TOA 07.21.12

The Review School of Accountancy First Pre-Board Examination

B:00 AM - 9r30 AM

21 July 2012

{freory of Accounts INSIBlfgIlgNS: Select the correct answer for each of the following questions. Mark only one answer for each item by shading the box corresponding to the letter of your choice on the answer sheet provided. STF.ICTLY NO ERASURES ALLOWED. Use pencil no. 2 only. SEt B

'

).

2a

The'fair

val-ue less costs to sell'is

measurement valuation for a, Biological assets i:. Agricultural produce c. Commodities of broker-traders i .i.'l rnvestment in held-in-maturity f

least

securities

likely

to be used as

fmofftzdCcs-{

n-'rentory purchases are always r:ecorded Net of cash discouni: Net of trade discount Gross of cash discount Gross of trade discount

V: According to tire 2C10 Conceptual i'::arnework, the usefulness ' f ,rrrancial information is err:raricett i f r-a ] Comoarable verifiable, timely and understandable b . Comparabl-e, consi-stent, timely and verif iabl-e' c. Consistent, reliable, relevant and veri fiable d. Consistent, verifiable, timely and understandable sv+v

\:/

4.

of

'

PAS 24 defines related party transaction as a transfer of resources, obligations and services between a. Related parties when a price is charged b. Unrelated parties when a price is not charged Related parties regardless of whether a price is charged or G.i './ not d. Unrelated parties regardless of whether a price is charged or

not

q

If the fair

value less cost to sell is higher than the carrying classification of a noncurrent asset as held for the accounting treatrnent for the dif ference 1s: rv\.,rghgef J;bnlft Not accounted for C\i 1rV Accgunted for as an impairment loss 7v{et/ --+ tf|paif Mufi Latt Deferrecl gain as component of equity Gain to be recorded in profit cr: loss st-atement

arnount on initial

sale, G) bc. d.

,6.

Which is not a characteristic of financial account.ing? a. Historical in nature b. Prepares general purpose reports c. Uses different measurement bases ('Jl Uses subjective data and int.erpretations if refevant .J

1

Which of the followinq is usual-Ly not tL:eaLeC retrospectively?

a.. Correction of prior period err:or:s (lr) Revision in depreciable asset's useful Life -c. Change in reporting entity and measurement basis C. Change from weighted average to FIEO method for inventory'

THEORY OF ACCOUNTS

First Pre-Board Examination (October 2012 Batch) 21 iuly 2012:8:00 AM to 9:30 AM

Page 2

The Conceptual Eramework of Accounting deals with a. Tax l-aws and regulatrorrs li" SEC rules and regulations c. Code of Ethlcs f or professional- account.ant..j itD Concepts of capiIa1 and capital maintenance

$zo'

trO.

"lf an entity pubJi"sires a: clirr1;,e.:1.,.. ;tei- c,f- ijnar,t-:i-,.r.i :::r,_,:ti-:.:l1iifLi,s i.ir iLs j.Liierim f inancial reportT t-ht: i i.,'rn rr.r-l rji-.ril,.: rrt. sili,ii l- ccr:f oi:rn to the ; r I ii rernertS of 1. (Presentation of Financial Statements)F"r.q 0F pffS34 *compl&C se1 ., IT h. PAS 34 (Interim Financial Reporting) r. PFRS 3 (Business Combinations) ,r. Conceptual Framework of 2010

Tlie entit.y solcl appliances wi-th 2-year warranty during the current pe-:i.od and recognized the related vrarranty expense and Iiability. T:'is t.ransaction is an example of expense recognition based cn .i. Immediate recognition Q) Cause and effect association :'" Systematic and rational al-l-ocation ,l. None of the choices

(.. asset to be classif ied as "helci for sale" under Yl -i Frr a non-current-misfTe IIFRS Il, th T available for immediafe sale 'in its present r:ondi i i cn and the Eale_ mug!_be. ;i. Probable

l'S rliohly probable c. Hiqhly possible .l . Reasonably Possible

of inventor:ies that ai e ili '. iri-e r chal..q,.:.ii:,i.r: an,J segreqateC for specific pr"ojecLs, regardlr::: s r,rf v,'i; L ne ]: ire )' have been bought or produced, sha1l be assigned by using a. Weighted average method b. Last-in, first out methoci c- I.rrst-in, firsl- ouL rnethod f;j:) \-/ Specific idenrificar.ion me1-hod Under PFRS 9, which type of financia,l instrument is subject to W,. . &qq j,,-!e€:l {{?'Je.. !.enrt- ancl rl,?"s11 .f,.i!ll,r: ij4L,ir.:.i:lrLr._r-ti:.s_ Lest fa l, ;Lnl- se ru-rities tr-F. Uquicy securities c. Derivative sricuriLies C. Debt and equity secr:rities lZ - The cos*L

1

r.r

A

1.,

?

.-*"

l) t\ {\ L/ v

r:: lo! p4rr of the f 1ti4_Ilctq! ieBoqltryr _.p_Lqqdeld sq!tllrq prqces,s ri: tl-,c Phi:ippines? ;i . ,Approva1 by Elrrancial Reporti ng Standards Council (FRSC) arrd eventua.l-]y by Professional Regurations commission (pRC) b. creation of a task force by the standard setting bocly to study the proposed accounting stanclarcl i..). Distribution of the exposure draf t f or comment to cpA professional.s and other int.erest-ed parties rLi) Publication i.n the PRC effic_ial Gazett_e and in a Belgipqpel