Quizzes in CFAS

• Which statement are correct and which are incorrect?

  I. General-purpose financial statements meet the specific needs of users including banks and regulators

   II. General-purpose financial statements are designed to help decision-makers make their own estimates as to an organization's value

  I incorrect, II correct
• which are correct and incorrect

  i. PAS 1 encourages, but does not require, the presentation of the preceding year's financialstatements as comparative information to the current year's financial statements. 

  ii An entity may omit the notes when presenting general purpose financial statements

  both are incorrect
• What are included in conversion costs?

  direct labor and manufacturing overhead
•  In preparing a statement of cash flows, cash flows from operating activities can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash.
• The IASB Conceptual Framework identifies user groups. Which of the following is not an information need for the 'investor' group?

  1. Assessment of repayment ability of an entity
  2. Measuring performance, risk and return
  3. Taking decisions regarding holding investment
  4. Taking buy/sell decisions

  answer: assessment of repayment ability of an entity
• Who is responsible for the preparation and fair presentation of an entity's financial statements in accordance with the PFRSs?

  Management
•  Information has this qualitative characteristic if different, knowledgeable and independent observers could reach a consensus, although not necessarily complete agreement, that a particular depiction is a faithful representation.

  Verifiability
• Entity Can't buy me love declares cash dividend in 20x1 and pays the dividends on 20x2. How should the entity report the dividends in the statement of cash flows for

  1. 20x1-Operating, 20x2- None
  2. 20x1-Financing, 20x2- None
  3. 20x1-Operating/ Financing, 20x2- None
  4. 20x1-None, 20x2- Operating/ Financing
  5. 20x1-None, 20x2- Operating/ Financing
• When making materiality judgements, the overriding consideration is

  the ability of the item being judged to influence user's decision
• The statement of financial position may be presented either showing current/non-currentdistinction (classified) or based on liquidity (unclassified). PAS 1 encourages a(an)?

  classified
• This concept is used in the recognition criteria to refer to the degree of uncertainty that the future economic benefits associated with an item will flow to or from the entity


  Concept of Probability
• Which of the following is represented in FSRSC (formerly FRSC)*

  Insurance Commission- YES; PICPA-YES; CHED-NO
• Which of the following entities do/does not show current and noncurrent distinctions among assets and liabilities?

  1. Banks and Financial Institutions 
  2. Mining Companies 
  3. Trading enterprises
  4. Manufacturing firms

  Banks and Financial Institutions
• Which of the following is/are among the Four Sectors in the practice of Accountancy as enumerated in R.A. 9298 also known as the "Philippine Accountancy Act of 2004" I.

  1. Practice in Commerce and Industry 
  2. Practice in the Government 
  3. Practice in Education/ Academe
  4. Practice of Private Accountancy

  practice in commerce and industry, government, education and academe
• Entity Kayangkaya changes its inventory cost formula from FIFO to weighted average. How should Entity account for this change?

  by retrospective application, as a change in accounting policy
• The following event/s is/are example of an adjusting event

  1. A building that is totally razed by fire at the end of the reporting period 
  2. Sales of inventories after reporting period that gives evidence to their net realizable value at the end of reporting period 
  3. Issuances of stocks after the reporting period.

  2 and 3 (clue; at the end of reporting period for adj event and after the reporting period for unadj)
• According to PAS 19, how are other long-term benefits accounted for

  similar to defined benefit plan except that all the components of the defined benefit cost are recognized in profit or loss
• Which of the following is/are correct?

  1. An entity can only have one functional currency but it can have as may presentation currencies as it wishes. 
  2. A foreign operation (e.g. a branch) that is essentially an extension of the entity (e.g. the home office) would have the same functional currency as that of the entity.
  3. A foreign currency transaction is initially recognized at the spot exchange rate at the date of transaction. iv.
  4. Subsequent to initial recognition, both monetary and non-monetary items arising from foreign currency transaction are translated at the closing rate.

  1, 2, and 3
• Compensated absences that can be carried forward and used in the future periods if not fully usedin the current period of entitlement are referred to as

  accumulating
• Non-adjusting events


  • Bankruptcy of a customer after the reporting period that indicates that the carrying amount of a trade receivable at the end of the reporting period is impaired
  • Evidence indicating that an asset is impaired after the reporting period and authorization date
  • Legal proceedings after the reporting for an incident that occurred before the end of the reporting period
  • Significant decline in foreign exchange rates after the reporting period resulting to massive losses on recognized foreign currency denominated financial statement
• Correct non-adjusting events

  • 2
  • 4
• Nagpapahinga D. Sumusuko Entity are entitled to 15 days paid sick leaves per year. Any unused sick leave is converted to cash when the employee resigns or retires. The sick leave benefits are considered

  vesting
• Actuarial gain or losses from the accounting for which of the of the following employee benefits?

  Post-employment defined benefit plan
• These events are indicative of conditions that arose after the reporting period.

  non - adjusting events
• PAS 26 shall be applied to?

  The general financial reports of pension scheme
• According to PAS 27, which of the following is required to present separate financial statements?  

  PAS 27 does not requires who should present a separate financial statements
• Which of the following may be disclosed in the financial report of a defined benefit plan but would not be shown in the financial report of a defined contribution plan?

  1. Government bonds held
  2. Actuarial present value of promised retirement benefits
  3. Employee contributions
  4.  Employer contributions

  actuarial PV of promised retirement benefits
•   Related parties include all of the following, except:  

  1. Affiliates
  2. Associates
  3. Individuals owning, directly or indirectly, an interest an interest in the voting power of the reporting that gives them significant influence over the entity
  4. Two entities that have common director


  two entities that have common director
• If there have been transactions between related parties, an entity shall disclose 

  I. Nature of the relationship 

  II. Information about the transaction and outstanding balances


  both I and II
• If the qualifying asset is financed by specific borrowing, the capitalizable borrowing cost is equal to  

  Actual borrowing cost incurred up to completion of asset minus any investment from the temporary investment of the borrowing
• According to PAS 27, investments in associates or joint ventures are accounted for in the separate financial statements

  using equity method under PAS 28
• Retirement benefit plan investments shall be carried at:

  Fair Value
• If the qualifying asset is financed by general borrowing, the capitalizable borrowing cost is equal to   

  Average expenditures on the asset multiplied by a capitalization rate or actual borrowing cost incurred, whichever is lower
• The report of defined benefit plan shall contain: 

  I. A statement showing net assets available for benefits, the present value of the promised benefit and the resulting excess or deficit. 

  II. A statement of net assets available for benefits including a note disclosing the present value of promised benefits  

  either I or II
• When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to  

  the portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made
• An entity is commencing a new construction project which is to be financed by borrowing.

  The key dates for the current year are as follows:

  1. May 15- Loan interest relating to the project starts to be incurred.
  2. June 15- Technical site planning commences.
  3. June 30- Expenditures on the project start to be incurred.
  4. July 15- Construction work commences
  5. The entity can commence the capitalization of borrowing cost from what date?   

  June 30
• Control is

   I. The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. 

  II. The power to participate in an entity's financial and operating policy decisions but not control those policies.

  I only
• For purpose of capitalization of borrowing cost, which of the following is not a qualifying asset?   

  Asset that is ready for the intended use or sale
• The report of defined contribution plan shall contain:

   I. Statement of net asset available for Benefit 

  II. A description of funding entity  

  both
• A party is related to an entity if the party directly or indirectly, through one or more intermediaries:

   I. Controls, is controlled by or is under common control with the entity.

   II. Has an interest in the entity that gives it significant influence over the entity. 

  III. Has joint control over the entity.  

  I,II, and III