5.

This type of presentation of statement of financial

position does not show distinctions between current
PAS 1 REVIEWER and non current items

A. classified presentation
1. PAS 1 requires an assesment of the entity’s ability to
continue as a going concern each time financial B. unclassified presentation-
statemnt are prepared. Who is responsible in making
this assessment? C. Non- discriminating presentation

A. accountant D. awesome presentation

B. auditor 6. In making an economic decision, investor needs

information on the amount of an entity’s economic
C. management resources and claims to those resources. That investor
would most likely refer to which of the following
D. government financial statements?
2. These are the end product of the fiancial reporting A. statement of financial position-
process and the means by which information gathered
and processed is periodically coomunicated to users. B. statement of comprehensive income

A. financial reporting C. statement of cash flows

B. financial statements D. statement of changes in equity

C. financial products 7. Which of the following financial statements would be

dated as at a certain date?
D. accounting statements
A. statement of financial position-
3.Which of the following is not one of the general
features of financial statements under PAS 1? B. statement of profit or loss and other comprehensive
income
A. fair presentation and compliance with PFRS’s
C. statement of cash flows
B. going concern
D. all of these
C. cash basis
8. Imagine you are a business manager. You would be
D. Materiality and aggregation most awesome as a manager in which of the following
4. Who is responsible for the preparation and the fair independent scenarios?
presentation of an entity’s financial statements in c. you changed your company’s method of allocating
accordance with the PFRSs? costs from an accelerated method to a straight-line
A. any account method. The change met the requirements of the
PFRSs. This ed to the smoothing of expenses, which
B. Certified Public Accountant increased your company’s profit during the period by
12% above the industry average.
C. auditor

D. management-
9. this comprises all “non owner changes in equity”. It B. A degree of caution in the exercise of
excludes owner changes in equity, such as subcription, judgements about estimates is made.
issuance, and reacquisition of share capital and
declaration of dividends
C. An appropriate balance is achieved
between the relevance and the reliability.
A. other comprehensive income of information that has been included.

B. changes in equity D. Information is provided to users within

the time period in which it is most likely to
C. total comprehensive income- bear on their decisions.
D. Profit or loss 4. An item cannot be recognized in the
10. materiality judgement least likely to be applied in balance sheet or the income statement
which of the following? unless it meets the two criteria of:

c. in determining whether the cost of processing and A. Materiality: Relevance to the users
communicating information exceeds the benefits B. Completeness; Measurement reliability
expected to derived from it.
C. Neutrality; Representational faithfulness
CONCEPTUAL D. Probable economic benefits:
FRAMEWORK AND Measurement reliability

PAS 1 5. The operating cycle

A. Measure the time elapsed between cash

1. The Conceptual Framework outlines one
disbursement for inventory and cash
underlying assumption of financial
collections of the sales price
statements. This is: Answer: Going concern
assumption B. Refers to the seasonal variations
experienced by business enterprise
2. If financial information that is presented
in a balance sheet or income statement is C. Should be used to classify assets and
misstated, and it influences the economic liabilities as current if it is less than one
decisions of users, that information is year
described as:
D. Cannot exceed one year
A. Reliable
6. In classifying the elements of financial
B. Material statements, the primary distinction
between revenues and gains is
C. Prudent
A. The materiality of the amounts involved
D. Faithful
B. The likelihood that the transactions
3. In respect to information included in
involved will recur in the future
financial statements, the accounting
concept of 'prudence' ensures that: C. The nature of the activities that gave
rise to the transactions involved
A. The financial statements report what
they purport to report.
7. Which of the following statements is not B. Trust deed
an objective of financial reporting?
C. Company constitution
A. Provide information that is useful in
investment and credit decisions D. Prospectus

B. Provide information about enterprise 11. Which statement is incorrect concerning financial
resources, claims to those resources, and statements?
changes to them A. Financial statements do not show the results of
C. Provide information on the liquidation management's stewardship of resources entrusted to it.
value of an enterprise B. Financial statements are prepared at least annually
D. Provide information that is useful in and are directed toward the common information
assessing cash flow prospects needs of a wide range of users.

8. Financial accounting can be broadly C. The objective of general-purpose financial statements

defined as the area of accounting that is to provide information about the financial position,
prepares performance and cash flows of an enterprise that is
useful to a wide range of users in making economic
A. General purpose financial statements to decisions.
be used by parties internal to the business
enterprise only D. The management of an enterprise has the primary
responsibility for the preparation and presentation of
B. Financial statements to be used by financial statements.
investor only
12.Which is correct regarding the overall considerations
C. General purpose financial statements to in preparation and presentation of financial
be used by parties both internal and statements?
external to the business enterprise
A. Assets and liabilities, and income and expenses, when
D. Financial statements to be used material should be offset against each other.
primarily by management
B. Financial statements should be prepared on liquidity
9. Preparation of consolidated financial concern basis.
statements when a parent-subsidiary
relationship exist is an example of the C. Each material item should be presented separately in
the financial statements. Immaterial amounts of similar
A. Economic entity assumption nature and function should be grouped or condensed as
one line item in the financial statements.
B. Relevance characteristic
D. The presentation and classification of financial
C. Comparability characteristic
statement items should not be uniform from one
D. Neutrality characteristic accounting period to the next.

10.A document that contains disclosures 13. Which of the following information should be
including financial statements, that is disclosed in the summary of significant accounting
issued to potential investors, by companies policies?
seeking capital, is known as a:
A. Criteria for determining which investments are
A. Securities statement treated as cash equivalents.
B. Guarantee of indebtedness of others. C. Items of a dissimilar nature or function shall be
presented separately unless they are immaterial.
C. Business combination after balance sheet date
D. Information is material if its nondisclosure could
D. Refinancing of debt subsequent to the balance sheet influence the economic decisions of users taken on the
date basis of the financial statements.
14. Financial information does not demonstrate 17.An entity decided to extend its reporting period from
comparability and consistency when a year (12-month period) to a 15-month period. Which
l. Firms in the same industry use different accounting of the following is not required under PAS 1 in case of
methods to account for the same type of transaction change in reporting period?

II. A company changes its estimate of the salvage value A. The entity should disclose the reason for using a
of fixed assets longer period than a period of 12 months.

III. A company fails to adjust its financial statements for B. The entity should change the reporting period only if
changes in value of the measuring unit other similar entities in the geographical area in which it
generally operates have done so in the current year.
A. I only
C. The entity should disclose that comparative amounts
B. I and II only used in the financial statements are not entirely
comparable.
C. I and III only
D. The entity should disclose the period covered by the
D. I, II and III
financial statements..
15. When the presentation or classification of items in
18.What is disclosed when departing from an
the financial statements is amended
international accounting standard?
A. Comparative amounts for comparative reporting
l. The Title of the Standard or Interpretation from which
need not be reclassified
it has departed
B. Comparative amounts for comparative reporting
II. The nature of the departure, and the treatment the
should be reclassified in all cases
Standard or Interpretation would require
C. Comparative amounts for comparative reporting
III. The reason why that treatment would be so
should be reclassified unless it is impracticable to do so
misleading
D. Nothing should be done
IV. The treatment adopted
16. Which is incorrect concerning the concept of
V. The financial impact of the departure on the financial
materiality and aggregation?
statements (for each period presented)
A. Materiality depends on the size and nature of the
A. I and II only
item judged in the particular circumstances of its
omission or misstatement. C. I, II and III only

B. Materiality provides that the specific disclosure B. I, II III and V only

requirements of a PFRS must be met even if the
resulting information is not material. D. All of the above
19.Which statement is incorrect concerning the are expense rather than appropriation of retained
Conceptual Framework? earnings.

A. Nothing in the framework overrides any specific D. The amount at which equity is shown in the balance
PFRS. sheet is dependent on the measurement of assets and
liabilities.
B. The framework deals with the objectives of the
financial statements, the qualitative characteristics that 22. According to the conceptual framework, which of
determine the usefulness of the information in financial the following statements conforms to the realization
statements, the definition, recognition and concept?
measurement of the elements of the financial
statements and concepts of capital maintenance, A. Cash was collected on accounts receivable.

C. The framework sets out the concepts that underlie B. Product unit costs were assigned to cost of goods
the preparation and presentation of financial sold when the units were sold.
statements for internal and external users. C. An impaired asset was sold for cash.
D. The framework is concerned with general purpose D. Equipment depreciation was assigned to a
financial statements including consolidated financial production department and then. to product unit costs.
statements.
23.Per PAS 1, in the absence of a Standard or
20. What is the primary difference in the treatment Interpretation that specifically applies. to a transaction
between the two concepts of capital maintenance? or event, management shall develop and apply
A. The treatment of the effects of changes in the prices accounting policy that results in relevant and faithfully
of assets and liabilities of the entity. represented information. Which of following is the least
likely source of such alternative?
B. The treatment of the effects of changes in the prices
of expense and revenue of the entity A. The requirements and guidance on Standards
/Interpretations on similar and related issues
C. The treatment of the effects of changes in foreign
exchange rates B. The definition, recognition criteria and measurement
concepts for assets, liabilities, income and expenses in
D. The treatment of the effect of changes in foreign the Framework.
subsidiary
C. Most recent pronouncements of other standard
21. Which of the following statements concerning setting bodies that use a similar conceptual framework
equity is incorrect? to develop accounting standards and accepted practice.

A. Although equity is defined as a residual, it may be D. Textbooks and other accounting literature to the
sub-classified in the balance sheet. extent that these do not conflict with existing Standards
and Interpretations
B. The creation of reserves is sometimes required by
statute or other laws in. order to give the entity and its 24.Which is incorrect concerning the accounting
creditors an added measure of protection from the constraints on relevant and faithfully represented
effects of losses . information?

C. The existence and size of legal, statutory and tax A. It may often be necessary to report before all aspects
reserves are information that can be relevant to the of a transaction or other event are known, thus
decision-making needs of users, transfer from reserves impairing f.r..
B. The benefits derived from the information should A. Use of property by lease between a
exceed the cost of providing it parent company and its subsidiary

C. In achieving a balance between relevance and f.r., the B. Receipt of services by subsidiary from a
overriding consideration is how best to satisfy the principal without charge or without record
economic decision-making needs of users. of receipt of services.

D. If there is undue delay in the reporting of information C. Possibility of strike

it may lose its relevance and f.r..
D. Guarantees for indebtedness of others if
25. Which one of the following bodies is responsible for the possibility of loss is remote
reviewing accounting issues that are likely to receive
29.In which section of the statement of
divergent or unacceptable treatment in the absence of
financial position should employment taxes
authoritative guidance, with a view to reaching
that are due for settlement in 15 months'
consensus as to the appropriate accounting treatment?
time be presented according to PAS 1?
A. International Financial Reporting Interpretations
Committee (IFRIC) A. Current liabilities
B. Standards Advisory Council (SAC) C. Non-current liabilities
C. International Accounting Standards Board (IASB) B. Current assets
D. International Accounting Standards Committee D. Non-current assets.
Foundation (IASCF)
30. This revenue recognition method is
26. Which of the following is an application of the allowed when a sale is assured under a
science aspect of accounting? forward contract or government guarantee
or when a homogenous market exists. and
A. Exercise of creative skill and judgment
there is negligible risk of failure to sell.
B. Interpreting the information presented in the
A. Percentage of completion method
financial statements through ratio and trend analysis
C. Cash method
C. Applying the rules of debit and credit
B. Production method
D. Attesting to the fairness of presentation of financial
condition and operating results D. Accrual method
27. Which is not included in the category of 31. Which of the following bases of
comprehensive income of an accounting entity? revenue recognition reflects the greatest
uncertainty about future events?
A. Net income for the period
A. Sales method applied to sales of a
B. Revaluation surplus
department store.
C. Gain on sale of treasury stock
B. Cost recovery method applied to an
D.None of the above instalment sales contract.

28. Disclosure in the financial statements is C. Production method for a gold mining
not required for which of the following? operation.
D. Percentage of completion on a 35. Which of the following is an implication of the going
construction contract. concern assumption?

32. The most useful information to existing A. The historical cost principle is credible.
and potential investors, lenders and other
creditors in predicting future cash flows is: B. Depreciation and amortization policies are justifiable
and appropriate.
A. Information about current cash flows
C. The current and noncurrent classification of assets
B. Current earnings based on accrual and liabilities is justifiable and significant.
accounting
D. All of these.
C. Information regarding the accounting
policies used by management 36. Which of the following statements pertaining to the
"Framework for the Preparation and Presentation of
D. Information regarding the results Financial Statements" is correct?
obtained by using a wide variety of
accounting policies. A. Financial statements, if properly prepared, can
provide all o all of the information needs of all types of
33. What is meant by comparability when users.
discussing financial accounting
information? B. The extemal auditor hired by an enterprise has the
primary responsibility for the preparation and
A. Information has predictive and presentation of the financial statements of the
confirmatory value. enterprise.

B. Information is reasonably free from C. Management has the ability to determine the form
error. and content of additional information in order to meet
its own needs, but the reporting of such information is
C. Information is measured and reported in
beyond the scope of the framework.
a similar fashion across entities.
D. Both A and C
D. Information is timely.
37. Which of the following statements in relation to the
34. Which of the following statements is
going concern assumption is incorrect?
true in relation to the enhancing qualitative
characteristic of understandability of A. The going concem concept assumes that the business
financial information? enterprise will never be liquidated.

A. Users have a reasonable knowledge of B. The going concern assumption serves as the basis for
business and economic activities and classifying liabilities as current and non-current.
review the information with reasonable
diligence. C. The going concern assumption is generally applicable
to most business situations whether or not liquidation
B. Users are expected to have significant business appears imminent.
knowledge.
D. If there is an intention or need to liquidate or curtail
C. Financial statements shall exclude complex matters. materially the scale of an enterprise's operations, the
financial statements may have to be prepared on a basis
D. Financial statements shall be free from material
other than a going concern and the basis used is
error.
disclosed.
38. Under the accrual basis of accounting, cash receipts
and disbursements may

A. Only coincide with the period in which revenues and

expenses are recognized.

B. Coincide with or follow, but never precede the period

in which revenues and expenses are recognized.

C. Precede, coincide with, but never follow the period in

which revenues and expenses are recognized.

D. Precede, coincide with or follow the period in which

revenues and expenses are recognized.

39. The information provided by financial reporting

pertains to

A. Individual business enterprises, rather than to

industries or an economy as a whole or to members of
society as consumers

B. Individual business enterprises and industries, rather

than to an economy as a whole or to members of
society as consumers

C. Individual business enterprises and an economy as a

whole, rather than industries or to members of society
as consumers

D. Individual business enterprises and an economy as a

whole, rather than to members of society as consumers

40. Which of the following statements in relation to the

accounting entity. assumption is incorrectly stated?

A. In financial accounting the accounting entity is the

specific business enterprise which is identified in the
financial statements

B. An accounting entity may exist as a sole

proprietorship, a partnership, a corporation, an
individual, a group of individuals or any other form of
organization

C. Under the accounting entity assumption, the business

enterprise is separate and distinct from its owners,
managers and employees that constitute the firm.

D. The boundaries of accounting entity is always the

same as those of the legal entity