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CFAS PAS 1 10 Answer Key1
CFAS PAS 1 10 Answer Key1
Name: Date:
Section: Professor: JM Mercado
1. The statement of financial position is useful for all of the following, except
a. To compute rate of return
b. To analyze cash inflows and outflows for the period
c. To evaluate capital structure
d. To assess future cash flows
4. An entity shall prepare how many statement of financial position as a result of retrospective
application, retrospective restatement and reclassification of items in the financial statements?
a. Two
b. Three
c. Four
d. One
5. Which of the following must be included as a line item in the statement of financial position?
a. Contingent asset
b. Property, plant and equipment analyzed by class
c. Share capital and reserves analyzed by class
d. Deferred tax
9. Which of the following should be included in inventory at the end of reporting period?
a. Goods in transit which were purchased FOB shipping point
b. Goods in transit which were purchased FOB destination
c. Goods received from another entity on consignment
d. Goods in transit to a customer which were sold to the customer FOB shipping point
10. A discount given to a customer for purchasing a large volume of merchandise is typically
referred to as
a. Quantity discount
b. Trade discount
c. Size discount
d. Cash discount
11. The use of purchase discount account implies that the recorded cost of a purchased inventory is
a. Invoice price
b. Invoice price plus any purchase discount lost
c. Invoice price less the purchase discount taken
d. Invoice price less the purchase discount allowable whether taken or not
12. The use of a discount lost account implies that cost of a purchased inventory is
a. Invoice price
b. List price
c. Invoice price less the purchase discount taken
d. Invoice price less the purchase discount allowable whether or not taken
13. Which of the following should be taken into account when determining the cost of inventory?
a. Storage cost of part-finished goods
b. Abnormal freight in
c. Recoverable purchase tax
d. Interest on inventory loan
14. The primary purpose of a statement of cash flows is to provide relevant information about
a. differences between net income and associated cash receipts and disbursements
b. an entity’s ability to generate positive net cash flows
c. the cash receipts and cash disbursements of an entity during a period
d. an entity’s ability to meet cash operating needs
15. Interest received and dividend received may be classifies alternatively as cash flow from
a. Operating activities
b. Investing activities
c. Financing activities
d. Revenue activities
16. In a statement of cash flows using indirect approach for operating activities, an increase in
inventory is presented as
a. Outflow of cash
b. Inflow and outflow of cash
c. Addition to net income
d. Deduction from net income
18. The effect of change in accounting policy that is inseparable from the effect of a change in
accounting estimate should be reported
a. By restating the financial statements of all prior periods presented
b. As a correction of an error
c. As a component of income from continuing operations, in the period of change and future
periods if the change affects both.
d. As a separate disclosure after income from continuing operations.
21. If it is impracticable to determine the cumulative effect of an accounting change to any of the
prior periods, the accounting change should be accounted for
a. As a prior period adjustment
b. On a prospective basis.
c. As a cumulative effect change on the income statement.
d. As an adjustment to retained earnings.
23. Events after reporting period that provide evidence about conditions that existed at the current
year-end and affect the realizability of accounts receivable should be
a. Discussed only in the management commentary.
b. Disclosed only in the notes.
c. Used to record an adjustment to doubtful accounts expense.
d. Used to record an adjustment to retained earnings.
24. Which event after the reporting period would require disclosure in the financial statements?
A. Retirement of the president
b. Settlement of litigation when the event that gave rise to the litigation occurred prior to the
end of reporting period
c. Strike of employees
d. Issue of a large amount of ordinary shares
25. All of the following events would be classified as nonadjusting events after reporting period,
except
a. The entity announced the discontinuance of the assembly operation
b. The entity entered into an agreement to purchase the currently leased office building
c. Destruction of a major production plant by fire.
d. A mistake was discovered in the calculation of the allowance for uncollectible accounts
receivable