Theory of Accounts

CSA-B THEORY OF ACCOUNTS EASY 1. Which statemen statementt is correct regardi regarding ng the Financial Financial Reporting Reporting Standards Standards Council Council (FRSC) (FRSC) a. Established by PICP PICP in  in !""# under the Implementing Rules and Regulations o$ the Philippine ccountancy o$ ct o$ !""%.  b. &he main $unction is to establish generally accepted auditing standards in standards in the Philippines. c. d.

&he Ch &he Chai airm rman an an and d me memb mber ers s o$ th the e FR FRSC SC ar are e ap appo poin inte ted d by th the e pr presi esiden dentt o$ the Phil Philipp ippine ines s upo upon n the recommendation recommenda tion o$ the PRC PRC in  in coordination 'ith the P. &he FRSC is the successor o$ the ccounting Standards Council (SC) 'hich 'as created in o*ember 1+,1 by the Philippine Institute o$ Certi$ied Public ccountants (PICP).

!. Which statemen statementt is incorrect incorrect regarding regarding the Philippine Philippine Interpret Interpretation ations s Committee Committee (PIC)a. &he PIC is respons responsibl ible e $or re*ie'i re*ie'ing ng accounti accounting ng issues issues that that are are liely liely to recei recei*e *e di*erge di*ergent nt or unaccept unacceptabl able e treatm treatment ent in the absenc absence e o$ author authorita itati* ti*e e guidan guidance/ ce/ 'ith 'ith a *ie' *ie' to reachi reaching ng consen consensus sus as to appro appropri priate ate accounting treatment. b. &he PIC 'as $ormed $ormed by the FRSC FRSC in ugust ugust !""# !""# to ass assist ist the FRSC in establis establishin hing g and impro impro*in *ing g $inancial $inancial reporting standards in the Phili ppines. c. &he PIC member members s are are appoin appointed ted by the FRSC FRSC and include include accoun accountan tants ts in public public practi practice/ ce/ the academe academe and regulatory bodies and users o$ $inancial statements. d. &he PIC PIC replaced replaced the the ccounti ccounting ng Standar Standards ds Council Council (SC) (SC)..

0. &he IS2s IS2s standar standard3set d3setting ting structur structure e includes includes all o$ the $ollo'ing $ollo'ing except4 a. Financial Financial Reportin Reporting g Interp Interpreta retations tions Committe Committee e b. Standa Standard rds s d* d*iso isory ry Counc Council il c. Sta Standa ndard rds s Comp Compari arison son Co Commi mmitte ttee e d. &rustees

%. 5o' IFRS standards standards bring bring trans transpare parencyncya. y enhancing enhancing the internationa internationall comparabilit comparability y and 6uality o$ $inancial $inancial in$ormation/ in$ormation/ enabling enabling in*estors in*estors and other maret participants to mae in$ormed economic decisions.  b. y reducing the in$ormation gap bet'een the pro*iders o$ capital and the people to 'hom they ha*e entrusted their money. c. y helping in*estors to identi$y opportunities and riss across the 'orld/ thus impro*ing capital allocation. d. ll ll o$ o$ the the abo* abo*e. e.

7. Which o$ the $ollo' $ollo'ing ing helps helps users users mae mae good good decis decisionsionsa.  $aith$ul $aith$ul repre representa sentation tion o$ o$ an irrele irrele*ant *ant pheno phenomeno menon. n. b. n un$aith$u un$aith$ull represe representatio ntation n o$ a rele*ant rele*ant pheno phenomeno menon. n. c. oth a and b. d. e eit ithe herr a nor nor b. #. Which o$ the the $ollo'i $ollo'ing ng is not a PICP PICP RegionRegiona. 8etro 8anila c. orthern 8indanao b. Southern &agalog d. Southern 9isayas

:. Which Which o$ the $ollo'in $ollo'ing g statem statement ents s re$lec re$lects ts one o$ the bene$it bene$its s o$ adopt adoption ion o$ Intern Internati ationa onall Financ Financial ial Reporti Reporting ng Standards (IFRS) by di$$erent countriesa. Earnings management is eliminated. b. Cost o$ capital is lo'er $or $irms. c. &he &here ar are no no ec econom onomic ic cons conse6 e6ue uen nces 'hen hen $ir $irms ms s'it s'itc ch to to IFR IFRS S $r $rom e;i e;is sting ting ustment to the asset. c. Gepreciation e;pense 'ill be higher i$ the grant is recorded as an ad>ustment to the asset/ but net income 'ill be the same under the t'o alternati*es. d. Gepreciation e;pense 'ill be higher i$ the grant is recorded as de$erred income/ but net income 'ill be the same under the t'o alternati*es.

1". Which o$ the $ollo'ing is incorrect regarding e;pected credit losses on $inancial assets in accordance 'ith PFRS +a. E;pected credit losses are a probability3'eighted estimate o$ credit losses (ie the present *alue o$ all cash short$alls) o*er the e;pected li$e o$ the $ inancial instrument. b.  cash short$all is the di$$erence bet'een the cash $lo's that are due to an entity in accordance 'ith the contract and the cash $lo's that the entity e;pects to recei*e. c. E;pected credit losses consider the amount and timing o$ payments. d.  credit loss cannot arise i$ the entity e;pects to be paid in $ull e*en i$ later than 'hen contractually due.

11. Which statement is incorrect i$ a grant o$ e6uity instruments is cancelled or settled during the *esting perioda. &he entity shall account $or the cancellation or settlement as an acceleration o$ *esting/ and shall there$ore recogni=e immediately the amount that other'ise 'ould ha*e been recogni=ed $or ser*ices recei*ed o*er the remainder o$ the *esting period. b. ny payment made to the employee on the cancellation or settlement o$ the grant shall be accounted $or as the repurchase o$ an e6uity interest. c. ny payment made to the employee on the cancellation or settlement o$ the grant that e;ceeds the $air *alue o$  the e6uity instruments granted/ measured at the repurchase date shall be recogni=ed as an e;pense. d. I$ the share3based payment arrangement included liability components/ the entity shall remeasure the $air *alue o$ the liability and e6uity components at the date o$ cancellation or settlement. 1!. When the e$$ecti*e3interest method is used to amorti=e bond premium or discount/ the periodic amorti=ation 'ill a. Increase i$ the bonds 'ere issued at a discount. b. Gecrease i$ the bonds 'ere issued at a premium. c. Increase i$ the bonds 'ere issued at a premium. d. Increase i$ the bonds 'ere issued at either a discount or a premium.

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10. Which statement is incorrect regarding accounting $or $inancial liabilities in accordance 'ith PS 0+ and PFRS+a. n entity shall recogni=e a $inancial liability in its statement o$ $inancial position 'hen/ and only 'hen/ the entity becomes party to the contractual pro*isions o$ the instrument. b. n entity shall remo*e a $inancial liability $rom its statement o$ $inancial position 'hen/ and only 'hen/ it is e;tinguished. c. n entity shall classi$y all $inancial liabilities as subse6uently measured at amorti=ed cost using the e$$ecti*e interest method/ e;cept as speci$ied in PS 0+ and PFRS +. d. n entity may reclassi$y $inancial liabilities 'hen/ and only 'hen/ it changes its business model $or managing $inancial liabilities.

1%. Which statement is incorrect regarding IFRS 1# Leasesa. IFRS 1# eliminates the classi$ication o$ leases as either operating leases or $inance leases as re6uired by IS 1: and/ instead/ introduces a single lessee accounting model. b.  lessee is re6uired to recogni=e assets and liabilities $or all leases 'ith a term o$ more than 1! months/ unless the underlying asset is o$ lo' *alue. c.  lessee is re6uired to recogni=e depreciation o$ lease assets separately $rom interest on lease liabilities in the income statement. d.  lessor shall classi$y its leases as operating leases.

17. Which o$ the $ollo'ing is not likely  an e$$ect o$ IFRS 1# on lesseeBs $inancial statementsa. Increase in assets and liabilities. b. Increase in $inance costs c. Increase in operating e;penses. d. Increase in $inancing cash out$lo's.

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