit in retained earnings
Distribute the shares of a newly created
subsidiary to its stockholders in exchange for part of their shares in the corporation
Obtain relief from its creditors

Revalue understated assets to their fair value

Theory of Accounts - Quasi Reorganization (Average)

Question 91
When an investor's accounting period ends on a date that does not coincide with an
interest receipt date for bonds held as an investment, the investor must
notify the issuer and request that a special payment be made for the appropriate
portion of the interest period.

do nothing special and ignore the fact that the

accounting period does not coincide with the bond's interest period.

make an

adjusting entry to debit Interest Receivable and to credit Interest Revenue for the
amount of interest accrued since the last interest receipt date.
make an adjusting

entry to debit Interest Receivable and to credit Interest Revenue for the total amount of
interest to be received at the next interest receipt date.
Theory of Accounts - Investments (Difficult)

Question 92
Budget accountability consists of
I
II
III

Periodic reporting by the agencies of performance under the approved budget

Top management review of government activities and the fiscal and policy implications thereof.
The actions of COA in assuring fidelity of officials and employees by carrying out the intent of
Congress in regard to their handling of receipts and expenditures.
I only
I, II and III
I and II only
I and III only

Theory of Accounts - Government Accounting (Difficult)

Question 93
Which of the following is not a category of financial assets defined in PAS 39?
Available-for-sale financial assets
Financial assets at fair value through profit or
loss

Loans and receivables

Held-for-sale financial assets

Theory of Accounts - Financial Asset at Fair Value (Easy)

Question 94
General income accounts encompass
I

All types of revenue or income generated by agencies in the exercise of their administrative and
regulatory function, income from public enterprises or investments, and income from grants and
donations.
II All taxes imposed on income, properties and use or sale of goods and services, taxes on
international trade and transactions, and other taxes including fines and penalties.
I only
II only
Neither I nor II
Both I and II
Theory of Accounts - Government Accounting (Difficult)

Question 95

Which of the following tables would show the smallest factor for an interest rate of 10%
for six periods?
Future value of an annuity due of 1

Present value of an annuity due of 1

Future value of an ordinary annuity of 1

Present value of an ordinary annuity of 1

Theory of Accounts - Time Value of Money (Easy)

Question 96
The term "depreciable base," or "depreciation base," as it is used in accounting, refers
to
the acquisition cost of the asset
expense over an asset's useful life
of its useful life

the total amount to be charged (debited) to

the estimated market value of the asset at the end

the cost of the asset less the related depreciation recorded to date

Theory of Accounts - Depreciation (Average)

Question 97
How should a gain from sale of used equipment for cash be reported in a cash flow
statement using the indirect method?
In investing activities as an addition to income
deduction from income

In investing activities as a

In investing activities as a cash outflow

In investing

activities as a reduction of the cash inflow from the sale

Theory of Accounts - Statement of Cash Flows (Easy)

Question 98
The contractual adjustment account of a nonprofit hospital is a(an)
Asset account
Contra-revenue account
Loss account
Expense account
Theory of Accounts - Not for Profit Organizations (Average)