I.
Enumeration (20 Items x 1 point)
a. Requisites for provision recognition
1. An entity has a present obligation due to past events.
2. An outflow of resources embodying economic benefits will be required to settle the
obligation.
3. A reliable estimate can be made of the amount of the recognition.
b. Example of events that may fall under the definition of restructuring.
4.Sale or termination of a line or business.
5. Closure of business locations in a country or region or relocation of business activities from
one country or region to another, and
6. Changes in management structure
OTHER RIGHT ANSWER: Fundamental reorganizations has a
material effect on the nature or focus of entity's operations.
c. Costs not included in restracturing provisions.
7. Retraining or relocating continuing staff
8. Marketing
9. Investment in new system and distribution networks.
d. Convertible Securities
10. Earnings
11. Shares
e. Conditions for an entity to recognize a deferred tax liability.
12. The parent, investor, joint-venturer , or joint operator on control the timing of the reversal
of the temporary difference.
13. The temporary difference will not reverse in the foreseeable future.
f. Examples of items recognized outside profit/loss
15.Changes in revaluation surplus.
16. Gains and losses in remeasuring available-for-sale financial assets.
17. Remeasurements of a net defined benefit liability or assets recognized per PAS 19.
18. Effects of changes in the credit risk of a financial liability designated at
II. IDENTIFICATION
1. LIABILITY. It is a present obligation of the entity arising from past events, the settlement of
which is expected to result in an outflow from the entity of resources embodying economic
benefits.
2. OBLIGATING EVENT. It is an event that creates a legal or constructive obligation that results in
an entity having no realistic alternative to settling that obligation.
3. ONEROUS CONTRACT. It is a contract in which the unavoidable costs of meeting the obligations
under the contract exceeds the economic benefits expected to be received under it.
4. CONTINGENT ASSETS. It is a possible asset that arises from past events and whose existence will
be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the entity's control.
5. PROVISIONS. Recognized as liabilities because they are present obligations and it is probable
that an outflow of resources embodying economic benefits will be required to settle the
obligations.
6. PRESENT VALUE. Where the time value of money is material, the amount of a provision shall be
the present value of the expenditures expected to be required to settle the obligation.
7. ACCOUNTING PROFIT. It is a profit or loss for a period before deducting tax expenses.
8. DEFERRED TAX LIABILITY. The amounts of income taxes payable in future periods in respect of
temporary taxable differences.
9. TAX EXPENSE. It is the aggregate amount included in determining profit or loss for the period in
respect of current and deferred tax.
10. ACTUARIAL VALUATION METHOD. An entity shall use the projected unit credit method to
determine the present value of its defined benefit obligations, the related current service cost,
and, where applicable, past service cost.
III. Multiple Choice ( 25 items x 3 points)
1. Refers to the financial instrument that contain a promise from the issuer to pay the holder a defined
amount by a specific date.
a. Equity Securities c. Derivatives
b. Debt Securities d. Stocks
2. It will be classified and measured at FVPTL with a fair value changes recognized in profit or loss
a. Warrants c. Equity Securities
b. Bonds d. Derivatives
3. It is any contract that gives rise to one entity's financial asset and another's financial liability or equity.
a. Financial Asset c. Financial Instrument
b. Equity Instrument d. Financial Liability
4. Which of the following statement is true about PFRS 7?
Statement 1: PFRS 7 requires entity to provide disclosures in their financial statements that
enable users to evaluate the significance of financial instruments.
Statement 2: PFRS 7 is elucidates financial instruments presentation.
a. Statements 1 and 2 c. Statement 2 only
b. Statement 1 only d. Neither 1, nor 2
5. It is the price that would be received to sell an asset or paid to transfer liability in an orderly
transaction between market participants at the measurement date.
a. Book Value c. Fair Value
b. Entry Price d. None of the above
6. It is a financial instrument that gives the holder the right to put the instrument back to the issuer.
a. Puttable Instrument c. Statement of Comprehensive Income
b. Equity Instrument d. Balance Sheet
7. Eliminating or significantly reduces a measurement or recognition inconsistency.
a. Derecognition c. Adjusting Entries
b. Accounting Mismatch d. Disclosure
8. An accounting standard that require or permit fair value measurements or disclosures and provides a
single IFRS framework for measuring fair value. Thus, requires disclosure about fair value measurement
a. PFRS 9 c. PFRS 7
b. PAS 32 d. PFRS 13
9. Contracts that give the purchaser the right, bot not the obligation, to buy (call option) or sell (put
option) a specified quantity of a particular financial instrument.
a. Forwards c. Features
b. Options d. Warrants
10. Bonds is lso known as:
a. Debt Instruments c. Debt Securities
b. Debt Securities d. Lease
11. It provides the most reliable evidence of fair value and is used without adjustment to measure fair
value whenever available, with limited exceptions.
a. Inputs c. Effective Interest Method
b. Credit Loss d. Quoted Market Price
12. It is to take an offsetting position in an asset or investment that reduces the price risk of an existing
position.
a. Accounting Mismatch c. Amortization
b. Hedge d. Derecognition
13. It is any contract that evidences a residual interest in an entity's assets after deducting all liabilities
a. Equity Instrument c. Financial Asset
b. Fair Value d. Puttable Instrument
14. It occurs when gains and losses on two items subject to the same fair value risk are not recognized
consistently.
a. Entity Price c. Accounting Mismatch
b. Exit Price d. Liquidity Risk
15. Generally settled through an offsetting (reversing) trade, whereas forwards are generally settled by
delivery of the underlying item or cash settlement.
a. Warrants c. Options
b. Forwards d. Futures
16. A derivative that gives the right, but not an obligation, to buy or sell a security---most commonly an
equity at a certain price before expiration.
a. Warrants c. Option
b. Futures d. Forwards
17. It is a way of calculating the allocating interest expense for a bond based on its book value at the
beginning of each period.
a. Effective Interest Method c. Effective Capital Rate
b. Effective Interest Rate d. Effective Interest Capital
18. It represents fractional ownership of equity in an organization.
a. Debt c. Stocks
b. Lease d. Bonds
19. It is an active market provides the most reliable evidence of fair value and is used without
adjustment to measure fair value whenever available, with limited exceptions.
a. Quoted Market Price c. Entry Price
b. Exit Price d. Liquidity Risk
20. The credit risk on that financial instrumnt has increased significantly since initial recognition.
a. Limited expected credit losses c. 6 months expected credit lossess
b. 12 month expected credit lossess d. none of the above
21. An accounting practicewhere the entries used to adjust the fair value of a derivative also include the
value of the opposing hedge for the security.
a. Financial Accounting c. Hedge Accounting
b. Management Accounting d. Cost Accounting
22. The credit risk on that financial instrument has not increased significantly since initial recognition.
a. Lifetime expected credit losses c. 6 months expected credit lossess
b. 12 month expected credit lossess d. none of the above
23. It is the rate that exactly discounts estimated future cash payments or receipts through the expected
life of the financial instrument to the net carrying amount of the financial asset or liability.
a. Effective Interest Method c. Effective Capital Rate
b. Effective Interest Rate d. Efficient Capital Method
24. It is a legal, binding contract outlining the terms under which one party agrees to rent property
owned by another party.
a. Lease c. Bonds
b. Stocks d. Payable
25. It represent the buy side: what a company would pay to acquire an asset or pay to settle a liability.
a. Book Value c. Fair Value
b. Entry Price d. None of the above
