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INSTRUCTION: On the space provided in your Answer Sheet, write the letter of your choice in CAPITAL
LETTER and with NO ERASURES.

1. According to PFRS 15 on Revenue from Contracts with Customers, the revenue recognition in accordance
with its core principle is applied following:

A. Four-step model
B. Five-step model
C. Three-step model
D. Any model
2. What is the core principle of PFRS 15?

A. Revenue is recognized when earned.

B. Revenue is recognized at a point in time or over time.
C. Revenue is recognized when collected.
D. Revenue is recognized in a manner that depicts the transfer of good or service to a
customer and the revenue reflects the consideration to which an entity expects to be
entitled.
3. A contract with a customer must meet all of the following criteria, except

A The contract is approved by all parties.

B. The rights and obligations of the parties and payment terms are identified.
C. The contract has a commercial substance.
D. It is not probable that the consideration will be collected.

4. The transaction price is allocated to the performance obligations based on relative

A. Stand-alone selling price

B. Fair value
C. Adjusted market price
D. Residual value

5. In fair value measurement, which of the following is an assumption used?

A. The asset must be in-use.
B. The asset must be considered in-exchange.
C. The most conservative estimate must be used.
D. The asset is in the highest and best use.
6. Valuation techniques for fair value that include the Black-Scholes formula, a binomial model, or discounted
cash flow are examples of which valuation technique?

A. Income approach
B. Market approach
C. Cost approach
D. Exit value approach

7. What is the law regulating the practice of accountancy in the Philippines?

A. R.A. No. 9298 B. R.A. 9198 C. R.A. 9928 D. R.A. 9892

8. CPAs are licensed by

A. The PICPA B. State Government C. The SEC D. The city government

9. What is the standard-setting body in the Philippines at the present time?

A. Accounting Standards Council

B. Auditing and Assurance Standards Council
C. Philippine Accounting Standards Board
D. Financial Reporting Standards Council
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10. Financial accounting emphasizes reporting to

A. Management B. Regulatory bodies C. Internal auditors D. Creditors and investors
11. For PFRS reporting, the functional currency is

a. The currency in which the company reports its earnings.

b. The currency in which the company primarily operates.
c. The currency in which the company presents its financial statements.
d. The currency in which the company primarily conducts banking activities.

12. The effect of closing entries is to

a. Change assets
b. Change liabilities
c. Change retained earnings
d. Change debit balances of all accounts into credits and vice-versa

13. Which of the following is a book of account utilized in both a single-entry bookkeeping system and a
double-entry bookkeeping system?
a. Subsidiary ledger
b. Cash receipts book
c. General journal
d. Sales journal

14. The effect of a change in accounting policy which is inseparable from the effect of a change in accounting
estimate should be reported
a. In the period of change and future periods if the change affects both.
b. By restating the financial statements of all prior periods presented.
c. By showing the pro-forma effects of retroactive application.
d. As a correction of error.

15. In financial reporting for segments of a business enterprise, segment data may be aggregated
a. Before performing the 10% tests if a majority of the aggregation criteria are met.
b. Before performing the 10% tests if all of the aggregation criteria are met.
c. If the segments do not meet the 10% tests but meet all of the aggregation criteria.
d. If any one of the aggregation criteria are met.

16. Which of the following statements is true regarding interim reporting for companies that prepare their
financial statements in accordance with IFRS?
a. The discrete view is required for interim financial statements.
b. Interim reports require the preparation of only a statement of earnings and a statement of financial position.
c. Interim reports are required on a quarterly basis.
d. Interim reports are not required for IFRS reporting.

17. Nongovernmental, not-for-profit organizations are required to provide which of the following external
financial statements?
a. Statement of financial position, statement of comprehensive income, statement of cash flows.
b. Statement of comprehensive income, statement of cash flows, statement of gains and losses.
c. Statement of cash flows, statement of comprehensive income, statement of unrelated business income
d. Statement of financial position, statement of activities, statement of cash flows.

18. KABRASO, a nongovernmental not-for-profit organization, provides food and shelter to the homeless.
KABRASO received a P1,500,000 gift with the stipulation that the funds be used to buy beds. In which net
asset class should KABRASO report the contribution?

a. Endowment. b. Temporarily restricted. c. Unrestricted. d. Permanently restricted.

19. Under PAS 1, the performance of an enterprise is shown in the

a. Income Statement
b. Statement of Financial Position
c. Statement of Comprehensive Income
d. Statement of Cash Flows

20. A gain on the sale of a trading equity securities from the available-for-sale portfolio should be presented in
a statement of cash flows in which the operating section is prepared using the direct method as a(n)
a. Deduction from net income under operating activities and as an inflow of cash under investing activities.
 3

b. Inflow of cash under investing activities only.

c. Inflow of cash under operating activities only.
d. Deduction from net income only.

21. In accounting for a long-term construction contract using the percentage-of-completion method, the amount
of income recognized in any year would be added to
a. Deferred revenues.
b. Progress billings on contracts.
c. Property, plant, and equipment.
d. Construction in progress.

22. In calculating the carrying amount of a loan, the lender deducts from the principal
Direct loan origination Loan origination fees
costs incurred by charged to
the lender the borrower
a. Yes Yes
b. Yes No
c. No Yes
d. No No

23. Under PFRS, a cash flow hedge and a hedge of a net investment are accounted for by
a. Recognizing gains and losses in profit and loss.
b. Recognizing gains and losses when the hedge is closed out.
c. Recognizing gains and losses in other comprehensive income.
d. Not recognizing gains and losses.

24. If financial assets are exchanged for cash or other consideration, but the transfer does not meet the criteria
for a
sale, the transferor should account for the transaction as a

Secured borrowing Pledge of collateral

a. Yes Yes
b. No Yes
c. Yes No
d. No No

25. Gains and losses of the effective portion of a hedging instrument will be recognized in current earnings in
each reporting period for which of the following?

Fair value Cash flow

Hedge hedge
a. Yes Yes
b. Yes No
c. No No
d. No Yes

26. Under PFRS the asset goodwill may be recognized

a. When it is internally generated or acquired by purchase.
b. When it is clear that it exists and has value.
c. When it has future economic benefits.
d. When it is acquired by purchase.

27. Upon the death of an officer, Jung Co. received the proceeds of a life insurance policy held by Jung on the
officer. The proceeds were not taxable. The policy’s cash surrender value had been recorded on Jung’s
books at the time of payment. What amount of revenue should Jung report in its statements?
a. Proceeds received less cash surrender value.
b. Proceeds received plus cash surrender value.
c. Proceeds received.
d. None.

28. Under IFRS any investment may be accounted for by fair value through profit and loss providing
a. It is an equity instrument.
b. It is a debt instrument.
c. The instrument matures within 2 years.
d. It is traded in an active market.
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29. The primary purpose of a quasi-reorganization is to give a corporation the opportunity to

a. Obtain relief from its creditors.
b. Revalue understated assets to their fair values.
c. Distribute the stock of a newly created subsidiary to its stockholders in exchange for part of their stock in the
corporation.
d. Eliminate a deficit in retained earnings.

30. When a company goes through a quasi-reorganization, its statement of financial position carrying amounts
are stated at
a. Original cost.
b. Replacement cost.
c. Original book value.
d. Fair value.

31. What is the measurement date for a share-based payment to employees that is classified as a liability?
a. The service inception date.
b. The settlement date.
c. The grant date.
d. The end of the reporting period.

32. A temporary difference that would result in a deferred tax liability is

a. Interest revenue on government bonds.
b. Excess of tax depreciation over financial accounting depreciation.
c. Subscriptions received in advance.
d. Accrual of warranty expense.

33. A deferred tax liability is computed using

a. The current tax laws, regardless of expected or enacted future tax laws.
b. Current tax laws, unless enacted future tax laws are different.
c. Either current or expected future tax laws, regardless of whether those expected laws have been enacted.
d. Expected future tax laws, regardless of whether those expected laws have been enacted.

34. Under PFRS 16, a lessee is required to recognize

A. Right of use asset and lease liability
B. Right of use asset but not lease liability
C. Lease liability but not right of use asset
D. Neither right of use asset nor lease liability

35. According to the IASB’s Conceptual Framework, which of the following characteristics should make
financial information relevant to users?
(1) Completeness
(2) Faithful representation
(3) Comparability
(4) Materiality
(5) Predictive value or confirmatory value or both

A (1), (2) and (3) B (2) and (4) C (1) and (2) D (4) and (5)

36. Which of the following are roles of the International Accounting Standards Committee Foundation (IASCF)?
(1) To guide the International Accounting Standards Board (IASB)
(2) To secure finance
(3) To issue IFRS
(4) To examine any identified or alleged departures from IFRS

A (3) and (4) B (1) and (2) C (1) and (3) D (2) and (4)

37. Which of the following contribute to the qualitative characteristic of comparability, according to the
IASB's Conceptual Framework
(1) Neutrality
(2) Materiality
(3) Corresponding information
(4) Disclosure of accounting policies
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A. All of the above B (1), (2) and (3) C. (3) and (4) D. (1), (2) and (4)

38. According to PAS 1 on Presentation of Financial Statements which of the following statements are correct?

(1) The accounting policies adopted by a company must be disclosed in the notes to the financial
statements
(2) Inappropriate accounting policies can be rectified by disclosure of the policies used or by the
inclusion of explanatory material
(3) Companies may choose to prepare their financial statements (except for the statement of cash
flows) on either the accrual basis or the cash basis

A. All of the above B. (1) only C. (1) and (2) D. (2) and (3)

39. PAS 1 on Presentation of Financial Statements suggests two possible formats for the income statement,
the difference between them being whether expenses are classified by their nature or by their function.

Which of the following items will be disclosed on the face of the income statement if a manufacturing
entity classifies expenses by their function?

(1) Raw materials and consumables used

(2) Distribution costs
(3) Employee benefit costs
(4) Cost of sales
(5) Depreciation and amortization expense

A (1), (3) and (4) B (1) and (5) C. (2), (3) and (5) D. (2) and (4)

40. In accordance with PAS on Inventories, the cost of interchangeable inventories must be arrived at using
cost formulas. Which of the following statements is correct?
(1) As long as the formula used is disclosed, any reasonable formula may be used
(2) First-in, first-out (FIFO) is the only acceptable formula
(3) Last-in, first-out (LIFO) is not an acceptable method
(4) An entity must use the same cost formula for all inventories having a similar nature

A (1), (3) and (4) B (3) and (4) C (2) only D (1) and (4)

41. According to PAS 8 on Accounting Policies, Changes in Accounting Estimates and Errors which of the
following items would qualify for treatment as a change in accounting estimate?

(1) Provision for obsolescence of inventory

(2) Correction necessitated by a material error
(3) A change as a result of the adoption of a new International Financial Reporting Standard
(4) A change in the useful life of a non-current asset

A. (2) and (3) B. (1) and (3) C. (1) and (4) D. All of the above

42. Which of the following statements concerning PAS 10 on Events After the Reporting Period are correct?

(1) Notes to the financial statements must give details of all material adjusting events reflected in those
financial statements
(2) Notes to the financial statements must give details of all non-adjusting events affecting users’ ability to
understand the company’s financial position
(3) Financial statements should not be prepared on a going concern basis if, after the reporting period, the
directors decide to liquidate the company

A All three statements are correct B (2) and (3) C (1) and (3) D (1) and (2)

43. According to PFRS 9 on Financial Instruments: Recognition and Measurement at what amount should a
financial instrument such as a long-term investment in the shares of a company initially be measured?

A. Cost if the nearest equivalent financial instrument

B. Fair value of consideration given
C. Fair value of consideration given less directly attributable transaction costs
D. Fair value of consideration given plus directly attributable transaction costs
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44. In accordance with PAS 36 on Impairment of Assets which of the following statements are true?

1) Non-current assets must be checked annually for indications of impairment

(2) An impairment loss must be recognized immediately in the income statement, except that all or part of a loss
on a previously revalued asset should be charged against any related revaluation surplus
(3) If the fair value less costs to sell exceeds the carrying amount of an asset there is no need to estimate value
in use
A. (1) and (2) B. (1) and (3) C. (2) and (3) D. (1), (2) and (3)

45. In accordance with PAS 36 on Impairment of Assets which of the following assets must be tested for
impairment annually?
(1) All assets
(2) Any assets where there is an indication of a potential impairment
(3) All intangible assets with indefinite useful lives
(4) Goodwill acquired in a business combination

A (1) only B (2) only C. (2) and (3) D. (2), (3) and (4)

46. According to PAS 37 on Provisions, Contingent Liabilities and Contingent Assets which of the following
criteria must be present in order for a company to recognize a provision?

(1) There is a present obligation as a result of past events

(2) It is probable that a transfer of economic benefits will be required to settle the obligation
(3) A reliable estimate of the obligation can be made

A. (1) and (2) B. (1) and (3) C. (2) and (3) D. (1), (2) and (3)

47. In which of the following circumstances would a provision be recognized under PAS 37 on Provisions,
Contingent Liabilities and Contingent Assets in the financial statements for the year ending 31 March 20X6?

(1) A board decision was made on 15 March 20X6 to close down a division. Potential costs are
P100,000. At 31 March 20X6 the decision had not been communicated to managers, employees or customers
(2) It is anticipated that a major refurbishment of the company’s head office will take place from June 20X6
onwards costing P85,000
(3) There are anticipated costs from returns of a defective product in the next few months of P60,000. In the past
all returns of defective products have always been refunded to customers

A (1) and (2) B (2) and (3) C (2) only D (3) only

48. In what circumstances is compensation expense immediately recognized?

A. In all circumstances.
B. In circumstances when the options are exercisable within two years for services rendered over the next two
years.
C. In no circumstances is compensation expense immediately recognized.
D. In circumstances when options are granted for prior service, and the options are immediately exercisable.

49. An item cannot be recognized in the statement of financial position or the income statement unless it meets
the two criteria of:

Criterion 1 Criterion 2
A . Materiality Relevance to the users;
B. Completeness Measurement reliability;
C. Probable economic benefits Measurement reliability.
D Neutrality Representational faithfulness;

50. The following are regarded as factors indicating the existence of significant influence over another entity:
I II III IV
 representation on the board of directors Yes Yes Yes Yes
 participation in decisions about dividends No Yes Yes Yes
 interchange of managerial personnel No No Yes No
 ability to control the investee’s operating policies No Yes No No

A . I; B. II; C. III; D. IV.

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51. For the purposes of equity accounting for an investment in an associate, it is presumed that the investor
has significant influence over the other entity where the investor holds:

A. between 1% and 5% of the voting power of the investee;

B. between 5% and 10% of the voting power of the investee.
C. 50% or more of the voting power of the investee;
D. 20% or more of the voting power of the investee;

52. When translating the revenue and expenses in the income statement, theoretically each item of revenue
and expense should be translated using the spot exchange rate between the:
A. functional currency and the foreign currency on the reporting date;
B. functional currency and the foreign currency on the date the transaction occurred;
C. presentation currency and the functional currency on the reporting date;
D. presentation currency and the local currency on the transaction date.

53. When preparing a consolidated statement of changes in equity, IFRS requires that any non-controlling
interest in equity of subsidiaries is:
A. shown on a line-by-line basis
B. shown as a one-line item;
C. disclosed in the statement of financial position, and not in the statement of changes in equity;
D. shown as a share of total ending equity of the subsidiary only;
.
54. The IASB Conceptual Framework identifies seven user groups that are considered to be important in
determining the existence of a reporting entity. These users groups include all of the following except:

A. investors;
B. lenders;
C. preparers
D. suppliers and other trade creditors.

55. All parent entities are required to present consolidation statements unless the following conditions apply to
them:

I. The parent is a wholly owned subsidiary.

II. The parent is a partly owned subsidiary and its owners do not object to the non-presentation of
consolidated financial statements.
III. The parent is not in the process of applying to issue any securities in a public market.
IV. The parent’s debt or equity securities are traded in a public market.

A. I and II only;
B. I, II and III only;
C. I, II and IV only;
D. I, II, III and IV.

56. In respect to both acquisitions and disposals of investments in subsidiaries, PAS 7 on Cash Flow
Statements, requires that an entity should disclose, in aggregate, the following:

I. The total purchase or disposal consideration.

II. The portion of the consideration discharged by cash or cash equivalents.
III.The amount of cash and cash equivalents in the subsidiary acquired or disposed of.
IV.The amount of the non-cash assets and liabilities acquired or disposed of.

A. I, II, and III only;

B. I, II and IV only;
C. II and III only.
D. I, II, III and IV;

57. Which of the following items would be presented in a cash flow statement?
A. payment of dividends through a share investment scheme;
B. proceeds from the issue of debentures;
C. acquisition of an investment in a subsidiary for consideration consisting of an exchange of non-
current assets and liabilities;
D. refinancing of long-term debt.
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58. If the classification of expenses by function method is used for the presentation of an income statement,
additional information on the following items must be disclosed:

A. revenue;
B. gains on disposal of assets;
C. gains on revaluation of assets;
D. depreciation and amortization expense.

59. PAS 1 on Presentation of Financial Statements requires disclosure in the statement of financial position of
the following items:

A. a statement of compliance with PFRS;

B. the measurement basis used for the revaluation of assets;
C. the carrying amount of property, plant and equipment;
D. information about the key assumptions used in the depreciation of assets.

60. The summary of accounting policies is normally presented:

A. before all of the financial statements in a financial report;

B. as the first note, after all the financial statements;
C. as the last note in a set of financial statements;
D. within the independent auditor’s report.

61. PAS 1 on Presentation of Financial Statements, requires the following note disclosures in relation to
dividends of an entity. The:
A. amount of any cumulative preference dividends not recognised;
B. names of the recipients of the dividends;
C. addresses of all shareholders who are entitled to receive the dividends;
D. a schedule of cumulative dividends paid in prior periods.

62. The following is no longer an allowable line item for presentation on the face of an income statement:
A. finance costs;
B. pre-tax loss attributable to discontinuing operations;
C. tax expense.
D. extraordinary items;

63. If an item of income is not material, then the manner of presenting that information, or whether or not it is
disclosed:
A. should not affect the economic decisions of users;
B. will have an impact on the economic decisions of users;
C. should not be included in the determination of profit or loss for the period;
D. will be included directly in retained earnings.

64. The level of rounding used in the financial statements refers to:
A. the abbreviation of words used;
B. the shortening of the notes by removing comparative numbers;
C. the truncation of the amounts presented;
D. the presentation of a concise financial report rather than a full financial report.

65. PAS 1 on Presentation of Financial Statements, requires that an entity must disclose the following
information in its financial statements:
I II III IV
 A description of the entity’s operations No No Yes Yes
 The legal form of the entity No Yes Yes Yes
 The name of the entity’s ultimate parent No No Yes No
 The address of the registered office No Yes Yes Yes

A. I; B. II; C. III; D. IV.

66. Where a material error occurs in the recording process, an adjustment:

A . may be recognized directly in retained earnings;
B . must be made to the prior period comparative balances;
C. may be deferred and recognized in a later accounting period;
D. is not necessary, but the item must be fully explained in the notes to the financial statements.
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67. Under PAS 36 on Impairment of Assets, the following assets are subject to impairment testing:

I II III IV
Inventory Yes Yes No No
Assets arising from construction contracts Yes Yes No No
Assets arising from employee benefits No Yes Yes No
Property, plant and equipment No Yes No Yes

A. I; B. II; C. III; D. IV.

68. An impairment loss occurs when:

A. the carrying amount of an asset exceeds the recoverable amount;
B. the recoverable amount of an asset exceeds the carrying amount;
C. the asset has a zero residual value;
D. the recoverable amount of an asset exceeds its initial cost.

69. The key characteristic for the classification of an asset as ‘held for sale’ is that the carrying amount of the
asset must:
A. principally be recovered through continuing use;
B. be lower than initial cost of the asset;
C. be higher than its net realisable value.
D. principally be recovered through a sale transaction;

70. The following criteria are used to determine whether an asset should be categorized as ‘held for sale’:
I. The asset should be available for immediate sale.
II. The asset should be available for sale at a future date yet to be determined.
III. The sale of the asset should be highly probable.
IV. The sale of the asset is a possibility.
V. There should be an active program to locate a buyer.
VI. There need not be an active marketing program for the asset.

A. I and III only;

B. I, III and V only;
C. II, IV and VI only;
D. IV and VI only.

71. According to PAS 38 on Intangibles, in order to be able to capitalize ‘development’ outlays an entity must
be able to demonstrate the following:
I. Technical feasibility and intention of completing the asset so it will be available for use or
sale.
II. Its ability to reliably measure the expenditure on the development of the asset.
II. Ability to use or sell the asset.
IV.How the asset will generate probable future economic benefits.
A. I, II, III and IV;
B. I, II and IV only;
C. II, and IV only;
D. II, III and IV only.

72. When an internally generated asset meets the recognition criteria, the appropriate treatment for costs
previously expensed is:
A. reinstatement;
B. include in the cost of the development of the asset;
C. no adjustment as these amounts may not be reinstated;
D. capitalize into the cost of the asset and adjust the opening balance of retained earnings.

73. The PAS 38 on Intangibles, allows the recognition of the following internally generated identifiable
intangibles:

I II III IV
Brands No No No Yes
Mastheads Yes No Yes Yes
Publishing titles No No Yes Yes
Customer lists Yes No No Yes
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A. I; B. II; C. III; D. IV.

74. In relation to the amortization of intangible assets, the general rule in PAS 38 Intangibles, is that unless
demonstrated otherwise:
A. the residual value does not enter into the determination of the amortisation charge;
B. the residual need no be reviewed at the end of each annual reporting period;
C. the residual value is presumed to be zero.
D. all intangible assets have a residual value at least equal to the amount of maintenance costs
incurred;

75. If a reporting entity chooses to switch from the cost model to the revaluation model for property, plant and
equipment, the periodic depreciation charge will:
A. decrease; B. increase; C. not be affected; D. no longer be required.

76. Deferred tax assets must be recognised for deductible temporary differences and for tax losses, but only to
the extent that:
A. it is probable that future taxable profits will be available;
B. it is possible that future taxable profits will be available;
C. there is a chance that future deductible items will be incurred.
D. it is likely that future deductible expenses will be incurred;

77. What happens when a petty cash is in use?

A. Petty cash is credited when the fund is replenished.
B. Most small amounts are paid from cash receipts before they are deposited.
C. Expenses paid with petty cash are recorded when the fund is replenished.
D. Petty cash is debited when the fund is replenished.

78. The allowance method of recognizing bad debt expense can be applied in more than one way. What two
conditions must be met before the allowance method can be used?
A. Bad debts must be relevant and reliable.
B. Bad debts must be consistent over time and the method used to estimate them must be consistently
applied.
C. Bad debts must be probable and estimable.
D. Bad debts must be expected and material.

79. Which of the following categories are used in the statement of financial position of a nonprofit organization?
A. Changes in unrestricted, temporarily restricted, and permanently restricted net assets.
B. Income, expenses, and unrestricted net assets.
C. Net assets, income and expenses.
D. Assets, liabilities, and net assets.

80. In the statement of activities for nonprofit organization, expenses should be deducted from
A. Temporarily restricted revenue
B. Unrestricted revenue
C. Permanently restricted revenue
D. Unrestricted net assets

81. Applied overhead consists of which of the following?

A. estimated activity times predetermined overhead rate
B. actual activity times actual overhead rate
C. estimated activity times actual overhead rate
D. actual activity times predetermined overhead rate

82. In a process costing system, the journal entry to record the transfer of goods from Department #2 to
Finished Goods Inventory is a
A.. debit Work in Process Inventory #2, credit Finished Goods Inventory.
B. debit Finished Goods Inventory, credit Work in Process Inventory #1.
C. debit Finished Goods Inventory, credit Work in Process Inventory #2.
D. debit Cost of Goods Sold, credit Work in Process Inventory #2.

83. The key point of double-entry bookkeeping is that every transaction:

A. Is recorded by equal peso amount of debit and credit entries.
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B. Is recorded in both the journal and the ledger.

C. Affects both sides of the statement of financial position.
D. Is both recorded and posted.

84. Which of the following should be taken into account when determining the cost of inventory?
A. Storage cost of part-finished goods
B. Abnormal freight-in
C. Recoverable purchase tax
D. Interest on inventory loan

85. Factory supplies to be consumed in the production process are included in

A. Inventory
B. Property, plant and equipment
C. Investment property
D. Intangible assets

86. Inventories shall be measured at

A. Cost
B. Net realizable value
C. Lower of cost or net realizable value
D. Higher of cost or net realizable value

87. A bearer plant is a living plant that

A. Is used in the production or supply of agricultural produce.
B. Is used to bear produce for more than one period.
C. Has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.
D. Must possess all of these characteristics.

88. Agricultural produce harvested from bearer plant is measured at

A. Fair value
B. Fair value less cost of disposal at the point of harvest
C. Cost less cost of disposal
D. Fair value plus cost of disposal at the point of harvest

89. The components of a defined retirement benefit cost include all, except
A. Service cost
B. Net interest
C. Remeasurements
D. Contribution to the plan

90. What valuation model should an entity use to measure property, plant, and equipment?
A. Revaluation model and fair value model
B. Cost model and revaluation model
C. Cost model only
D. Cost model and fair value model

91. Depreciation is best described as a method of

A. Asset valuation
B. Current value allocation
C. Cost allocation
D. Useful life determination
92. When property is acquired by issuing equity shares, which of the following is the best basis for establishing
the historical cost of the acquired asset?
A. Historical cost of the asset to the seller.
B. Historical cost of a similar asset.
C. Fair value of the asset received.
D. Fair value of shares issued.
93. It is the process of reporting in the statement of financial position or income statement an element of
financial statements.
A. Recognition
B. Allocation
C. Realization
D. Summarization
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94. For purposes of consolidating FS, the difference between the end of the reporting period of the
subsidiary and that of the parent should be no more than
a. One month
b. Two months
c. Three months
d. The number of months in the normal operating cycle

95. On January 1, 2018, Lake Corporation acquired 100% of the outstanding ordinary shares of Shore
Corporation for P800,000. On the date of acquisition, the fair value of Shore’s net identifiable assets is
P820,000. The book value of Shore Corporation’s net assets is P760,000. In Lake’s 2018 financial
statements, Lake should recognize
a. Goodwill on the statement of financial position.
b. A gain from bargain purchase.
c. A reduction in certain noncurrent assets on the statement of financial position.
d. An extraordinary gain.

96. With respect to the cost of a business acquisition, PFRS 3 requires cost (total considerations) to be
allocated
a. Based on fair values c. Based on recoverable amounts
b. Based on original costs d. To the assets based on their carrying value

97. Due to a decline in market price in the the second quarter, an entity incurred an inventory loss. The market
price is expected to return to previous level by the end of the year. At the end of the year, the decline had
not reversed. When should the loss be reported in the interim statement?
A. In the second quarter.
B. In the fourth quarter.
C. Proportionately in each of the second, third, and fourth quarters.
D. Proportionately in the first, second, and third quarters.

98. Segment reporting shall apply to

A. Consolidated financial statements of a group.
B. Separate financial statements of an entity.
C. Neither the separate financial statements of an entity nor the consolidated financial statements of a
group.
D. Both the separate financial statements of an entity and the consolidated financial statements of a
group.

99. What is the authoritative status of of the Framework?

A. The Framework has the highest level of authority.
B. In the absence of a Standard or an Interpretation that specifically applies to a transaction, the
Framework should be followed.
C. In the absence of a Standard or an Interpretation that specifically applies to a transaction,
management should consider the applicability of the Framework in developing and applying an
accounting policy that results in information that is relevant and reliable.
D. The Framework applies only when the FRSC develops new or revised standards.
100. The system of bookkeeping that recognizes the two-fold effect of an accountable event is known as
a. Double-entry b. Single-entry c. Cash basis d. Accrual basis