SECOND YEAR - ELIMINATION

The Philippine Financial Reporting Standards (PFRSs) are standards adopted by the

• Accounting Standards Council (ASC)
• Financial Reporting Standards Committee (FRSC)
• Philippine Institute of Certified Public Accountants (PICPA)
• Financial Reporting Standards Council (FRSC)

When resolving accounting problems not specifically addressed by current standards, an entity should be guided by the hierarchy of reporting standards. The correct sequence of the hierarchy of reporting standards in the Philippines is I. PASs, PFRSs, and Interpretations II. Conceptual Framework III. Judgement

• I, III, II
• I, II, III
• II, I, III
• I, II

Imputing interest for certain assets and liabilities is primarily based on the concept of

• Valuation
• Conservatism
• Consistency
• Stable monetary unit

The operating expenses section of a statement of comprehensive income does not include

• Selling expenses
• Administrative expenses
• Interest expenses
• Loss on sale of securities

There is no operating leverage if there is no

• Profit
• Sales
• Variable cost
• Fixed cost

Which is or are the means by which the issue price of no par value common value shares is determined?

• It may be fixed in the articles of incorporation or by-laws.
• It may be fixed by the Board of Directors based on the authority given in the Articles of Incorporation.
• It may be fixed by the stockholders representing at least the majority of the outstanding capital stock at a meeting duly called for the purpose.
• All of the above

On an entity’s December 31, 20x1 statement of financial position, which of the following items should be included in the amount reported as cash? I. A check payable to the enterprise, dated January 2, 20x2, in payment of a sale made in December 20x1 II. A check drawn on the enterprise’s account, payable to a vendor, dated and recorded in the company’s books on December 31, 20x1 but not mailed until January 10, 2002.

• I only
• II only
• I and II only
• Neither I nor II

An entity has a quick ratio of 1:25:1. Which of the following transactions will most likely deteriorate the entity’s quick ratio?

• Issuance of additional stocks arising from stock split
• Issuance of serial bonds to purchase a machinery
• Uncollectible accounts receivable is written off against allowance account
• Sale of inventory on account

Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense?

• A percentage of net credit sales adjusted for the balance in the allowance
• A percentage of net credit sales not adjusted for the balance in the allowance
• A percentage of accounts receivable not adjusted for the balance in the allowance
• An amount derived from aging accounts receivable and not adjusted for the balance in the allowance

Loans and receivables are initially recognized at

• Fair value
• Face value
• Amortized cost
• Fair value plus transaction costs that are directly attributable to the acquisition