1.

Which of the following is not one of the criteria for revenue recognition for sales of
goods under IFRS?

b. Payment has been received.

2. The original cost of an inventory item is below both replacement cost and net
realizable value. The net realizable value less normal profit margin is below the original
cost. Under the lower of cost or market method, the inventory item should be valued at
Net Realizable Value

3. Which of the following statements are correct when a company applying the lower
of cost or market method reports its inventory at replacement cost? I. The original cost
is less than replacement cost. II. The net realizable value is greater than replacement
cost. *
b. II only.

4. Which of the following methods of accounting for inventory is not allowed under
IFRS? *
a. LIFO.
5. What are the Statements of Financial Accounting Concepts intended to establish? *
c. The objectives and concepts for use in developing standards of financial
accounting and reporting.
6. The enhancing qualitative characteristics of financial reporting are
Comparability, verifiability, timeliness, and understandability
7. According to the FASB conceptual framework, which of the following statements conforms
to the realization concept?
b. Depreciated equipment was sold in exchange for a note receivable
8. According to the IASB Framework, the two criteria required for incorporating items into the
income statement or statement of financial position are that
. It meets the definition of an element and can be measured reliably
9. Which of the following is a characteristics of a change in accounting estimate?
It does not affect the financial statements of prior periods.
10. Under IFRS, a voluntary change in accounting method may only be made by a company
if *
The new method provides reliable and more relevant information
11. Financial assets include all of the following, except
Prepaid expenses
12. What is the authoritative status of the Conceptual Framework?
In the absence of a standard 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 .
13. The Conceptual Framework is intended to assist
a. CPAs in public practice
b. Users of financial statements
c. Financial Reporting Standards Council
d. All of the choices

14. Under PAS 1, which of the following should be classified as extraordinary item in
reporting results of operation?
c. Losses resulting from an unusual major flashflood in the Visayas region
15. Which of the following is a characteristics of a change in accounting estimate?
It does not affect the financial statements of prior periods.
16. Which of the following changes would be accounted for prospectively?
b. Changes in the expected life of a depreciable asset
17. A required format for the presentation of the Statement of Financial Position is
a. Prescribed by the standard
18. A statement of financial position provides a basis for all of the following, EXCEPT:
. Determining profitability and assessing past performance
19. PAS 1 requires disclosure in the balance sheet of the following items:
d. The carrying amount of property, plant and equipment.
20. The summary of accounting policies is normally presented:
Before all of the financial statements in a financial report

21. Which of the following information is NOT specifically a required disclosure of PAS 1?

a. Names of major shareholders of the entity

22. The Conceptual Framework

deals with a set of comprehensive concepts that underlie the preparation, and
presentation of financial statements for internal users.

23. The Conceptual Framework is intended to establish

b. The objectives and concepts used in developing financial reporting standards

24. The objective of financial reporting indicates indicates that a reporting entity must provide
information about:
 Changes in economic resources and claims resulting from financial performance

25. Accounting information is relevant when it

c. Is capable of making a difference in decision

26. Which of these is NOT related with relevance as a qualitative characteristic of financial
information?
b. Conservatism

27. An accounting policy

b. Comprises the principles applied in preparing the financial statements

28. Accounting changes are often made even though this may be a violation of the accounting
concept of
b. Consistency

29. Which is not classified s an accounting change?

c. Error in the financial statements

30. The effect of a change in accounting estimate shall be recognized prospectively by

31. It is an adjustment of the carrying amount of an asset or a liability or the amount of the
periodic consumption of an asset that results from the assessment of the present status and
expected future benefit and obligation associated with the asset and liability.
a. Change in accounting estimate

32. The recording phase of financial accounting covers the following steps, EXCEPT

d. Financial statements are prepared

33. A complete set of financial statement includes the following components, except

. Reports and statement such as environmental reports and value added

34. What is the objective of financial statements?

a.To provide information about the financial position, financial performance and
changes in financial position of an entity that is useful to a wide range of users in making
economic decisions.

35. The initial application of a policy to revalue assets is

a. A change in accounting policy

36. Which of the following terms best describes applying a new accounting policy to
transactions as if that policy had always been applied?
a. Retrospective application
37. “Substantive over form” is closely associated with the qualitative characteristics of

a. Faithful representation

38. What links the decision makers and the decisions they make so that financial
information would be useful? *
a. Relevance
39. Which of the following is not an ingredient of faithful representation according to
Conceptual Framework for Financial Reporting?
b. Confirmatory value
40. When complete set of financial statements is presented, comprehensive income and the
components should
d. Be displayed in a statement that has the same prominence as other financial
statements