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Theory of Accounts > PAS 1, Presentation of Financial Statements &Statement of Financial Position > Flashcards

PAS 1, Presentation of Financial Statements &Statement of Financial Position Flashcards

1
Q 
Financial statements include a statement of financial position, a statement of comprehensive income and a statement of changes in equity. According to the Preface of IFRS which two of the following are also included within the financial statements?
I.	A  statement of cash flows 
II.	Accounting policies 
III.	An Auditor’s report 
IV.	A director’s report
a.	I and II 
b.	I and III
c.	II and III
d.	III and IV
A

a. I and II

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2
Q

The level of rounding used in the financial statements refers to the

a. Abbreviation of words used
b. Truncation of the amounts presented
c. Shortening of the notes by removing comparative figures
d. Presentation of a concise financial report rather than a full financial report

A

b. Truncation of the amounts presented

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3
Q

What financial statement does not involved a distinct period of time

a. Statement of cash flows
b. Statement of financial position
c. Statement of changes in equity
d. Statement of comprehensive income

A

b. Statement of financial position

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4
Q

A public utility reports noncurrent assets as the first item on its balance sheet. This is an example of

a. Conservatism
b. Improper statement presentation
c. Industry practice
d. Substance over form

A

c. Industry practice

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5
Q

PAS 1, Presentation of Financial Statements, requires disclosure in the balance sheet of the following items

a. The carrying amount of property, plant and equipment
b. The measurement basis used for the revaluation of assets
c. Information about the key assumptions used in the depreciation of assets
d. A statement of compliance with Philippine Financial Reporting Standards (PFRS)

A

a. The carrying amount of property, plant and equipment

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6
Q

PAS 1 precludes an entity to present or classify this account as current in the statement of financial position

a. Available for sale securities
b. Deferred tax assets
c. Prepayments
d. Provisions

A

b. Deferred tax assets

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7
Q

Under PAS 1, which of the following is not among the criteria in classifying a liability as current?

a. It is held primarily for the purpose of being traded
b. Expected to be settled in the entity’s normal operating cycle
c. Due to be settled within twelve months after the balance sheet date
d. The entity has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date

A

d. The entity has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date

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8
Q

PAS 1 refers to it as all changes in equity other than introduction and return of capital to owners

a. Net income
b. Other comprehensive income
c. Profit
d. Total comprehensive income

A

d. Total comprehensive income

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9
Q

The presence of “cost of sales” account in the income statement signifies that an entity classifies expenses according to

a. Amounts
b. Function
c. Maturity
d. Nature

A

b. Function

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10
Q

An entity classified expenses by logistics quality control, manufacturing plant engineering, sales & marketing, research & development, finance & administration. The classification basis is by

a. Area of responsibility
b. Function performed
c. Nature of expense
d. Object of expenditure

A

b. Function performed

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11
Q

If the classification of expenses by function method is used for the presentation of an income statement, additional information on the following items must be disclosed

a. Revenue
b. Gains on disposal of assets
c. Gains on revaluation of assets
d. Depreciation and amortization expense

A

d. Depreciation and amortization expense

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12
Q

If expense accounts in the income statement are not presented according to functions, they may be represented using

a. Account form
b. Functional presentation
c. Natural presentation
d. Report form

A

c. Natural presentation

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13
Q

Under PAS 1, which of the following items is not included in the computation of profit?

a. Finance cost
b. Post-tax gain or loss on discontinued operations
c. Unrealized gain in change in value of biological assets
d. Unrealized gain in change in value of available-for-sale securities

A

d. Unrealized gain in change in value of available-for-sale securities

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14
Q

Under PAS 1, which of the following should be classified as extraordinary item in reporting results of operations?

a. Losses resulting from an unusual major flash flood in the Visayan region
b. Gain resulting from the national government expropriation of corporate property
c. Foreign exchange loss arising from appreciation of Japanese yen relative to the Philippine peso
d. None, all are ordinary gains and losses

A

d. None, all are ordinary gains and losses

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15
Q

PAS 1 does not allow presenting any items of income or expenses as extraordinary items in the

a. Notes to the financial statements
b. Separate income statement
c. Statement of comprehensive income
d. All of these

A

d. All of these

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16
Q

PAS 1 requires the allocation of profit or loss for the period between or among
I. Profit or loss attributable to owner of the parent
II. Profit or loss attributable to subsidiaries of the parent
III. Profit or loss attributable to non-controlling interests
a. I and II
b. I and III
c. II and III
d. I, II and III

A

b. I and III

17
Q

PAS 1 requires the allocation of total comprehensive income for the period between or among
I. Total comprehensive income attributable to owners of the parent
II. Total comprehensive income attributable to subsidiaries of the parent
III. Total comprehensive income attributable to non-controlling interests
a. I and II
b. I and III
c. II and III
d. No such required

A

c. II and III

18
Q 
Determine the true statement(s) relating to presentation of the statement of changes in equity 
Statement I: The amounts of dividends shown as distribution to owners and the amounts of dividends per share should be shown in the notes only 
Statement II: Components of equity include each class of contributed equity, the accumulated balance of each class of their comprehensive income and retained earnings
a.	Statement I true, statement II true
b.	Statement I true, statement II false 
c.	Statement I false, statement II true 
d.	Statement I false, statement II false
A

c. Statement I false, statement II true

19
Q

What is the purpose of information presented as notes to financial statements?

a. To present management’s responses to auditor comments
b. To correct improper presentation in the financial statements
c. To provide disclosures required by generally accepted accounting principles
d. To provide recognition of amounts not included in the totals of the financial statements

A

c. To provide disclosures required by generally accepted accounting principles

20
Q

Which is not an objective of the notes to the financial statements as an envisaged under PAS 1?

a. Notes disclose information required PFRS that is not presented on the face of the primary statements
b. Notes present information about the basis of presentation of financial statements and the specific accounting policies used
c. Notes provide additional information that is not presented on the face of the primary statements but is relevant to an understanding of any of them
d. Notes allow external auditors in assessing whether amounts in the financial statements are fairly presented/stated so as to form an opinion as to the fairness of the financial statements taken as a whole.

A

d. Notes allow external auditors in assessing whether amounts in the financial statements are fairly presented/stated so as to form an opinion as to the fairness of the financial statements taken as a whole.

21
Q

Proper application of accounting principles is most dependent upon the

a. External audit function
b. Oversight of regulatory bodies
c. Existence of specific guidelines
d. Professional judgment of the accountant

A

d. Professional judgment of the accountant

22
Q

Which of the following about note disclosures are considered mandatory rather than voluntary (optional)?
I. Disclosure of information about key sources of estimation uncertainty
II. Disclosure of information about judgment that management has made in the process of applying accounting principles
III. The presentation of notes to the financial statements in a systematic manner
IV. The cross-reference between each line in the financial statements and any related information disclosed in the notes to the financial statements
a. I and II only
b. III and IV only
c. I, II and III only
d. I, II, III and IV

A

d. I, II, III and IV

23
Q

What is the first item presented in the notes to financial statements

a. Statement of compliance with PFRS
b. Summary of significant accounting policies
c. Supporting computations for items presented in the financial statements
d. Other disclosures including contingent liabilities, unrecognized contractual commitments and nonfinancial disclosures

A

a. Statement of compliance with PFRS

24
Q

The summary of accounting policies is normally presented

a. Within the auditor’s report
b. As the last note in a set of financial statements
c. As the first note, after all the financial statements
d. Before all of the financial statements in a financial report

A

c. As the first note, after all the financial statements

25
Q

As a significant component of notes to the financial statements, the accounting policies section should be describe

a. Only the specific accounting policies followed by the enterprise
b. The nature of the enterprises operations and its principal activities
c. Both the measurement bases used and accounting policies followed
d. Only the measurement bases used in preparing the financial statements

A

c. Both the measurement bases used and accounting policies followed

26
Q

Which of the following should be disclosed in the summary of significant accounting policies?

a. Guarantees of indebtedness of others
b. Refinancing of debt subsequent to the balance sheet date
c. Adequacy of pension plan assets relative to vested benefits
d. Criteria for determining which investments are treated as cash equivalent

A

d. Criteria for determining which investments are treated as cash equivalent

27
Q

Which of the following should be disclosed in the summary of significant accounting policies?

a. Depreciation charges for the period
b. Borrowing cost capitalized for the period
c. Valuation method used for work in process inventory
d. Adequacy of pension plan assets in relation to vested benefits

A

c. Valuation method used for work in process inventory

28
Q

The summary of significant account policies shall disclose

a. The depreciation method used only
b. The composition of property, plant and equipment only
c. The composition of property, plant and equipment and the depreciation method used
d. Neither the composition of property, plant and equipment nor the depreciation method used.

A

a. The depreciation method used only

29
Q

Identify the false statement regarding PAS 1’s general principles relating to accounting policies

a. Inappropriate accounting policies are not rectified by disclosure of accounting policies used
b. Materiality depends on the size and nature of the omission or misstatement judged based on the surrounding circumstances
c. Measuring assets net of valuation allowances is considered as offsetting, which is generally not allowed unless permitted by a specific PFRS
d. The presumption that application of PFRS, with additional disclosure when necessary, results in financial statements that achieve a fair presentation, is rebuttable

A

c. Measuring assets net of valuation allowances is considered as offsetting, which is generally not allowed unless permitted by a specific PFRS

30
Q

PAS 1 requires the following note disclosures in relation to dividends of an entity

a. Names of the recipients of the dividends
b. A schedule of cumulative dividends paid prior period
c. Amount of any cumulative preference dividends not recognized
d. Address of all shareholders who are entitled to receive dividends

A

c. Amount of any cumulative preference dividends not recognized

31
Q

Which of the following is not included in the notes to the financial statements?

a. Narrative description of items disclosed in the financial statements
b. Information on disaggregation of items disclosed in the financial statements
c. Information about items that do not qualify for recognition in the financial statements
d. Information presented in the balance sheet, income statement and cash flow statement

A

d. Information presented in the balance sheet, income statement and cash flow statement

32
Q

Which of the following is not a required supplemental disclosure for the statement of financial position?

a. Accounting policies
b. Contingencies
c. Contractual situation
d. Financial forecasts

A

d. Financial forecasts

33
Q

Which of the following information is not specifically a required disclosure of PAS 1?

a. Name of the reporting entity or other means of identification and nay change in that information from the previous years
b. Names of major shareholders of the entity
c. Level of rounding used in presenting the financial statements

A

b. Names of major shareholders of the entity

34
Q

Under PAS 1, which information is normally not included in the “notes to financial statements”?

a. A statement of cash flows
b. A statement of compliance with GAAP
c. Supporting information for line items presented and aggregated
d. A statement of measurement basis for the financial statements and accounting policies applied.

A

a. A statement of cash flows

35
Q

The following statements are based on the PAS 1 (Presentation of Financial Statements):
Statement I: The number of shares authorized shall be shown in the statement of financial position or the statement of changes in equity or in the notes to the financial statements
Statement II: An entity presenting a separate income statement and a statement of comprehensive income shall present a statement of changes in equity
Statement III: An income statement is prepared under the “natural presentation” when it presents expenses based on logistics, marketing and production
Which of the foregoing statements are true?
a. I only
b. II only
c. I and II
d. I, II and III

A

c. I and II

36
Q

Which of the following should not be considered as a current asset in the balance sheet?

a. Prepaid taxes which covers assessments of the following operation cycle of the business
b. Instalment notes receivable due over 18 months in accordance with normal trade practice
c. Trading securities purchased as a temporary investment of cash available for current operation
d. The cash surrender value of a life insurance policy carried by a corporation, the beneficiary, on its president

A

d. The cash surrender value of a life insurance policy carried by a corporation, the beneficiary, on its president

37
Q

In which section of the statement of financial position should cash that is restricted for the settlement of a liability due 18 months after the reporting period be presented?

a. Current assets
b. Equity
c. Noncurrent assets
d. Noncurrent liabilities

A

c. Noncurrent assets

38
Q

Which of the following is generally classified as ac current liability on the balance sheet?

a. Bank overdrafts
b. Customer NSF checks
c. Post-dated checks
d. Travel advances

A

a. Bank overdrafts

Theory of Accounts (6 decks)

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