WorksheetsCFAS Modules 10, 11 & 12
Total questions: 44
Worksheet time: 23mins
It is the process of capturing for inclusion in the statement of financial position or the statement(s) of financial performance an item that meets the definition of the elements of financial statements.
Recognition
Measurement
Derecognition
Presentation
Revenues, expenses, contributions from and distributions to holders of equity claims are reflected in the statement of financial performance. This statement is
False
True
All items which meet the definition of the elements of financial statements should always be included in the financial statements.
True
False
Only items that meet the definition of income and expense are recognized in the statement of financial performance.
True
False
Which of the following situations can a liability be recognized for Wonyoung Company?
Wonyoung Company signs a letter of intent to purchase goods worth P5.2 million from Yujin Company. The goods will be delivered in six months.
Rei Trading pays Wongyoung Company in advance for goods amounting to P8 million to be delivered throughout the year.
Wonyoung Company's lawyers estimate that it is probable that Wonyoung will have to pay damages on account of a patent infringement suit although the amount cannot yet be ascertained.
Leeseo invests P5 million in Wonyoung, expecting to earn a profit on this investment as stockholder.
Which of the following is not to be recognized as a liability?
estimated warranty costs
the portion of a long-term debt due within one year
advance payments by customers
advance payments to suppliers
Before derecognizing an asset, there is a need to check if the entity might continue to control that asset. If this is so, then
the item remains to be an asset of the entity
the item ceases to be an asset of the entity
the item becomes the asset of the other party.
the item may be partially derecognized by the entity
The excess of revenue over expenses for the period in a corporation will
decrease retained earnings
increase retained earnings
not affect retained earnings
none of the above
In which of the following transactions will result in the recognition of one asset and the derecognition of another asset?
purchase of equipment for cash
purchase of inventories on account
payment of accounts to suppliers
collection of the proceeds from bank loans
In which of the following transactions will result in the recognition of an asset and the recognition of a liability?
purchase of inventories COD (Cash on Delivery)
collection of the proceeds from bank loans
purchase of equipment for cash
purchase of equipment for cash
In which of the following transactions will result in the recognition of an asset and the recognition of a liability?
purchase of inventories on account
purchase of equipment for cash
payment of accounts to suppliers
collection of customers' accounts
In which of the following transactions will result in the derecognition of both an asset and a liability?
purchase of inventories on account
purchase of equipment for cash
payment of accounts to suppliers
collection of the proceeds from bank loans
Which of the following will increase total assets?
purchase of equipment for cash
expiration of insurance
payment of accounts to suppliers
collection of the proceeds from bank loans
An item that does not meet the definition of any of the elements of financial statements may be recognized in the statement of financial position or statement of financial performance.
True
False
The elements directly related to the measurement of financial position are:
Assets, liabilities and equity.
Assets, liabilities, equity, income and expense.
Income and expense.
Assets and liabilities.
The amount at which an asset, liability, or equity is recognized in the statement of financial position is referred to as its:
monetary value.
remaining balance.
carrying amount.
financial quantity.
Which of the following statements is false?
Recognising an asset or liability entails cost.
Just as cost constrains other financial reporting decisions, it also constrains recognition decisions.
What is useful to users depends on the item and the facts and circumstances.
In all cases, the costs of recognition may outweigh its benefits.
Faithful representation of a recognized asset, liability, equity, income, or expenses involves
Recognition.
Measurement.
Presentation and Disclosure.
All of the above.
It is the process of determining the monetary amounts at which the elements of the financial statements are to be recognized and carried in the statement of financial position and income statement.
Realization
Recognition.
Measurement
Allocation
Proponents of historical cost ordinarily maintain that in comparison with all other valuation alternatives for general purpose financial reporting, statements prepared using historical costs are more
relevant.
verifiable.
conservative.
indicative of the entity's purchasing power.
Which of the following is an argument against using historical cost in accounting?
Historical costs cannot be determined easily.
Historical costs are based on an exchange transaction.
Fair values are more relevant.
Fair values are more subjective.
The historical cost of a liability when it is incurred or taken on is the value of the consideration to incur or take on the liability
minus transaction costs.
plus transaction costs.
multiplied by transaction costs.
over transaction costs.
Which of the following is true about value in use and fulfilment value?
These include transaction costs incurred on acquiring an asset or taking on a liability.
These reflect entity-specific assumptions.
These reflect the assumptions of market participants
These are entry values.
In which accounting standard is fair value discussed more extensively
PAS 13
PAS 32
PAS 18
PFRS 7
The price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
Current cost
Fulfilment value
Historical cost
Fair value
For assets measured at historical cost, transaction costs ________.
are not included.
are included.
may or may not be included, depending on the preference of the entity's management.
are difficult to identify and thus, usually disregarded in applying this measurement basis.
are difficult to identify and thus, usually disregarded in applying this measurement basis.
Once historical cost is used as a basis for measurement, the measure shall not be updated until such time that the item will be derecognized.
When incurred or taken on, the value of the consideration received to incur or take on the liability shall be increased by transaction costs, if any.
Amortized cost reflects estimates of future cash flows, discounted at a rate determined at initial recognition.
Financial assets include cash, equity instrument of another entity, prepaid expenses and intangible assets.
Which of the following factors is (are) considered in selecting a measurement basis?
The variability of cash flows of the asset or liability.
How the asset or liability contributes to future cash flows, which depends in part on the nature of an entity's business activities.
The level of measurement uncertainty associated with a particular measurement basis.
All of the above
The Conceptual Framework identifies a preferred measurement basis for all assets and liabilities.
False
True
The Conceptual Framework covers only the presentation and does not deal with the required disclosures of items in the general purpose financial statements.
This statement is false.
This statement is true.
The financial reporting standards are the only sources of the presentation and disclosure requirements that preparers of financial reports must consider.
True
False
In all cases, offsetting is not allowed
True
False
In presenting financial reports, preparers must consider which of the following?
Both classification and aggregation
Aggregation only
Classification only
Neither classification and aggregation
One of the documents preparers of financial statements should look into because it also provides guidelines on presentation and disclosure is the SRC Rule No. 68, which issued by the ______.
FRSC
IASB
SEC
BIR
Income and expense accounts are useful in
analyzing the profitability of a company.
making forecasts for budgeting purposes.
setting prices for goods and services.
all of the choices are correct.
Aggregation makes the information simpler and not obscured with many details.
This statement is false.
This statement is true.
In presenting and disclosing information through general purpose financial statements, preparers should keep in mind that _________ is/are more useful to decision-makers.
Historical amounts
Standardized descriptions
Industry trends
Entity-specific information
Cost is not a constraint in decisions pertaining to presentation and disclosure.
This statement is true.
This statement is false.
In classifying assets, liabilities, equity, income and expenses, preparers of financial statements need not look into what is generally accepted or provided in the standards but should always focus more on recent trends in order to achieve relevance.
True
False
Which of the following is a common category for classification?
Nature of the item
Function or role within the business activities
How the item is measured
All of the above
As of January 2022, Crisostomo Company owes P400,000 in total from Maria, Clara and Klay companies. During the year, Crisostomo paid P50,000 to Klay to fully settle the account plus an additional amount for the advance payment for goods ordered, amounting to P80,000. Crisostomo Company's accounts payable as of December 31, 2022 should be presented in the
1) Statement of Financial Position
2) Statement of Financial Performance
Both 1) and 2)
Neither 1) nor 2)
As of January 2022, Crisostomo Company owes P400,000 in total from Maria, Clara and Klay companies. During the year, Crisostomo paid P50,000 to Klay to fully settle the account plus an additional amount for the advance payment for goods ordered, amounting to P80,000. Crisostomo Company's accounts payable as of December 31, 2022 amounts to __________
400,000
P480,000
P350,000
P270,000
As of January 2022, Crisostomo Company owes P400,000 in total from Maria, Clara and Klay companies. During the year, Crisostomo paid P50,000 to Klay to fully settle the account plus an additional amount for the advance payment for goods ordered, amounting to P80,000. Offsetting of assets and liabilities in this situation
is not allowed
is allowed
depends on what the standards say
depends on what the accounting standards say
Profit or loss is the difference among income and expenses, excluding components of other comprehensive income.
True
False
