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ICED TEA > TEMPURA > Flashcards

TEMPURA Flashcards

1
Q

If a new partner’s contributed capital is greater than the agreed capital, the difference is either share in bonus or revaluation of net assets (goodwill) from old partners

A

FALSE

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2
Q

PFRS 11 requires that impairment losses on equity method investment are reported in OCI.

A

FALSE

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3
Q

If the partnership agreement provides a formula for the computation of a bonus to the partners, the bonus would always be computed after the salary and interest allocations are made.

A

FALSE

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4
Q

Under the cost-recovery (point-in-time) method of construction accounting, revenue, cost, and gross profit are recognized at the time the contract is completed.

A

TRUE

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5
Q

Marshalling of assets is keeping the partnership assets and liabilities combined with the personal assets and liabilities of the individual partners.

A

FALSE

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6
Q

PFRS 11 requires joint ventures to be reported as equity method investments

A

TRUE

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7
Q

When a partnership is formed, equity dictates that assets contributed to the partnership be recorded in the general ledger at their historical costs.

A

FALSE

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8
Q

The partner’s creditors and the partnership’s creditors are one in the same because the partnership is an extension of the partners.

A

FALSE

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9
Q

A partnership agreement calls for allocation of profits and losses by salary allocations, a bonus allocation, interest on capital, with any remainder to be allocated by preset ratios. If a partnership has a loss to allocate, generally the loss will be allocated using the profit and loss ratio only.

A

FALSE

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10
Q

If existing partners acquire a withdrawing partner’s equity, the existing partners must purchase the withdrawing partner’s equity in proportion to their residual profit or loss ratios.

A

FALSE

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11
Q

The converged standard on revenue recognition recognizes and measures revenue based on changes in assets and liabilities.

A

TRUE

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12
Q

A cash distribution plan is a guarantee to partners that distributions will occur during the partnership liquidation.

A

FALSE

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13
Q

Franchise arrangements often include a performance obligation for a license as well as for delivery of goods and services.

A

TRUE

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14
Q

For providing the construction or upgrade services, the consideration received or receivable by the operator shall be recognized at its fair value.

A

TRUE

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15
Q

One of the major characteristics of partnership is that it requires written Articles of Partnership.

A

FALSE

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16
Q

The salary portion of the partnership profit and loss allocation should be included in the partnership’s income statement.

A

FALSE

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17
Q

In the concession arrangement, the operator shall account for revenue and costs relating to construction or upgrade services in accordance with the stage of completion method.

A

FALSE

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18
Q

All joint arrangements which are not structured through a separate vehicle are classified as joint ventures.

A

FALSE

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19
Q

Medical insurance is an example of insurance contract covered by PFRS 17.

A

TRUE

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20
Q

Assets in a statement of affairs (financial statement) are assigned to one of three categories: assets pledged for fully secured liabilities, assets pledged for partially secured liabilities, and priority assets.

A

FALSE

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21
Q

On the valuation of initial investments in a partnership and there is no specification as to what approach may be used, the revaluation (goodwill) approach is preferred over the bonus approach.

A

FALSE

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22
Q

Where the joint operators have designed the joint arrangement so that its activities primarily aim to provide the parties with an output it will be classified as a joint operation

A

TRUE

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23
Q

According to PFRIC 12, the infrastructure asset shall be recognized by the operator as property, plant and equipment.

A

FALSE

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24
Q

In the service concession arrangement, the operator shall account for revenue and costs relating to construction or upgrade services using methods other than the percentage-of-completion method.

A

FALSE

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25
Q

Joint arrangements require investors to have equal interests in the joint arrangement.

A

FALSE

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26
Q

When goodwill is acquired by an investor in an associate, the amortization of goodwill is not permitted.

A

TRUE

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27
Q

The initial franchise fee is consideration for establishing the continuing franchise relationship and providing some continuing services until the last day of operations.

A

FALSE

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28
Q

If total contributed capital is equal to total agreed capital, there will be no adjustment for revaluation (goodwill) of net assets.

A

TRUE

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29
Q

The goodwill method of admitting a new partner to a partnership results in greater total assets than the bonus method of admitting a new partner.

A

TRUE

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30
Q

The dissolution of a partnership occurs only when the partnership is terminating operations and going out of business.

A

FALSE

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31
Q

Claims arise when the unearned premium reserve is less than the anticipated claims and related expenses.

A

FALSE

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32
Q

Nonrefundable upfront fees should be recognized upon receipt of payment.

A

FALSE

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33
Q

A partner’s withdrawal account of assets from a limited liability partnership that is considered a permanent reduction in that partner’s equity is debited to the partner’s drawing account.

A

FALSE

34
Q

Absence of revaluation approach or bonus procedure prevents the recognition of asset appreciation, which is not allowed under generally accepted accounting principles.

A

FALSE

35
Q

The cost recovery method is the most conservative revenue recognition method.

A

FALSE

36
Q

Contract liability is a company’s obligations to transfer goods or services to a customer for which the company has received consideration from the customer. An example of contract liability is

a. Mortgage Payable.
b. Prepaid Subscription.
c. Unearned Magazine Subscription.
d. Service Revenue.

A

Unearned Magazine Subscription.

37
Q

Which of the following will not result in the dissolution of a partnership?

I. Partners are incompatible and choose to cease operations.
II. Partners realize that the profit figures have failed to reach projected levels.
III. Retirement of a partner.
IV. Death of a partner.

a.1 and 2 only
b. 3 and 4 only
c. 1, 2, and 3
d. All 1, 2, 3, and 4
Neither 1, 2, 3, and 4

A

These reasons will all result in dissolution of the partnership

38
Q

In accounting for a long-term construction contract for which there is a projected profit, the balance in the Construction in Progress account at the end of the first year of work using the percentage-of-completion method would be
a. Lower than the cost recovery method.
b. The same as the cost recovery method.
c. Zero.
d. Higher than the cost recovery method.

A

Higher than the cost recovery method.

39
Q

A performance obligation exist when
a. A company received the right to receive consideration.
b. A company provides a distinct product or service.
c. A company provides interdependent product or service.
d. A contract is approved and signed.

A

A company provides a distinct product or service.

40
Q

How should earned but unbilled revenues at the balance sheet date on a long-term construction contract be disclosed if the percentage-of-completion (overtime) method of revenue recognition is used?

a. As Construction in Progress in the noncurrent section of the balance sheet.
b. As a receivable in the noncurrent asset section of the balance sheet.
c. As Construction in Progress in the current section of the balance sheet.
d. In a note to the financial statements until the customer is formally billed for the portion of work completed.

A

As Construction in Progress in the noncurrent section of the balance sheet.

41
Q

How should earned but unbilled revenues at the balance sheet date on a long-term construction contract be disclosed if the percentage-of-completion (overtime) method of revenue recognition is used?

a. As Construction in Progress in the noncurrent section of the balance sheet.
b. As a receivable in the noncurrent asset section of the balance sheet.
c. As Construction in Progress in the current section of the balance sheet.
d. In a note to the financial statements until the customer is formally billed for the portion of work completed.

A

As Construction in Progress in the noncurrent section of the balance sheet.

41
Q

How should earned but unbilled revenues at the balance sheet date on a long-term construction contract be disclosed if the percentage-of-completion (overtime) method of revenue recognition is used?

a. As Construction in Progress in the noncurrent section of the balance sheet.
b. As a receivable in the noncurrent asset section of the balance sheet.
c. As Construction in Progress in the current section of the balance sheet.
d. In a note to the financial statements until the customer is formally billed for the portion of work completed.

A

As Construction in Progress in the noncurrent section of the balance sheet.

42
Q

Noncash consideration in revenue recognition should be:

a. Recognized on the basis of fair value of what is received.
b. Recognized on the basis of fair value of what is given up.
c. Recognized on the basis of original cost paid by customer.
d. Recognized on the basis of fair value of equivalent goods or services.

A

Recognized on the basis of fair value of what is received.

43
Q

For a construction firm using the cost recovery method, if costs exceeds billings on same contracts by P2,500,000 and billings exceed costs by P2,000,000 on others, the contracts should ordinarily be reported as
a. Current asset of P500,000
b. Current asset of P2,500,000 less a contra-current asset of P2,000,000
c. Current liability of P500,000
d. Current asset of P2,500,000 and a current liability of P2,000,000

A

Current asset of P2,500,000 less a contra-current asset of P2,000,000

44
Q

Franchise revenue are recognized over time if

a. The franchisee fee is payable upon signing of contract.
b. The franchisor is providing access to the right rather than transferring control.
c. Franchise rights are transferred at a point in time.
d. Performance obligations regarding franchise rights are completed when the franchise opens.

A

The franchisor is providing access to the right rather than transferring control.

45
Q

The most popular input measure used to determine the progress toward completion is

a. Labor hours worked.
b. Cost-to-cost basis.
c. Units-of-delivery method.
d. Tons produced.

A

Labor hours worked.

46
Q

Revenue in a consignment is recognized by the consignor when the

a. Consignee receives the goods.
b. Consignor receives an advance from the consignee.
c. Consignor receives an account sales report from the consignee.
d. Goods are shipped to the consignee.

A

Consignor receives an account sales report from the consignee.

47
Q

When a customer purchases a product but is not yet ready to accept delivery, this is referred to as

a. A consignment.
b. A bill-and-hold arrangement.
c. Principal-agent relationship.
d. A repurchase agreement.

A

A bill-and-hold arrangement.

48
Q

When eliminating any unrealized profit arising when a joint operator provides services to a joint operation, the profit is eliminated against
a. Work in Progress, finished goods and other inventory related accounts
b. Cost of goods sold
c. The Investment in the Joint Operation account
d. Retained Earnings

A

Work in Progress, finished goods and other inventory related accounts

49
Q

Which of the following would be least likely to be used as a means of allocating profits among partners who are active in the management of the partnership?

a. Bonus as a percentage of sales in excess of a targeted amount
b. Bonus as a percentage of net income before the bonus
c. Interest on average capital balances
d. Salaries

A

Interest on average capital balances

50
Q

The accounting equation for a trustee in bankruptcy liquidation is

a. Assets equal liabilities plus owner equity.
b. Assets equal accountability.
c. Assets equal liabilities minus estate deficit.
d. Assets minus liabilities equals accountability

A

Assets equal accountability.

51
Q

Revenue for sales-based royalty payments should be recognized

a. On the date the contract was signed.
b. When the amount of sales can be determined.
c. On the date payment is received by the franchisor.
d. On the date the performance obligation is satisfied.

A

When the amount of sales can be determined.

52
Q

Constitutes the transfer of possession of merchandise without the transfer of title from the owner to another person.

A

CONSIGNMENT

53
Q

Normally referred to as general creditors.

A

UNSECURED LIABILITIES

54
Q

A revenue recognition approach wherein each collection on a contract is regarded as representing both a return of cost and a realization of gross profit.

A

INSTALLMENT METHOD

55
Q

It is a demand by any party for payment by the insurer of a policy benefit on account of an alleged loss resulting from an event or events alleged to be covered by a policy of insurance.

A

INSURANCE CLAIM

56
Q

Involves a private sector entity (an operator) constructing the infrastructure used to provide public service or upgrading it.

A

SERVICE CONCESSION AGREEMENT

57
Q

A contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent.

A

CONSTRUCTION CONTRACT

58
Q

A revenue recognition approach wherein collections on a contract are regarded as representing first the recovery of product costs and after which, all further collections are regarded as profit.

A

COST RECOVERY (SUNK COST) METHOD

59
Q

Used to compensate for differences in the fair value of the talents for partners.

A

SALARIES

60
Q

The core principle is that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration (payment) to which the entity expects to be entitled in exchange for those goods or services.

A

PFRS 15

61
Q

This pertains to transactions between a joint venturer and a joint venture wherein the joint venturer purchases assets from a joint venture.

A

DOWNSTREAM TRANSACTIONS

62
Q

The rationale of which an entity has rights to assets and obligations incurred in a joint arrangement and the objective is to establish principles for financial reporting by entities that have an interest in arrangements.

A

PFRS 11

63
Q

A financial condition prepared for a corporation entering into the state of liquidation or bankruptcy.

A

BANKRUPTCY

64
Q

A claim against the net assets of the partnership

A

PARTNER’S CAPITAL INTEREST

65
Q

This generally follows the book-value method wherein the existing book values should not be adjusted to current values unless allowed by GAAP.

A

BONUS METHOD

66
Q

Given to partners in recognition to differences on capital contributions by partners especially if the business is capital intensive.

A

INTEREST

67
Q

Applied when the deficit balance in partner’s capital account may be set off against any balance existing in his/her loan account.

A

LEGAL DOCTRINE OF SETOFF

68
Q

A process of realizing some assets, paying creditors, paying the remaining available cash to partners, realizing additional assets, and making additional cash payments to partners.

A

INSTALLMENT LIQUIDATION

69
Q

An activity statement of the progress of the corporate liquidation that reports the actual liquidation results.

A

STATEMENT OF REALIZATION AND LIQUIDATION

70
Q

An insurance contract issued by one insurer (the reinsurer) to compensate another insurer (the cedant) for losses on one or more contracts issued by the cedant.

A

REINSURANCE CONTRACT

71
Q

This standard applies to almost all insurance contracts (including reinsurance contracts) that an entity issues and to reinsurance contracts that it holds.

A

PFRS 17

72
Q

Used as a means of providing additional compensation to partners who have provided services to the partnership.

A

SALARIES

73
Q

In PFRS 15, a company’s obligation to transfer goods or services to a customer for which the company has received consideration from the customer is

A

CONTRACT LIABILITY

74
Q

Refers to the financial condition of a person or business enterprise

A

FINANCIAL POSITION

75
Q

A method of admission wherein no additional money or properties invested in the partnership.

A

PURCHASE OF AN INTEREST

76
Q

A partnership in which each partner is personally liable to the partnership’s creditors if partnership assets are not sufficient to pay such creditors.

A

GENERAL PARTNERSHIP

77
Q

A joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

A

JOINT VENTURE

78
Q

An insurer which accepts part of a risk in a reinsurance.

A

REINSURER

79
Q

A joint arrangement that is not structured typically through a separate vehicle.

A

JOINT OPERATION

80
Q

The payment of claims in a partnership is referred to as

A

INTEREST ON CAPITAL

81
Q

Usually referred to as goodwill approach which is non-compliance to generally accepted accounting principles

A

REVALUATION APPROACH

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