ACCTG 22 FINAL EXAM

It is the process of incorporating in the statement of financial position or statement of comprehensive income an item that meets the definition of an element of the financial statement.

• Recognition

• Measurement

• Realization

• Allocation

Which measurement is not currently used in practice

• Present value

• Net realizable value

• Current replacement cost

• Inflation-adjusted cost

Generally, revenue is recognized

• At the point of sale

• When cause and effect are associated

• At the point of cash collection

• At appropriate points throughout the operating cycle

The primary distinction between revenue and gain is

• The materiality of the amount

• The likelihood that the transaction will recur in the future

• The nature of the activity that gives rise to the transaction

Which is the purpose of the notes to financial statements?

• To present information about the basis of preparation of the financial statements and the specific accounting policies used.

• To disclose the information required by Philippine Financial Reporting Standards that is not presented elsewhere in the financial statements

• To provide additional information that is not presented on the face of the financial statements but that is necessary for a fair presentation.

• All of those can be considered a purpose of the notes to financial statements.

Which is the first item in presenting the notes to financial statements?

• Statement of compliance with PFRS.

• Other disclosures, such as contingent liabilities, unrecognized contractual commitments, and nonfinancial disclosures.

• Supporting for items presented on the face of the financial statements.

• Summary of significant accounting policies.

The cross reference between each line item in the financial statements and any related information disclosed in the notes to financial statements

• Is voluntary

• Is mandatory

• Depends on the industry

• Is either voluntary or mandatory

The elements directly related to the measurement of financial position are

• Assets, liabilities, equity, income, and expense

• Assets, liabilities, and equity

• Income and expense

• Assets and liabilities

The accounting equation must remain in balance

• Throughout each step of the accounting cycle

• Only when journal entries are recorded

• Only at the time the trial balance is prepared

• Only when formal financial statement are prepared

Which of the following statements about Philippine GAAP is (are) false?

I. The Philippine Interpretation Committee issuances are an indication that the IFRSs (or PFRSs) are rules-based

II. The Securities and Exchange Commission (SEC) allows micro-entities to use the cash basis of accounting

III. All reporting enterprise entities in the Philippines including regulated entities are required to follow full Philippine Financial Reporting Standards (PFRSs) in the preparation of financial statements.

• I only

• III only

• I and III only

• I, II, and III