1. A decrease in net assets arising from peripheral or incidental transactions is B.

Probable
called a(n) C. Certain
A. Cost D. Reasonably possible
B. Capital expenditure
C. Expense 7. The basic elements directly related to the measurement of financial
d. Loss position are
A. Assets and liabilities
2. Which of the following is a fundamental quality of useful accounting B. Revenue and expense
information C. Assets, liabilities equity, revenue and expenses
A. Conservatism D. Assets, liabilities and equity
B. Comparability
C. Faithful representation 8. These are present obligations of an enterprise arising from past
D. Consistency transactions or events the settlement of which is expected to result in an
outflow from the enterprise of resources embodying economic benefits
3. It focuses on general purpose reports on financial position/ performance A. Liabilities
and cash flows B. Assets
A. Managerial accounting C. Equity
B. Financial accounting D. Expense
C. Management advisory services
D. Auditing 9. Which basic assumption may not be followed when a firm in bankruptcy
reports financial results?
4. Continuation of an accounting entity in the absence of evidence to the A. Economic entity assumption.
contrary is an example of the basic concept of B. Going concern assumption
A. Business entity C. Periodicity assumption
B. Time period D. Monetary unit assumption
C. Going concern
D. Accrual 10. Under current conceptual framework, inflation is ignored in accounting
due to the
5. It is the exercise of care and caution in dealing with uncertainties in A. Periodicity assumption.
measurement so as not to overstate assets and income and not understated B. Economic entity assumption
liabilities and expenses. C. Monetary unit assumption.
A. Completeness D. Going concern assumption
B. Faithful representation
C. Prudence 11. Preparation of consolidated financial statements when a parent-
D. Neutrality subsidiary relationship exists is an example of the
A. Business entity assumption
6. The likelihood that the future event will or will not occur can be expressed B. Relevance
by a range of outcome. Which range means that the future event occurring is C. Comparability
very slight? D. Neutrality
A. Remote
12. The term recognized is synonymous with the term 18. In preparing a statement of cash flows, sale of treasury stock at an
A. Recorded amount greater than cost would be classified as a(n)
B. Realized A. Investing activity
C. Matched B. Financing activity
D. Allocated C. Operating activity
D. Extraordinary activity
13. Revenue generally should be recognized
A. At the end of production 19. Which item below is not a current liability?
B. At the time of cash collection A. Stock dividends distributable
C. When realized B. Unearned revenue
D. When the performance obligation is satisfied C. The currently maturing portion of long-term debt
D. Trade accounts payable
14. Under PFRS, which type of item is unexpired insurance usually considered
to be? 20. Which of the following is a change in accounting estimate?
A. Noncurrent asset A. A change in the estimated service life of machinery
B. Inventories B. A change from FIFO to LIFO
C. Prepaid Expense C. A change from straight-line to double-declining-balance
D. Short term investment D. Both B and C

15. Equipment is sold at a loss. This means
A. The selling company had a decrease in cash because of the sale
B. Depreciation was recognized at a rate slower than the decline in market
value
C. Depreciation was recognized at a rate faster than the decline in market
value
D. The equipment wore out faster than the decline in market value
21. A company changes from straight-line to an accelerated method of
calculating depreciation, which will be similar to the method used for tax
purposes. The entry to record this change should include a
A. Debit to Retained Earnings in the amount of the difference on prior years
B. Credit to Accumulated Depreciation
C. Debit to Deferred Tax Asset
D. Credit to Deferred Tax Liability

16. The current assets section of the financial position should include 22. Which type of accounting change should always be accounted for in
A. Inventory current and future periods?
B. Goodwill A. Change in reporting entity
C. Machinery B. Change in accounting estimate
D. Patents C. Correction of an error
D. Change in accounting principle
17. Which of the following is not a long-term investment?
A. A sinking fund 23. Which of the following is a period cost?
B. Cash surrender value of life insurance A. Labor costs
C. Franchise B. Production costs
D. Land held for speculation C. Selling costs
D. Freight in
24. All of the following events after reporting period should be classified as A. Immediately
non-adjusting, except B. Over a maximum of five years using straight line
A. The entity announced the discontinuation of assembly production C. Over the same period as the relevant expense
B. Destruction of a major production plant by fire D. None of the above
C. A mistake in the calculation of allowance for uncollectible accounts
receivable 31. If the cost of the asset is recorded net of grant
D. The entity entered into an agreement to purchase the leased building A. Equity is overstated
B. Liability is understated
25. Related parties include all of the following, except C. Asset is overstated
A. Key management personal and close family members of such individuals D. Net income is understated
B. Two ventures simply because they share joint control over a joint venture
C. Associate 32. Which of the following is not a related party of an entity?
D. Parent, subsidiary and fellow subsidiaries A. Subsidiary of the entity
B. Key management personnel of the entity
26. Which of the following costs are capitalized for self-constructed assets? C. An entity providing banking facilities to the entity
A. Materials, labor, and overhead D. Both A and B
B. Materials and overhead only
C. Labor and overhead only 33. Interest revenue earned on specific borrowing for qualifying asset.
D. Materials and labor only A. Increase in equity
B. Must be recorded as interest income
27. When a plant asset is acquired by issuance of common stock, the cost of C. Offset with interest expense to be recorded under finance charge
the plant asset is properly measured by the D. Should be deducted from the borrowing cost
A. Book value of the stock
B. Market value of the stock 34. Under the equity method of accounting for investments, an investor must
C. Par value of the stock recognize revenue when
D. Stated value of the stock. A. Investor sells the investment
B. Earnings are reported by the investee
28. Which of the following is least likely to be classified in PPE? C. Investee declares a dividend
A. Land Improvements D. Investee pays the dividend
B. Land
C. Building 35. Significant influence arises when
D. Idle Land A. The entity holds at least 10% of the voting stock of the investee
B. The entity holds 100% of the preference share of the investee
29. Which of the following is not a major characteristic of a plant asset? C. The entity holds least 25% of the voting stock of the investee
A. Acquired for use D. The entity holds least 20% of the voting stock of the investee
B. Acquired for resale
C. Possesses physical substance 36. Interim financial statements are usually presented on a
D. All of the above A. Monthly basis
B. Semi annually
30. Government grant in recognition of specific cost is recognized as income C. Quarterly basis
D. Annual basis 43. Animals related to recreational activities are accounted for under what
standard
37. Conceptually, interim financial statements can be described as A. IAS 41
emphasizing B. IAS 16
A. Reliability over relevance C. IAS 40
B. Timeliness over reliability D. IAS 39
C. Comparability over neutrality
D. Relevance over neutrality 44. A living plant with dual purpose is classified as
A. Bearer plant
38. Impairment of asset is reported B. Investment property
A. As an extraordinary item C. Inventory
B. As a component of discontinued operation D. Biological asset
C. Under Profit and Loss
D. Under Other comprehensive income 45. During a period of inflation, an account balance remains constant. With
respect to this account, a purchasing power loss will be recognized if account
39. Which of the following is not relevant in determining value in use is a
A. The expected future cash flows from the asset A. Monetary liability
B. Expectation about possible variations in the amount and timing of future B. Nonmonetary liability
cash flows C. Monetary assets
C. The carrying amount of the asset D. Monetary liability
D. The time value of money
46. If management can estimate the amount of loss that will occur due to
40. Which does not qualify as an intangible asset? litigation against the company, and the likelihood of the loss is reasonably
A. Computer Software possible, a contingent liability should be
B. Patent A. Disclosed, but not reported as a liability
C. Management expertise of company’s president B. Disclosed and reported as a liability
D. Copyright C. Neither disclosed nor reported as a liability
D. Reported as a liability, but not disclosed
41. Which is a characteristic a an intangible assets
A. Physical existence 47. Which of the following is true regarding the relationship between net
B. Long-lived income reported in the income statement and taxable income reported to BIR
C. Held for Sale A. Net income and taxable income are always the same amount
D. Claim for a specific amount cash B. Taxable income is always larger than net income
C. Net income is always larger than taxable income
42. Which statement best describes investment property? D. Net income and taxable income are rarely the same amount
A. Property held for sale in the ordinary course of business
B. Property held for use in the production and supply of goods or services and 48. What effect will the acquisition of treasury stock have on stockholders'
property held for administrative purpose equity and earnings per share, respectively?
C. Property held to earn rental or for capital appreciation A. Decrease and no effect
D. None of the above B. Increase and decrease
C. Increase and no effect
D. Decrease and increase

49. These are employee benefits which are payable after completion of
employment?
A. Short term employee benefits
B. Other long term employee benefits
C. Post employment benefits
D. Termination benefits

50. An entity that presents the first annual financial statements that conform
with PFRS is known as
A. An original entity
B. A provisional presenter
C. A first time adopter
D. An initial reporter