1: cfas reviewer

• When shares with par value are sold, the excess of the proceeds over the par value is credited to

  Share premium
• When shares without par value are sold, the excess proceeds overstated value shall be credited to

  Share premium
• If shares are issued for a noncash consideration, the shares issued shall be measured by

  Fair value of the noncash consideration
• If shares are issued to extinguish a financial liability, what is the initial measurement of the shares issues?

  Fair value of the shares
• When shares are issued in payment for services, what is the least appropriate basis for recording the transaction?

  Par value of the shares
• What is the meaning of net assets of a corporation?

  Shareholders' equity
• The two primary account classifications within shareholders' equity are

  Contributed capital and retained earnings
• Details of each class of share capital should be reported

  On the face of the statement of financial position or in disclosure notes.
• The corporate charter is known as

  Articles of incorporation
• Characteristics if the corporate form that have led to the growth of this form of business ownership include all of the following except

  Low government regulation
• Outstanding ordinary shares are

  Shares in the hands of shareholders
• Issued shares refer to the number of shares

  Outstanding plus treasury shares
• Authorized share capital refers to the total number of shares

  That can be issued
• The share capital account is measured as

  The shares issued multiplied by par value
• The par value of shares issued is normally recorded in

  Share capital
• It represents the maximum number of shares fixed in the entity's authorized articles of incorporation that can be subscribed and issued to shareholders.

  Authorized share capital
• It represents the portion of the authorized share capital not yet issued and is still available for subscription and issuance.

  Unissued share capital
• It represents residential corporate interest that bears the ultimate risk of loss and receives the benefits of success.

  Ordinary shares
• Shares that give the holders thereof certain preferences over other shareholders.

  Preferred stocks
• It is the portion of contributed capital that cannot be distributed to the owners during the lifetime of the corporation unless the corporation is dissolved and all of its liabilities are settled first.

  Legal capital
• An entity's own shares that were previously issued but are subsequently reacquired but not retired.

  Treasury shares
• An artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident its existence.

  Corporation
• It is the residual interest in the assets of a corporation after deducting all its liabilities.

  Shareholders' equity
• A contact between the purchaser of shares (i.e, investor) and the issuer (i.e, corporation) in which the purchaser promises to buy shares of the issuing company's stocks.

  Subscription
• It represents the unpaid portion of the subscription price.

  Subscription receivable
• It represents the portion of the authorized share capital that is subscribed but not yet issued.

  Subscribed share capital
• It represents the portion of the authorized share capital that is already issued.

  Share capital
• It is a document that evidences the ownership of a share.

  Share certificate
• It arises from various sources which include the following:

  Share premium
• When shares are retired, the total par value and the related share premium of the retired shares are

  removed from the books of accounts.
• What are the basic purposes of the Conceptual Framework? I. To assist the International Accounting Standards Board to develop IFRS based on consistent concepts. II. To assist preparers of financial statements to develop consistent accounting policy when no Standard applies to particular transaction or other event or where an issue is not addressed by an IFRS. III. To assist preparers of financial statements to develop accounting policy when a Standard allows a choice of an accounting policy. IV. To assist all parties to understand and interpret IFRS.

  All of the above
• Which statement is not true about the Conceptual Framework for Financial Reporting?

  The Conceptual Framework is an IFRS.
• The Conceptual Framework is intended to establish


  The objectives and concepts for use in developing standards of financial accounting and reporting.
• In the Conceptual Framework for Financial Reporting, what provides the "why" of accounting?

  Objective of financial reporting
• During a period when an entity is under the direction of a particular management, financial reporting will directly provide information about

  Both entity performance and management performance
• To achieve faithful representation, the financial statements


  Must be complete, neutral, and free from error.
• Qualitative characteristics a. Are considered either fundamental or enhancing b. Contribute to the decision-usefulness of financial reporting information. c. Distinguish better information from inferior information for decision-making purposes.


  All of the choices are correct.
• The economic substance of a transaction shall prevail over the legal form

  Substance over form
• Which violates the concept of faithful representation?

  Property, plant and equipment with carrying amount increased to management estimate of market value.
• An item would be considered material when

  The omission or misstatement would make a difference to the primary users.