You correctly answered54out of98questions with an accuracy of55.1%.You gained980experience points!Question 1Minimum lease payments may include aany of thesebargain purchase optionpenalty for failure to renewguaranteed residual valueTheory of Accounts - Finance Lease - Lessee (Easy)Question 2Which of the following is usually considered cash?Postdated checkMoney market savings certificatesCertificates of depositChecking accountsTheory of Accounts - Cash and Cash Equivalents (Easy)Question 3Limitations of the income statement include all of the following, exceptOnly actual amounts are reported in determining net income.Items that cannot be measured reliably are not reported.Income numbers are affected by the accounting methods employed.Income measurement involves judgment.Theory of Accounts - Statement of Comprehensive Income (Average)Question 4Which of the following entities must not describe its financial statements as being incompliance with the PFRS for SMEs even if it is allowed by law to prepare its financial statements in accordance with PFRS for SMEs?IAn entity whose shares are traded in a public market

IIAn entity whose debt instruments(but nit its shares) are traded in a public market

IIIAn entity that is in the process of issuing its debt instruments (but not its shares) fro trading in a public market

I and III onlyI and II onlyI, II and IIIII and III onlyTheory of Accounts - SME (Average)Question 5Goods on consignment should be included in the inventory ofThe consignor but not the consigneeThe consignee but not the consignorBoth the consignor and the consigneeNeither the consignor nor the consigneeTheory of Accounts - Inventory Valuation (Average)Question 6Which of the following assets generally is required to be tested at least annually for impairment?CopyrightRenewable broadcast licensePatentMachineryTheory of Accounts - Impairment of Assets (Average)Question 7A consignee paid the freight costs for goods shipped form a consignor. These freight costs are to be deducted from the consignees payment to the consignor when the consignment goods are sold. Until the consignee sells the goods, the freight costs should be included in the consigneesAccounts receivableFreight outCost of goods soldSelling expensesTheory of Accounts - Inventory Valuation (Easy)Question 8Net assets restricted by the governing board of a non-government, not-for-profit organization are reported as part of:Temporarily restricted net assetsUnrestricted net assetsPermanently restricted net assetsAny of these, depending on the termsTheory of Accounts - Not for Profit Organizations (Average)Question 9Which of the following is not considered investment property?Land to be leased out under a finance lease.Building held for undetermined useBuilding being constructed for use as Investment propertyLand held for capital gainsTheory of Accounts - Investment Property (Average)Question 10Which two of the following statements are correct per PAS 16 Property, plant and equipment?AAssets are depreciated even if their fair value exceeds their carrying amount.

BLand and buildings are accounted for separately, even when acquired together.

CA non-current asset acquired as the result of an exchange of assets is not recognized

DA gain on disposal of a non-current asset is classified as revenue

A and BA and CB and DA and DTheory of Accounts - Property, Plant and Equipment (Easy)Question 11A national budget designed wherein total estimated revenue is more than total estimate expenditures.Balanced budgetLine item budgetSupplemental budgetSpecial budgetTheory of Accounts - Government Accounting (Easy)Question 12Which dividend when declared does not create a liability?Scrip dividendProperty dividendCash dividendShare dividendTheory of Accounts - Retained Earnings (Easy)Question 13The overriding qualitative characteristic of accounting information isRelevanceFreedom from biasComparabilityUsefulness for decision makingTheory of Accounts - Conceptual Framework (Average)Question 14An entity sold its headquarters building at a gain and simultaneously leased back the building. The lease was reported as a finance lease. At the time of sale, the gain should be reported asOperating incomeAn asset valuation allowanceComponent of other comprehensive incomeComponent of shareholders' equityTheory of Accounts - Sale and Leaseback (Average)Question 15A adjusting entry that debits an expense and credits a liability is which type?Cash expenseAccrued expensePrepaid expenseDepreciation expenseTheory of Accounts - Financial Statements (Easy)Question 16For which of the following products is it appropriate to recognize revenue at the completion of production even though no sale has been made?Single family residential unitsLarge appliancesAutomobilesPrecious metalsTheory of Accounts - Revenue Recognition (Average)Question 17In determining diluted earnings per share, dividends on nonconvertible cumulative preferred stock should beadded back to net income whether declared or notdeducted from net income only if declareddisregardeddeducted from net income whether declared or notTheory of Accounts - Diluted Earnings Per Share (Average)Question 18To compute basic EPS, the amount of preferred dividends on noncumulative preferred stock should beAdded to net income, only when declaredDisregardedDeducted from net income, whether declared or notDeducted from net income, only when declaredTheory of Accounts - Basic Earnings Per Share (Easy)Question 19Contingent assets are usually recognized whenOccurrence is reasonably possible and the amount can be measured reliablyThe amount can be measured reliablyRealizedOccurrence is reasonably probable and the amount can be measured reliablyTheory of Accounts - Provision and Contingent Liability (Average)Question 20Ian Company is authorized to issue 50,000 shares of P25 par ordinary share. On May 30, 2014, Ian issued 20,000 shares at P45 per share. Ians journal entry to record these facts should include aboth a and ccredit to ordinary share of P500,000credit to Paid-in Capital in Excess of Par for P900,000debit to ordinary shares for P900,000SOLUTION:(20,000 shares x P25 = P500,000)Theory of Accounts - Shareholders' Equity (Easy)Question 21An example of an item which is not an element of working capital isgoods in process.goodwill.temporary investments.accrued interest on notes receivable.Theory of Accounts - Statement of Financial Position (Easy)Question 22An SME shall capitalize all of the following as cost of property, plant and equipment, exceptTransport costLoan raising costInstallation costNonrefundable purchase taxTheory of Accounts - SME (Average)Question 23A new entity has come out with an offer to refund the cost of purchase within one month after the sale if the customer is not satisfied with the product. When should the entity recognize the revenue?After one month of saleWhen goods are sold to the customersOnly if goods are not returned by the customers after the period of one monthAt the time of sale along with an offset to revenue of the liability of the same amount for the possibility of the return.Theory of Accounts - Statement of Comprehensive Income (Average)Question 24On December 31, 2013, special insurance costs, incurred but unpaid, were not recorded. If these insurance costs were related to work in process, what is the effect of the omission on accrued liabilities and retained earnings in the December 31, 2013 balance sheet?Accrued Liabilities (No effect); Retained Earnings (No effect)Accrued Liabilities (Understated); Retained Earnings (Overstated)Accrued Liabilities (Understated); Retained Earnings (No effect)Accrued Liabilities (No effect); Retained Earnings (Overstated)Theory of Accounts - Error Correction (Average)Question 25The income statement revealsResources and equities of an entity at a point in timeNet earnings an entity at a point in timeNet earnings an entity for a period of timeResources and equities of an entity for a period of timeTheory of Accounts - Statement of Comprehensive Income (Easy)Question 26Under PAS 28, what accounting method should be used for an investment in an associate where it is operating under severe long-term restrictions, for example, where the government of the entity has temporary control over the associate?The associate should be shown at costThe equity method should be applied if significant influence can be exertedPAS 39 should be appliedConsolidation method should be usedTheory of Accounts - Investment In Associate (Average)Question 27Which of the following terms best describes the removal of an asset from an entitys statement of financial position?DepreciationDerecognitionImpairmentWrite-offTheory of Accounts - Property, Plant and Equipment (Average)Question 28Prior period errorsDo not cause misstatements in current period FSDo not reverse themselves in the future in all circumstancesAre corrected through current profit or lossAre corrected through accumulated profit or lossTheory of Accounts - Error Correction (Average)Question 29How should import duties be dealt with when valuing inventories at the lower of cost and net realizable value (NRV) according to PAS 2 Inventories?IgnoredAdded to costDeducted in arriving at NRVDeducted from costTheory of Accounts - Inventory Valuation (Easy)Question 30Antidilutive securitiesare those whose inclusion in earnings per share computations would cause basic earnings per share to exceed diluted earnings per shareshould be included in the computation of diluted earnings per share but not basic earnings per shareinclude stock options and warrants whose exercise price is less than the average market price of common stockshould be ignored in all earnings per share calculationsTheory of Accounts - Diluted Earnings Per Share (Average)Question 31This is defined in PFRS 1 as the "first annual financial statements in which an entity adopts Philippine Financial Reporting Standards (PFRS) by an explicit and unreserved statement of compliance with PFRS"First PFRS financial statementsOpening PFRS statement of financial positionFirst audited PFRS financial statementsPFRS financial statementsTheory of Accounts - Conceptual Framework (Average)Question 32A voluntary health and welfare organization received a cash donation in the prior year which contained a donor-imposed restriction which stipulated that the donation could not be spent until the current year. The organization spent the donation in the current year for fund raising activities. In the statement of activities for the current year, the expiration of the time restriction would result in reportingIncrease in temporarily restricted net assetsExpense which decreased temporarily restricted net assetsIncrease in unrestricted net assetsReclassification which decreased temporarily restricted net assetsTheory of Accounts - Not for Profit Organizations (Difficult)Question 33The balance in Common Stock Dividend Distributable should be reported as a(n)contra current asset.deduction from common stock issued.current liability.addition to capital stock.Theory of Accounts - Retained Earnings (Average)Question 34Which of the following best describes the net effect on retained earnings of the purchase and subsequent sale of treasury stock?Retained earnings may never be increased but sometimes decreasedRetained earnings is always affected unless the reissue price is exactly equal to costRetained earnings may never be decreased but sometimes increasedRetained earnings may never be increased or decreasedTheory of Accounts - Shareholders' Equity (Easy)Question 35Where there is a production cycle of more than one year, PAS 41 encourages separate disclosure of thePrice change onlyPhysical change and price changeTotal change in valuePhysical change onlyTheory of Accounts - Biological Assets (Average)Question 36At the end of the current reporting period, an entity carried a receivable from a major customer. The customer declared bankruptcy after the end of reporting period but prior to authorization of financial statements. How should the entity account for this event?Ignore the eventMake a provision for this post-reporting period eventDisclose in the notes the fact that the customer declared bankruptcyReverse the sale pertaining to this receivable in the comparative statement for the prior period and treat this as an error.Theory of Accounts - Provision and Contingent Liability (Average)Question 37The statement of the financial position of non-profit organization displays the organizationsAssets, liability and fund balanceExcess of assets over liabilitiesAssets, liability and equityAssets, liability and net assetsTheory of Accounts - Conceptual Framework (Easy)Question 38Which of the following is the dollar amount recorded when bonds are purchased?The cost of the bonds is recorded.The amortized cost is recorded.The maturity value of the bonds is recorded.All of the above terms are the same amount.Theory of Accounts - Investments (Average)Question 39The amount of receivables that are hypothecated or pledged against borrowings should beIncluded in total receivables without disclosureIncluded in total receivables with disclosureExcluded from total receivables without disclosureExcluded from total receivables with disclosureTheory of Accounts - Receivable Financing (Average)Question 40Which method of recording bad debt loss is consistent with the accrual accounting?Direct write-off methodPercent of accounts receivable methodPercent of sales methodAllowance methodTheory of Accounts - Accounts Receivable (Average)Question 41Josh Company's December 31 year-end financial statements contained the following errors:Dec. 31, 2010Dec. 31, 2011

Ending inventoryP7,500 understatedP11,000 overstated

Depreciation expense2,000 understated

An insurance premium of P18,000 was prepaid in 2010 covering the years 2010, 2011, and 2012. The prepayment was recorded with a debit to insurance expense. In addition, on December 31, 2011, fully depreciated machinery was sold for P9,500 cash, but the sale was not recorded until 2012. There were no other errors during 2011 or 2012 and no corrections have been made for any of the errors. Ignore income tax considerations.What is the total net effect of the errors on Josh's 2011 net income?Net income understated by P14,500Net income overstated by P13,000Net income overstated by P7,500Net income overstated by P15,000SOLUTION:P7,500 (o) + P11,000 (o) + P6,000 (o) P9,500 (u) = P15,000 (o)Theory of Accounts - Error Correction (Easy)Question 42The cost of land typically includes the purchase price and all of the following costs, exceptStreet light, sewer and drainage system costAssumption of any lien or mortgage on the propertyPrivate driveway and parking lotGrading, filling, draining and clearing costTheory of Accounts - Property, Plant and Equipment (Average)Question 43Which of the following disclosures should be made when the fair value model has been adopted for investment property?Net gain or loss from fair value adjustmentsUseful life of propertyThe amount of impairment loss recognizedDepreciation method usedTheory of Accounts - Investment Property (Average)Question 44If the foreign operation reports in the currency of a hyperinflationary economy, assets, liabilities income and expenses shall be translated atAverage rateExchange rate on the date of transactionForward rateClosing rateTheory of Accounts - Foreign Currency Transactions and Translations (Easy)Question 45Which of the following statements is true with regard to the accountants concept of Materiality?Relevant items are always materialMateriality judgments are made only by accounting standard setters, not by managementMateriality judgments generally may be based solely on the magnitude of the itemMateriality is the threshold of recognition as to what accountable events will be recognized in the balance sheet and which will be recognized in the income statement.Theory of Accounts - Conceptual Framework (Average)Question 46In an entitys April 30, 2013 statement of financial position, a note receivable was reported as a noncurrent asset and its accrued interest for eight months was reported as a current asset. Which of the following terms would fit the entitys note receivable?Principal is due August 31, 2013, and interest is due August 31, 2013 and August 31, 2013Both principal and interest amounts are payable on August 31, 2013 and August 31, 2013Principal and interest are due December 31, 2013Both principal and interest amounts are payable on December 31, 2013 and December 31, 2013Theory of Accounts - Notes Receivable (Average)Question 47Are each of the following factors relevant, according to PAS 38 Intangible assets, in determining the annual amortization expense on an intangible asset?Cost method (Not relevant); Amortization method (Not relevant)Cost method (Relevant); Amortization method (Relevant)Cost method (Relevant); Amortization method (Not Relevant)Cost method (Not relevant); Amortization method (Relevant)Theory of Accounts - Intangible Assets (Average)Question 48An example of an inventory accounting policy that should be disclosed is theClassification of inventory into raw materials, work in process and finished goodsIdentification of major suppliersMethod used for inventory costingEffect of inventory profit caused by inflationTheory of Accounts - Inventory Valuation (Average)Question 49Which of the following will not require an adjusting entry on the depositor's books?Collection from a customer amounting to P90,000 recorded by depositor as P900,000.Deposit of another entity credited by the bank to the account of the depositorLoan proceeds credited to the depositor's accountDAIF check from a customerTheory of Accounts - Audit of Cash (Average)Question 50Depending on the business model for managing financial assets, an entity shall classify financial assets subsequent to initial recognition atAmortized costEither fair value or amortized costNeither fair value nor amortized costFair valueTheory of Accounts - Financial Instruments (Average)Question 51At the end of the fiscal year, Jane Airlines has an outstanding purchase commitment for the purchase of 1 million gallons of jet fuel at a price of P4.60 per gallon for delivery during the coming summer. The company prices its inventory at the lower of cost or market. If the market price for jet fuel at the end of the year is P4.25, how would this situation be reflected in the annual financial statements?Disclose the existence of the purchase commitmentRecord unrealized losses of P350,000 and disclose the existence of the purchase commitmentNo impactRecord unrealized gains of P350,000 and disclose the existence of the purchase commitmentTheory of Accounts - Inventory Valuation (Average)Question 52Net realizable value isEstimated selling price less estimated cost to completeCurrent replacement costEstimated selling price less estimated cost to complete and estimated cost to sellEstimated selling priceTheory of Accounts - Inventory Valuation (Average)Question 53The usual ordering of accounts in the general ledger isassets, liabilities, owner's capital, drawings, revenues, and expensesowners capital, assets, liabilities, drawings, expenses, and revenuesliabilities, assets, owner's capital, revenues, expenses, and drawingsassets, liabilities, drawings, owner's capital, expenses, and revenuesTheory of Accounts - Financial Statements (Easy)Question 54If an entity does not prepare interim financial reports, thenInterim financial reports should be included in the year-end FSThe year-end FS compliance with PFRS is not affectedThe year-end FS will not be acceptable under local legislationThe year-end financial statements (FS) are deemed not to comply with PFRSTheory of Accounts - Interim Financial Reporting (Average)Question 55It is the present value of the cash flows an entity expects to arise from the continuing use of an asset and from its disposal at the end of its useful life or expects to incur when settling a liability.Entity-specific valueValue in useFair valueDiscounted valueTheory of Accounts - Property, Plant and Equipment (Average)Question 56One of the accepted methods of accounting for by-product is to recognize the value of the by-product as it is produced. Under this method, inventory costs for the by-product would be based onNeither an allocation of some portion of joint costs plus any subsequent processing costsAn allocation of some portion of joint costs plus any subsequent processing costsNeither an allocation of some portion of joint costs plus any subsequent processing costsAn allocation of some portion of joint costs but not any subsequent processing costsTheory of Accounts - Joint and by-Product Costing (Difficult)Question 57Adjusting events are those thatAre indicative of conditions that arose after the end of the reporting period.Provide for conditions that existed after the date the financial statements were authorized for issue.Provide evidence of conditions that existed at the end of the reporting period.Are favorable or unfavorable and indicative of conditions that arose after the end of the reporting period.Theory of Accounts - Notes to Financial Statements (Average)Question 58Which of the following costs would be capitalized?Salaries of research staffAcquisition cost of equipment to be used on current research project onlyCost of research to determine whether a market for the product exists.Engineering costs incurred to advance the product to the full production stageTheory of Accounts - R & D Expense (Average)Question 59The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to asFinancial flexibilitySolvencyLiquidityExchangeabilityTheory of Accounts - Statement of Financial Position (Average)Question 60All of the following are minimum line items for current liabilities, exceptCurrent provisionsAccounts payableTrade and other payablesCurrent tax liabilityTheory of Accounts - Statement of Financial Position (Average)Question 61Use of the sum-of-the-years'-digits methodresults in salvage value being ignoredmeans the book value should not be reduced below salvage valuemeans the denominator is the years remaining at the beginning of the yearall of theseTheory of Accounts - Depreciation (Average)Question 62Which of the following adjusting entries cannot be subject to reversing entriesDeferral of expense under the asset methodAccrual of expenseAccrual of incomeDeferral of income under the income methodTheory of Accounts - Financial Statements (Easy)Question 63Which of the following statements about property retained earnings is not true?A property dividend is also called a dividend in kind.The accounting for a property dividend should be based on the carrying value (book value) of the nonmonetary assets transferred.A property dividend is usually in the form of securities of other companies.All of these statements are true.Theory of Accounts - Retained Earnings (Average)Question 64Under PAS 40, which of the following best describes owner-occupied property?Property held for capital appreciationProperty held to earn rentalsProperty held for use in the production of goods and for administrative purposesProperty held for sale in the ordinary course of businessTheory of Accounts - Investments (Average)Question 65If an SME is unable to make a reliable estimate of the useful life of an intangible asset, the life is presumed to beTwenty yearsFive yearsTen yearsIndefiniteTheory of Accounts - SME (Easy)Question 66Santiago Corporation signs an agreement to lease land a building for 20 years. At the end of the lease, the property will not transfer to Santiago. The life of the building is estimated to be 20 years. Santiago prepares its financial statement in accordance with PFRS. How should Santiago account for the lease?The lease is recorded as a finance lease and the building is recorded as an operating leaseThe lease is recorded as a finance leaseThe lease is recorded as an operating lease and the building is recorded as a finance leaseThe lease is recorded as an operating leaseTheory of Accounts - Finance Lease - Lessee (Average)Question 67The fair value optionReports all gains and losses in incomeMay be selected as a valuation method by the entity at any time during the first two years of ownershipMust be applied to all instruments the entity holdsAll of the choices are correct.Theory of Accounts - Financial Asset at Fair Value (Average)Question 68Ignoring tax effects, accelerated depreciation methodsIncrease funds provided by operationsTend to offset steadily increasing repair and maintenance costsProvide funds for the earlier replacement of fixed assetsTend to decrease the fixed assets turnover ratioTheory of Accounts - Depreciation (Average)Question 69The basic accounting issue for a lessor isRevenue recognition during the lease termComputing depreciation over the lease termExpense recognition during the lease termDetermination of the cost of the leased assetTheory of Accounts - Direct Financing Lease - Lessor (Easy)Question 70At the commencement of the lease, the lessee shall recognize a finance lease as asset and liability at an amount equal to thePresent value of the minimum lease paymentsFair value at the leased assetFair value of the leased asset or present value of the minimum lease payments, whichever is higherFair value of the leased asset or present value of the minimum lease payments, whichever is lowerTheory of Accounts - Finance Lease - Lessee (Easy)Question 71Gomez Company received P7,200 on April 1, 2014 for one year's rent in advance and recorded the transaction with a credit to a nominal account. The December 31, 2014 adjusting entry isdebit Unearned Rent and credit Rent Revenue, P1,800debit Unearned Rent and credit Rent Revenue, P5,400debit Rent Revenue and credit Unearned Rent, P5,400debit Rent Revenue and credit Unearned Rent, P1,800Theory of Accounts - Financial Statements (Average)Question 72An entity owns 2% of another entity. A property dividend distributed by the other entity consisted of merchandise with a fair value lower than the listed retail price. The entity in turn gave the merchandise to its employees as a holiday bonus. Hoe should the entity report the receipt and distribution of the merchandise in its statement of cash flows?As an inflow for investing activities and outflow for operating activitiesAs both an inflow and outflow for operating activitiesAs both an inflow and outflow for investing activitiesAs a noncash activityTheory of Accounts - Statement of Cash Flows (Average)Question 73Under PAS 33, contingent ordinary shares are treated as outstanding and included in the computation of both basic and diluted earnings per share if the conditions are satisfied. Which of the following statements is true?IContingent ordinary shares are included in the calculation of basic earnings per share from the date the condition is satisfied

IIContingent ordinary shares are included in the calculation of diluted earnings per share from the beginning of the period or from the date of contingent agreement, lf later

I onlyNeither I nor IIII onlyBoth I and IITheory of Accounts - Diluted Earnings Per Share (Average)Question 74Factory overhead includesAll manufacturing costsAll manufacturing costs which may be variable or fixed, except direct materials and direct laborIndirect labor but not indirect materialsIndirect materials but not indirect laborTheory of Accounts - Cost Concepts (Easy)Question 75How would you describe fixed cost?It is constant per unit of change in productionIt may change in total where such change depends on production within the relevant range.It may change in total where such change is unrelated to changes in productionIt may change in total where such change is related to changes in production.Theory of Accounts - Cost Concepts (Average)Question 76To value a stock initially going public, which of the following processes would not be an effective pricing tool?liquidity value approachIPO approachcalculate NPV of cash flowsbook value approachTheory of Accounts - Shareholders' Equity (Average)Question 77A pension asset is reported whenthe accumulated benefit obligation exceeds the fair value of pension plan assetsthe accumulated benefit obligation exceeds the fair value of pension plan assets, but a prior service cost existspension plan assets at fair value exceed the accumulated benefit obligationpension plan assets at fair value exceed the projected benefit obligationTheory of Accounts - Retirement Benefits (Average)Question 78A statement of cash flows typically would not disclose the effects ofcapital stock issued at an amount greater than par valuestock dividends declareda purchase and immediate retirement of treasury stockcash dividends paidTheory of Accounts - Statement of Cash Flows (Average)Question 79A debit balance in the allowance for doubtful accountsShould never occurMay occur before year-end adjustment for uncollectiblesIs always the result of management not providing a large enough allowance in order to manage earningsMay exist even after year-end adjustment of uncollectiblesTheory of Accounts - Accounts Receivable (Average)Question 80Under the allowance method, the entries at the time of collection of an account previously written off wouldDecrease the allowance for doubtful accountsHave no effect on the allowance for doubtful accountsHave no effect on net incomeIncrease net incomeTheory of Accounts - Accounts Receivable (Average)Question 81To compute the price to pay for a bond, what present value concept is used?Neither the present value of 1 concept 'nor the present value of annuity of 1 conceptBoth the present value of I concept and present value of an annuity of 1 conceptOnly the present value Of 1 conceptOnly the present value of an annuity of 1 conceptTheory of Accounts - Bonds Payable (Average)Question 82The warrants time value is equal to(market price - exercise value)/number of sharesmarket price/exercise valuethe market price of the warrant minus its exercise valueexercise value/market priceTheory of Accounts - Shareholders' Equity (Average)Question 83Significant change in the market value of trading securities occurring after the balance sheet date shouldBe treated as a prior period error in next years financial statementsResult in an adjustment of the market value used in the lower of cost or market valuation at balance sheet dateNot be considered in the valuation of the securities at the balance sheet date but disclosed in the notes to the financial statementsBe considered in the valuation of securities at balance sheet date and disclosed in the notes to the financial statementsTheory of Accounts - Financial Asset at Fair Value (Difficult)Question 84All of the following can be classified as cash and cash equivalents, exceptBank overdraftEquity investmentsRedeemable preference shares acquired and due in 60 daysLoan notes held due for repayment in 90 daysTheory of Accounts - Cash and Cash Equivalents (Easy)Question 85Which of the following is a correct statement of one of the capitalization criteria?The lease contains a purchase optionThe minimum lease payments (excluding executory costs) equal or exceed 90% of the fair value of the leased propertyThe lease term is equal to or more than 75% of the estimated economic life of the leased propertyThe lease transfers ownership of the property to the lessorTheory of Accounts - Finance Lease - Lessee (Average)Question 86On the basis of the Conceptual Framework, revenues + gains =IncomeNo meaningful amountCash receiptsSales and earned feesTheory of Accounts - Conceptual Framework (Average)Question 87All appropriations, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application and private bills shall originate exclusively in theHouse of RepresentativesHouse of Representatives but the Senate may propose or concur with amendments.SenateSenate but the House of Representatives may propose or concur with amendments.Theory of Accounts - Government Accounting (Average)Question 88An entity issue rights to its existing shareholders to purchase unissued ordinary shares at more than par value. Share premium would be recorded when the rightsAre not exercisedAre issuedAre exercisableAre exercisedTheory of Accounts - Shareholders' Equity (Average)Question 89Under PFRS 2, if the fair value of the share options cannot be estimated reliably, then share options are measured based onTheoretical parity valueAppraised ValueIntrinsic ValuePar ValueTheory of Accounts - Share Options (Easy)Question 90The primary purpose of a quasi-reorganization is to give the entity the opportunity toEliminate a deficit in retained earningsDistribute the shares of a newly created subsidiary to its stockholders in exchange for part of their shares in the corporationObtain relief from its creditorsRevalue understated assets to their fair valueTheory of Accounts - Quasi Reorganization (Average)Question 91When an investor's accounting period ends on a date that does not coincide with an interest receipt date for bonds held as an investment, the investor mustnotify the issuer and request that a special payment be made for the appropriate portion of the interest period.do nothing special and ignore the fact that the accounting period does not coincide with the bond's interest period.make an adjusting entry to debit Interest Receivable and to credit Interest Revenue for the amount of interest accrued since the last interest receipt date.make an adjusting entry to debit Interest Receivable and to credit Interest Revenue for the total amount of interest to be received at the next interest receipt date.Theory of Accounts - Investments (Difficult)Question 92Budget accountability consists ofIPeriodic reporting by the agencies of performance under the approved budget

IITop management review of government activities and the fiscal and policy implications thereof.

IIIThe actions of COA in assuring fidelity of officials and employees by carrying out the intent of Congress in regard to their handling of receipts and expenditures.

I onlyI, II and IIII and II onlyI and III onlyTheory of Accounts - Government Accounting (Difficult)Question 93Which of the following is not a category of financial assets defined in PAS 39?Available-for-sale financial assetsFinancial assets at fair value through profit or lossLoans and receivablesHeld-for-sale financial assetsTheory of Accounts - Financial Asset at Fair Value (Easy)Question 94General income accounts encompassIAll types of revenue or income generated by agencies in the exercise of their administrative and regulatory function, income from public enterprises or investments, and income from grants and donations.

IIAll taxes imposed on income, properties and use or sale of goods and services, taxes on international trade and transactions, and other taxes including fines and penalties.

I onlyII onlyNeither I nor IIBoth I and IITheory of Accounts - Government Accounting (Difficult)Question 95Which of the following tables would show the smallest factor for an interest rate of 10% for six periods?Future value of an annuity due of 1Present value of an annuity due of 1Future value of an ordinary annuity of 1Present value of an ordinary annuity of 1Theory of Accounts - Time Value of Money (Easy)Question 96The term "depreciable base," or "depreciation base," as it is used in accounting, refers tothe acquisition cost of the assetthe total amount to be charged (debited) to expense over an asset's useful lifethe estimated market value of the asset at the end of its useful lifethe cost of the asset less the related depreciation recorded to dateTheory of Accounts - Depreciation (Average)Question 97How should a gain from sale of used equipment for cash be reported in a cash flow statement using the indirect method?In investing activities as an addition to incomeIn investing activities as a deduction from incomeIn investing activities as a cash outflowIn investing activities as a reduction of the cash inflow from the saleTheory of Accounts - Statement of Cash Flows (Easy)Question 98The contractual adjustment account of a nonprofit hospital is a(an)Asset accountContra-revenue accountLoss accountExpense accountTheory of Accounts - Not for Profit Organizations (Average)