CFAS QUIZ 3 Prelim
CFAS QUIZ 3 Prelim
Question 1
Question 2
o the fact that comparative amounts for the income statement, statement of changes in equity,
cash flow statement and related notes are not entirely comparable
o the new period covered by the financial statement
o the reason why other similar entities should also change their reporting period
o the reason for using a longer or shorter period
Question 3
o Market values of equity adjusted for the effects of inflation or deflation are used to calculate
real wealth.
o The transactions approach is used to record income and expenses throughout the reporting
period.
o Income is measured as the amount of "real wealth'" 'that an entity could consume during a
period and be as well off at the end of that period as it was at the beginning.
o Income equals the change in market value of the firm's outstanding common stock for the
period.
Question 4
o External activities.
o Investing activities.
o Financing activities.
o Operating activities.
Question 5
The current assets section of the statement of financial position should include
o patents.
o inventory.
o machinery.
o goodwill.
Question 7
Which of the following is not a requirement in the financial statements under PAS 1?
Question 8
o An entity shall present separately items of a dissimilar nature or function unless they are
immaterial.
o PAS 1 Presentation of Financial Statements sets out the overall requirements for general-
purpose financial statements.
o An entity is permitted to deviate from some requirements of PFRSs in certain rare cases if
compliance with the provisions of the PFRSs would be so misleading.
o When an entity presents notes, it shall not present it with equal prominence with the other
financial statements so as not to imply inaccuracies in the information presented on the face of
the financial statements.
Question 9
When an entity breaches an undertaking under a long-term loan agreement on or before the balance
sheet date with the effect that the liability becomes payable on demand, (choose the incorrect
statement)
o the liability is classified as non-current, even if the lender has agreed, after the balance sheet
date and before the authorization of the financial statements for issue, not to demand payment
as a consequence of the breach
o the liability is classified as current, even if the lender has agreed, after the balance sheet date
and before the authorization of the financial statements for issue, not to demand payment as a
consequence of the breach
o The liability is classified as current because, at the balance sheet date, the entity does not have
an unconditional right to defer its settlement for at least twelve months after that date.
o The liability is normally classified as current, however, the liability is classified as non-current if
the lender agreed by the balance sheet date to provide a period of grace ending at least twelve
months after the balance sheet date, within which the entity can rectify the breach and during
which the lender cannot demand immediate repayment.
Question 10
Which of the following are acceptable methods for reporting comprehensive income under PFRS?
Question 11
Which of the following accounts would not be classified under current assets on the balance sheet?
o Supplies
o Cash restricted for plant acquisition
o 90-day Note Receivable
o Prepaid Insurance
Question 12
XYZ Company has a loan due for repayment within 6 months but has the option to refinance for
repayment two years later. The company plans to refinance this loan. In which section of its statement
of financial position should this loan be presented, according to PAS1 Presentation of Financial
Statements?
o Non-current liabilities
o Current liabilities
o Current assets
o Non-current assets
Question 13
o Accounts payable
o The currently portion of 10-year bonds payable
o Unearned revenue
o Prepaid expenses
Question 14
The basis for classifying assets as current or noncurrent is realization within
Question 15
You breached the terms of your long-term loan and it becomes payable on demand. Your Statement of
Financial Position date is December 31, 2019. On the same date, the lender agrees not to demand
payment as a consequence of the breach , giving beyond 12 months after F/S date to rectify the breach.
The long-term loan is shown as:
o A current liability
o A contingent liability
o Disclosed only
o A non-current liability
Question 16
The financial statement element that is defined as increases in economic, benefits during the accounting
period in the form of inflows or enhancements' of assets or decreases of liabilities that result in
increases in equity, other than those relating to contributions from equity participants, is:
o Revenue
o Gains
o Asset
o Income
Question 17
Glenda Corporation prepares its financial statements in accordance with PFRS. Glenda must report
finance costs on the statement of cash flows:
Question 18
The elements of the equity section of balance sheet of a corporation should be classified primarily by:
o Class of capital
o Maturity
o Liquidity
o Source
Question 19
Question 20
Carol, Inc. hired a new controller in late 2018. The controller has not prepared financial statements
using PFRS before and needs your assistance. In compiling a complete set of financial statements
under PFRS, which of the following components must be included?
Question 21
Question 22
o all of these.
o obligations not expected to be liquidated within the operating cycle.
o obligations payable at some date beyond the operating cycle.
o deferred income taxes and most lease obligations.
Question 23
All of the following statements correctly refer to PAS 1 Presentation of Financial Statements, except
o The application of PFRSs, with additional disclosure when necessary, is presumed to result in
financial statements that achieve a fair presentation.
o PAS 1 shall be applied to special-purpose financial statements prepared and presented in
accordance with Philippine Financial Reporting Standards (PFRSs).
o Inappropriate accounting policies are not rectified either by disclosure of the accounting policies
used or by notes or explanatory material.
o The objective of this Standard is to prescribe the basis for presentation of general purpose
financial statements, to ensure comparability both with the entity’s financial statements of
previous periods and with the financial statements of other entities.
Question 24
Question 25
Which of the following would not represent cash inflow nor outflow?
Question 26
When the entity’s normal operating cycle is not clearly identifiable, it is assumed to be
o 18 months
o 3 months
o 6 months
o 12 months
Question 27
o an entity whose financial statement comply with PFRSs is presumed to have compliance and is
not required to make an explicit and unreserved statement of such compliance
o omission or misstatement of an item is material if they could individually or collectively,
influence the decision of users taken on the basis of the financial statements
o inappropriate accounting policies are not rectified by disclosures of the accounting policies used
or by notes or explanatory materials
o the application of PFRSs, with additional disclosure when necessary, is presumed to result in
financial statement that achieve fair presentation
Question 28
Which of the following reports is not a component of the financial statements according to PAS 1?
o Director's report
o Notes to the financial statements
o Balance sheet
o Statement of changes in equity
Question 29
Under PAS 1, which of the following is not among the criteria in classifying a liability as current?
Question 30
An asset shall be classified as current when it satisfies any of the following criteria, except
Question 31
When preparing financial statements, management shall make an assessment of an entity’s ability to
continue as a going concern. An entity shall prepare financial statements on a going concern basis unless
Statement III: Management has no realistic alternative but to cease operations of the entity
o I, II or III
o II, III or IV
o I, II, III or IV
o I or II
Question 32
Question 33
Which of the following financial statements is concerned with the entity at a point in time?
Question 34
Which of the following disclosures are not required in relation to share capital on the statement of
financial position?
Question 35
Which of the financial statements should presents operating, investing and financing activities of a
company?