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ACCTG 100
CONCEPTUAL FRAMEWORK AND ACCOUNTING STANDARDS
FINAL GRADING EXAMINATION

1. Which of the following correctly relate(s) to the Monetary/ Stable monetary/ Monetary Unit concept?
I. assets, liabilities, equity, revenues and expenses should be stated in terms of a unit of measure
which is the peso in the Philippines.
II. the purchasing power of the peso is stable or constant and that its instability is insignificant and
therefore ignored.
a. I
b. II
c. I and II
d. None

2. To be relevant, information should have which of the following?

a. Verifiability.
b. Confirmatory value.
c. Understandability.
d. Costs and benefits.

3. The PFRSs do not apply to

a. sole proprietorships.
b. partnerships.
c. cooperatives.
d. non-profit organizations.
e. The PFRSs apply to all of these entities.

4. "Aanhin mo pa ang damo kung patay na ang kabayo.”

a. Materiality
b. Relevance
c. Timeliness
d. Biological asset - Horse

5. This refers to financial statements that are intended to meet the needs of users who are not in a
position to require an entity to prepare reports tailored to their particular information needs.
a. All-purpose financial statements
b. General purpose financial statements
c. Managerial reports
d. Unisex financial statements

6. A complete set of financial statements does not include a

a. statement of financial position
b. statement of comprehensive income
c. statement of retained earnings
d. notes

7. Which of the following is an acceptable method of reporting other comprehensive income and its
components?
a. In a statement of profit or loss and other comprehensive income.
b. In a statement of changes in equity
c. In the notes only.
d. All of these
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8. Which of the following may be included in the cost of inventories?

a. Storage costs of part-finished goods
b. Abnormal amount of wasted costs of materials, labor and factory overhead
c. Recoverable purchase taxes
d. Administrative costs

9. Which of the following cost formulas is not allowed under PAS 2?

a. FIFO
b. Weighted average
c. Specific identification
d. LIFO

10. Entity A, a trading entity, buys and sells Product Z. Movements in the inventory of Product Z during
the period are as follows:

Date Transaction Units Unit cost Total cost

Feb. 1 Beginning inventory 100 ₱15 ₱1,500
7 Purchase 300 18 5,400
12 Sale 320
21 Purchase 200 21 4,200

How much is the cost of sales under the FIFO cost formula?
a. 5,460
b. 5,840
c. 5,640
d. 4,860

11. Interest expense that is paid in cash is presented in the statement of cash flows under
a. operating activities.
b. investing activities
c. financing activities
d. a or c

12. When it is difficult to distinguish a change in accounting policy from a change in accounting
estimate, the change is treated as
a. a change in an accounting estimate.
b. a change in an accounting policy.
c. a correction of prior period error.
d. not accounted for.

13. ABC Co. completes the draft of its December 31, 20x1 year-end financial statements on January 31,
20x2. On February 5, 20x2, the board of directors reviews the financial statements and authorizes
them for issue. The entity announces its profit and selected other financial information on February
23, 20x2. The financial statements are made available to shareholders and others on March 1, 20x2.
The shareholders approve the financial statements at their annual meeting on March 18, 20x2 and the
approved financial statements are then filed with a regulatory body on April 1, 20x2. Events after the
reporting period are those occurring
a. from December 31, 20x1 to February 5, 20x2.
b. from January 1, 20x2 to February 5, 20x2.
c. from January 1, 20x2 to February 23, 20x2.
d. from January 1, 20x2 to March 18, 20x2.
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14. These are differences that do not have future tax consequences.
a. Permanent differences
b. Taxable differences
c. Temporary differences
d. Deductible differences

15. This type of difference will give rise to deferred tax asset.
a. Taxable temporary difference
b. Permanent difference
c. Deductible temporary difference
d. No difference

16. In accounting parlance, depreciation means

a. the amount derived by dividing the cost of an asset over its useful life.
b. the amount derived by multiplying the cost of an asset by its useful life.
c. the systematic allocation of the depreciable amount of an asset over its useful life.
d. the decline the in the value of an asset during the period.

17. It is a type of retirement plan where the employer assures a definite amount of benefit to be received
by the employee. The risk that funds needed to pay the agreed benefits may be insufficient is retained
by the employer.
a. Defined contribution plan
b. Defined benefit plan
c. Leche plan
d. Plan vs. zombies

18. The government extends a repayable loan to Entity A. The loan pays interest at market rate. Entity A
should account for the government loan using which of the following standards?
a. PAS 20
b. PAS 41
c. PFRS 9
d. PFRS 16

Use the following information for the next two questions:

On December 1, 20x1, Entity A sells goods to Entity B, on credit, for a total sale price of $1,000. Entity B
settles the account on January 6, 20x2. Entity A’s functional currency is the Philippine peso (₱).The
relevant exchange rates are as follows:
Dec. 1, 20x1 Dec. 31, 20x1 Jan. 6, 20x2
₱50:$1 ₱52:$1 ₱47:$1

19. How much is the foreign exchange gain (loss) to be recognized by Entity A on December 31, 20x1?
a. 2,000
b. 1,000
c. (2,000)
d. (1,000)

20. How much is the foreign exchange gain (loss) to be recognized by Entity A on January 6, 20x2?
a. 3,000
b. 5,000
c. (3,000)
d. (5,000)

21. According to PAS 23, borrowing costs are capitalized when

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a. they relate directly to the acquisition, construction or production of a qualifying asset.

b. the entity chooses to capitalize them.
c. they are material and are expected to be incurred over more than one reporting period.
d. all of these

22. Which of the following are not related parties?

a. A parent and its subsidiary
b. Two or more subsidiaries with the same parent
c. A company and its Chief Executive Officer
d. Two co-venturers of a common joint venture business

23. According to PAS 27, which of the following is required to present separate financial statements?
a. A publicly-listed entity
b. A parent
c. An entity with an investment in associate
d. None of these

24. On January 1, 20x1, Entity A acquires 25% interest in Entity B for ₱800,000. Entity B reports profit of
₱1,000,000 and declares dividends of ₱100,000 in 20x1. How much is the carrying amount of the
investment in associate on December 31, 20x1?
a. 800,000
b. 1,250,000
c. 1,000,000
d. 1,025,000

25. Entity A operates in a hyperinflationary economy. Entity A has the following assets before
restatement on December 31, 20x1:
Accounts receivable, net ₱300,000
Building, net 900,000

The building was acquired on May 21, 20x0. The general price indices are as follows:
May 21, 20x0 100
Average – 20x2 180
December 31, 20x1 150

What are the restated amounts of the assets?

Accounts receivable Building
a. 250,000 1,350,000
b. 286,667 1,478,932
c. 300,000 1,350,000
d. 300,000 900,000

26. Which of the following is classified as an equity instrument rather than a financial liability?
a. Preference shares that are mandatorily redeemable
b. A contract that is settled by the delivery of a variable number of the entity’s own equity
instruments in exchange for a fixed amount of cash or another financial asset.
c. A contract that is settled by the delivery of a fixed number of the entity’s own equity instruments
in exchange for a variable amount of cash or another financial asset.
d. Shares issued but were subsequently reacquired.

27. Entity A issues convertible bonds with face amount of ₱2,000,000 for ₱2,600,000. Each ₱1,000 bond is
convertible into 10 shares with par value of ₱60 per share. On issuance date, the bonds are selling at
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102 without the conversion option. What is value allocated to the equity component on initial
recognition?
a. 2,040,000
b. 540,000
c. 560,000
d. 460,000

28. Entity A had the following instruments outstanding all throughout 20x1:

12% convertible bonds payable issued at face amount, each

₱1,000 bond is convertible into 30 ordinary shares ₱2,000,000
Ordinary shares, ₱10 par, 100,000 shares issued and
outstanding 1,000,000

Profit for the year is ₱800,000. Entity A’s income tax rate is 30%.

What is the diluted earnings per share in 20x1?

a. 6.28
b. 6.05
c. 6.15
d. 5.98

29. Which of the following is correct regarding the provisions of PAS 34?
a. All entities should publish quarterly interim reports.
b. All publicly-listed entities should publish quarterly interim reports.
c. All publicly-listed entities should publish semi-annual interim reports.
d. PAS 34 does not require any entity to publish interim reports, and how often.

30. If a cash-generating unit (CGU) is impaired, the impairment loss is allocated first to
a. the goodwill in that CGU.
b. the noncurrent assets in that CGU.
c. the current assets in that CGU.
d. a and b

31. The amount at which an asset is recorded in the books of accounts minus any accumulated
depreciation and accumulated impairment losses is referred to as
a. fair value.
b. cost.
c. carrying amount.
d. amortized cost.

32. Which of the following analysis on asset impairment is most likely to have been made by a CPA?
(where: RA = recoverable amount; FVLCD = fair value less costs of disposal; VIU = value in use; CA =
carrying amount; IL = impairment loss; > = greater than; < = less than)
a. if “FVLCD > CA,” then, “IL = 0”
b. if “FVLCD < VIU,” then, IL = > 0”
c. if “FVLCD > VIU,” then, “RA = FVLCD,” now, if “CA > RA,” then “IL = RA – CA”
d. if “FVLCD > VIU,” then, “RA = VIU,” now, if “CA < RA,” then “IL = RA – CA”

33. Which of the following statements is correct?

a. A provision is recognized only when it represents a present obligation.
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b. An event or transaction that meets both the “probable outflow of economic benefits” and
“reliable measurement” criteria is always recognized.
c. A contingent asset that is possible is ignored.
d. A contingent liability that is possible is ignored.

34. Intangible assets are measured as follows:

Initial measurement Subsequent measurement
a. cost fair value
b. cost cost model or revaluation model
c. cost cost model or fair value model
d. fair value cost model or revaluation model

35. Which of the following properties falls under the definition of investment property?
I. Land held for long-term capital appreciation
II. Property occupied by an employee paying rent at market rate
III. Property being constructed on behalf of third parties
IV. A building owned by an entity and leased out under an operating lease

a. I and II
b. I and IV
c. II and IV
d. II, III and IV

36. Which of the following is considered a bearer plant?

a. Palm oil
b. Corn oil
c. Baby oil
d. Oil palm

37. According to PFRS 1, when a first-time adopter presents one year comparative information to its first
PFRS financial statements, it shall prepare, at the minimum,
a. two statements of financial position and one of each of the other financial statements, and related
notes.
b. two statements of financial position and two of each of the other financial statements, and related
notes.
c. three statements of financial position and two of each of the other financial statements, and
related notes.
d. three statements of financial position and three of each of the other financial statements, and
related notes.

38. On January 1, 20x4, Entity A has granted 600 share options to each of its 100 employees. The options
vest in three years’ time. Each share option has a fair value of ₱100 on grant date. Information on
employee departure is as follows:
• January 1, 20x4: estimate of employees leaving the entity during the vesting period – 4%
• December 31, 20x4: revision of estimate of employees leaving to 5% before vesting date
• December 31, 20x5: revision of estimate of employees leaving to 6% before vesting date
• December 31, 20x6: actual employees leaving 5%

How much is the salaries expense in 20x4?

a. 6,000,000
b. 1,900,000
c. 2,000,000
d. 1,920,000
39. On January 1, 20x1, ABC Co. acquired 75% interest in XYZ, Inc. for ₱2,500,000 cash. ABC Co. incurred
transaction costs of ₱250,000 for legal, accounting and consultancy fees in negotiating the business
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combination. ABC Co. elected to measure NCI at the NCI’s proportionate share in XYZ, Inc.’s
identifiable net assets. The carrying amounts and fair values of XYZ’s assets and liabilities at the
acquisition date were as follows:

Assets Carrying amounts Fair values

Cash in bank 25,000 25,000
Accounts receivable 425,000 300,000
Inventory 1,300,000 875,000
Equipment – net 2,500,000 2,750,000
Goodwill 250,000 50,000
Total assets 4,500,000 4,000,000
Liabilities
Payables 1,000,000 1,000,000

How much is the goodwill (gain on a bargain purchase)?

a. 140,000
b. 278,500
c. 287,500
d. 264,500

40. According to PFRS 5, assets held for sale are measured at

a. fair value.
b. fair value less costs to sell.
c. carrying amount.
d. lower of b and c

41. After recognition, exploration and evaluation assets are accounted for under the
a. cost model
b. fair value model
c. revaluation model
d. a or c

42. Entity A acquires a legal right to search for mineral resources in a specific area. What PFRS should
Entity A apply in accounting for the costs it incurs on its exploration and evaluation activities?
a. PAS 26
b. PFRS 4
c. PFRS 5
d. PFRS 6

43. Which of the following properly describes credit risk?

a. The possibility that Entity A will not be able to settle its financial liabilities when they become
due.
b. The possibility that Entity A will incur loss on its foreign-currency denominated financial
instruments when there is an adverse change in foreign exchange rates.
c. The possibility that Entity A cannot collect on its receivables.
d. The possibility that Entity A will be required to pay higher interest on its variable-rate loan when
market interest rates increase.

44. Andrix Domingo’s Sari-sari Store has a sign that reads “Your credit is good but I need cash.” What
type of risk is Mr. Andrix trying to avoid by putting up that sign?
a. credit risk
b. market risk
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c. liquidity risk
d. store risk

45. Which of the following is not among the quantitative thresholds under PFRS 8?
a. At least 10% of total revenues (external and internal)
b. At least 10% of the higher of total profits of segments reporting profits and total losses of
segments reporting losses, in absolute amount.
c. At least 10% of total assets (inclusive of intersegment receivables).
d. At least 10% of total revenues (external only)

46. Rex Banggawan Co. acquires investment in stocks of Darrell Joe Asuncion. The investment will be
held for trading and it gives Rex neither significant influence nor control over Darrell. Rex will most
likely measure the investment
a. at fair value through profit or loss.
b. using the equity method.
c. at amortized cost.
d. at historical cost

47. According to PFRS 10, which of the following is not an element of control?
a. power
b. exposure, or rights, to variable returns
c. major holdings
d. ability to affect return.

48. Which of the following is a peculiar characteristic of a joint arrangement?

a. significant influence
b. joint control
c. control
d. joint venture

49. This PFRS provides a single framework for measuring the fair value of an asset, liability or equity
when other PFRSs require or permit measurement at fair value or fair value less costs to sell. It also
prescribes the disclosures related to fair value measurement.
a. PFRS 3
b. PAS 1
c. PFRS 9
d. PFRS 13

50. Entity A’s assets have a carrying amount of ₱100,000 before year-end adjustments. The PFRSs require
these assets to be measured at fair value at each reporting date. Location is a characteristic of the
assets. Information at year-end is as follows:
Active Market #1 Active Market #2
Quoted price ₱130,000 Quoted price ₱135,000
Transport costs 10,000 Transport costs 12,000
Costs to sell 2,000 Costs to sell 3,000

If neither Active Market #1 nor Active Market #2 is the principal market, how much is the fair value?
a. 135,000 c. 120,000
b. 132,000 d. 123,000

51. Arrange the following steps of revenue recognition in accordance with PFRS 15.
I. Identify the performance obligations in the contract
II. Recognize revenue when (or as) the entity satisfies a performance obligation
III. Determine the transaction price
IV. Identify the contract with the customer
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V. Allocate the transaction price to the performance obligations in the contract

a. IV, I, III, V, II c. III, IV, I, V, II
b. IV, I, V, III, II d. IV, III, I, V, II

52. The tenant (as opposed to the landlord) in a lease contract is referred to as the
a. Lessor
b. Lessee
c. Leasee
d. Tenor

53. Which of the following is a characteristic of a finance lease?

a. The lease term is substantially less than the estimated economic life of the leased property.
b. The lease contains a bargain-purchase option.
c. The present value of the minimum lease payments at the beginning of the lease term is 75% or
more of the fair value of the property at the inception of the lease.
d. The lease obligation does not appear in the balance sheet of the lessee.

54. Leases are accounted for under

a. PAS 16
b. PFRS 14
c. PFRS 15
d. PFRS 16

55. PFRS 8 relates to which of the following?

a. Disclosure of operating segments
b. Disclosure of related party relationships and transactions
c. Disclosure of events after the reporting period
d. Interim financial reporting

56. You are the accountant of ABC Co. During the period, ABC Co. acquired short-term investment in
stocks, which of the following financial reporting standards would most likely be relevant in
accounting for the transaction?
a. PFRS 8
b. PFRS 9
c. PAS 28
d. b or c

57. You are a CPA and were engaged to audit the annual financial statements of ABC Co., a mining
company. Which of the following standards is most likely relevant to ABC Co.?
a. PFRS 4
b. PAS 34
c. PAS 41
d. PFRS 6
58. You are the accountant of ABC Co. During the period, your company acquired majority holdings in
XYZ, Inc. This transaction gave rise to goodwill. Which of the following standards will be referred to
in your company’s notes to the financial statements under summary of significant accounting
policies?
a. PFRS 3
b. PFRS 10
c. PAS 36
d. All of these

59. You are the accountant of Entity X. The board of directors asked you for an advice because they feel
like the company’s financial statements do not properly reflect the company’s financial position. The
board noted out that the company’s properties (i.e., land) are absurdly stated at their historical cost.
The properties were acquired 50 years ago and the market prices of the properties have more than
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tripled since then. In providing your professional advice, you will most certainly quote the
provisions of which of the following standards?
a. PAS 7
b. PAS 33
c. PAS 16
d. All of these

60. When determining whether an investor controls an investee, the investor should refer to
a. PAS 21
b. PFRS 10
c. PAS 10
d. PAS 1

61. When measuring the fair value of an asset or a liability, an entity refers to
a. PFRS 13
b. PAS 28
c. PFRS 1
d. PFRS 7

62. Non-current assets held for sale and discontinued operations are accounted for under
a. PFRS 4
b. PAS 41
c. PFRS 5
d. PFRS 8

63. The equity method of accounting for investments is discussed under

a. PAS 28
b. PAS 29
c. PAS 21
d. PFRS 2

64. The computation of employee retirement benefits expense is addressed in this standard.
a. PAS 17
b. PFRS 7
c. PAS 19
d. PFRS 9

65. This standard deals with the recognition and measurement of financial instruments.
a. PAS 32
b. PFRS 7
c. PFRS 9
d. PFRS 3

66. Joint arrangements are discussed under

a. PFRS 1
b. PFRS 11
c. PAS 20
d. PAS 24

67. Entity A is preparing its first PFRS financial statements. Which of the following standards is most
relevant to Entity A?
a. PFRS 1
b. PAS 12
c. PAS 8
d. PFRS 9
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68. Intangible assets, other than goodwill, are accounted for under
a. PAS 38
b. PFRS 8
c. PAS 26
d. PAS 20

69. The computation of earnings per share is addressed by

a. PAS 36
b. PFRS 3
c. PAS 33
d. PFRS 11

“Do not be deceived: God cannot be mocked. A man reaps what he sows.” - Galatians 6:7

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