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WorksheetsCPAR FAR
Total questions: 55
Worksheet time: 28mins
1. Certified Public Accountants are licensed by
a. The Philippine Institute of Certified Public Accountants
b. The Securities and Exchange Commission
c. The Financial Executives Institute of the Philippines
d. The state government
2. The Continuing Professional Development is required for
a. Renewal of CPA license
b. Accreditation to practice the accountancy profession
c. Both renewal of CPA license and accreditation to practice the accountancy profession
d. Neither renewal of CPA license nor accreditation to practice the accountancy profession
3. The qualifications of the members of the Board of Accountancy include all of the following, except
a. Must be a natural-born citizen and a resident of the Philippines.
b. Must be duly registered CPA with at least ten years of work experience in any scope of practice of accountancy.
c. Must be of good moral character and must not have been convicted of crime involving moral turpitude.
d. Must have any pecuniary interest, directly or indirectly, in any school conferring an academic degree necessary for admission to the practice of accountancy.
4. What are the three main areas in the practice of accountancy profession?
a. Public accounting, private accounting and managerial accounting
b. Auditing, taxation and managerial accounting
c. Financial accounting, managerial accounting and corporate accounting
d. Public accounting, private accounting and government accounting
5. Which statement is incorrect in relation to the practice of public accounting?
a. Single practitioners for the practice of public accounting shall be registered CPAs in the Philippines
b. Partners of partnership formed for the practice of public accounting shall be registered CPAs in the Philippines
c. The Securities and Exchange Commission can register any corporation organized for the practice of public accounting
d. The Professional Regulation Commission upon favorable recommendation of the Board of Accountancy shall issue certificate of accreditation to CPAs in public practice provided the registrant has acquired a minimum of three years of meaningful experience in public practice
6. As amended, the FRSC shall be composed of how many members, including the chairman?
a. 15
b. 16
c. 14
d. 10
7. The membership of the FRSC shall be through an appointment made by
a. Professional Regulation Commission
b. Board of Accountancy
c. Accredited Professional Organization of CPAs or APO
d. Professional Regulation Commission upon recommendation of the Board of Accountancy in coordination with the APO
8. Which is not an objective of the Conceptual Framework?
a. To assist users of financial statements in interpreting the Standards
b. To assist preparers of financial statements in applying the Standards
c. To assist preparers of financial statements in developing an accounting policy when a Standard allows an accounting policy choice
d. To assist the Board of Accountancy in promulgating rules and regulations affecting the accountancy profession
9. What is the authoritative status of the Conceptual Framework?
a. The Conceptual Framework has the highest level of authority
b. In the absence of a standard or an interpretation that specifically applies to a transaction, the Conceptual Framework shall be followed
c. In the absence of a standard or an interpretation that specifically applies to a transaction, management shall consider the applicability of the Conceptual Framework in developing and applying an accounting policy that results in information that is relevant and reliable
d. The Conceptual Framework applies only when the IASB develops new standard
10. The fundamental qualitative characteristics are
a. Relevance and faithful representation
b. Relevance, faithful representation and materiality
c. Relevance and reliability
d. Faithful representation and materiality
11. The enhancing qualitative characteristics of financial information are
a. Comparability and understandability
b. Verifiability and timeliness
c. Comparability, understandability and verifiability
d. Comparability, understandability, verifiability and timeliness
12. It is the process of capturing for inclusion in the financial statements an item that meets the definition of the elements of financial statements
a. Recognition
b. Measurement
c. Classifying
d. Derecognition
13. An item is recognized in the financial statements if
a. It is probable that economic benefits will flow to or from the entity.
b. It meets the definition of an asset, liability, equity, income and expense.
c. The entity has ownership of such item.
d. It is probable that economic benefits will flow to or from the entity and that the cost can be measured reliably.
14. It is the removal of all or part of a recognized asset or liability from the statement of financial position.
a. Writeoff
b. Derecognition
c. Extinguishment
d. Retirement
15. Derecognition normally occurs when
a. An item no longer meets the definition of an asset or a liability.
b. The entity loses control of the asset.
c. The entity no longer has a present obligation for the liability
d. Under all of these circumstances
16. The measurement bases include
a. Historical cost
b. Current value
c. Assessed value
d. Historical cost and current value
17. Current value includes
a. Fair value and present value
b. Fair value and current cost
c. Current cost and value in use
d. Fair value, value in use and current cost
18. Financial capital is defined as
a. Net assets in monetary terms
b. Net assets in terms of physical productive capacity
c. Legal capital
d. Share capital issued and outstanding
19. Which concept is applied to net income and other comprehensive income?
a. Financial capital
b. Physical capital
c. Legal capital
d. Borrowed capital
20. Which statement best defines an accrual?
a. Adjusting entries where cash flow precedes revenue or expense recognition
b. Adjusting entries where revenue or expense recognition precedes cash flow
c. Adjusting entries where cash flow and revenue or expense recognition are simultaneous
d. Adjusting entries where revenue and expenses are recognized in the absence of cash flow evidence
21. Closing entries are made (choose incorrect statement)
a. At the end of accounting period.
b. After adjusting entries and financial statements have been prepared.
c. After adjusting entries and reversing entries have been prepared.
d. For the purpose of reducing all balances of nominal or temporary accounts to zero.
22. Adjusting entries that should be reversed include those for prepaid and unearned items that
a. Create an asset or a liability account.
b. Were originally entered in a revenue or expense account.
c. Were originally entered in an asset or liability account.
d. Create an asset or a liability account and were originally entered in a revenue or expense account.
23. The International Accounting Standards Board was formed
a. To enforce IFRS in foreign countries
b. To develop a single set of high quality IFRS
c. To establish accounting standards for multinational entities
d. To develop accounting standards for countries that do not have their own standard-setting bodies
24. The IASB declared that the merits of proposed standards are assessed
a. From a position of neutrality
b. From a position of materiality
b. From a position of materiality c. Based on possible impact on behavior
d. Based on arguments of lobbyist
25. What is the chronological order in the standard setting process?
a. Exposure draft, Research, Standard and Discussion paper
b. Research, Exposure draft, Discussion paper and Standard
c. Standard, Research, Discussion paper and Exposure draft
d. Research, Discussion paper, Exposure draft and Standard
26. IFRIC Interpretations
a. Are considered authoritative and must be followed.
b. Cover newly identified financial reporting issues not specifically addressed.
c. Cover issues where unsatisfactory or conflicting interpretations have developed
d. All of these are correct regarding IFRIC Interpretations
27. The due process system in developing financial accounting standards
a. Is an efficient system for collecting dues from members.
b. Enables interested parties to express their views on issues under consideration.
c. Identifies the accounting issues that are the most important.
d. Requires that all accountants must receive a copy of financial accounting standards.
28. Accounting standard setting
a. Can be described as a political process which reflects political actions of various user groups.
b. Is based solely on research and empirical findings
c. Is a legalistic process.
d. Is democratic in the sense that a majority of accountants must agree.
29. Which of the following is usually considered cash?
a. Certificate of deposit
b. Checking account
c. Money market saving certificate
d. Postdated check
30. Cash equivalents do not include
a. Money market instrument
b. Treasury bonds
c. BSP Treasury bills
d. Commercial papers
31. Which inventory cost flow assumption would consistently result in the hightest income in a period of sustained inflation?
a. FIFO
b. LIFO
c. Weighted average
d. Specific identification
32. Which statement is incorrect regarding LCNRV?
a. Net realizable value is the estimated selling price less estimated cost to complete and estimated cost of disposal.
b. In most situations, entities measure inventory on a total inventory basis.
c. The direct method may be used to record the income effect of valuing inventory at net realizable value.
d. An entity may use an allowance account to reduce inventory to net realizable value.
33. Which statement is incorrect concerning the equity method?
a. The investment is initially recorded at cost.
b. The investment in associate is increased or decreased by the investor’s share of the profit or loss of the associate after the date of acquisition.
c. The investor’s share of the profit or loss of the associate is recognized in the investor’s profit or loss.
d. Dividends received from the associate are accounted for as dividend income.
34. An investor uses the equity method to account for a 30% ownership in an investee. At year end, the investor has a receivable from the investee. How should the receivable be reported?
a. The total receivable should be reported separately.
b. The total receivable should be included as part of the investment, without separate disclosure.
c. Seventy percent of the receivable should be reported separately, with the balance offset against the investee’s payable to the investor.
d. The total receivable should be offset against the investee’s payable to the investor.
35. Which statement is true for a bond maturing on a single date when the effective interest method of amortizing bond discount is used?
a. Interest expense as a percentage of the bond carrying amount varies from period to period
b. Interest expense increases each six-month period
c. Interest expense remains constant each six-month period
d. Nominal interest rate exceeds effective interest rate
36. In theory, the proceeds from the sale of a bond would be equal to
a. The face amount of the bond
b. The present value of the principal amount due at the end of the life of the bond plus the present value of the interest payments made during the life of the bond
c. The face amount of the bond plus the present value of the interest payments
d. The sum of the face amount of the bond and the periodic interest payments
37. How should contingent liability be reported in the financial statements when it is reasonably possible?
a. As a deferred liability
b. As an accrued liability
c. As a disclosure only
d. As an account payable
38. Contingent asset is usually recognized when
a. Realized
b. Occurrence is reasonably possible and the amount can be reliably measured
c. Occurrence is probable and measurable
d. The amount can be reliably measured
39. Magazine subscriptions collected in advance should be accounted for as
a. A contra account to magazine subscriptions receivable
b. Deferred revenue in the liability section
c. Deferred revenue in the shareholders’ equity section
d. Magazine subscription revenue in the income statement in the period collected
40. When collectibility is reasonably assured, the excess of the subscription price over the stated value of no par ordinary share subscribed shall be recorded as
a. No par ordinary share capital
b. Share premium when the subscription is recorded
c. Share premium when the subscription is collected
d. Share premium when the ordinary share is issued
41. The purchase of treasury ordinary shares
a. Decreases authorized ordinary share capital
b. Decreases issued ordinary shares
c. Decreases outstanding ordinary shares
d. Has no effect on ordinary shares outstanding
42. The cost of right of use asset comprises all, except
a. The present value of lease payments
b. Lease payments made to lessor on or before commencement date
c. Initial direct cost incurred by lessee
d. Estimated cost of dismantling, removing or restoring the underlying asset for which the lessee has no present obligation
43. The right of use asset is reported as
a. Noncurrent as separate line stem
b. Property, plant and equipment
c. Intangible asset
d. Investment property
44. The lease payments include all, except
a. The residual value guarantee
b. The lessee’s obligation to pay executory cost
c. The purchase option that is reasonably certain to be exercised
d. Any payment that the lessee must make upon failure to extend or renew the lease
45. Which of the following is a required enterprise-wide disclosure regarding external customers?
a. The identity of any external customer considered to be major by management
b. The identity of any external customer providing 10% or more of a particular operating segment revenue
c. Information on major customers is not required in segment reporting
d. Information on major customers is not required in segment reporting d. The fact that transactions with a particular external customer constitute at least 10% of the total entity revenue
46. An operating segment is considered reportable when any of the following conditions is met, except
a. Segment revenue is 10% or more of the combined revenue of all of the entity’s segments
b. Segment assets are 10% or more of the combined assets of all segments
c. Segment liabilities are 10% or more of the combined liabilities of all segments
d. Segment’s profit or loss is 10% or more of the combined profit of all segments that did not incur a loss
47. A nonpublicly accountable entity can claim compliance with IFRS for SMEs when the entity
I. Complies with local tax requirements that are substantially the same as IFRS for SMEs
II. Complies with local tax requirements that are, except in name, word for word the same as IFRS for SMEs III. Complies with all the requirements of IFRS for SMEs
IV. Complies with full IFRS
a. I and III
b. II and III
c. II, III and IV
d. III and IV
48. Which statement is not correct with respect to IFRS for SMEs?
a. All borrowing costs are expensed immediately in the period when incurred
b. Intangible assets shall be measured using either cost method or revaluation model
c. Goodwill is amortized and tested for impairment where there is an indication of impairment
d. Investment in associate shall be accounted for using cost model, fair value model or equity method.
49. Which is not within the definition of a small entity?
a. With total assets or total liabilities between P3,000,000 and P100,000,000
b. Not required to file financial statements under SRC Rule 68
c. Not in the process of filing financial statements in a public market
d. Holder of a secondary license
50. Which statement is incorrect concerning small entity?
a. Inventories are measured at the lower of cost or market value
b. Investment in associate shall be accounted for using cost model, fair value model or equity method
c. Property, plant and equipment shall be accounted for using either the cost model or fair value method
d. The benefit obligation of a small entity is calculated under company policy if higher than R. A. 7641
51. Under IFRS 1, the first annual financial statements in which an entity adopts IFRS by an explicit and unreserved statement of compliance with IFRS is called
a. IFRS financial statements
b. First IFRS financial statements
c. Opening IFRS statement of financial position
d. First audited financial statements
52. An entity that presents first annual financial statements that conform with IFRS is known as
a. An originating entity
b. A provisional presenter
c. A first time adopter
d. An initial reporter
53. What is the date of transition to IFRS?
a. The beginning of latest period in most recent annual financial statements under previous GAAP.
b. The end of latest period in most recent annual financial statements under previous GAAP
c. The beginning of the earliest period for which an entity presents full comparative information under IFRS
d. The end of the earliest period for which an entity presents full comparative information under IFRS.
54. The statement of financial position at the date of transition to IFRS is best described as
a. Provisional IFRS statement of financial position
b. Closing IFRS statement of financial position
c. Opening IFRS statement of financial position
d. Originating IFRS statement of financial position
55. Which is not a required adjustment in an opening IFRS statement of financial position?
a. Recognize all assets and liabilities whose recognition is required under IFRS.
b. Derecognize assets and liabilities if IFRS does not permit such recognition
c. Disclose as comparative information all figures under previous GAAP alongside figures for the current year presented under IFRS.
d. Measure all recognized assets and liabilities according to principles contained in IFRS.
