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WorksheetsSession 1 and 2 Assessment
Total questions: 70
Worksheet time: 36mins
Name
Class
Date
1.
A complete set of financial statements includes the following components, except
a)
Statement of financial position, statement of comprehensive income and statement of cash flows.
b)
Statement of changes in equity
c)
Notes, comprising a summary of significant accounting policies and other explanatory information
d)
Reports and statements such as environmental reports and value added statements.
2.
What is the objective of financial statements?
a)
To provide information about the financial position, financial performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions.
b)
To prepare and present a statement of financial position, statement of comprehensive income, statement of cash flows and statement of changes in equity.
c)
To prepare and present relevant, reliable, comparable and understandable information to investors and creditors.
d)
To prepare and present financial statements in accordance with all applicable PFRS and Interpretations.
3.
To meet the objective of providing information about financial position, financial performance and cash flows of an entity, financial statements should provide information about all of the following, except
a)
Assets, liabilities and equity
b)
Income and expenses, including gains and losses
c)
Contributions by and distribution to owners in their capacity as owners.
d)
Nature of the entity's business activities
4.
Which of the following statements is incorrect concerning fair presentation of financial statements?
a)
Fair presentation requires the faithful representation of the effects of transactions and other events.
b)
Financial statements shall present fairly the financial position, financial performance and cash flows of an entity.
c)
In virtually all circumstances, a fair presentation is achieved by compliance with applicable PFRS.
d)
An entity whose financial statements comply with PFRS shall not make an explicit and unreserved statement of such compliance in the notes.
5.
Technically, offsetting in financial statements is accomplished when
a)
The allowance for doubtful accounts is deducted from accounts receivable.
b)
The accumulated depreciation is deducted from property, plant and equipment.
c)
The total liabilities are deducted from total assets to arrive at net assets.
d)
Gains or losses from disposal of noncurrent assets are reported by deducting from the proceeds the carrying amount of the assets and the related disposal cost.
6.
Materiality depends on
a)
The nature of the omission or misstatement.
b)
The size of the omission or misstatement.
c)
The size and nature of the omission or misstatement judged in the surrounding circumstances.
d)
The judgement of management.
7.
Financial statements include a statement of financial position, a statement of comprehensive income, a statement of changes in equity and a statement of cash flows. Which of the following is also included as a component of financial statements? (a)
Choose from the below words
A statement of retained earnings
Accounting policies
An auditor's report
A directors' report
8.
Which of the following is included in a complete set of financial statements?
a)
A statement by the board of directors of compliance with local legislation
b)
A statement of changes in equity
c)
Summarized statements of financial position for the last five years
d)
Value added statement
9.
Items of dissimilar nature or function
a)
Must always be presented separately in financial statements.
b)
Must not be presented separately in financial statements.
c)
Must be presented separately in financial statements if those items are material
d)
Must be presented separately in financial statements even if those items are immaterial.
10.
An entity shall classify an asset, as current when (choose the incorrect one)
a)
The entity expects to realize the asset or intends to sell or consume it within the entity's normal operating cycle.
b)
The entity holds the asset for the purpose of trading.
c)
The entity expects to realize the asset within twelve months after the reporting period.
d)
The asset is cash or a cash equivalent that is restricted to settle a liability for more than twelve months after the reporting period.
11.
In which section of the statement of financial position should employment taxes that are due for settlement in 15 months' time be presented?
a)
Current liabilities
b)
Current assets
c)
Noncurrent liabilities
d)
Noncurrent assets
12.
An entity has a loan due for repayment in six months' time, but the entity has the option to refinance for repayment two years later. The entity plans to refinance this loan. In which section of the statement of financial position should this loan be presented?
a)
Current liabilities
b)
Current assets
c)
Noncurrent liabilities
d)
Noncurrent assets
13.
A dividend declared by the entity before year-end and payable to the shareholders three months after the end of reporting period is classified as
a)
A noncurrent liability
b)
A current liability
c)
Equity
d)
A current asset
14.
Which of the following must be included on the face of an entity's statement of financial position?
a)
Investment property
b)
Number of shares authorized
c)
Contingent liability
d)
Shares in an entity owned by that entity
15.
Which of the following is not required to be presented as minimum information on the face of the statement of financial position?
a)
Investment property
b)
Investment accounted under the equity method
c)
Biological asset
d)
Contingent liability
16.
An example of an item which is not an element of working capital is
a)
Accrued interest on note receivable
b)
Treasury share
c)
Work in process
d)
Temporary investment
17.
As generally used, the term "net assets" represents
a)
Retained earnings of an entity
b)
Current assets less current liabilities
c)
Total paid in capital of an entity
d)
Total assets less total liabilities
18.
Which of the following items would normally be excluded from the computation of working capital?
a)
Advances from customers
b)
The portion of long-term debt that matures within one year after the reporting period and will be paid from the regular cash account
c)
Prepaid insurance
d)
Cash surrender value of life insurance
19.
Which of the following items is usually classified as a noncurrent asset?
a)
Plant expansion fund
b)
Prepaid rent
c)
Supplies
d)
Goods that are in the process of being completed for another entity
20.
The term "deficit" refers to
a)
An excess of current assets over current liabilities.
b)
An excess of current liabilities over current assets.
c)
A debit balance in retained earnings.
d)
A loss that is reported as a prior period error.
21.
The operating cycle of an entity
a)
Is the time between the acquisition of materials entering into a process and their realization in cash or cash equivalent.
b)
Causes the distinction between current and noncurrent items to depend on whether they will affect cash within one year.
c)
Is the period of time normally elapsed from the time the entity expends cash to the time it converts trade receivables back into cash.
d)
Is a period of one year.
22.
When there is much variability in the duration of the entity's normal operating cycle, the operating cycle is measured at
a)
Its mean value
b)
Its median value
c)
Twelve months
d)
Three years
23.
Assets to be sold, consumed or realized as part of the entity's normal operating cycle are
a)
Current assets
b)
Noncurrent assets
c)
Classified as current or noncurrent in accordance with other criteria.
d)
Noncurrent investments
24.
In which section of the statement of financial position should cash that is restricted for the settlement of a liability due 18 months after the reporting period be presented?
a)
Current assets
b)
Equity
c)
Noncurrent liabilities
d)
Noncurrent assets
25.
Refer to the image below
(a)
26.
Refer to the image below
(a)
27.
Refer to the image below
(a)
28.
Refer to the image below
(a)
29.
Refer to the image below
(a)
30.
Refer to the image below
(a)
31.
Refer to the image below
(a)
32.
Refer to the image below
(a)
33.
What amount should be reported as total shareholder's equity?
(a)
34.
What amount should be reported as Retained earning on December 31,2021?
(a)
35.
Refer to the image below
a)
5,150,000
b)
4,850,000
c)
5,050,000
d)
8,550,000
36.
Refer to the image below
a)
4,400,000
b)
3,500,000
c)
4,200,000
d)
2,800,000
37.
Refer to the image below
a)
700,000
b)
900,000
c)
500,000
d)
800,000
e)
38.
How much is the cost of goods sold
a)
900,000
b)
350,000
c)
450,000
d)
375,000
39.
How much is the total manufacturing cost
a)
5,950,000
b)
5,250,000
c)
4,750,000
d)
5,050,000
40.
How much is the total cost of goods sold
a)
4,900,000
b)
5,750,000
c)
4,550,000
d)
5,050,000
41.
Refer to the image below
a)
980,000
b)
1,050,000
c)
1,000,000
d)
1,220,000
42.
Naval Company consumed P 450,000 worth of direct materials during the year. At the end of the year the direct materials inventory was P 25,000 lower than at the beginning of the year. How much was the direct materials procured/purchases during the year?
a)
475,000
b)
375,000
c)
400,000
d)
425,000
43.
How much is the cost of goods manufactured?
a)
443,500
b)
382,000
c)
386,000
d)
388,000
44.
How much is the cost of goods sold?
a)
383,000
b)
385,000
c)
379,000
d)
440,500
45.
The summary of significant accounting policies shall disclose
a)
The composition of property, plant and equipment and the depreciation method used
b)
The composition of property, plant and equipment only
c)
The depreciation method used only
d)
Neither the composition of property, plant and equipment and the depreciation method used
46.
Financial statements shall include disclosure of material transactions between related parties, except
a)
Nonmonetary exchange by affiliates
b)
Sales of inventory by a subsidiary to its parent
c)
Expense allowance for executives which exceed normal business practice
d)
An entity’s agreement to act as surety for a loan to its chief executive officer
47.
Which is not a purpose of the notes to financial statements?
a)
To present information about the basis of preparation of the financial statements and the specific accounting policies used.
b)
To disclose the information required by Philippine Financial Reporting Standards that is not presented elsewhere in the financial statements.
c)
To provide additional information which is not presented on the face of the financial statements but that is necessary for a fair presentation.
d)
To provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.
48.
Notes to financial statements are beneficial in meeting the disclosure requirements of financial reporting. The notes should not be to used to
a)
Describe significant accounting policies.
b)
Describe depreciation, methods employed by the entity.
c)
Describe the principles and methods peculiar to the industry in which the entity operates when these principles and methods are predominantly followed in that industry.
d)
Correct an improper presentation in the financial statements.
49.
The presentation of the notes to financial statements in a systematic manner
a)
Is voluntary
b)
Is mandatory
c)
Is mandatory, as far as practicable
d)
Depends on the industry
50.
A related party transaction is a transfer of resources or obligations
a)
Between related parties when a price is charged.
b)
Between related parties, regardless of whether a price is charged.
c)
Between unrelated parties when a price is charged.
d)
Between unrelated parties, regardless of whether a price is charged.
51.
Unrelated parties include all of the following, except
a)
Providers of finance in the course of their normal dealings with an entity by virtue only of those dealings.
b)
Two venturers simply because they share joint control over a joint venture.
c)
Single customer with whom an entity transacts a significant volume of business merely by virtue of the resulting economic dependence.
d)
Key management personnel and close family members of such individuals.
52.
Close family members of an individual include all of the following, except
a)
The individual’s spouse and children
b)
Children of the individual’s spouse
c)
Dependents of the individual or individual’s spouse
d)
Brothers and sisters of the individual
53.
The minimum disclosures about related party transactions necessary for an understanding of the financial statements include all of the following, except
a)
The amount of the transactions
b)
Amounts of outstanding balances
c)
Provision for doubtful accounts related to the outstanding balances
d)
Nature of the relationship
54.
This is a pricing policy between related parties which sets the price by reference to comparable goods sold in an economically comparable market to a buyer unrelated to the seller.
a)
No price method
b)
Cost plus method
c)
Resale price method
d)
Uncontrolled price method
55.
An entity decided to sell the small appliance group. What is the earliest point at which the entity shall report the small appliance group as a discontinued operation?
a)
When the entity classifies it as held for sale.
b)
When the entity receives an offer for the segment.
c)
When the entity first sells any of the asset of the segment.
d)
When the entity sells the majority of the assets of the segment
56.
How should the effect of a change in accounting estimate be accounted for?
a)
By restating amounts reported in financial statements of prior periods.
b)
By reporting proforma amounts for prior periods
c)
As a prior period adjustment to beginning retained earnings
d)
In the period of change and future periods if the change affects both
57.
Which of the following is characteristic of a change in accounting estimate?
a)
It usually need not be disclosed
b)
It does not affect the financial statements of prior period
c)
It should be reported through the restatement of the financial statement
d)
It makes necessary the reporting of proforma amounts for prior periods
58.
Which of the following is not a justification for a change in depreciation method?
a)
A change in the estimated useful life
b)
A chance in the pattern of the estimated future benefit
c)
To conform with the depreciation method prevalent in a particular industry.
d)
A change in the estimated future benefit
59.
When an entity changed the expected service life of an asset, which of the following should be reported?
a)
Cumulative effect of change in accounting policy
b)
Proforma effect of retroactive application
c)
Prior period error
d)
An accounting change that should be reported in the period of change and future periods.
60.
Which is not classified as an accounting change?
a)
Change in accounting policy
b)
Change in accounting estimate
c)
Error in the financial statements
d)
All of these are classified as an accounting change
61.
Which is the best explanation why accounting changes are classified into change in accounting policy and change in accounting estimate?
a)
The materiality of the change.
b)
Each change involves different method of recognition in the financial statements.
c)
The fact that some treatments are considered GAAP and some are not.
d)
The need to provide a favourable profit picture.
62.
Why is retrospective treatment of a change in accounting estimate prohibited?
a)
Change in accounting estimate is a normal recurring correction or adjustment which is the natural result of the accounting process.
b)
The retrospective treatment for any type of presentation is not allowed.
c)
Retrospective treatment of a change in accounting estimate is prohibited under existing standard.
d)
The existing standard is silent on the issue.
63.
cumulative effect of the change for prior periods should be reported as adjustment to
a)
Beginning retained earnings for the earliest period presented.
b)
Net income for the period in which the change occurred.
c)
Comprehensive income for the earliest period presented.
d)
Shareholders’ equity for the period in which the change occurred.
64.
Which of the following is accounted for as a change in accounting policy?
a)
A change in the estimated useful life of property, plant and equipment
b)
A change from cash basis to accrual basis of accounting
c)
A change from expensing immaterial expenditures to deferring and amortizing them when material
d)
A change in inventory valuation from FIFO to average method.
65.
A change in accounting policy includes all of the following except
a)
The initial adoption of an accounting policy to carry asset at revalued amount.
b)
The change from cost model to revaluation model in measuring property, plant and equipment.
c)
A change in the measurement basis.
d)
A change from one method of depreciation to a different method of depreciation.
66.
a)
1,350,000
b)
1,400,000
c)
1,300,000
d)
1,325,000
67.
a)
600,000
b)
180,000
c)
420,000
d)
0
68.
a)
1,800,000
b)
1,000,000
c)
800,000
d)
200,000
69.
What adjustment should be made to net income of 2019?
a)
3,000,000 decrease
b)
3,000,000 increase
c)
1,200,000 decrease
d)
1,200,000 increase
70.
What adjustment should be made to net income of 2018 presented as comparative figure in 2019?
a)
1,800,000 decrease
b)
1,800,000 increase
c)
3,000,000 decrease
d)
0
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