WorksheetsReviewer ni Ritsard sa CFAs Padayon!!!!
Total questions: 78
Worksheet time: 39mins
Financial accounting is concerned with
General- purpose reports on financial position and financial performance
Specialized reports for inventory management and control.
Specialized reports for income tax computation and recognition
General- purpose reports on changes in stock prices and future estimates of market position.
The assumed continuation of a business entity in the absence of evidence to the contrary is an example of the accounting concept of
Accrual
Consistency
Comparability
Going concern
The primary focus of financial accounting has been on meeting the needs of which of
the following groups?
Managers of an entity
Present and potential creditors of an entity
National and local taxing authorities
Independent auditors
It is a global phenomenon" intended to bring about transparency and a higher degree of comparability in financial reporting, both of which will benefit the investors and are essential to achieve the goal of one uniform and globally accepted financial reporting standards.
IFRS
Borderless accounting
World trade
Information technology
Accounting is a service activity and its function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be usefiul in making economic decision. This accounting definition is given by
Financial Reporting Standards Council
AICPA Committee on Accounting Terminology
American Accounting Association
Board of Accountancy
Once an accounting standard has been established
The standard is continually reviewed to see if modification is necessary
The standard is not reviewed unless the SEC makes a compliant.
The task of reviewing the standard to see if modification is necessary is given to the PICPA,
The principle of consistency requires that no revisions ever be made to the standard.
The process of establishing financial accounting standards
Is a democratic process in that a majority of practicing accountants must agree with a standard before it becomes implemented.
Is a legislative process based on rules promulgated by government agencies
Is based solely on economic analysis of the effects each standard will have if it is implemented.
Is a social process which incorporates political actions of various interested users groups as
well as professional research and logic
Which accounting process is the recognition or non-recognition of business activities as accountable events?
Identifying
Measuring
Recording
Communicating
It is the body authorized by law to promulgate rules and regulations affecting the practice of the accountancy professions in the Philippines.
Board of Accountancy
Philippine Institute of Certified Public Accountant
Securities and Exchange Commission
Financial Reporting Standards Council
The basic purpose of accounting is
To provide the information that the managers of an economic entity need to control its operation.
To provide information that the creditors of an economic entity can use in deciding whether to make additional loans to the entity.
To measure the periodic income of the economic entity.
To provide quantitative financial information about an entity that is useful in making rational economic decision,
Financial accounting can be broadly defined as the area of accounting that prepares
General purpose financial statements to be used by parties internal to the entity only.
Financial statements to be used by investors only
General purpose financial statements to be used by parties both internal and external to the entity.
Financial statements to be used primarily by management
The purpose of the International Financial Reporting Standards is to
Issue enforceable standards which regulate the financial accounting and reporting of multinational entities.
Develop a uniform currency in which the financial transactions of entities throughout the world would be measured,
Promote uniform accounting standards among countries of the world
Arbitrate accounting disputes between auditors and international entities.
The International Accounting Standards Board was formed to
Enforce IFRS in foreign countries
Develop worldwide accounting standards
Establish accounting standards for multinational entities
Develop accounting standards for countries that do not have their own standard-setting bodies
What is the law regulating the practice of accountancy in the Philippines?
R.A. No. 9298
R.A. No. 9198
R.A. No. 9928
R.A. No. 9892
It is the accounting standard setting body created by PRC upon recommendations of the Board of Accountancy to assist the Board of Accountancy in carrying out its powers and functions under R.A. No. 9298
Accounting Standards Council
Auditing and Assurance Standard Council
Philippine Accounting Standards Board
Financial Reporting Standard Council
The communicating" process of accounting includes all of the following, except
Recording
Classifying
Summarizing
Interpreting
Which of the following is not one of the fundamental criteria for recognition?
Timeliness
Measurability
Relevance
Reliability
When a large number of individuals, using the same measurement method, demonstrate that a high degree of consensus can be secured among independent measurers, then the result exhibits the characteristic of
Verifiability
Neutrality
Relevance
Reliability
Accounting for inventories by applying the lower-of-cost-or- market is an example of the application of
Conservatism
Comparability
Consistency
Materiality
Important constraints underlying the qualitative characteristics of accounting information are
historical cost and going concern
materiality, conservatism, and cost-effectiveness
consistency, comparability, and conservatism
verifability, neutrality, and representational faithfulness
The secondary qualitative characteristics of accounting information are
relevance and reliability
comparability and consistency
understandability and decision usefulness
materiality and conservatism
Financial information exhibits the characteristic of consistency when
accounting procedures are adopted which smooth net income and make results consistent
between years
extraordinary gains and losses are shown separately on the income statement
accounting entities give similar events the same accounting treatment each period
expenditures are reported as expenses and netted against revenue in the period in which they are paid
The primary current source of generally accepted accounting principles for nongovernmental operations is the
American Institute of Certified Public Accountants
Securities and Exchange Commission
Financial Accounting Standards Board
Governmental Accounting Standards Board
Accountants prepare financial statements at arbitrary points in time during a company's lifetime in accordance with the accounting concept of
Matching
Comparability
Accounting periods
Materiality
When financial reports from two different companies have been prepared and presented in a similar manner, the information exhibits the characteristic of
Relevance
Reliability
Comparability
Consistency
A conceptual framework of accounting should
lead to uniformity of financial statements among companies within the same industry
eliminate alternative accounting principles and methods
guide the AICPA in developing generally accepted auditing standards
define the basic objectives, terms, and concepts of accounting
Historical cost has been the valuation basis most commonly used in accounting because of its
Timelessness
Conservatism
Reliability
Accuracy
The financial statements that are prepared for the business are separate and distinct from the owners according to the
going-concern principle
matching principle
Separate entity priciple
full disclosure principle
Which of the following statements concerning the objectives of financial reporting is correct?
The objectives are intended to be specific in nature.
The objectives are directed primarily toward the needs of internal users of accounting information.
The objectives were the end result of the FASB's conceptual framework project
The objectives encompass not only fínancial statement disclosures, but other information as well.
According to the FASB's conceptual framework, the process of reporting an item in the financial statements of an entity is
Realization
Recognition
Matching
Allocation
The overriding qualitative characteristic of accounting information is
Relevance
Understandability
Reliability
Decision usefulness
Recording the purchase price of a chalkboard eraser (with an estimated useful life of 10 years) as an expense of the current period is justified by the
going-concern assumption
materiality concept
matching principle
comparability principle
What accounting concept justifies the use of accruals and deferrals?
Going concern assumption
Corporate form of organization
Consistency characteristic
Arm's-length transactions
The process of establishing financial accounting standards
is a democratic process in that a majority of practicing accountants must agree with a standard before it becomes implemented.
is a legislative process based on rules promulgated by government agencies.
is based solely on economic analysis of the effects each standard will have if it is implemented.
is a social process which incorporates political actions of various interested user groups as well as professional research and logic,
An entity can rectify inappropriate accounting policies either by disclosure of the accounting policies used or by notes or explanatory material.
True
False
Maybe True
Maybe False
Which statement is correct about the types of comparability?
I. Intra-comparability is the comparability of Financial Statements of the same entity.
II. Inter-comparability is the comparability of Financial Statements between different entities.
I only
II only
Both I and II
Neither I nor II
The following are considered as identifiable intangible assets in the balance sheet except
Computer Software
Franchise
Goodwill
Trademark
Under PAS 1, paragraph 7, the holders of instruments classified as equity are simply known as
Owners
Entity
Proprietor
Shareholders
Which of these classifications are needed for a liability to be considered under current liability?
I. Expected to be settled beyond the entity's normal operating cycle
II. Held for purpose of trading
III. Due to be settled after 12 months
IV. For which the entity does not have an unconditional right to defer settlement beyond 12 months
(settlement by the issue of equity instrument does not impact classification).
I and II only
I and Ill only
II and IV only
I, II and IlIonly
Which of the following does not comprise a set of financial statements?
Statement of Financial Position at the end of the period
Statement of Profit or Loss and Other Comprehensive Income, changes in equity and cash flow for the period
Report of the entity's sources of funding
Comparative information in respect of the preceding period and notes, comprising significant accounting policies and other explanatory information
The information which must be provided so as to properly identify each component of set of Financial Statements does not include:
The country in which the entity operates
The presentation currency used
The name of the reporting entity
The level of rounding used
The main purpose of the statement of changes in equity is:
To show how each component of an entity's equity has altered during an accounting period
To show an entity's total equity at the end of an accounting period
To show an entity's assets, liabilities and equity at the end of an accounting period
To show an entity's income, expenses and profit for an accounting period
The notes to the financial statements should provide information:
As required by international standards, if not presented elsewhere in the financial statements
Which is relevant to an understanding of the financial statements
About the entity's accounting policies
All of the above
The main financial performance statement is:
The statement of financial position
The statement of changes in equity
The statement of profit or loss and other comprehensive income
The statement of cash flows
Gains and losses on foreign currencies are reported:
On two-separate lines
Net- in a separate line
Within revenue
Within expense
Reimbursement of provisions should be:
Netted against the provision in the Statement of Profit or Loss
Shown as an asset in Statement of Financial Position
Shown as separate lines in the Statement of Profit or Loss
None of the above
The judgement on whether additional items are presented separately is based on an assessment of except:
The nature and liquidity of assets
The function of assets
The amounts, nature and timing of liabilities
The space available in the financial statements
1,2,4,5,and 6 only
1 to 6 all inclusive
1, 2, 5 and 6 only
1, 2, 3, 5 and 6 only
Environmental reports and value-added statements are:
Outside the scope of IFRS
Never provided with financial statement
An integral part of financial statements
None of the above
Users' knowledge of business and accounting is assumed to be:
Negligible
Comprehensive
Reasonable
Understanding
I, and II only
I, III, and IV only
I, II, and III only
II only
When the departure from a Standard creates a continuing impact:
A return to the Standard is required
This must be disclosed in each period
A deferred tax asset is created
All of the above
Accounts produced on a going-concern basis suggest the business will continue in operation for:
One decade
Six months
One year
The foreseeable future
Consistency entails:
No new standard is being produced
No changes in accounting policies
No changes in accounting estimates
The ability to compare the figures of different periods
Which of the following should be disclosed in the financial statements as contingent liability?
◦ The entity has accepted liability prior to year-end for unfair dismissal of an employee and is to pay damages.
The entity has received a letter from a supplier complaining about an old unpaid invoice.
The entity is involved in a legal; case which it may possibly lose, although this is not probable.
The entity has not yet paid claims under sales warranties
A retail store received cash and issued a gift certificate that is redeemable in merchandise. When the gift certificate was issued, a
Deferred revenue account should be decrease
Deferred revenue account should be increase
Revenue account should be decreased
Revenue account should be increase
Which of the following must be included on the face of statement of financial position?
Number of shares authorized
Contingent Asset
Contingent Liability
Investment Property
Appropriation for plant expansion is reported under
Plant, Property, and Equipment
Current assets
Retained Earnings
Intangible Assets
Which of the following statements is true?
I. Financial flexibility is a company's ability to respond and adapt to financial adversity and unexpected needs and opportunities.
II. On the balance sheet, an adjunct account reduces either an asset, a liability, or an owners' equity account.
Statement A is true and Statement B is false,
Statement A is false and Statement B is true.
Both Statements are true.
Both Statements are false.
It refers to the availability of cash over the longer term to meet maturing obligations?
Liquidity
Solvency
Profitability
Both a and b
It is the ability of the entity to meet currently maturing obligations
Profitability
Solvency
Liquidity
Maturity
The following are considered as characteristics of an asset, except
The cost of the asset can be measured reliably
The asset provides future economic benefits
The asset is the result of the future events
The asset is controlled by the entity
These are probable future economic benefits obtained or controlled by an entity as a result of past transactions
Liabilities
Assets
Equity
None of the above
Which of the following should not be considered as a current asset in the balance sheet?
Installment notes receivable due over 18 months in accordance with normal trade practice.
Prepaid taxes which cover assessments of the following operating cycle of the business.
Equity or debt securities purchased with cash available for current operations.
The cash surrender value of a life insurance policy carried by a corporation, the beneficiary, on its president.
Which of the following is a limitation of the balance sheet?
Many items that are of financial value are omitted.
Judgments and estimates are used.
Current fair value is not reported.
All of these
What is the appropriate treatment for a contingent asset in the financial statements of an entity?
Disclosure of information in the notes but not recognized in the financial statements.
Recognition in the financial statements and a note disclosure.
Recognition in the financial statements but no further disclosure in the notes.
Not recognized in the financial statements and neither disclosed in notes.
If an entity expects and has the discretion to refinance on a long-term basis, the notes payable should be
reclassified as
Current Liabilities
Noncurrent Asset
Non-current Liabilities
Current liabilities
Which of the following is not an acceptable presentation of current liabilities?
Listing current liabilities in the order of maturity
Listing current liabilities according to amount
Offsetting current liabilities against assets that are to be applied to their liquidation
Showing current liabilities in the order of liquidation preference
Non-current liabilities often referred to as:
Other long-term provisions
Long-terms debts
Other long-term financial liabilities
Other non-current non-financial liabilities
All are classified as current liabilities, except:
Deferred tax liability
Short-term borrowing
Current provisions
Trade and other payables
Which of the following is not a component of contributed capital under equity section?
Ordinary shares
Treasury shares
Preference share
Share premium
The trading securities and other investments in quoted equity instrument is an example of what line item under current asset
Financial assets at fair value
Financial assets at book value
Other current assets
Noncurrent assets
Which is not true about the Statement of Financial Position in the given choices?
Biological Assets should be reported in the statement of financial position
The number of shares authorized for issue should be reported in the statement of fïnancial position or the statement of changes in equity or in the notes
Provision should be recognized in the statement of financial position
A revaluation surplus on a noncurrent asset in the current year should be recognized in the income statement
The analysis of the statement of financial position is useful in assessing the liquidity, which is the ability to
Satisfy short-term obligations,
Maintain profitable operations
Maintain past levels of preferred and ordinary dividends
Survive major economic downturn.
The analysis of the statement of financial position is useful in assessing the liquidity, which is the ability to
Satisfy short-term obligations
Maintain profitable operations
Maintain past levels of preferred and ordinary dividends
Survive major economic downturn
What total amount should be reported as current assets at year-end?
8,100,000
6,300,000
8,000,000
7,600,000
How much current assets should be shown in the
balance sheet on December 31, 2021?
7,900,000
8,000,000
7,400,000
7,700,000
At year-end, the current assets of Hazel Company revealed cash and cash equivalents of P700,000, accounts receivable of P1,200,000 and inventories of P600,000. The examination of
accounts receivable disclosed the following:
What total amount should be reported as current assets at year-end?
2,412,000
2,440,000
2,240,000
2,500,000
