CFAS

Question 1

3 process in the definition given by (AAA) American Accounting Association

Answer 1

Identifyng - analytical
Measuring - technical
Communicating - formal

Question 2

Accounting is a service activity. The accounting function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision.

Answer 2

Accounting Standards Council

Question 3

CAT

Accounting is the art of ______________________ in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and _____ the results thereof.

Answer 3

recording, classifying and summarizing, interpreting

Question 4

The 3 important points made in the definition of accounting:

Answer 4

It is a quantitative information
Financial in nature
Useful in decision making

Question 5

This accounting process is the recognition or nonrecognition of business activities as “accountable” events.

Answer 5

Identifying

Question 6

Are all business activities accountable?

Answer 6

No

Question 7

An event is ______________ when it has an effect on assets, liabilities and equity.

Answer 7

accountable or quantifiable

Question 8

Only ___________ are emphasized and recognized in accounting.

Answer 8

economic activities

Question 9

______________ or exchange transactions are those economic events involving one entity and another entity.

Answer 9

External transactions

Question 10

any sudden and unanticipated loss from fire, flood, earthquake and other event ordinarily termed as an act of God

Answer 10

Casualty

Question 11

examples of internal transactions.

Answer 11

Production and Casualty

Question 12

the accounting process of assigning of peso amounts to the accountable economic transactions and

Answer 12

Measuring

Question 13

The measurement bases are

Answer 13

historical costa and current value

Question 14

the original acquisition cost and the most common measure of financial transactions.

Answer 14

Historical Cost

Question 15

the process of preparing and distributing accounting reports to potential users of accounting information

Answer 15

Communicating

Question 16

the sorting or grouping of similar and interrelated economic transactions into their respective classes.

Answer 16

Classifying

Question 17

the process of systematically maintaining a record of all economic business transactions after they have been identified and measured.

Answer 17

Recording

Question 18

the preparation of financial statements which include the statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows.

Answer 18

Summarizing

Question 19

Implicit in the communication process

Answer 19

Recording, classifying, and summarizing

Question 20

is the body authorized by law to promulgate rules and regulations affecting the practice of the accountancy profession in the Philippines.

Answer 20

Board of Accountancy

Question 21

This law is known as the Philippine Accountancy Act of 2004.

Answer 21

Republic Act No. 9298

Question 22

Certified Public Accountants generally practice their profession in three main areas,

Answer 22

Public Accounting
Private Accounting
Government Accounting

Question 23

Public accountants usually offer three kinds of services, namely

Answer 23

Auditing, Taxation and management advisory services

Question 24

the examination of financial statements by independent certified public accountant for the purpose of expressing an opinion as to the fairness with which the financial statements are prepared.

Answer 24

Auditing

Question 25

includes the preparation of annual income tax returns and determination of tax consequences of certain proposed business endeavors.

Answer 25

Taxation or Taxation Services

Question 26

have become increasingly important in recent years although audit and tax services are undoubtedly the mainstay of public accountants.

Answer 26

Management advisory services

Question 27

The highest accounting officer in an entity is known as the

Answer 27

CFO or Controller

Question 28

encompasses the process of analyzing, classifying, summarizing and communicating all transactions involving the receipt and disposition of government funds and property and interpreting the results thereof.

Answer 28

Government Accounting

Question 29

The focus of government accounting is the

Answer 29

custody and administration of public funds.

Question 30

CPD meaning

Answer 30

Continuing Professional Development

Question 31

required for thebrenewal of CPA license and accreditation of CPA to practice the accountancy profession.

Answer 31

CPD

Question 32

How many CPD are required for accreditation of a CPA to practice the accountancy profession?

Answer 32

120 CPD credited units

Question 33

How many CPD Units are needed for renewal of license

Answer 33

15 CPD credited units

Question 34

A CPA shall be permanently exempted from CPDvrequirements upon reaching the age of __ years.

Answer 34

65

Question 35

refers to the profession of accounting practice.

Answer 35

Accountancy

Question 36

used in reference only to a particular field of accountancy such as public accounting, private accounting and government accounting.

Answer 36

Accounting

Question 37

is procedural and largely concerned with development and maintenance of accounting records.

Answer 37

Bookkeeping

Question 38

primarily concerned with the recording of business transactions and the eventual preparation of financial statements.

Answer 38

Financial Accounting

Question 39

focuses on general purpose reports
known as financial statements intended for internal and external users.

Answer 39

Financial Accounting

Question 40

is the accumulation and preparation of financial reports for internal users only.

Answer 40

Managerial Accounting

Question 41

represent the rules, procedures, practice and standards followed in the preparation and presentation of financial statements.

Answer 41

Generally accepted accounting principles

Question 42

Replacement of Accounting Standards Council

Answer 42

Financial Reporting Standards Council or FRSC

Question 43

The main function is to establish and improve accounting standards that will be generally accepted in the Philippines.

Answer 43

FRSC

Question 44

The approved statements of the FRSC are known as

Answer 44

Philippine Accounting Standards or PAS and Philippine Financial Reporting Standards or PFRS.

Question 45

The Financial Reporting Standards Council issues standards in a series of pronouncements called

Answer 45

Philippine Financial Reporting Standards or PFRS.

Question 46

CPA’s are licensed by

Answer 46

PICPA

Question 47

Accounting standard-setting has been characterized as

Answer 47

A political process

Question 48

What is the standard-setting body in the Philippines at the present time?

Answer 48

Financial Reporting Standards Council

Question 49

Accountants employed in entities in various capacity as accounting staff, chief accountant or controller are said to be engaged in

Answer 49

Private Accounting

Question 50

The primary responsibility for properly applying GAAP lies with

Answer 50

Internal Auditor

Question 51

The Conceptual Framework provides the foundation for Standards that: 3

Answer 51

Contribute to transparency
Contribute to economic efficiency
Strengthen accountability

Question 52

In the absence of a standard or an interpretation that specifically applies to a transaction, management shall consider the applicability of the

Answer 52

Conceptual Framework

Question 53

include the existing and potential investors, lenders and other creditors.

Answer 53

Primary users

Question 54

include the employees, customers, governments and their agencies, and the public.

Answer 54

Other users

Question 55

Users of Financial information

Answer 55

Primary users
Other users

Question 56

financial information are the parties to whom general purpose financial reports are primarily directed

Answer 56

Primary users

Question 57

users of financial information other than the existing and potential investors, lenders and other creditors

Answer 57

other users

Question 58

information about the entity’s economic resources and the claims against the reporting entity.

Answer 58

Financial position

Question 59

the assets and the claims are the liabilities and equity of the entity

Answer 59

Economic resources

Question 60

is the availability of cash in the near future to cover currently maturing obligations.

Answer 60

Liquidity

Question 61

is the availability of cash over a long term to meet financial commitments when they fall due.

Answer 61

Solvency

Question 62

means that income is recognized when earned regardless of when received and expense is recognized when incurred regardless of when paid.

Answer 62

Accrual Accounting

Question 63

The underlying theme of the Conceptual Framework is

Answer 63

Decision Usefulness

Question 64

These users require information on risk and return provided by their investment.

Answer 64

Investors

Question 65

These users are interested in information about the continuance of an entity, especially when they have a long-term involvement with or are dependent on the entity.

Answer 65

Customers

Question 66

These users are interested in information about the profitability and stability of the entity in order to assess the ability of entity to provide remuneration, retirement benefits and employment opportunities.

Answer 66

Employees

Question 67

These users are interested in information that enables them to assess whether their loans,the related interest thereon, and other amounts owing to them will be paid when due.

Answer 67

Lenders or Creditors

Question 68

These users are interested in information in order to regulate the activities of an entity, determine taxation policies and provide a basis for national statistics.

Answer 68

Government and its agencies

Question 69

These users need information on trends and recent developments where an entity makes a substantial contribution to the local economy providing employment and using local suppliers.

Answer 69

The public

Question 70

The overall objective of financial reporting is to provide information

Answer 70

that is useful in decision making

Question 71

The primary objective of financial reporting is to provide useful information to

Answer 71

Capital Providers

Question 72

are the qualities or attributes that make financial accounting information useful to the users.

Answer 72

Qualitative Characteristics

Question 73

The fundamental qualitative characteristics are

Answer 73

Relevance and Faithful representation

Question 74

relate to the content or substance of financial information.

Answer 74

The fundamental qualitative characteristics

Question 75

the capacity of the information to influence a decision.

Answer 75

Relevance

Question 76

Financial information has _______ if it can be used as an input to processes employed by users to predict future outcome.

Answer 76

Predictive Value

Question 77

financial information has predictive value when it can help users increase the likelihood of correctly or accurately predicting or

Answer 77

forecasting outcome of events.

Question 78

Financial information is capable of making a difference in a decision if it has

Answer 78

Predictive Value and Confirmatory Value

Question 79

means that the information provides feedback on previous evaluations

Answer 79

Confirmatory Value

Question 80

is a practical rule in accounting which dictates that strict adherence to GAAP is not required when the items are not significant enough to affect the evaluation, decision and fairness of the financial statements.

Answer 80

Materiality

Question 81

The materiality concept is also known as the

Answer 81

doctrine of convenience

Question 82

The relevance of information is affected by its

Answer 82

nature and materiality

Question 83

Materiality of an item depends on ______ rather than absolute size.

Answer 83

Relative size

Question 84

an item is ______ if knowledge of it could reasonably affect or influence the economic decision of the primary users of the financial statements.

Answer 84

material

Question 85

means the presentation of financial information not readily understood or not clearly expressed.

Answer 85

Obscuring Information

Question 86

may be characterized by deliberate vagueness, ambiguity and abstruseness.

Answer 86

Obscuring Information

Question 87

3 Ingredients of faithful representation

Answer 87

a Completeness
b. Neutrality
c. Free from error

Question 88

means that financial reports represent economic phenomena or transactions in words and numbers.

Answer 88

Faithful Representation

Question 89

means that the actual effects of the transactions shall be properly accounted for and reported in the financial statements.

Answer 89

Faithful Representation

Question 90

requires that relevant information should be presented in a way that facilitates understanding and avoids erroneous implication.

Answer 90

Completeness

Question 91

Actually, to be complete, the financial statements shall be accompanied by

Answer 91

notes to financial statements

Question 92

depiction is without bias in the preparation or presentation of financial information.

Answer 92

Neutral

Question 93

means that all significant and relevant information leading to the preparation of financial statements shall be clearly reported.

Answer 93

Adequate disclosure

Question 94

Neutrality is synonymous with the all-encompassing

Answer 94

Principle of Fairness

Question 95

is the exercise of care and caution when dealing with the uncertainties in the measurement process such that assets or income are not overstated and liabilities or expenses are not understated.

Answer 95

Prudence

Question 96

Neutrality is supported by the exercise of

Answer 96

prudence

Question 97

synonymous with prudence.

Answer 97

Prudence

Question 98

means “in case of doubt, record any loss and do not record any gain.”

Answer 98

Conservatism

Question 99

arises when monetary amounts in financial reports cannot be observed directly and must instead be estimated.

Answer 99

Measurement Uncertainty

Question 100

can affect faithful representation if the level of uncertainty in providing an estimate is high.

Answer 100

Measurement Uncertainty

Question 101

means there are no errors or omissions in the description of the phenomenon or transaction.

Answer 101

Free from error

Question 102

If information is to represent faithfully the transactions and other events it purports to represent, it is necessary that the transactions and events are accounted in accordance with their substance and not merely their legal form.

Answer 102

Substance over form

Question 103

The enhancing qualitative characteristics are: 4

Answer 103

comparability, understandability, verifiability and timeliness.

Question 104

means the ability to bring together for the purpose of noting points of likeness and difference.

Answer 104

Comparability

Question 105

may be made within an entity or between and across entities.

Answer 105

Comparability

Question 106

Comparability within an entity is also known as

Answer 106

horizontal comparability or intracomparability.

Question 107

Comparability across entities is also known as

Answer 107

intercomparability or dimensional comparability.

Question 108

is the uniform application of accounting method from period to period within an entity.

Answer 108

Consistency

Question 109

is the uniform application of accounting method between and across entities in the same industry.

Answer 109

Comparability

Question 110

requires that financial information must be comprehensible or intelligible if it is to be most useful.

Answer 110

Understandability

Question 111

means verifying an amount or other representation through direct observation, for example, by counting cash.

Answer 111

Direct Verification

Question 112

means checking the inputs to a model, formula or other technique and recalculating the inputs using the same methodology.

Answer 112

Indirect Verification

Question 113

means that different knowledgeable and independent observers could reach consensus, although not necessarily complete agreement, that a particular depiction is a faithful representation.

Answer 113

Verifiability

Question 114

Verifiability implies

Answer 114

Consensus

Question 115

means that financial information must be available or communicated early enough when a decision is to be made.

Answer 115

Timeliness

Question 116

enhances the truism that without knowledge of the past, the basis for prediction will usually be lacking and without interest in the future, knowledge of the past is sterile.

Answer 116

Timeliness

Question 117

is a pervasive constraint on the information that can be provided by financial reporting.

Answer 117

Cost

Question 118

The ingredients of relevant financial information are

Answer 118

Predictive Value and Confirmatory Value

Question 119

What is the quality of information that gives assurance that it is reasonably free of error and bias?

Answer 119

Faithful representation

Question 120

The financial accounting information is directed toward the common needs of users and is independent of presumptions about particular needs and desires of specific users

Answer 120

Neutrality

Question 121

In the event of conflict between the economic substance of a transaction and the legal form, the economic substance shall prevail

Answer 121

Substance over form

Question 122

Which concept of accounting holds that, to the maximum extent possible, financial statements shall be based on arm’s length transactions?

Answer 122

Monetary Unit

Question 123

Recognizing expected losses immediately but deferring expected gains is an example of

Answer 123

Conservatism

Question 124

Which of the following relates to both relevance and faithful representation?

Answer 124

Comparability

Question 125

Principle of objectivity includes concept of

Answer 125

Verifiability

Question 126

entity, claims against the entity and changes in the economic resources and claims.

Answer 126

Financial Statements

Question 127

are the financial statements prepared when the reporting entity comprises both the parent and its subsidiaries.

Answer 127

Consolidated Financial Statements

Question 128

are the financial statements when the reporting entity comprises two or more entities that are not linked by a parent and subsidiary relationship.

Answer 128

Combined Financial Statements

Question 129

are the financial statements prepared when the reporting entity is the parent alone.

Answer 129

Unconsolidated Financial Statements

Question 130

provide information about the assets, liabilities, equity, income and expenses of both the parent and its subsidiaries as a single reporting entity.

Answer 130

Consolidated Financial Statements

Question 131

is the entity that exercises control over the subsidiaries.

Answer 131

The parent

Question 132

are designed to provide information about the parent’s assets, liabilities, income and expenses and not about those of the subsidiaries.

Answer 132

Unconsolidated Financial Statements

Question 133

is an entity that is required or chooses to prepare financial statements.

Answer 133

Reporting entity

Question 134

A reporting entity is not necessarily a

Answer 134

legal entity

Question 135

is the period when financial statements are prepared for general purpose financial reporting.

Answer 135

Reporting Period

Question 136

means that in the absence of evidence to the contrary, the accounting entity is viewed as continuing in operation indefinitely.

Answer 136

Going Concern Assumption

Question 137

requires that the indefinite life of an entity is subdivided into accounting periods which are usually of equal length for the purpose of preparing financial reports on financial position, performance and cash flows.

Answer 137

Time period principle

Question 138

is a twelve-month period that ends on December 31.

Answer 138

Calendar year

Question 139

is a twelve-month period that ends on any month when the business is at the lowest or experiencing slack season.

Answer 139

Natural business year

Question 140

The monetary unit assumption has two aspects

Answer 140

quantifiability and stability of the peso

Question 141

means that the assets, liabilities, equity, income and expenses should be stated in terms of a unit of measure which is the peso in the Philippines.

Answer 141

Quantifiability

Question 142

assumption means that the purchasing power of the peso is stable or constant and that its instability is insignificant and therefore may be ignored.

Answer 142

Stability of peso

Question 143

the residual interest in the assets of the entity after deducting all of the habilities.

Answer 143

Equity

Question 144

Obligations can either be

Answer 144

legal or constructive

Question 145

arise from normal business practice, custom and a desire to maintain good business relations or act in an equitable manner.

Answer 145

Constructive Obligations

Question 146

arises in the course of the ordinary regular activities and is referred to by variety of different names including sales, fees, interest, dividends, royalties and rent.

Answer 146

Revenue

Question 147

represent other items that meet the definition of income and do not arise in the course of the ordinary regular activities.

Answer 147

Gains

Question 148

The essence of revenue is

Answer 148

regularity

Question 149

is defined as decreases in assets or increases in liabilities that result in decreases in equity, other than those relating to distributions to equity holders.

Answer 149

Expense

Question 150

encompass losses as well as those expenses that arise in the course of the ordinary regular activities.

Answer 150

Expense

Question 151

do not arise in the course of the ordinary regular activities and include losses resulting from disasters.

Answer 151

Loses

Question 152

gain resulting from the sale of an asset in an arm’s length transaction.

Answer 152

Income

Question 153

can be an effective communication tool about the information in financial statements.

Answer 153

presentation and disclosure

Question 154

is the adding together of assets, liabilities, equity, income and expenses that have similar or shared characteristics and are included in the same classification.

Answer 154

Aggregation

Question 155

primary source of information about an entity’s financial performance for the reporting period.

Answer 155

Income Statement

Question 156

is the monetary amount of the net assets contributed by shareholders and the amount of the increase in net assets resulting from earnings retained by the entity.

Answer 156

Financial Capital

Question 157

is the traditional concept based on historical cost and adopted by most entities.

Answer 157

Financial Capital

Question 158

is an erosion of the capital invested in the entity.

Answer 158

Return of Capital

Question 159

means that net income occurs only after the capital used from the beginning of the period is maintained.

Answer 159

Capital Maintenance Approach

Question 160

is the quantitative measure of the physical productive capacity to produce goods and services.

Answer 160

Physical Capital

Question 161

Accordingly, physical capital is equal to the net assets of the entity expressed in terms of

Answer 161

current cost

Question 162

_____ assets include inventories and property, plant and equipment.

Answer 162

Productive

Question 163

In physical capital productive assets are measured in _____

Answer 163

current cost

Question 164

What is the accounting concept that justifies the usage of accruals and deferrals?

Answer 164

Going Concern

Question 165

When a parent and subsidiary relationship exists, consolidated financial statements are prepared in recognition of

Answer 165

Economic Entity

Question 166

The valuation of a promise to receive cash in the future at present value is valid because of what accounting concept?

Answer 166

Going Concern

Question 167

Accounting for government grant and disclosure of government assistance

Answer 167

PAS 20

Question 168

Employee benefits

Answer 168

PAS 19

Question 169

Property, plant and equipment

Answer 169

PAS 16

Question 170

Income taxes

Answer 170

PAS 12

Question 171

Events after the reporting period

Answer 171

PAS 10

Question 172

Accounting policies, changes in accounting estimate and errors

Answer 172

PAS 8

Question 173

Statement of cash flows

Answer 173

PAS 7

Question 174

Inventories

Answer 174

PAS 2

Question 175

Presentation of financial statements

Answer 175

PAS 1

Question 176

The elements directly related to the measurement of financial position are:

Answer 176

a. Asset
b. Liability
c. Equity

Question 177

The elements directly related to the measurement of financial performance are:

Answer 177

Income
Expense

Question 178

Which is not within the new definition of an asset?

a. An asset is a present economic resource.
b. The economic resource is a right that has potential to produce economic benefit.
c. The economic resource is controlled by the entity as a result of past event.
d. Future economic benefit is expected to flow to the entity.

Answer 178

D

Question 179

Which of the following criteria need not be satisfied for a liability to exist?

a. The entity has an obligation.
b. The obligation is to transfer an economic resource.
c. The obligation is a present obligation that exists as a result of a past event.
d. The settlement is expected to result in an outflow of economic benefit.

Answer 179

D

Question 180

Rights that have the potential to produce economic benefits and correspond to an obligation of another entity include all, except

a. Right to receive cash
b. Right to receive goods
c. Right to exchange economic resources with another entity on favorable terms
d. Right over property, plant and equipment

Answer 180

D

Question 181

An economic resource could produce economic benefit if an entity is entitled to all, except

a. To receive contractual cash flows b. To exchange economic resources with another entity on unfavorable terms
c. To receive cash by selling the economic resource
d. To extinguish a liability by transferring an economic resource

Answer 181

B

Question 182

Obligations to transfer an economic resource include all, except

a. Obligation to pay cash
b. Obligation to deliver goods
c. Obligation to provide services
d. Obligation to transfer an economic resource even specified future event does not occur

Answer 182

D

Question 183

It is the present ability to direct the use of an economic resource and obtain the benefit that may flow from it.

a. Control
b. Legal right
c. Obligation
d. Ownership

Answer 183

A

Question 184

A decrease in an asset arising from peripheral or incidental transaction is called

Answer 184

Loss

Question 185

An outflow of asset based on an activity that represents the major operations is called

Answer 185

Expense

Question 186

What is the primary distinction between revenue and gain?

a. The materiality of the amount
b. The likelihood that the transaction will recur
c. The nature of the activity that gives rise to the transaction
d. The method of disclosing the transaction

Answer 186

C

Question 187

Only items that meet the definition of an asset, a liability or equity are recognized in the statement of financial position.

Answer 187

Recognition

Question 188

A principle means that expenses are
recognized when incurred.

Answer 188

Expense Recognition

Question 189

The basic principle of _______ is that income shall

be recognized when earned

Answer 189

income recognition
or point of sale recognition

Question 190

The _________ requires that those costs and expenses incurred in earning a revenue shall be reported in the same period.

Answer 190

matching principle

Question 191

The matching principle has three applications, namely:

Answer 191

a. Cause and effect association
b. Systematic and rational allocation c. Immediate recognition

Question 192

Under the _________, the expense is recognized when the revenue is already recognized.

Answer 192

cause and effect association

Question 193

The cause and effect association principle is actually the ________

Answer 193

strict matching concept.

Question 194

Under ___________ some costs are expensed by simply allocating them over the periods benefited

Answer 194

systematic and rational allocation,

Question 195

is defined as the removal of all or part of a recognized asset or liability from the statement of financial position.

Answer 195

Derecognition

Question 196

is defined as quantifying in monetary terms the elements in the financial statements.

Answer 196

Measurement

Question 197

Measurement
The Revised Conceptual Framework mentions twoeasurement

Answer 197

Historical Cost
Current Value

Question 198

Current value includes:

Answer 198

a. Fair value
b. Value in use for asset
c. Fulfillment value for liability
d. Current cost

Question 199

the price that would be received to sell an asset in an orderly transaction between market participants at measurement date.

Answer 199

Fair Value

Question 200

is the present value of the cash flows that an entity expects to derive from the use of an asset and from the ultimate disposal.

Answer 200

Value in Use

Question 201

is the present value of cash that an entity expects to transfer in paying or settling a liability.

Answer 201

Fulfillment Value

Question 202

is the cost of an equivalent asset at the measurement date comprising the consideration paid and transaction cost.

Answer 202

Current cost of an asset

Question 203

is the consideration that would be received less any transaction cost at measurement date.

Answer 203

Current cost of a liability

Question 204

is the measurement basis most commonly adopted in preparing financial statements..

Answer 204

Historical Cost

Question 205

A cause and effect relationship is implicit in the

Answer 205

Matching Principle

Question 206

are the means by which the information accumulated and processed in financial accounting is periodically communicated to the users.

Answer 206

Financial Statements

Question 207

is the time between the acquisition of assets and their realization in cash.

Answer 207

Operating Cycle

Question 208

an entity shall classify all other assets not classified as current as noncurrent.

Answer 208

PAS 1, paragraph 66,

Question 209

is simply defined as an identifiable nonmonetary asset without physical substance.

Answer 209

Intangible assets

Question 210

The common examples of identifiable intangible assets include

Answer 210

patent, franchise, copyright, lease right, trademark and computer software.

Question 211

An example of an unidentifiable intangible asset is

Answer 211

goodwill

Question 212

are actually restrictions on the borrower as to undertaking further borrowings, paying dividends. maintaining specified level of working capital and so forth.

Answer 212

Covenants

Question 213

is the residual interest of owners in the net assets of a corporation measured by the excess of assets over liabilities.

Answer 213

Shareholders’ equity

Question 214

provide narrative description or disaggregation of items presented in the financial statements and information about items that do not qualify for recognition.

Answer 214

Notes to financial statements

Question 215

are used to report information that does not fit into the body of the financial statements in order to enhance the understandability of the financial statements.

Answer 215

Notes to financial statements

Question 216

is to provide the necessary disclosures required by Philippine Financial Reporting Standards.

Answer 216

Notes to financial statements

Question 217

Forms of Financial Statements

Answer 217

Report Form
Account Form

Question 218

The financial performance is also known as the

Answer 218

Results of Operations

Question 219

constitute costs which are directly related to selling, advertising and delivery of goods to customers.

Answer 219

Distribution Cost

Question 220

constitute cost of administering the business.

Answer 220

Administrative expenses

Question 221

No More extraordinary items

Answer 221

PAS paragraph 87

Question 222

Non-current asset is a ___ definition

Answer 222

residual

Question 223

Current liabilities

Answer 223

PAS 1 paragraph 69

Question 224

The ________ classifies expenses according to their function as part of cost of goods sold, distribution costs, administrative expenses and other expenses

Answer 224

functional presentation

Question 225

is also known as the cost of goods sold method

Answer 225

functional presentation

Question 226

Forms of IS

Answer 226

Functional Presentation
Natural Presentation

Question 227

is referred to as the nature of expense method

Answer 227

Natural Presentation

Question 228

the change in equity during a period resulting from transactions and other events, other than changes resulting from transactions with owners in their capacity as owners.

Answer 228

Comprehensive Income

Question 229

are the cash flows derived primarily from the principal revenue producing activities of the entity.

Answer 229

Operating Activities

Question 230

are the cash flows derived from the acquisition and disposal of long-term assets and other investments not included in cash equivalent.

Answer 230

Investing Activities

Question 231

are the cash flows derived from the equity capital and borrowings of the entity.

Answer 231

Financing Activities

Question 232

Statement of Cash flow is strictly a ____ concept

Answer 232

Cash

Question 233

may be classified as financing cash flow because it is a cost of obtaining financial resources.

Answer 233

Interest Paid

Question 234

may be classified as investing cash flow because it is a return on investment.

Answer 234

Interested Received

Question 235

shall be classified as operating cash flow because it enters into the determination of net income.

Answer 235

Dividend Received

Question 236

be classified as financing cash flow because it is a cost of obtaining financial resources.

Answer 236

Dividend Paid

Question 237

are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.

Answer 237

Accounting Policies

Question 238

means that any resulting adjustment from the change in accounting policy shall be reported as an adjustment to the opening balance of retained earnings.

Answer 238

Retrospective Application

Question 239

are omissions and misstatements in the financial statements for one or more periods arising from a failure to use or misuse of reliable information.

Answer 239

Prior Period Errors

Question 240

as those events, whether favorable or unfavorable, that occur between the end of reporting period and the date on which the financial statements are authorized for issue.

Answer 240

events after the reporting period

Question 241

Types of events after the reporting period

Answer 241

Adjusting Events
Nonadjusting events

Question 242

Types of events after the reporting period

after the reporting period are those that provide evidence of conditions that exist at the end of reporting period.

Answer 242

Adjusting Events

Question 243

Types of events after the reporting period

after reporting period are those that are indicative of conditions that arise after the end of reporting period.

Answer 243

Nonadjusting Events

Question 244

when the board of directors reviews the financial statements and authorizes them issue.

Answer 244

Financial statements are authorized for issue

Question 245

is ownership directly or indirectly through subsidiaries of more than half of the voting power of an entity

Answer 245

Control

Question 246

is the contractually agreed sharing of control over an economic activity.

Answer 246

Joint Control

Question 247

Examples of Related Parties

Answer 247

Affiliates
Associates
Venturers

Question 248

meaning the parent, the subsidiary and fellow subsidiaries.

Answer 248

Affiliates

Question 249

If an investor owns more than 50% of an investee, the investor is known as

Answer 249

Parent

Question 250

If an investor owns more than 50% of an investee, the imvestee is known as

Answer 250

Subsidiary

Question 251

meaning the entities over which one party exercises significant influence.

Answer 251

Associates

Question 252

If an investor owns at least 20% of the investee, the investee is known as

Answer 252

Associates

Question 253

The term “____” includes the subsidiary or subsidiaries of the associate.

Answer 253

Associate

Question 254

are the persons with managerial positions, like the president, vice-president, chief executive officer and other officers with responsibility of controlling the activities of entity.

Answer 254

The key management personnel

Question 255

a. The individual’s spouse and children
b. Children of the individual’s spouse
c. Dependents of the individual or the individual’s spouse

Answer 255

Close family members of key management personnel

Question 256

owning at least 20% of the reporting entity.

Answer 256

Individuals oe shareholders

Question 257

is a transfer of resources or obligations between related parties, regardless of whether a price is charged.

Answer 257

Related party transaction

Question 258

PAS 24, paragraph 12, requires ______________ relationships where control exists irrespective of whether there have been transactions between the related parties.

Answer 258

disclosure of related party

Question 259

shall comprise cost of purchase, cost of conversion and other cost incurred in bringing the inventories to their present location and condition.

Answer 259

Cost of inventories

Question 260

are assets held for sale in the ordinary course of business, in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

Answer 260

Inventories

Question 261

The _____ of inventories includes cost directly related to the units of production such as direct labor.

Answer 261

Cost of conversion

Question 262

means that specific costs are attributed to identified items of inventory.

Answer 262

Specific Identification

Question 263

PAS 2, paragraph 9, provides that inventories shall be measured at the lower of

Answer 263

cost and nrv

Question 264

The cost of inventory is determined using either

Answer 264

FIFO cost
Average cost

Question 265

the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost of disposal.

Answer 265

Net realizable value or NRV

Question 266

The write down of inventory to net realizable value is accounted for using the

Answer 266

Allowance Method

Question 267

PPE initial measurement

Answer 267

Cost

Question 268

Major characteristic of PPE

Answer 268

Tangible Asset
Used in business
More than one year

Question 269

means that property, plant and equipment are carried at cost less any accumulated depreciation and any accumulated impairment loss.

Answer 269

Cost model

Question 270

means that property, plant and equipment are carried at revalued carrying amount.

Answer 270

Revaluation model

Question 271

the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment loss.

Answer 271

revalued carrying amount

Question 272

as assistance by government in the form of transfer of resources to an entity in return for part or future compliance with certain conditions relating to the operating activities of the entity.

Answer 272

Government Grant

Question 273

is action by government designed to provide an economic benefit specific to an entity or range of entities qualifying under certain criteria

Answer 273

Government Assistance

Question 274

Intangible Assets

Answer 274

PAS 38

Question 275

Impairment of Assets

Answer 275

PAS 36

Question 276

Investment in Associates

Answer 276

PAS 28

Question 277

Borrowing Cost

Answer 277

PAS 23

Question 278

Related Party Disclosure

Answer 278

PAS 24

Question 279

is an asset that necessarily takes a substantial period of time to get ready for the intended use or sale.

Answer 279

Qualifying Asset

Question 280

defined as interest and other costs that an entity incurs in connection with borrowing of funds.

Answer 280

Borrowing Cost

Question 281

PAS 23 requires that borrowing costs incurred in connection with acquisition of a qualifying asset should be

Answer 281

capitalized as cost of the qualifying asset.

Question 282

Capitalization of borrowing costs shall cease when substantially all the activities necessary to prepare the qualifying asset for the intended use or sale are

Answer 282

Complete

Question 283

is simply defined as an entity over which the investor has significant influence.

Answer 283

Associate

Question 284

is the power to participate in the financial and operating policy decisions of the associate but not control or joint control over those policies.

Answer 284

Significance influence

Question 285

The investment in associate is measured using the

Answer 285

equity method of accounting

Question 286

If the carrying amount of an asset is higher than the recoverable amount, the asset is judged to have suffered an

Answer 286

impairment loss

Question 287

is an incremental cost directly attributable to the disposal of an asset, excluding finance cost and income tax expense.

Answer 287

Cost of disposal

Question 288

is the smallest identifiable group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows from other assets or group of assets

Answer 288

Cash generating unit

Question 289

Future economic benefits may include

Answer 289

Revenue
Cost Savings

Question 290

is the systematic allocation of the amortizable amount of an intangible asset over the useful life.

Answer 290

Amortization

Question 291

cost of the intangible asset less residual value.

Answer 291

Amortizable Amount

Question 292

The useful life of an intangible asset must be assessed as either

Answer 292

indefinite and definite

Question 293

The useful life of an intangible asset is ______ when there is no foreseeable limit to the period over which the asset is expected to generate net cash flows.

Answer 293

indefinite

Question 294

is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved material, device, product, process, system or service, prior to the commencement of commercial production.

Answer 294

Development

Question 295

is original and planned investigation undertaken with the prospect of gaining scientific or technical knowledge and understanding.

Answer 295

Research

Question 296

expenditure on research or on the research phase of an internal project shall be recognized as expense when

Answer 296

incurred