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WorksheetsACCTG 22 FINAL EXAM
Total questions: 50
Worksheet time: 50mins
It is the process of incorporating in the statement of financial position or statement of comprehensive income an item that meets the definition of an element of the financial statement.
Recognition
Measurement
Realization
Allocation
Which measurement is not currently used in practice
Present value
Net realizable value
Current replacement cost
Inflation-adjusted cost
Generally, revenue is recognized
At the point of sale
When cause and effect are associated
At the point of cash collection
At appropriate points throughout the operating cycle
The primary distinction between revenue and gain is
The materiality of the amount
The likelihood that the transaction will recur in the future
The nature of the activity that gives rise to the transaction
Which is the purpose of the notes to financial statements?
To present information about the basis of preparation of the financial statements and the specific accounting policies used.
To disclose the information required by Philippine Financial Reporting Standards that is not presented elsewhere in the financial statements
To provide additional information that is not presented on the face of the financial statements but that is necessary for a fair presentation.
All of those can be considered a purpose of the notes to financial statements.
Which is the first item in presenting the notes to financial statements?
Statement of compliance with PFRS.
Other disclosures, such as contingent liabilities, unrecognized contractual commitments, and nonfinancial disclosures.
Supporting for items presented on the face of the financial statements.
Summary of significant accounting policies.
The cross reference between each line item in the financial statements and any related information disclosed in the notes to financial statements
Is voluntary
Is mandatory
Depends on the industry
Is either voluntary or mandatory
The elements directly related to the measurement of financial position are
Assets, liabilities, equity, income, and expense
Assets, liabilities, and equity
Income and expense
Assets and liabilities
The accounting equation must remain in balance
Throughout each step of the accounting cycle
Only when journal entries are recorded
Only at the time the trial balance is prepared
Only when formal financial statement are prepared
Which of the following statements about Philippine GAAP is (are) false?
I. The Philippine Interpretation Committee issuances are an indication that the IFRSs (or PFRSs) are rules-based
II. The Securities and Exchange Commission (SEC) allows micro-entities to use the cash basis of accounting
III. All reporting enterprise entities in the Philippines including regulated entities are required to follow full Philippine Financial Reporting Standards (PFRSs) in the preparation of financial statements.
I only
III only
I and III only
I, II, and III
1. Which of the following statements about the background of accounting is (are) true?
I. The accounting cycle that Luca Pacioli designed is exactly the same as that which the accounting profession is adopting today
II. A milestone for the accountancy profession in the current millennium is the uniform adoption of international accounting standards by all countries of the world
III. Adoption of the same accounting standards worldwide would have the advantage of comparability across entities and lower costs in the preparation of financial information.
Statement I Statement II Statement III
False True True
False False True
True True False
True False True
The Financial Accounting Standard Board employs a “due process” system which
Is an efficient system for collecting dues from members
Enables interested parties to express their views on issues under consideration
Identifies the accounting issues that are the most important
Requires that all accountants must receive a copy of financial standards
The Financial Reporting Standards Council (FRSC)
Works under the direct supervision of the Professional Regulation Commission
Has the power to issue and revoke CPA license
Is the authority of accounting standards in the Philippine
Crafted the Implementing Rules and Regulations (IRR) of the Philippine Accountancy Act of 2004
A soundly developed a conceptual framework of concepts and objectives should
Increase financial statements user’s understanding of and confidence in financial reporting
Enhance comparability among companies financial statements
Allow new emerging practical problems to be more quickly solved
All of these
The use of a special journal system of transactions and events is an application of which of the following qualities of financial reporting?
Faithful representation
Relevance
Timeliness
Completeness
All of the following will justify the recognition of an asset by an accounting entity except when
It acquires legal ownership of the asset
It has legal control of the asset
It has exclusive knowledge band control of expected benefit flow even without legal right
It acquires physical possession of the asset with or without legal ownership or legal control.
Which of the following global phenomenon is the primary factor that accelerated what is known as “borderless accounting”?
Information technology
Globalization
Uniform international financial reporting standards
Uniform international education standards
The basic financial statements, according to the PAS 1, include all of the following except:
Statement of Changes in Financial Position
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
1. Which of the following statements are about financial accounting is incorrect?
I. General purpose financial statements must be prepared by a certified public accountant
II. Financial accounting is a social science that can be influenced by changes in the legal, political, and business environments
III. Financial statements can be stated in any language or dialect of a geographical jurisdiction
IV. All significant information useful to users can be displayed on the face of the basic financial statements
Statement I and II only
Statements I and II and III only
Statement I, III, and IV only
Statement III and IV only
Which of the following accounting measurements may be made with the greatest degree of objectivity?
Bad debts expense for the year
Cost of land owned as at year-end
The appraised value of the land at year-end
Net income
In which step/s of the accounting cycle is GAAP and the qualitative objectives most applied?
Journalizing and adjusting the books
Posting and preparing a trial balance
Journalizing and preparing closing entries
Preparing the financial statements
Which of the following statements about the accounting cycle is true?
The first step in posting is to transfer the debit account from the journal to the ledger
A periodic adjusting entry affects both a balance sheet and income statement accounts, or in some rate instances, only income statement accounts
Selecting and analyzing accountable events are part of the recording phase of the accounting cycle
Adjusting are part of the recording phase of accounting
The financial information qualities of faithful representation, verifiability, and freedom from error are typically applied in which of the following steps of the accounting cycle?
Journalizing
Posting
Trial Balance preparation
Adjusting entries
Which of the following basic accounting assumptions is threatened by the existence of severe inflation in the economy?
Monetary unit assumption
Periodicity assumption
Going-concern assumption
economic entity assumption
1. Under the revised Conceptual Framework, which of the following are among the enhancing qualitative objectives of financial accounting?
A. Relevance D. Faithful representation G. Comparability
B. Neutrality E.Verifiability H. Freedom from error
C. Understandability F.Timeliness I. Completeness
A, D, and F
C, E, F, and G
E, G, H
C, D, E, and F
The International Accounting Standards Board’s conceptual framework includes a cost-benefit constraint. Which of the following best describes the cost-benefit constraint?
The benefits of the information must be greater than the cost of providing it
Financial information should be free from cost to users of the information
Costs of providing financial information are not always evident or measurable but must be considered
All of the choices are correct
Which of the following statements about the bases of accounting for income and expense is false?
Total Operating expenses will be the same under pure cash and modified cash basis
Income and expenses with cash flows are recognized in cash, modified cash, and accrual basis.
Modified cash basis will yield the same Cost of Sales amount as Accrual basis
Cash basis of accounting does not recognize any adjusting entry at year-end
The purpose of the International Accounting Standards Board is to
Develop a single high-quality IFRS
Issue enforceable standards that regulate the financial accounting and reporting of multinational corporations
Develop a uniform currency in which the financial transactions of companies throughout the world would be measured
Arbitrate accounting disputes between auditors and international companies
Related parties include all the following except
Affiliates
Associates
Individuals owning, directly or indirectly, an interest in the voting power of the reporting entity that gives them significant influence over the entity.
Two entities that have two common directors.
Events after the end of the reporting period are favorable or unfavorable events that
Occur between the end of the reporting period and the date of the next annual financial statements.
Occur between the end of the reporting period and the date of the next interim or annual financial statements.
Occur between the end of the financial reporting period and the date when the financial statements are authorized for issue
Occur between the end of the financial reporting period and the date of the next interim financial statements
The financial statements are authorized for issue
When the board of directors reviews the financial statements and authorizes them for the issue.
When the financial statements are made available to shareholders.
When the shareholders approve the financial statements at their annual meeting.
When the approved financial statements are filed with a regulatory body.
Which of the following information is not specifically a required disclosure in relation to the Financial Statement?
Name of the reporting entity or other means of identification and charge in that Information from the previous year
Names of major shareholders of the entity
Level of routing used in presenting the financial statement
Whether the financial statement covers the individual entity or a group of entities
The International accounting standard board.
Was the predecessor to the IASC.
Can overrule the FRSC when their policies disagree.
Promotes the use of high quality and understandable global accounting standards.
Had its Headquarters in Geneva.
General-purpose financial statements are the product of.
Financial accounting
Managerial accounting
Both Financial and managerial accounting
Neither Financial nor managerial accounting
What is the quality of information that is capable of making a difference in a decision?
Faithful representation
Understandability
Timeliness
Relevance
Which statement of discontinued operation is true?
The gain or loss on disposal of a component of business should be reported as other income.
Results of operations of a discontinued component should be reported below income from continuing operation.
Earnings per share should not be presented for discontinued operation.
The gain or loss of disposal of a component of a business should not be segregated but reported together with the results of continuing operations
Which is a financing activity in the statement of cash flow?
Cash purchase of an intangible asset.
Cash purchase of bonds issued by another entity.
Cash received as repayment for funds loaned
Cash purchase of treasury shares
All of the following topics are addressed in PFRS for SME, except
Revaluation model for property, plant, and equipment
Measurement of the basic debt instrument
Earnings per share
Cost model for investment in an associate
What is the effect of overstatement of ending inventory in the current period in the income of the next period?
Overstated
Understated
Correctly stated
The answer cannot be determined from the information
What would be the advantage of having all countries adopt and follow the same accounting standards?
Consistency
Comparability
Lower preparations cost
Both “b” and “c”
Which of the following is an ethical concern of accountants?
Earnings manipulation
Conservative accounting
Industry practices
None of these
Which of the following are the lead international standard-setters in the world?
IASB and FASB
IASB and IFRIC
IASB and IOSCO
FASB
In the International Accounting Standards Board’s (IASB’s) Conceptual Framework, qualitative characteristics
Are considered either fundamental or financing
Contribute to the decision-usefulness of financial reporting information
Distinguish better information from inferior information for decision-making purposes.
Are all of (A), (B), and (C) choices above
1. Which of the following is true regarding financial information in the Statement of Comprehensive Income?
I It helps users to evaluate the past performance of the enterprise
II It provides a basis for predicting future performance as a going concern
III It is indicative of management’s stewardship of the entity for a period of time
I only
I and II only
I and III only
I, II, and III
Which of the following statements on the scope of authority of the PFRSs, and the Conceptual Framework is false?
The Philippine Financial Reporting Standards in the Philippines include the PFRSs, the PASs, and the Philippine Interpretation
The Conceptual framework has the highest level of authority in financial accounting and reporting practice in the Philippines
The Philippine Accounting Standards applies to all reporting enterprises, whether publicly accountable or small and medium-sized entities
The Philippine Interpretation Committee (PIC) assists the FRSC and the public it serves by addressing newly identified financial reporting or controversial issues in the Philippines not specifically covered by the PFRSs.
The accounting concept of matching is best demonstrated by
Recognizing prepaid rent received as revenue
Not recognizing any expense unless some revenue is realized
Establishing an allowance for possible market declines in inventory value
Recognizing ending inventory in the computation of the cost of sales to be deducted from sales
CPAs, firms and partnerships of CPAs engaged in the practice of public accountancy including partners and staff members thereof, shall register with the Commission and the Board, such registration to be renewed every
One year
Two years
Three years
Five years
What is the relationship between the Securities and Exchange Commission and accounting standard setting in the Philippines?
The SEC requires all companies listed on an exchange to submit their financial statements to the SEC.
The SEC coordinates with the FRSC in establishing accounting standards.
The SEC has the mandate to establish accounting standards to be followed by enterprises under its jurisdiction.
The SEC reviews financial statements for compliance
According to the IASB Framework, the financial statement element is defined as increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants, is
Revenue
Income
Profits
Gains
According to the IASB Framework, the two criteria required for incorporating items into the income statement or statement of financial position are that
It meets the definition of relevance and faithful representation.
It meets the definition of an element and can be measured reliably
It satisfies the criteria for capital maintenance.
It meets the requirements of comparability and consistency.
