SMALL AND MEDIUM-SIZED ENTITIES (SMEs) SMALL AND MEDIUM-SIZED ENTITIES (SMEs)
1.
1. Which oWhich of the fof the followinllowing termg terms is not des is not descriptscriptive of Sive of SMEs?MEs? a.
a. PrPrivivatate ee entntititieiess b.
b. LiListsted ced comompapaninieses c.
c. SmaSmall anll and medd mediumium-si-sied ened entittitiesies d.
d. !on-pu!on-publiclblicl" " accouaccountabntable le entitientitieses #.
#. Which of thWhich of the followine following entitieg entities ma" descris ma" describe its $nancbe its $nancial stateial statementsments as being in compliance with P%&S for
as being in compliance with P%&S for SMEs?SMEs? a.
a. MetMetropropolitolitan 'anan 'an( and )ru( and )rust *omst *ompanpan"" b.
b. PhilipPhilippine Lopine Long +istng +istance )ance )elephonelephone *ompae *ompan"n" c.
c. SM ,SM ,rouroup of *p of *omompapaninieses d.
d. !o!one ne of of ththe ae aboboveve .
. n whicn which of the follh of the following sitowing situationuations can ents can entit" thait" that does not ht does not haveave public accountabilit" claim compliance with the P%&S for SMEs? public accountabilit" claim compliance with the P%&S for SMEs? a.
a. )he entit)he entit" prepare" prepares its $nancis its $nancial statemal statements in accents in accordancordance with thee with the P%&S
P%&S b.
b. )he entit)he entit" prepare" prepares its $nancis its $nancial statemal statements in accents in accordancordance with thee with the P%&S/ e0cept that it applies the reuirement of P%&S for SMEs for P%&S/ e0cept that it applies the reuirement of P%&S for SMEs for amortiation of intangible with indeterminate useful life
amortiation of intangible with indeterminate useful life c.
c. )he enti)he entit" prept" prepares its $nares its $nanciaancial stateml statements in acents in accordacordance witnce with theh the P%&S for SMEs
P%&S for SMEs d.
d. n bn bototh cah cases ses ' a' and *nd * 2.
2. 3n entit3n entit" that is not pub" that is not publicl" acclicl" accountabountable must ma(le must ma(e an e0plicie an e0plicit andt and unreserved statement of compliance with the P%&S for
unreserved statement of compliance with the P%&S for SMEsSMEs a.
a. f the entf the entit" compit" complies with alies with all the reull the reuirementirements of P%&S fs of P%&S for SMEsor SMEs b.
b. f the entf the entit" compit" complies with tlies with the ma4orhe ma4orit" of the rit" of the reuiremeuirements of %ents of %&S&S for SMEs
for SMEs c.
c. f the entf the entit" compit" complies with tlies with the ma4orhe ma4orit" of the rit" of the reuiremeuirements of tents of thehe full %&S/ e0cept that it applies a particular reuirement of P%&S full %&S/ e0cept that it applies a particular reuirement of P%&S for SMEs for a particular $nancial statement element
for SMEs for a particular $nancial statement element d.
d. f thf the entite entit" comp" complies witlies with the h the full Pfull P%&S%&S 5.
5. 3ll of t3ll of the follohe following cwing can be clan be classi$eassi$ed as SMd as SMEs/ e0cEs/ e0ceptept a.
a. *ommer*ommercial cial ban( ban( with with assets assets of Pof P mill millionion b.
b. ManufManufacturacturing entiting entit" with to" with total liabtal liabilitieilities of P millios of P millionn c.
c. MerchMerchandisiandising comng compan" wipan" with totth total assetal assets of P56 s of P56 millionmillion d.
d. %o%ood and beveod and beverage charage chain with totin with total liabilal liabilities of P#56 milities of P#56 millionlion 7.
7. n whicn which of the follh of the following sitowing situationuations can an ens can an entit" thtit" that does noat does not havet have public accountabilit" claim compliance with the P%&S for SMEs in its public accountabilit" claim compliance with the P%&S for SMEs in its $nancial statements?
$nancial statements? a.
a. )he enti)he entit" prept" prepares its $nares its $nanciaancial stateml statements in acents in accordacordance witnce withh local ta0 reuirements that are substantiall" the
local ta0 reuirements that are substantiall" the same as the P%&Ssame as the P%&S for SMEs
b. )he entit" prepares its $nancial statements in accordance with local ta0 reuirements that are/ e0cept in name/ word-for-word the same as full P%&S
c. )he entit" prepares its $nancial statements in accordance with local ta0 reuirements that are/ e0cept in name/ word-for-word the same as the P%&S for SMEs
d. n both cases ' and * above
8. 'ased on Philippine SE* rules/ which of the following entities would not normall" ualif" as SMEs?
a. Entities with total assets between P million and P56 million b. Entities with total liabilities between P million and P#56 million c. Public utilit" companies or holders of secondar" licensed issued b"
a regulator" agenc"
d. Entities that are not in the process of $ling %S for purposes of issuing an" class of instrument in a public mar(et
9. Which set of standards shall be used b" small publicl"-listed entities? a. %ull P%&S
b. P%&S for SMEs
c. Either %ull P%&S of P%&S for SMEs
d. %ull P%&S/ P%&S for SMEs/ or an" acceptable accounting basis
:. ;nder Section 2 of P%&S for SMEs/ one of the following is not among the three <= categories of >specialied activities
a. 3griculture
b. E0tractive activities c. nsurance
d. Service concessions
16. %or small and medium entities/ >S&E ma" under certain conditions replace which two <#= $nancial statements?
a. %inancial Position and ncome Statement
b. ncome Statement and Statement of *hanges in Euit"
c. %inancial Position and Statement of *omprehensive ncome
d. Statement of *omprehensive ncome and Statement of *hanges in Euit"
11. 3n SME whose onl" changes to its euit" in the periods for which $nancial statements are presented arise from pro$t or loss/ pa"ment of dividends/ corrections of prior period error and changes in accounting polic"
a. s reuired to present a statement of comprehensive income b. Should present a statement of income but not retained earnings c. s reuired to present a statement of income and retained earnings
in place of a statement of comprehensive income
d. @as the option to present a statement of income and retained earnings in place of a statement of comprehensive income
1#. 3n entit" is not publicl" accountable must ta(e an e0plicit and unreserved statement of compliance with the P%&S for SMEs if the entit" complies with
a. %ull P%&S
b. 3ll the reuirements of P%&S for SMEs
c. )he ma4orit" of the reuirements of P%&S for SMEs
d. )he national ,33P based on P%&S for SMEs with some speci$c diAerences
1. )he following statements are based on P%&S for SMEsB S)3)EME!) B SMEs are entities that do not have public accountabilit"
S)3)EME!) B SMEs are entities that publish general purpose $nancial statements for e0ternal users
S)3)EME!) B SMEs are entities that publish special purpose $nancial statements for internal users
a. )rue/ )rue/ %alse b. )rue/ %alse/ %alse c. %alse/ )rue/ )rue d. %alse/ )rue/ %alse
12. )he following statements are based on P%&S for SMEsB S)3)EME!) B f an entit"Cs normal operating c"cle is not clearl" determinable/ its duration is assumed to be twelve <1#= months S)3)EME!) B f an entit" is unable to ma(e a reliable estimate of the useful life of an intangible asset/ the life shall be presumed to be twent" <#6= "ears
S)3)EME!) B 3n entit" shall recognie all borrowing costs as an e0pense in pro$t or loss in the period in which the" are incurred a. )rue/ )rue/ )rue
b. )rue/ %alse/ %alse c. )rue/ %alse/ )rue d. %alse/ %alse/ %alse
15. )he following statements are based on P%&S for SMEsB
S)3)EME!) B )he P%&S for SME is organied b" topic/ with each topic presented in a separate numbered section
S)3)EME!) B 3ll of the paragraphs in the P%&S for SMEs/ which has a total of 5 sections/ have eual authorit"
S)3)EME!) B Some sections include appendices of implementation guidance that are not part of the P%&S but/ rather/ are guidelines for appl"ing it
a. )rue/ )rue/ )rue b. )rue/ %alse/ %alse c. %alse/ %alse/ )rue d. %alse/ %alse/ %alse
S)3)EME!) B 3n entit" has public accountabilit" if its debt or euit" instruments are traded in a public mar(et
S)3)EME!) B 3n entit" has public accountabilit" if it is in the process of issuing debt or euit" instruments for trading in a public mar(et
S)3)EME!) B 3n entit" has public accountabilit" if it holds assets in a $duciar" capacit" for a broad group of outsiders as one of its primar" businesses
a. )rue/ )rue/ )rue b. )rue/ )rue/ %alse c. )rue/ %alse/ )rue d. )rue/ %alse/ %alse
18. Which of the following is not among the ualitative characteristics of information in the %S of SMEs?
a. 'alance between bene$t and cost b. *onsistenc"
c. Materialit" d. Prudence
19. %air presentation reuires a faithful representation of the eAect of transactions/ other events and conditions in accordance with the de$nitions and recognition criteria for assets/ liabilities/ income and e0penses. %air presentation in accordance with the P%&S for SMEs/ is prescribed to result from compliance with the P%&S for SMEs/ is
prescribed to result from compliance with the P%&S for SMEs a. '" an entit" that has public accountabilit"
b. With additional disclosures where necessar"/ b" an entit" that has public accountabilit"
c. '" an entit" that does not have public accountabilit"
d. With additional disclosures where necessar"/ b" an entit" that does not have public accountabilit"
1:. n accordance with the P%&S for SMEs/ the $nancial statement that presents an entit"Cs assets/ liabilities and euit" at a point in time a. Must be titled the balance sheet
b. Must be titled the statement of $nancial position
c. *ould be titled the statement of $nancial position or the balance sheet
d. *ould be titled the statement of $nancial position/ the balance sheet/ or an" other title that is not misleading
#6. n accordance with the P%&S for SMEs/ in presenting a statement f $nancial position/ an entit" must
a. Present assets and liabilities in order of liuidit"
b. Ma(e the currentDnoncurrent presentation distinction
c. *hoose either the currentDnoncurrent or the liuidit" presentation formats <i.e./ a >free choice of presentation format=
d. Ma(e the currentDnoncurrent presentation distinction e0cept when a presentation based on liuidit" provides information that is
reliable and more relevant.
#1. Which of the following is not used in accounting for investment in associate and interest in 4ointl" controlled entities of SMEs?
a. *ost model b. Euit" model c. %air value model d. &evaluation model
##. ;nder the cost model/ the investment in associate is subseuentl" measured at?
a. *ost
b. *ost less accumulated impairment losses c. %air value
d. %air value less cost to sell
#. ;nder the fair value model/ the investment in associate is subseuentl" measured at?
a. *ost less accumulated impairment losses b. Euit"
c. %air value less cost to sell d. %air value
#2. 3 small and medium-sied entit" must measure its propert"/ plant and euipment after initial recognition at
a. *ost
b. *ost plus the cost of da" to da" servicing
c. *ost less an" accumulated depreciation less an" accumulated impairment losses
d. *ost less an" accumulated depreciation less an" accumulated impairment losses plus the cost of da" to da" servicing
#5. Which of the following is speci$call" reuired to be reported as lie item for an SME but not under full P%&S
a. %inancial assets
b. nvestment in 4oint venture
c. !on-current assets held for sale d. Propert"/ plant and euipment
#7. 3n SME shall capitalie all of the following as cost of propert"/ plant and euipment/ e0cept
a. )ransport cost b. Loan raising cost c. nstallation cost
d. !onrefundable purchase ta0
#8. 3n entit" shall measure all government grants at a. )he amount of cash or cash euivalents received
b. )he amount of cash or cash euivalents received or receivable c. )he fair value of the assets received or receivable
d. !il
#9. 3n SME must recognie government grant received before the income recognition criteria are satis$ed
a. n income when the grant proceeds are received b. n euit"
c. 3s a liabilit"
d. !one of the above
#:. 3ll of the following are considered line item in the statement of $nancial position of an SME/ e0cept
a. Provisions
b. &evaluation surplus c. !on-controlling interest
d. Euit" attributable to the owners of parent
6. Which of these terms cannot be used to describe a line item in the statement of comprehensive income?
a. E0traordinar" item b. ,ross pro$t
c. Pro$t before ta0 d. &evenue
1. Which is not considered as Other Comprehensive Income (OCI) for SMEs?
a. Some actuarial gains and losses
b. Some foreign e0change translation gains and losses c. Some changes in fair values of hedging instruments d. Some gains and losses on available-for-sale securities
#. %or SME/ which of the following gains and losses are recognied in other comprehensive income <i.e./ in total comprehensive income outside of pro$t or loss=?
a. ,ains and losses from discontinued operations
b. ,ains on the revaluation of propert"/ plant and euipment
c. ,ains and losses that management considers e0traordinar" income d. ,ains and losses arising on translating the $nancial statements of a
foreign operation
. Which of the following gains and losses can an entit" elect <i.e./ an accounting polic" choice= to recognie in other comprehensive income <i.e./ in total comprehensive income outside of pro$t or loss= a. Losses from discontinued operations
b. 3ctuarial gains and losses of de$ned bene$t plans
c. ,ains and losses that management considers e0traordinar" items d. ,ains and losses arising on translating the $nancial statements of a
2. Which of the following are presented in the statement of changes in euit" of SMEs?
a. +istribution to owners b. nvestment b" owners
c. *hanges in ownership interests in subsidiaries that do not result in a loss of control
d. 3ll of the choices
5. n #617/ after an entit"Cs #615 $nancial statements were
approved for issue/ the entit" discovered an error in the calculation of depreciation e0pense. )he error occurred during #612. )he entit" presents comparative $gures among several "ears. )he eAect of the correction in the entit"Cs $nancial statements will be recognied
a. n the entit"Cs pro$t or loss for the "ear ended +ecember 1/ #615 b. n the entit"Cs pro$t or loss for the "ear ended +ecember 1/ #617 c. utside of total comprehensive income/ in the statement of
changes in euit" as an ad4ustment to retained earnings at Fanuar" 1/ #615
d. utside of total comprehensive income/ in the statement of
changes in euit" as an ad4ustment to retained earnings at Fanuar" 1/ #617
7. 3n SME whose onl" changes to its euit" in the periods for which $nancial statements are presented arise from pro$t or loss/ pa"ments of dividends/ correction of prior period error and changes in accounting polic"
a. Should present on a statement of income
b. s reuired to present a statement of comprehensive income c. @as the option to present a statement of income and retained
earnings in place of a statement of comprehensive income
d. s reuired to present a statement of income and retained earnings in place of a statement of comprehensive income
8. *onsolidated $nancial statements of SMEs must include the $nancial statements of the entit" and its
a. 3ssociates b. Subsidiaries
c. *ontrolled special purpose entities
d. Subsidiaries and controlled special purpose entities
9. Which method is used b" SMEs in recogniing revenue from rendering services?
a. 3ccrual method
b. *ost recover" method c. nstallment method
d. Percentage-of-completion method
:. Which of the following cannot be accounted b" SMEs under the cost method?
a. ntangible assets b. nvestment propert" c. nvestment in associates
d. Propert"/ plant and euipment
26. 3n SME must assign the cost of inventories b" a. )he L% cost formula
b. Speci$c identi$cation of individual costs for inventories that are not ordinaril" interchangeable and/ for inventories that are
ordinaril" interchangeable/ the %% or the weighted average cost formula
c. Speci$c identi$cation of individual costs for inventories that are ordinaril" interchangeable/ and for inventories that are not
ordinaril" interchangeable/ the %% or the weighted average cost formula
d. )he %% cost formula
21. 3n SME ma" use techniues for measuring cost of inventories if the results appro0imate cost. 3ccepted techniues include all of the following/ e0cept
a. Standard cost b. &etail method
c. Most recent purchase price d. ,ross pro$t method
2#. )he impairment loss of an inventor" of SMEs refer to the e0cess of
a. *ost over !&G b. !&G over cost
c. *arr"ing amount over recoverable amount d. &ecoverable amount over carr"ing amount
2. n accounting for $nancial instruments/ the SME shall appl" . Sections 11 and 1# of P%&S for SMEs
. )he recognition and measurement provisions of P%&S : and the disclosure reuirements of Sections 11 and 1# of P%&S for SMEs
a. onl" b. onl"
c. Either or d. 'oth and
22. 3ll of the following are considered basic $nancial instruments/ e0cept
a. *ash
b. nvestment in bonds c. 3ccounts receivable
25. %or a basic $nancial instrument measured at cost less impairment
. )he impairment loss is the diAerence between the carr"ing amount and the best estimate of the amount that would be received if the asset were sold
. )he impairment loss is the diAerence between the carr"ing amount of the asset and the present value of estimated future cash Hows at mar(et rate of interest for similar asset
a. onl" b. onl"
c. 'oth and d. !either nor
27. 3ll of the following are considered basic $nancial instruments/ e0cept
a. +emand and $0ed term deposits b. ption and forward contracts
c. Loans from subsidiaries that are due on demand
d. 3 debt instrument that becomes pa"able on demand if the issuer defaults on interest or principal pa"ments
28. Which of the following items in an SMECs statement of $nancial position is a $nancial asset or $nancial liabilit"?
a. 3 liabilit" for an amount due to a supplier for a past receipt of goods
b. 3n asset for a prepa"ment made to a supplier for the rent of a machine for two months
c. 3 liabilit" for a $ne for the late pa"ment of income ta0 b" the entit" d. !one of the above
29. Which of the following is not considered a >basic $nancial instrument for SMEs?
e. 'onds and loans pa"able f. *ash and ban( accounts g. *ommercial paper and bills h. ptions and warrants
2:. Which of the following is not considered as >other $nancial instrument for SMEs?
a. +erivatives
b. @edging instruments
c. nvestments in convertible and puttable shares
d. nvestments in non-convertible and non-puttable shares
56. nvestment in associates must be tested for impairment if the entit" uses
a. )he cost method or the euit" method b. )he cost method or the fair value model c. )he euit" method or the fair value model
d. )he cost method/ euit" method or fair value model
51. ;nder de$ned bene$t plans for SMEs/ all actuarial gains and losses during the "ear are full" recognied
a. n either pro$t or loss or * b. n pro$t or loss
c. n other comprehensive income d. ;sing the corridor approach
5#. @ow do "ou call an SME that presents its $rst $nancial statements that conform to P%&S for SMEs?
a. %irst-time adopter b. %irst-time compiler c. %irst-time presenter d. %irst-term reporter
5. )he statement of $nancial position at the date of transition to P%&S for SMEs is best described as
a. *losing statement of $nancial position b. pening statement of $nancial position c. )ransitional statement of $nancial position d. Provisional statement of $nancial position
52. 3n entit" shall disclose in the summar" of signi$cant accounting policiesB
a. )he measurement basis <or bases= used in preparing $nancial statements
b. 3ll the measurement bases speci$ed in the P%&S for SMEs
irrespective of whether the" were used b" the entit" in preparing its $nancial statements
c. )he measurement basis <or bases= used in preparing the $nancial statements and the accounting policies used that are relevant to an understanding of the $nancial statements
d. 3ll of the measurement bases and the accounting polic" choices available to the entit" <i.e./ speci$ed in the P%&S for SMEs=
irrespective of whether the" were used b" the entit" in preparing its $nancial statements
55. P%&S for SMEs strictl" reuires disclosure of information about a. Earnings per share
b. nterim $nancial reports c. &elated part" transactions d. Segment information
57. When did P%&S for SMEs ta(e into eAect in the Philippines? a. Fanuar" 1/ #669
b. Fanuar" 1/ #66: c. Fanuar" 1/ #616 d. Fanuar" 1/ #611