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ACCTG 5 Financial Accounting Theory and Practice III: Lyceum-Northwestern University
ACCTG 5 Financial Accounting Theory and Practice III: Lyceum-Northwestern University
LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City
Name:_____________________________________ Score:____________________
1. Philippine Financial Reporting Standars (PFRSs) are Standards and Interpretations adopted by
the Financial Reporting Standards Council (FRSC). They comprise:
a. Philippine Financial Reporting Standards (PFRSs)
b. Philippine Accounting Standards (PASs)
c. Interpretations
d. All of these
2. The correct arrangement of the following in accordance with the hierarchy of financial reporting
standards is
I. Conceptual Framework
II. PFRSs comprising PASs, PFRSs and interpretations
III. Management’s judgement
IV. Standards issued by other standard-setting bodies that use a similar framework
a. I, II, IV, III
b. II, III, I, IV
c. II, III, IV, I
d. II, I, III, IV
3. The types of accounting changes under PAS 8 are
I. Change in accounting policy
II. Change in accounting estimate
III. Change in reporting entity
IV. Prior period errors
a. I and II
b. I, II and III
c. I, II and IV
d. All of these
4. This type of accounting change results from change in measurement basis
a. Change in accounting policy
b. Change in accounting estimate
c. Prior period error
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d. Change in reporting entity
5. This type of accounting changes results from changes in the realization (or incurrence) of
expected inflow (or outflow) of economic benefits from assets (or liabilities).
a. Change in accounting policy
b. Change in accounting estimate
c. Prior period error
d. Change in reporting entity
6. According to PAS 8, these are those adopted by an entity in preparing and presenting its
financial statements which shall be applied consistently.
a. Accounting estimates
b. Accounting policies
c. PFRSs
d. Debit Credit
7. Accounting policies shall be changed
I. When the change is reuired by PFRSs
II. When the change results in a more relevant and reliable information
a. I only
b. II only
c. I or II
d. None
8. Changes in accounting policies are accounted for
a. Based on specific transitional provisions of relevant PFRSs
b. By retrospective application by restatement of the beginning balance of retained earnings
and by restatement of previously presented financial statements, unless impracticable
c. By prospective application
d. Choice (a) or in the absence thereof then choice (b)
9. A voluntary change in accounting policy is accounted for
a. Based on specific transitional provisions of relevant PFRS
b. By retrospective application by restatement of the beginning balance of retained earnings
and by restatement of previously presented financial statements, unless impracticable.
c. By prospective application.
d. Choice (a) or in the absence thereof then choice (b)
10. Early application of a PFRS is
a. A voluntary change in accounting policy
b. Not a voluntary change in accouniting policy
c. An involuntary change in accounting policy
d. A prior period error
11. Changes in accounting estimates are accounted for
a. Based on specific trasitional provisions of relevant PFRS
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b. By retrospective application by restatement of the beginning balance of retained earnings
and by restatement of previously presented financial statements, unless impracticable.
c. By prospective application.
d. Choice (a) or in the absence thereof then choice (b)
12. Which of the following in incorrect regarding the accounting for a change in accounting
estimate?
a. The effect of a change in accounting estimate affects profit or loss in the current period or
future period, or both.
b. No adjustments are made to the beginning balance of retained earnings or to previously
presented financial statements.
c. The effects of a change in accounting estimate affect profit or loss in the current period only.
d. Previous financial statements need not be adjusted to apply the changed estimate in prior
periods.
13. A correction of prior period error is accounted for by item (Item#1) while a change in accounting
policy is accounted for by (Item #2)
a. Retrospective restatement, retrospective application
b. Retrospective application, retrospective restatement
c. Prospective application, retrospective restatement
d. None of these
14. If an entity adjusts the beginning balance of its retained earnings, then there must be a
a. Change in accounting policy
b. Correction of prior period error
c. Change in accounting estimate
d. A or b
15. Adjustments to the beginning balance of retained earnings
a. Are also presented in the income statement
b. Are made because of a current period error
c. Are made net of tax
d. Are presented in the statement of financial position
16. Retrospective restatement and retrospective application (choose the incorrect statement)
a. Involves adjustments to the beginning balance of retained earnings
b. Are presented in the statement of changes in equity
c. Affects profit or loss in the current period
d. Are not presented in the statement of financial position
17. Prior period errors in items of other comprehensive income
a. Require net of tax adjustments to the beginning balance of retained earnings
b. Require gross of tax adjustments to the beginning balance of retained earnings
c. May not require any adjustment to the beginning balnce of retained earnings
d. A or b as an accounting policy choice in accordance with PAS 1
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18. Which of the folloing errors is not a counterbalancing error?
a. Misstatement of unearned income and prepaid expenses
b. Misstatement of accrued income and accrued expenses
c. Misstatement of inventory
d. Misstatement of depreciation
19. Which of the following statements is incrrect?
a. Counterbalancing errors automatically reverse in subsequent period if not corrected.
b. Non-counterbalancing errors do not automatically reverse in subsequent period.
c. Some errors affect only the statement of financial position.
d. Errors in financial statement elements may be rectified by appropriate disclosures in the
notes
20. If the ending inventory is understated
a. Profit for the year is overstated
b. Cost of sales for the year is also understated
c. Working capital is overstated
d. Profit for the year is also understated
21. If an asset-related (e.g., prepaid insurance) is understated,
a. Profit for the year is overstated
b. Cost of sales for the year is also understated
c. Working capital is overstated
d. Profit for the year is also understated
22. If current assets are understated, working capital is
a. Overstated
b. Understated
c. Effect is indeterminable
d. Not affected
23. The effect of prior period errors in retained earnings
a. Is none
b. Is always counterbalancing
c. Is equal to the sum of the effects of prior period errors to profit
d. Is limited to the effect of non-counterbalancing errors only
24. Which of the following items are included in the statement of changes in equity?
a. Total comprehensive income for the period, dividends declared, and proceeds from issuance
of share capital
b. Proceeds from issuance of shares, loan notes issued or repaid, retained profit for the period,
surplus on revaluation of non-current assets
c. Profit on ordinary activities, income tax expense, extraodinary items
d. Accumulated profits, reserves, issued share capital amd profit sharing of employees.
25. The initial adoption of the revaluation model for PPE is
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a. A change in accounting policy accounted for under PAS 16 Property, Plant and Equipment
b. A change in accounting policy accounted for under PAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors
c. A change in accounting estimate accounted for prospectively
d. A change in accounting estimate accounted for retrospectively
ajmiranda
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Goodluck and Godbless
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