The Review School Final Pre-Board of Accountancy Examination tt / _ i-/ i\-_ 15 Septerber 2012 10:30 AM - 12:00 NN
{freiry
of
flccounts
INS:IBUqI'qNg:SelecttheCorrectanswerforeachofthefollowingguestions. Mark only one ans!\Ier for each ltem by shadinq the box
correspond.i.nq Lo the leLter of your choi.ce on t'he answel sheet provided '
STRICTLY NO ERASURES AL1,OWED. Use pencil no. 2 on1y.
Set B
.1. vJhrch
of
t_he f crlowi ng termsis
not clescripLir,.eof
sMEs?'/
a.
Private entities
P.
l, j sLeC comPan ies. c. Smal1 and medi'-tm-sized ent--Ltie:: d. Non-pr:bli cLy accountable enLi-Li es
. DeLermine tlie true stat.ernenL regarding IFRS wlren referred
coLJ ectively - -orru,st* t'-i {e*tq-tl*
-,a'.' The term "IAS" generally inciudes '\Ty,: b. The term "1L-RS" qenerally irrclr'r<ies i*TAS'"
c . The term " IAS" qeneral ly includes * l FRIC ' " il . Tire tern "lFRIC" general l y incLrrdes "JF'RS"'
:],: Wh.lt item appears frr:st- on the sLatement of cash flows prepar:ed using
t,i-ie dire ct met-hod? a. Net income
b. DePrer:l at ron
c. Retained earni-ngs
d. Cash r:eceiPts f rom customers
;. investor, s int-erest i'come f or a pe riod would be highest i f the bonds is Purchased at .t. Eace val.r-te: b." A cliscount. --1 'd. A Premium Par value ,+-.1 ^n ^f t ho f-,P'RS Concentual 5;, Which of the foll0wing is not'; a function of t',he PFRS Conceptua
Framework (2010) ?
a. To provide a bas j s f csr the ilse of jucigment in resolving
accounLing issues
b. To taci.Lj,tate the consistent and l-ogical formulatlon ol:
Phili-ppine Financial Repcrl'ing'5t'-endards
c . To acldress l-he concepti ur:tler Lyi ng the i'n f ormat-ion preserttc':<l
i-n general pur:poge financj"al st'atement"s
t. ,; ' ,ua or1t t-..coqnitron, rne.lsltrement, prese'tation and
disclosure requirements rleating with tran.;actions and other
events and collditions t-irat al:e importartt in qenerai purpose
financial st-dtements Fn cf PfR-c
./
g,. The cl assif ication of .i share*b'ased payment has an impact on its
.. measurement. what are the classi f i cations f or share-based
paynelit-transact-ions under PFRS 2?
a. Vest-ed, not vest'ed
b. Entity-settled ancl gror:p se1--tled
c. nqui.ty-settlecl, cash-settl-ec] antl sh.rre option-set'LIe<l
ynquitv*sett'1ed,cash*se't-tled,sharebasedpaymenl-t-ransactions ' wit.h a setLlement chol ce
:- 4
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rHEoRy oF ACCouNrs$Si),
rr1a.l nre-Bgard Examinarion (October 2Oi.Z Batch)\ifl
i5 September ZOLZ r 10:30 AM to 12:00NN
paqe2
iJ;
- 1. 1_*:u"t
an assel-with
economic-l-rfq--q!- oo years mayqualify
as alrnance i-ease if the Ieasc term islat_ leasl.
a. 30 years
b,. 36 years
c. 45 years
.a( 54 years
8,"'l'he fof lowing sLalemenls are based on pt-RS 5 (Ncn-current Assets Held
,.u for Sale and Discontinuecl Operat.ions) :
stat.ement r: An ent-ity sha.r-l classify a non-current
group as held for sale if its carryi_ng amount
pr"i'cipal1y through a sale transaction rather than
asset or disposal
will be r:ecovered
through continuing statement "rr: An extensi.on of the perioc1 required to complete a sale
cjoe's not preclucie an asset or disposai- qroup from being .la"sified
as
held f or sale i f t.i]e delay is caused by events or c1rcumstances
beyond the entit-yrs cr:ntro] and there is sufficient evidence that the
eniity remains committed to its plan to se1l the asset (or disposal
group).
St-atement r r r : An entrty shal l. measrlr e a non-current asset or
disposal- group classified as held for sale at the lower of its carryi nq; amount and fair value less costs to sel1 .
a. Only star-emenl T is f al .se b. Only statement II is fal-se
c. Only statement III is t.rue
9. Al_1 of the statements a::e true
'-- '9, What f inancial statement does not j"nvc-ilve a distinct period of time?
_ e.' Statement of cash f lows
b. St_atement of change*s rn equity
c. Statement of f inanci-a1 posrr_ion
d. Statement of comprehensive income
'?- l0.which of the following is most l1ke1y to be regarded as ar-r esLimatecl
:. i liability that is suniect to provision?
a. Deferred revenues
b. Vacation pay Iiabitity
. c, Current portion of lorrg-t_erm rlebt
.r.B' Payroll liabil j ties
--1'1.under: the PFRS conceptual Framework (2010). which of the following is
considered a fundament.al characteristic rather: than an enhancing
characteristic of financi al information?
a. Ti mel iness
b. Verifiability
c. Understandability
.-d- Faithful representation
-\-'
.,i'* 12'Which is not among the indicators of hyperinftatiol in pAS 29?
a. People prefer to keep their: wealt.h in non-monetary a,ssets
b' People prefer to keep tireir weaftli in relatively stable foreign pr:ices are linked to a price j_rrdex
rate over thrae yea:ts exceeds or is
c. Int.erest rates, wages and
{. The cumu]ative ^ inf faLion approachinOa50Z' lir-"1
13. Which set
entities ?
o f s tandards s ira l, 1 be used by smal1 pqQlicly-traded
Ni' Fult PFRS
b. PFRS for SlvIEs
i-'.. Either Fu]1 PFRS or
,:) " Fu11 PFRS, PFRS f cr
PFRS foT SMEs
7
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THE.RY oF AccouNrsf
k(hsl)l Finat pre-Board Examination (october 2aL2 Batch)$}7
15 Sepremb er Zot1r 10:30 AM to 12:00NN
Pa-ge 3y*'.lWnat criLerion j s exc,luded i rt the rlef init-ion of cash equivalents
'' under PAS '12
a. Subject- to an insignificant change in value
b. Short-term, hiqhly l iqr-rl d i nves tmenLs
5r.' Investment in higir-qualit"y i-nstrumernts
d. Readily conve r:1-'i ble to known amount-s of cash
15. The f ollowing statemeni-s rel'aLe tcr
' account.ing Process:
the recording Phase of Lhe basi<: Statement 7 : Ad j r-rs tirrg ent ries are macle j'n
S[atemet t II: C]osi ng ent'r jes are made in
Statement III: Rever:sing entries ar:e made
a . Onl y statement' I is true
b. OnLY statemenL iI is Lrue
4 OnlY staternent II is 1'alse
d. A1 I of tire st.at-ement-s are true
16,,'{n partnershiP,
a. l{anagement consists of the board of directors
b. Profi.ts are always divided equally among partners
; nlrr"r"aion results when a part-ner leaves t-he pa::tnership
,l . l,lo parLner is l i-able for more than a proport-ion of the
coml:anY's rJebLs
Lhe ggneral -; ournaf .
the '$eciif lour:nal -qrnrlra'i
in the general
journa-I-payment- transactions, t-he entity shall
r:eceirred and the corresponding increase
LJ.'. h-or eqrriry*settled share-based
measure the qoods or servrces
in equitY:
sta tenen t I : Direcr- Ly at- f .ri r va lue of-' t-he goods or service received
stateilent II; Indirectly, by ref erence to the f ai r: val-ue of the
equi.ty instruments granted, if the fair value of the goods or
services received cannot be estimated reliably
a. Onl Y stal-ement I
b. OnlY staternent I I
*x Both st-aLements I and II
d. Neither of the staLements is Lrue'
18.;Other than financiaf fiifrl-fities measured at fair val'ue through
:''
;;;;;r If "ror" . how are- f i nanci:ii' l iabil it-ies subsequent-lv measured
under PFRS?
a. L-air value i f acceptable tc the enf ity '
-v Amortized cost using the ef fect-ive interest rate meLhod/ C.Amortizedcostusingthestatedinterestrateofthedebt'
d. The amount of undiscoi.lnted cash that would be r:equired to
settle the obligation at the end of the reporting
period-)9 . Generally acceplecl accountlng pr:i nciples
a' RarelY change
"nt- in time
{ Define ar:count-ing pract-ice at a poi
C.Arenotaffec|.edbychangesinLhewaysbusinessoperate
d. Are si*irar in nat;re to t-ire principles of chemisl-ry or physics
Which of the f ol lowing component s rsf other:
:l
should (ot )be recyqlgq-!e-e!*ola1.ar Ios=2 --rnt1 '' . \-J .-^!:^ l,,E---;?a/ --l-":--
^t
I; ChanqeY in revaluat jon surplus crak-"\ t'?-7
II: Changes in tire fair value of available
III: Actuarial gains and losses on defined
IV: Gains and losses arisinq fronL
statemenLs ,/ of foreign operat-ions
.A'. I and lI onlY
b. I and III onlY
c. I, II and III onIY
d. I, II, III and IV
comprehrens i ve income
lcsel takr io ?,'t
for sale flnancial asst-s
benef it p1an" citkA to R*
THEORY OF ACCOUNTS
Final Pre-Board Examination
15 September 2A12 o 10:30
(October 2012 Batch)
AM to 12:00 NN Page 4
: i-l nte::est- paid can be classlfied
a. trj-nancing act_ivit-re.s
b. Operating activit.ies
c " Operating, investing otl
9( Operatinq ar fi-r-rancinq;
":
ttl.\
financing activit-ies ac tivi t.ies
/i ...-- \
Professional Regulat-ory Board of Accountancv?
d/
>x.
'members.E+ of the
)
24,I \-l
a. 'Ihe chairman of the Board of Accountancy
o". The president of the Republic of the phillppines
c'. The cirairperson of p::ofessional Regulations Commlssion
il- The president of Philippine Tnstitute of certified publlc
Accountants
?"3,.,Lrty loss incurred from the sale of treasury shares shal1 be charged
t-o
a. Share premium from original lssuance, share premium from
treasury shares and t-hen r:etalned earnings.f€trre,r.-oq
b - Loss cn sale of treasury sh.ires t-o be reported as other
expense
c- RetaineC- earnings and then share pr:emiurn from treasury shares
"A. snar{Y$m treaiury shares and then retained earnings.
Which of the following jterrs shal-1 be excluded. in estimating future cash flows in determining the value in use of an asset?
a - .Cash inf l-ows or outf l-ows f rom f inancing activities or income
tax receipts or payment_s
h. Projections of cash inflows from the continuing use of the
C
as set
Pro j ections of cash outf 1ow,: that- are necessarily incurre d. Lo
generate the cash lnflows from corrtj-nuing use of the asset
Net cash flows to be received (or paid) for the disposal af the asset at the end oi its useful rife
':- 25) Determrne the true statement (s) relating to presentation of the
. /'-'-/ statement of changes in equity.
Statement I: The amounts of dividends shown as disLributions to ou/ners and the amount.s of djvidends per shar:e should be shown in the
notes only.
Statement II; Components of eqr"ri.ty
equiLy, the accumu.l_ated balance of
income and retained earnings.
a. I only
b. II only
c. Both I and II
,... f. Neither r nor 1r
26 -Whtch of the f ollowing is nor- a description cr a f unct j-on of the
--r Financial Reportlng Standards CounciL (ERSC) ?
('^ttf A a. rt- establishes generally acceptecl accounting principles in
the
' Philippines.
b. It assists the Professicnal Regulatory Board of Accountancy
(BoA) in carrying out its power and fr:nction to promulgate accounting standards in the philippines.
c- It is the successor of the Accounting Standards Council (ASC)
and the creator of the Philippine Int.erpretations Committee
/
(Prc)., T+
p. 1r receives financial support principally from the
,' Professional Requlations Cornmission (pRC) .
i,nc,l ude each class of contributecl each cl.ass of other comprehenslve
,"-A\
THEoRY oF ACCouNTS(:'( h:^), Final Pre-Board Examination (october 2oL2 Batch)
\r'
ri
septlmoer 2or2 r 10:30 AM to 12:00NN
Page 5//
27r/one characLerist-ic
oi
a cor$oration is,/ a. Unlimited liability of its owners
/
b--. Tire ease with whlcir ownership is transfe::red ,r'
c. Shareholders acting as automatic corporate agents
d. Dissolution upon the cjeaLh of an owner
Which of the follcwing is an example of cleferral?
a. Accrurng year-end wages
b. Recognizing revenues earned but not yet r'ecorded
c. Recognizing prepaid rent
At RecoqnL-zi ng expell.ses incur rc:d buL not yet recordcd
.,''l p
2'9.il'he following stat-ements are based on PFRS for SMEs:
Sta temen t I: T f an -ent i ty' s normal operati ng cycle is noL clea::1y
determinable, igy'ciuration is assumed to be twelve (72) months.
Statement -I{;,If an ent-it-y is unable t-o make a reliab}e esLimate of
the useful t)(e of an inlangibLe asseL, the life shall be presumed to
be twenty (tO)\Years.
Statement /tt: An entiLy shal.l recoqnrz{ al l- borrowlng cos;ts as an
expense i-rr profit or loss in t-he peg*da in whj,ch Lhey ar:e incurred.
a. True/ true, Lrue
-Jc f" Tr,re, fa 1se, true
c . 'Irue, f al se, f a-l se
d. Ea1se, fa1se, fa.lse
/
3t)l'Which of the following is least Iikely to be included j-n the cost of
. i nvcntcry?
a. Freight 1n
-b.- Cost to store goods
c. Purchase cost of good's -"'
' d. Excise tax on qoods purchase5)'"
3.1'. Which of the following statements
/'' "Agr:iculture?"'
are ccrrect according to PAS 47
less costs to sel I wit.hcut excepti on.
Statement II: Agricu-Liural produce harvested f r:om an ent-ityrs
biological assets shall be measur:ec1 at its fatr value less cosLs to
sell at the point of harvest
-a. I /' onlY -.b:' II only c. Both I and II d. Neither I nor II -, -- -/'
:3{.'Depreciation best aPPI ies Lo
'\. "'' d: Recorded costs that must. be divicted among periods
b. Recorded revenues that- must be di-rided among per:iods
c. unrecorded (accrued) expenses that must- be recorclec
d. unrecorded (accruqd) revenues that- must- be recorded
Staternerlt I: A biologicaL asseL ' shafl
recoqnition and at the enci of eaci"t repari ing
be measured oI) init.ial
perrod at its fair value
disclosed by the
i t t-o be out of
i. e. , noLhing is
(i.e-, nothing is
31.which of the following errors
. preparatron of a trial balance
entefed)
{ Failure to poSL Parr of
/d. Posting the debit of
cre<li t as a debi r-will pr:obably be (j- . e. , would cause a j our:na1 entry a journ;rI entry ^s .l balance) ?
a . Eai lure to post an entire j ournal entry
posted )
b. Failu::e to recor:d an entry j.n Lhe journai
THEORY OF ACCOUNTS
Final Pre-Board Examination
15 September 2012 r 10:30
(October 2012 Batch)
AM to 12:00 NN Page 6
,,
l
v-' (:,1)tf the market rate of interest- is lower V on the date of issuance, the boncls wi1] than
y. Sell at a di^scount
b" Sel] at a premium
c. Se11 at face value
d. Not sell until the face interest. rate
purchase of treasury stock does not affect, The amount of stock outstandirrg
-The amount of sLock issued
Total assets
Total sharehol"ders' equi [y
the face interest rate
is adjusted l( l-l - ! purchased method?
D
c
i 1'he following stat.ements are based on pAS 28 (rnvesLment in AsscclaLes):'statement I: An invesLme nt in an
"bl.iute shaf 1 be accounted for. using the equity met-hod (benchmark) /r )ost met.hod (alternative) .
:iratement ff .' An investor shal1 ciiscontinue the use of equity method
fronL the date when it ceases Lo have significant influence over an aSsociate and shall account for the investment i-n accordance with pAS
39.
Statetnent IrI: On the loss of significant influence, the investor
sha1l measure at historical cost any investmenL the investor retains
in the former associate.
y' anry stat-ement f is fal-se
b. Only statement II i-s true
c. OnIy statement III is true
,/O All of the statements are false
3,f,.A pretax income alwalz5 results when
/ a. The cost of goocls sold exceeds operati-ng expenses
b. Revenues exceed the cost of goods sold
' c. Revenues exceed operating expenses
-Aa The gross margin e5ceeds operating expenses
3l/fne following statements 9ne based on PFRS 3 (Business Combinations):
,/' Statement I: An entity-*Yiall account for each business combination by
,/ applying the acquisiflon methoct.
Statement II.'The a;:quirer sha11 measure the identifiab.le assets acquired and t]ne)45bi1ities assumed at their acqursitlon date fair
values.
Statement III: Eor )>a'ci business combination, the acquirer sirall
measure any non-csfl-trolling interest in the acquiree either at fair
value or at Lhe non-controlling interest's proportlonate share of lhe
acqu-iree's identifiabfe net assets.
7': Afl of the statements are true
-
b. On]y statement I is true
a
g. Only statement II is false
,/d. Only statement III is false
3fl. The
a-F
7
d. ^,:-/9. Land td, ,' -/ / b -d. / ...40. Il]hich a k\ -2/ -{ r'). improvementsAre subject to depreci_ation
Should be incfuded in the cost- of land \, Should be deducted from the cost of land{ Should be charged as an expense in the year
would most 1ikely use the retail inventory
A farm supply company
A TV repair company
A dealer in heavy machinery
A men's clothing shop
I a tLv^ r vl nLLvvt!
Final Pre-Board Examination
15 September 2Ol2 r 10:30
(October 2012 Batch)
AM to 12:Oo
NN
Page 7,'^-) 't-'
4L.The fol]owing are based on PAS 15 (Property, plant and equipment:
StatemenL f: An entity is reguired Lo mcasure Ltre residual value of
an iLem of properLy,' plant and. equipment as the amQunt it estimates
it would rece |ve clu:rently f or-/tl:e asset j. f the asset were already of
the age and in the condition expecLed at t-he end of its useful life.
Statement IL: An entj.ty ts,rlequired to determine the depreciation
charc_Ie separate.J.1, for ea){trtrsnj f icant part Qf 'an ite:n of property/
plant arrd eqi-riPmenL. '/
slaleqent III: If faj.r value can be measured reliably, dtr err[ity
1shou1$. carry aJ i items of propP{ty, p,lant and equipment of a class at
)--rEfa]ueO amount, whi:h ts,z(ne falr vaLue of the items aL the date
of Lhe revaluat-ion Less.{ny subsequenL accumulated depreciation and
accumulated impairment" losses
a. Only Staternenl. 1 is t rue
b. _, Only Stat.em.enLs I ancJ I I are true
..c'1' Only Statement.s I I and 11I are true
..'d. A1 I of t-he above stat-ements are t-rue
Qi .Vnder pAS l, which of. the f ol- lowi-ng is not amonq the criteria in
a. Elxpected to be settlecl in tiie entity' s normal operating cycle
b. Due to be settled witirin twel.ve months after the balance sheet
c. ?:t:" held primarilv for the purpose of being traded
cl . The entity has an unconcli t j-onaI r iqht to def er set.t'lement- of
.. the 1labi1ity for at least twel.ve months after the balance
sheeL <1ate
Under PAS 31, what- is the cori'ect treatment irr accounting f or an
interest in joi-nt1y controlled entities?
a. Cost method (benchmark) ; equit'y method (aft'er:naLive)
b. Equity nrethod (benchmark) ,' cosl methocl (alt-ernat lve )
c. froportionate consolidaIion method (benchroark); equity method
(alrer:nat ive)
O,/ tqutty method (benchmark) ; pr:oportionaLe consol j-dation method
/ (a lter:nat i ve ) c!{r ufl .- 11. i \-./ a/.wnar / a. b.
is t-he arrthorrtative Status of the Conceptual l"ramewark?
It has the higtrest l-evel. of authority. 1n case of a conflict
between the Framework ancl a Standard oI Interpretation, the:
Framework overrides the Standarci or Interpretatlon'
If ther.e is a SEandard or lnterpretatj on that specifically
applies to a transacLion, it overrides the Framewotk. I1 the
absence of a Stanciard or an lnt-erpretation that speci. f ir:a11y
applies, the E ramework should be foll-owed'
If there is a Standard or lnterprel-ation tilat specificalty
applies to a transaction, it. c;verrides the Fratnework. In the
absence of a Standard or an Interpretation that specif-ically
applies to a transaction, management shogld consider the
applicabj lity of t-he Framework in developing anc applying an
actounting policy which results i n information that i s
relevant and reliable
d. The Framework applies when ERSC develops rlew or revised
Standards . An enlerpr ise is never required t-o cons ider the
f ramework a if (^
i)
(qi t./ .J:lunder PFRS 4 , it re f:ers [-o
undg,r an jnsuranr:e
conl-rdct-gl ceaant
b. lnsure.r
c - Reinsurer
d - Policyholder
party l-haL i-ras, a ai.ght to cornpensaticin
an insu::eci event occurs.
THEORY OF ACCOUNTS
Final Pre-Board Examination (October 2Ot2 Batch)
4.f'Which of the fotrlowing items is an example of investment property?
/ a. Property that is ]eased to another entitv under a finance
lease
b. Prcperty that , '"third parties
&. Property that
as investment
d. Property held
business
is being consLructed or devel"oped on behalf of is being const.nrcted or developed for future use
p rolre rt y
f.or short-term sale i n the ordinary course of
41/A corporation has issuec-l orrly one type of sLock and wants to compute
/ book value per share. It needs all the information ,below, except
a. Reta j,ned earriings
b. Total contribut,ed capital -Z: The current year's dividends
d. Total shares. out.standing and distributable
What is correct concerninq the 151ie overall sj-ze test for operafing segmenLs ?
a. The total external and internal revenue of a.Ll reportable
segmenLs is 15% or more of the entity's external revenue.
- The total- ext.ernal revenue of all reportable segments is 152
or more of the enti-ty's external and in.Lernal
revenue-The total external lrevenue of all repor:Lab1e segments is J5e"
or more of the entity's exlernal revenue.
The total internal revenue of al-1 report.able segments is 'l 5Z
. or more of the entity/ s interna.l- revenue.
d.
aS.rhe following
/ contracts) :
sLatements are based on PAS 11 (Constructiori
(New Governmen;
n
f)
Statement I: Contract revenue is measured at the fair value of the consideration received or receivable.
Statement II: The measuremerit of contr:act revenue is affected by a
variety of uncertainties that depend on the outcome of future events.
The estimates often need Lo be revised as events occur and
uncerLainties are resol-ved
statemenL rrl: the amount of contract revenue may increase or decrease from one period to the next
a. Only Stat-ement I is true
b. Only Statements I and II are true
c. Only Statements I1 and III are true d1" Alt of the above statements are t.rue
,, ,,
/O.Uo* frequent shall a government unit covered by NGAS
' Accounting System) prepare financial report.s?
a. Monthly
,Y. QuarlerlY c. Semi-annually
d. Annually
/Sl.)fne following statements relates to discount on
\--l of Lhe f o1]owing s tatemenLs rs correct?
SLatement I: The-.*iscount on hote payable is account which 15-shown as a deductlon from'note
Sta tement II: Thr.e discount on note payable
chagges applicable to future periods
/. I only
b. II only
c. Both I and II d. Neither f nor II
notes payable, ' which
aont/i3
r,\-an \adjunct\ Ijability
payab.re.
6(e$Il Finat Pre-Board Examination (october 2oL2 Batch)
r
lr
n'.,/12.\rt
r./ r__- pf t-he price ice of t-he a. At- the b. f n li'ie c. On the Ar! out of of the underlyi.ng is underlying, the ca-Llmoney money money the money
qreilter: than t-he strike or exercj-se
opt-ion i s \
\ al'
/'-,/
l'
53. The followlnq statements
Reporting):
Sta temen t I : lnterim fi nancia l repor t means a financial r:eport
cont-aininq either a complete:;et of financial sLatements or a set of
condensed frnancial st-atement-s for an' jnterjm period.
Statenent II; If an eni-ity pubiishes a gomplet-e set of financial
statements in its interim f inanci aI rep;s-it, t-he f orm and content of
those statemenLs sha1l conform to l\{ requirements of PAS 1 for a
compleLe set of financial statements. Jam {
Statement III: An entit"y shail apply di;[ferent accounting policies in
i +- i ^+^-im financiai statemenLs and in it-s annual financial
.LL) f ilLcL.
statements.
a. Only statement I is true
b. Only statement- II is tt ue
-y Only statement III is false
d. AL I of the statements al:e true
z'
,5a'lfne Purchases D-i scounLs Lost acc,f unt may appear in Lhe accounting
' recor'<Js if whiclr methorJ is used to account for purchased discounts.
: lrlnl nficc mcLhOd
/. P
b. Gross p'rrce method c . Al lowance rnethod
d. Saies price rnethoct
,p5.e statemerlt of f inancial posi tion as aL the beginninq' of the earliest
" comparative period should be prepared by an entity in any of the
following circumstances/
excepl-a. When an entity applies an accounting policy retrospectil,ely
b. When an entity makes ::et-::ospecLive restat.ement of items in Lhe
f inancial stal-.emenLs
c. When an entity recl.assifies items in the financial sLatements
{ When an entily changes in any of it-s estimates used in
accountinq
,/
56;the followinq statements are based on PAS 3B- {Intangihrle Assets) :
Statement I: InLernaf J-y generated goodvri._).--3nat -I not be recognized as
an asset . -t
Statement II; No i-ntangible asset arjsipg-f.rom research or reseatch
phase of an internal project shalI L>e-fecognized.
are krased on PAS 34 ( Interim Financial
Statement III; Internally genarated brands, rnastheads,
tit]es, customer lists and it-ems s Lmi Lar: in substance
recoqnized as int.angible assets
a. A11 of Lhe sLatements are true
b. Only slalemen1: I is t,r:ue
c. Only statemenL I1 is false
d:'Only staLenent III is false
publ i shing
shall be
10r
5?;'The term 'outsIanding cirer:k.s' refers to
/ a. Checks that have been lost in Lhe maiI or for: some other reason have been misplaced
b. Depositor checks whiclr have been processed by t-he bank buL
have not yet been recorded by the depositor
c. Customer checks whjch have been retu::ned by the bank because
the customer's bank would rtot honor them
THEORY OF ACCOUNTS
Final Pre-Board Examination
15 September 2Ot2 r 10:30
(October 2012 Batch)
AM to 12:00 NN Page 10
.'i
!-' \
5pz. What are qualitative characteristic of financial stat-ements according
' ,r. "ho trr;rngut7yl<!
,/
a. ' Qualitati',re characteristics ar:e the attributes that make the
inf,:rmation provided 1n financiaL statements useful to users. b. Quaf iLative cl:aracLerisLics a.re broad classes of f
inancial-effecLs of transactions and other events.
c" Quali-tative characteristics are non-quantitative aspects of an entity's posi't-ion ancl perfornance and changes in financial
position
d. Qualitative characteristics measure
entity has complied with all
I nte rprel-at i ons
the extent to which an
relevant St'andards and
n
r59,Tne following statements are based on PAS 29 (Financlal Reportlng in - Hyperinflationary Econornies) :
c+-+^-^--+ f.' The financial- staternerrts of an enLity whose functional
J Ld I-C1lICT] L
currcncy is the currency of a hype::inflati"onary economy, whether they
are based on a historical cost appr:oach or a current cost appr:oach,
shaI,} be stated in terms of t-he measuri-ng unit current at end of the
repc-rLing period.
Sta ternen t I I.' When an economy ceases to be hyperinf lationary, an
entity shall discontinue the preparation and presentation of
financi-al statements under PAS 29 and shall treat the amounts
expressed in the measuring unit cur:r'ent aL the end of the reporting
period as t-he basis for the carrying amounts in its subsequent
financial statements.
a. True, true
b. True, false
g( Ealse, trre
d. Ea Ise, false
'60,rUnder the effective interest method, as a discounL is amortized each
ij'*-' period, t-he
--*-a b. fnterest Amount amortized expense decreases-recorded increases
c. Interest paid on brondholders increases !'
d. Bonds'carrying vaJ-ue decrease.s .,
l--
t-i61/Einancial statement of not-for-profit organizaticn focuses on
a. Basic information for t.he organizat-ion as a whole
M": Standardization of funcis ncmenclature
c. lnherent differences of nol--for*profit organization that
impact reporti-ng presentations
d. Distinctions between current funC and noncurrent fund
6.d..fne following are based on PAS 24 (Related Party Dlsclosure) :
' Stutement I: Relationships )c.lreen a parent and it.s subsidiaries sha1l be disclosed only if the.|e erre transactj.ons between Lhem.
Statement II: An entity shail disclose the narne of it-s parent and, if
different, the ultimate cont-rol1ing party.
a. True, Lrue
h 'T'vrra a ! uv , f:1ca ,n'/ L_r I ca f 1116 L&. / LruL
d. False, false
6i.p, newiy acquired plant asset is Lo be
life. The rationale for this process i.s
a. Economic entil-y assunption
b. Monet.ary unit assumpt-l-on
c. Material ity assumption
..d': Going concern assumption
depr:eciate,J over: its r:sefuI
the
THEORY OF ACCOUNTS
Final Pre-Board Examination
15 September 2A12 r 10:30
(October 2012 Batch)
AM to 12:00 NN Page 11
-E4.The following are basecl orr PAS 20 (Account.ing for Governrnent GranLs
and Disclosrrre of Governrrer)t Assistance):
Statement I: Governntenl grants sha.Ll be recognized in profit. or loss
on a systematic bas j s o\/er1 the per:iods in whj-ch t-he entity recognizes
as expenses the related costs for whi ch the grant-s are intended to
compensate
Statement II:
compensation for expenses or losses purpose of giving immediate financial
future related cosLs shall be recogni
peri.a.d in which j.t. becomes receivable.
-a: True, b. True, truefalse c. Fa1se, true
d. Fa1se, false
A government grant [hat becomes receivab]e as
already incurred or for [he
support t-o the entity with no
zed in profiL or loss of the
n I h5 \,j
,Earnings per share (EPS) reportinq is strictly requirecl for
' a. Publicly accountabLe entit j-es
b. Small & medium-sizeci entit.ies (SMEs)
_q" 'SMEs and Publ icly accourrtable entities
d. SMEs, publicly accountable entities & micro-business entities
654.'-lhe f ollowlng statrements refer t-o PFRS for SMEs:
/' Statement I: The PFRS for SMEs is organized by topic, wj,th each topic
presented in a separate numbered section.
Sfatement II: All of the paragraphs in the PFRS for SMEs, which has a
tota1 of 35 sections, have er;ual aut-hority.
Statemen t III: Some sections include appenciices of implementation
guiciance that are not par:t of the PF'RS bLrt, rather, are guidance for
applying it.
a " A]1 of the statemenLs ar:e f alse
--b. AII of the statements are true
c. OnIy statement III is true
d. Only statement- I is t-rue
67.,{Abnorma}.spoilage i-.n a manuf acLurir}g pr:ocess shoulcJ be charged to
1 A: Profit or loss
b. Accirrnulat'ed profit or .l oss
c. Manuf actur.ing overhead appl i ed
d- Manufacturing over:head control.
68. Under the indirect method, which of the followinq items must be deducted from reported net lncome to d.etermine the net cash flow from
operating activities?
a. Decreases in current asset:: ,
b. Depreciation of plant assets .,'
c. Amor:tization of boncl di scount"
/ Decreases in current liabilitie-s
69'-Which of the following statement.s is/are correct accor:ding to PAS 3't
/ "Prov.isions, continqent li"abililies and contirrgent assets"?
Statenent I: ConLingent asseLs are not. recognized in financial
statements si-nce this pay resr-rLt i n the r:ecognition of income t-hat may never be realiied."
Statement II: When Lhe tga4ization of income is virtually certain,
then the relat-ed asset 26 naL a conti-nqent asseL and its recognition
is appropr i ate
a. I only
b. II only
y{' BoLh I and II
d, Neither I nor: II
THEORY OF ACCOUNTS
Final Pre-Board Examination
15 September 2A12 r 10:30AM (October 2012 to 12;O0 NNBatch) Page 12
--i,,
\ ,'-,,,
. n : rr:
" \-_/ manu f An crrtil_v acturinq r-:lassj.fies planl_ en,Einee::ing, expenses bysd
deveJ.opnent, finance e acJminist-::at_jcn.
:1 . Oi:'1 cct o.f cxpencjiture
o" /' i.iaLure :f r,xpenss
-(- A-rea ol re:;porrsjLriiil-y J. F'uncl ',orr pe r f crmerl
logrsLlcs qL-rality contro L,
les & market.ing, rcsearch &
The ciass,i.fication oasis is by
(Tiie Effects of Changes in Foreign
(Cortso1id;r1-.er-i an<f
be p r e1:a r arJ r.-; :rg
and othe r r:vcrrLs
the account_lng recorcis cirly whcn
aCvant-itr;e lla s nilme, capal;1c busrness f ive or rnorc
;-
., .'_:\ ir 1 I U " '.-liTlre followr-ng are basecl on pAS 2i Exci:ange Rates:
St.lterient r: A foreign cul:rency Lransact j.on shal l be reccrded, on iriitlal- recognlLiot't in the functlonal cLrrrency, by applyilg to tiie lcreign currency amount t-he spot- exchange rate between the functlonal and t-he foreign currency aL the dat-e of the Lransaction.
St.a tenenL I I.' For 6:raci ical lieasons / a rate thar- approximates 1he
.ic;tua1 r:ate at the date of the transact-ion is often used. for
example ! ar\ averaqe rate for a week or a rnorrlh miqh; be used for all
.\^,, - )t on.sai:tions -i-n each f oreiqn currency occur:rinq during the periccl
vr\l€99 JQtt
-i-f 'exr--hange rat-es rluctuate significantiy during the period.
5. Only statelnerit_ I is truc.
b. .Only staterneni I rs false q/ Bot-h staternents are t_rue d. Botir st.at_ene nts ar,- fa I se
I
JZ.Under PAS iL, when iL is probable thar tol.al contl:ac1, co.st-s ()n a
' fixecl price constructrorr cont-ract- lvil-1 exceed total cont::.act ;evenue,
Lhe expected loss shoulci be
a" Set oft against- profit of ot-Lir,.:r: const-ruct-ion ccrlt-ract wirel.e avairable
b. Recognizeci as an expense inr:r,ediate1y, unless revenr.re Lo d;rt,e exceeds cosls tc iate
c. ApportioneC to 1,he years of t-he contract accor:dipq tc-, t_he
-Dercentaqe of completion met_hod H Recognized as an expense immedia[e1y
7.3. The defer::ecl tax consequerlce aLt.ri.brit-abl.e t.o .r deduct.i.bl<,. t--€jinporary '/ difference and cperatir:g loss carlyfo::ivarci is known as
a. Tax expcnsc
b . /, Cu:: rent. t_a x
a'. 'l'ax aSSet
'd. Tax 1iabili1,y
-1,4 - netermine the t-rue stat.ement regarciing pAS
;r.1
' Se!).ircrLe Einancial Statements) :
.$t!tgU?it ' t,^_I : Consolidate.l f, irranr;ia_L staLen)€lnts n",ay
(arnp
Q:{erenD-ae,Jour,Ljno pUii.:ies lot . :- r jkc t-r,rsdcliuns .t n s rml-La-r cLrcum.stanccs.
Statement Ii: fntragrrtug--*sa tances
shaf l. be el imina+;ed tpl-f ui L
-a. 1 only
p< TI only
c. Both I and 1I
.d. Neither I nor: Ii
i-.ransact t.oris r .lnCOme;tnd €]xpenses
]5.GoodwitI should be recorcied in
a. It is interna_I 1y generatecl
b . I t (lan be establisfred tha
resulted to a firm from
staff. or reputat__ior:
--C'.- It is acquj-red thror-rqh t-he
d- A firm report s above
consecut-r.vr: Veal-S
I a,definite benefit or sone i tem sucit as qcorl
;r<-:qi-Li :; i 1-ir.ri't of anr-;thcr ncrrnal earnrntJ.s for
r
THEORY OF ACCOUNIsFinal Pre-Board Examination
15 September 2012. 10;30
(October 2012 Batch)
AM to 12:00 NN Page 13
- / 26 (Accountino and Reportiirq bv Ret-ir:ement );
lgtVnaer PAS 26 (Accounting and Reportiirg by Ret-ir:ement Benefit PIansl
// investments held by reti-r:ement benefit plans should be stated at
which of the follovring value in Lheir statement of net assets?
,A'- Fair value
" b. Value in use
c. Net realizable value
d. Or:iqinal cost less lmPairment
,/
'772;/U1der PAS 1B (Revenue), whj-ch is not a criterion to satisfy before
,/' revenue from sale of goods be recognized in prof it or loss? / 21. Revenue can be reliably measured
b. ControL over the goods sol-d has been relinquished but
man4gi€nient mainLains cont j-nuing involvemenL over the goods
sold
c. The risks and rewards of ownership has breen transferred to th€
buyer
. td. The outcome of the transaction i s probable
18,,,.An entity has puhl1c accountability, and hence disqualified as SME,
/ if:
Statemept I: Its dgbt or equity instrumenLs are traded in a public market. ' '.""'
Statemen t JI.. Ir r9,'"{n Lhe process of issuing debL or equity
instruments for trafing i-n a publ-ic market.
Statenent III: lt h9.1'ds assets in a ficluciary capacity for a broad
group of outsiclers as one of j t-.'; primary busi-nesses '
g.' 'Ir:ue, Lrue, trne
b . True, f alse, ti:ue
c. True, true, false
d, {a}se, false. false
:,.,
t9.,: r'or wnlcn type of hedge are changes in f air value deferred and
./ amortized as an equity adjr:stment?
a. fai:: val,ue hedge
{Cash ft.ow hedge
c. Operating hedge
.d. Notional value hedqe
80.The followrng are based on.PAsi 19 (Empioyee benefits):
,, Statement I: An entity shall determine Lhe present- value of defined
benefit obl igafioris ahd the fair value of any' plan assets with
suf f icient reqularrl,O that t-he amounts recogni zecl in the f inancial
stafements do not/aiffer materially from the amount-s that. would be determined at the end of the reporting period
Statement II: An entity shall use tbre Projected Unit Credit Method to determine the present value of it"s clefineci benefit obligatj-ons and
the re1ated current serwice cost and, where appliqable, past servi,ce cost.
a. Only staf-ement. I is true
b. OnlY statement 11 is true
-h Both statements are true
/, d. Both statements are false
/
pl-.Cextain accpunts are closed aL the encl cf an accounting period to
/"' a. Reduce the ' number of items t.hat get reported in the general
purpose financial statements
b/ prepare those'accounts"fcr recording of transactions of the
,/
,/ subsequenL accounting Period
c. Reduce the number of account.s t-hat
d. Transf er the ef fecL ot t rarlsacL
accounls to owners' equitY
appe:ir jn the ledger
Aa
rHEoRy oF ACCouNTS.(i(kt),
Final Pre-Board Examination (Octob er 2O1Z Batch)"$l/
rs septlmber 2oL2. 10;30 AM to 12:00NN
Page 14:
/-, I t.-. | ..t
\
/The following statements are based en PAS 40 (fnvestment Property):
Statement r: An j-nvestment property is a property held to earn
renta]s or for capital appreciatj,on or both
:;l:atement II: An j-nvestment properry shall be measured c.Js LS. TransacL-lon cosLs shal 1 be he-xciutcdl in
1 r, ini-tia11y at the initial comrnon measur:ement'. f{- -:^Ludql
st \,mode1, . a ga:ri brt ktud"rlloss ^Stal emer:t III.' Under rhe'fcost.\,mode1, a qa:ri"bi'" ioss :h.rngc in the fair valr-ie ffiia=f+m6irt property shall
ai
J t) .
arising from a
be recogni zed
in prof it or loss f or the peri-od
"in in!."fr it arises.
a. A11 of the statements are true
b. Only sLatement I is true
c. Only statement 1I is false
, d. Only statement IlI is false
Under SEC rules. a company is classified as a "small & Medium Enlity"
(SME) when its total assets are between
a. P 3 million and P 250 million
./.
W P 3 million and P 350 million
c. P 5 million and P 250 million.
d. P 5 mil-lion and P 250 million
Al.tne following are based cn PAS 12 (Income Taxes) :
./ Statement I: A deferred tax asset shaLl be recognized for the carry
forward of unused tax losses and unused Lax cr:eciits to the extent
thaL it is probable t.hat- f uture taxab,le prof it will be avail-able
against which the unused tax loss6:s- -/ anci unused tax credit-s can be
/ utilized.
Statemen t II.' Current tax ti#itities (assets) tor the currenE and
prior periods shall be ,measureci at tire amount expected to be paid
(recovered from) the taxation authori-ties, using 1-he tax rates (and
tax Laws) that have been enactgd or substantively enacted by the end
of the reporting period.
Statement III: Deferred tax assets and 1i-abiliLies shall be measured
at the tax rates that are expe-cted to apply to the period when the
asset is realized or the J-rability is settled, based on tax rates
(and tax laws) that have been enacted or: substantively enacted by the
encl of the reporting period.
a. Statements I and I1 are true
L c! ^+
-D. .;uauetrl€rttS II and II1 are Li:ue
c. StaLemenLs I and fII are true
{ ett of the sLatements are true
B/. under PAS 28, which of the following will not fa11 under the
/ situaLion "existence of sig'nificant inflJence" of an investor?
a. PartiCipation rn policy making process
b. MateriaJ j.ntercolnpany transactions
_94 Power to \9over",t,!,,.e.,!#yt.ncia-l- and operating policy decisions
of an ent[-ty-so*{g"t'd-b5*ain benefits from its activities d. Techno1ogical dependency
i g O . f l^,. monetary un.i t assumpt ion provides Lha E
a-/ a. Items whose costs are insignificant compared to other amounts
on the financial statementi may be accounted for in the most
expedient manner
b- Assets and equities be expressed in terms of
,,,'denominator
.q. The recorded vafue of arl acquired item should be the fair
,/ market vafue of what is given or the fair market value of what
is received in the exchange, whichever: is more objectively
determinable
d. Expenses of generatinq revenue should he recognized in the
I ftc\Jn I \rI A\-Lrvrl.,tr I J
Final Pre-Board Examination
15 September 2Al2 o 10:30 (October 2012 AM to 12:00 NNBatch) Page 15
,,u
94.'L'ine following statements are basecl on PAg-'17
,/ SLaLi'Inerr l.' Any .Lnit iaI di rccL rioslrr''.ncur f inancc leasc arae aaOea 1o rhc arnsr:.rr .f thc,
stat-ement of fi.nancial positi,,rn.-'r'
(Leases ) : red by a Iessee asset- recoqni-zecl i;nder a 1n the under a i zed in
Staternent IT: Any irril-ia1 dj-re'ci-,, ,lsi.:r incur:red by a lessee finarrce leilse rr" ad,led to ihe/amourrL of the Liafility recoqn
:he rrtateqrenL c1. f Lnanr:i-al p<,f r;-,n.
a.-,True, t rire
_V True, ralse
c. False, true
n F:lso. false ,/
&8 . What j s the account-i nq for treasury sharer transacti,ons?
a. Treasury shares arc accounted fctr as firrancrjaL asseLs
accordance with PAS 39.
!y! On repurchrase or r:eissi.rarr ce csf own shares, no qain or.ioss is
/
c. On re1:ur:cha:;e uf Lrea.sury -share.s, a gain or loss is recognizerC
equal to tttc dii'fere:1u*e betweert the issue price and the
repurcLrase prlce ior the-shares.
d. On reissuance of treasury sirares, a qain or loss is recoqnized eqr:a1 Lo the-' cjif fer:ence between t-he previr:us r:epu.rr:hase pr Lce
anil Lhr: rc i ssrlanc(.' prrcc.
I z\-,
'\ ,1 '89.\A conpany -r.s sublect to war:r:anl-y
k l- between p l,0r:)C,000 and P 3,00C,000
estimate of loss withrrr this range
The companv s;houlcl
a. Accrlie a loss of P 1,000,000
b. Accrue a loss oL P ?-,000,000
(:. Acr:rue a loss of P 3,000,000
-._-*.'Djsclose this r:onl"inqent Ljabilit-y in lhe foot-not-es only
t
90\To be {hiqhly ..cffecti,vc, 1-lie act"u;rl
'l\-. \ _,/*itir Ln I ratre;e of a. 100?, - 150% b" 10c?, * 125e. c'|' B0t - 100ri ""- ci. 80? - 1 252
c;laims. It is esLimated that
r^r i I I ;-'rabably be paid ,:ut . No
i r; more Ii kel y Lhan any oLI'ier.
d
.lu
results of t.-he herlqe musl- be
rrl ( 1.,
Tlq- ' l1
Which 'of t-ire' f o-l l.owinc; .:ihou1"c-l be amor t i zed cvel'r tire per iods of estimated benefit?
a. Developmenr- cost.s thaL resultcci in a .srrcccsrs;fuI product- for
conrmercial saLe
b. Gooclwil1 ar:isirig f r:orn 1-he purcirarse.: of an erj,st,ing bus.irres.s / Costs irtcrtrre<l in or'rjarr izinq ;i (:.if),)rar-ion
la- Legai cost. in slrccessful. defenst- of er patent. i.nfri.nqement suit
92.Leqally ::estr'icted deposit-s hr:icl as cornf,\ensatir:gr i:a1ant;es f'or:
short-,,' term loan shoul-ci be c-Lass L-f red as a. Cash, wiLh dr scl-osr-rre
b, Cash, without disclr;surc
--1t Current asseL..;, but not cash, wiLh di-scl-osr-rre
i d. Current as$eLs, but noL ca;sh, wi1-i'ror,rL clisr:lorir-irt:
I
9y'.Under wh.t-h of Lhe f ollorn'inq c'lepreciaLi,lr net-ht,ds ls it. pr--ssiLr1,: lrrr ,. depreciaf ion e-xpense t-o be hi-ghe-r irr t-he later years o'f an assct's
/-' usetu-L lrie ? \
a. Straiglrt-line
.h-" Activity methocl baised on unit-s o,f procluct-jon
c, Srrm-of -t-he-ye.lrr;' Jigit s
Final Pre-Board Examination 15 September 2Al2 r 10:30 (october 2012 Batch) AM to 12:00 NN \.' ,' ,L,/ Pa 16 a'"
(4_'The folfowing sta'tements are based on PFRS 2 (Share-based payment) :
- Statement I: For equity-settled share*basecl payment- transactions, the
entj-ty shatl measure the goods or services received,' and the
cor:r'esponding increase j.n equiLy, directly at the fair vafue of the
c;o,-rds or services rece j-vecl .
Sta:-ement II.. For cash-settfed share-based pa),ment transactions, the
entity shall measure the goods cr services acqui-red and the Iiability
itrcu:red at the fair /.." value of che .---- fqoods L7""*" or services u\-! vf vsp
received-= ,. rrrt.a tI. Ue
_y
1 L,.,c, ::I:^
l,.a.v.L&i b. True, false ! , r ) c. balse, true d. False, false.!5.The modifled accrual basis in accounting for government transactions
/
/ fireans
a - f ncome is recognized rnrhen received whrle expenses are recognized when incurre<l
b. rncome is recogni2ed when earnecl while expenses are recogn.ized when paid
c ' fncome is recognizeci when receivecl while expenses are
recognized when paid. except for transactions that are
. required by law to be accounted for under another basis
,d. Income is recognized when earnecl whrle experrses are recognized
when incurred, except. f or t.ransact.ions t.hat are required by
law to be accounLed fr:r und.er cash or another basi-s
9.6-For purposes of computing the weighted average number of shares
,./' outstanding in EPS computatj-on, a midyear event- that must be treated
as occurring at the beg.inning of the year is Lhe
a. Issuance of shares
b. Issuance of share warrants
._:-c..r- Issuance of shares out of stock sp1 i t
d. Purchase and reissuance of treasury shares
-rt.Under currency PAS transl-ation 21, both forelgnlosses a. Statement of incorne
iurrency transaction gains and foreign
can be generally presented in r_he
plan has attributes of both
plan, it is considerecl as
for construction of
ar:ra nqeroent ?
EXAI{INAT ]ON _
ai,
b. Statement of cash flows
c. Statement of financial position ;p/ statement of cornprehensivr: income _.-+ '-'--t
i gg.tn rare circumstances, when a pension
I ideflned conlribution and defined benefit
\--" a. Defined benefj-t plan
b( oefined contribution plan
c. Both defined benefit plan and defined contrjbution plan
d. Neither defined benefiL plan nor defined t:ont.ribution plan
9.p'. Which of the followi nq shoul.d
/ significant accopnting policies? loe disclosed in Lhe summary of a - Depreciation charges for the perio,C
b. Borrowing cost capitalized for. the perioci
*-c-.r''valuation method used for work in process inventory
1.00 i Which is a common method used .in accr:unting
r' public work under build-operate-transfer (BOT)
a. lnstdllment method -b':-,.-' Pe rcentage -o f *comp1 e t i on me thod c. Production method d. Sales method - END of
