c 9. RC-ACE/FAR: Final Pre-board Exams (May 2018 batch) PAGE 2 C. Includes the concept of prudence or conservatism which means when in doubt, choose the solution that will be least likely to understate assets or income and/or overstate liabilities or expenses. fi 1D. _ Includes the concept of prudence or conservatism aa desirable, but riot required, quality of financial reposting information, Which of the following selected business documents of Webtoon Corporation that are presented to you by its management in 2018 will qualify as an accountable event(s}? (1) A purchase invoice for P1,000,000 under terms 2/10, 2/30. @) A purchase ordet for P 500,000 worth of merchandise @) A salary voucher for P 300,000 for the last five days of the current year. () A sales invoice for P400,000 shipped to a customer under terms FOB destination. Goods are sill in transit. (5) probable loss from lawsuit amounting to P65,000 as estimated by the legal counsel, The total assets of Webtoon is P 150,000,000. ‘The accountable events that should be tecogaized in the books of Kevin Cosporation is A. 1,800,000 BP 1,700,000 C. -P1,365,000 D. P 1,300,000 Which of the following statements about “other comprehensive income” section of the Statement of Comprehensive income (SCH) is /are fab? 1. The amount of revaluation sueplus reported in the other comprehensive income section ‘of the SCI mast be the same as the amount of revaluation surplus ending balance in the general ledger IL Foreign exchange gains and losses arising ftom puschase of property and equipment should be reported under the other comprehensive income section of the SCI UL Unrealized gain o: loss on change in value of Investment Property should be presented {in other comprehensive income section of the SCI IV, Only the cutrent year’s unrealized gain or loss on change in value of Financial Assets through Equity should be shown under other comprehensive income section ofthe Statement of Comprehensive Income A. Land I only B.Mand1Vonly C1, Wand ifonly D. 1,1, WandT « Which of the following items is 2 required disclosure in the income staternent? A. Revenue, cost of goods sold and advertising expense. B. Finance costs, tax expense and income. ©. Operating expenses, nonoperating expenses and extraotdinary items D. Gross profit, operating profit and net profit. 10. Inaccounting, the concepé of “recognition” means 1 A. the process of formally incorporating in the totals of the balance sheet and income statement an jem that meets the “probability” and “measurability” critetia for accountable events criteria, B. journalizing a transaction in the books or original entry and posting it to the ledger C. assigning an amount or value to an accountable event and reporting it in the financial statements, D. journaling and posting an accountable event and including it in the tral balance totals. 1, Which of the following statements about the bases of accounting for income and expense is false? A. Total Operating expenses will be the same under pure cash and modified cash basis, B. Income and expenses with cash flows are recognized in cash, modified cash and accrual bases . Modified Cash basis will yield the same Cost of Sales amount as Accrual basis 1D, Cash basis of accounting does not recognize any adjusting entry at year end. SFT ACCRC-ACE/FAR: Final Pre-board Exams (May 2018 batch) PAGE 4 19, ‘Which of the following statements concerning impairment is nor true? A. All assets should be tested for iespaizment B. Intangible assets with unlimited life should be tested for impairment snaually If the recoverable amount (higher of carrying amount and fait value less cost to sell applies to all types of assets. D. The objective of PAS 36, impaitment of asset is faithful representation of the value of an asset at reporting date, Which of the following statements does nat pertain to year-end (periodic) adjusting entries ? A. Some transaction extend beyond one accounting period B, ‘They ate often prepared after the statement of financial position date, but dated as of the statement of financial position date. ©. ‘They are necessaty to enable the financial statements to conform to International Financial Repocting Standard (HFRS). D._Estors that are discovered at the end of the period should be cottected in order to generate more reliable financial reports ‘The basis for classifying assets as current or aoncurrentis its ability to generate cash, either disectly of inditeetly, within ‘A the accounting cycle or one year, whichever is shorter, B. the operating cycle or one year, whichever is longer. C. the accounting cycle or one year, whichever is longer. D. the operating cycle or one year, whichever is shorter. ~ appear on the siatement of cash lows? ‘A. [e-would depend on whether you ate using the director the indirect method. * B. It would be a positive P2.5 million in the financing section and a negative P 2.5. milion in the investing section. €. Iewould be a neyative P2.5 million in the financing section and a positiveP2.5 million in the investing section. 1D. Tewould not appear on the statement of cash flows but rather of a schedule of noncash investing and financing activities. Using IFRS, which of the following items is matched Corsectly with its basis of valuation for purposes of reporting on the statement of financial position? Tem Basis of Valuation 1. laventories A. Cost MT, Beaver ‘Trees By Fair value : JL Receivables C. | Lower-of-cost-or net realizable value AL Land B C Mande B. Wand A D. Mend B ‘Debta, Inc. is preparing its annual financial starememts based on its adjusted trial balance. Which financial statement will Debra, Ine. prepare fi A. Statement of financial position, B. Sauement of Cash Flows C. Stuement of Comprehensive Income D. Theve is no particular order, any financial statement shay be prepared first once the adjusted ‘til balance is preparedCRCACE/FAR: Final Pre-board Exams (May 2018 batch) PAGE 6 IIL. An Unrealized grin of loss on change in value of Investment Property should be ;ptesented in other comprchensive income section of the SCI TV, Under custent IFRS, recyclable other comprehensive income items should be shown separately from those that are not recyclable to profit and loss. A. Vand TV.only —B. TandIonly C [,Mand {only D. 1,11, Mand T 31, Imaccounting, the Contepe of “recognition” means 1A. the process of fotmally incorporating in the totals of the balance ‘sheet and income statement an lem that meets the “probability” and “measutsbity” criteria for accountable 33, journaling » transaction in the books or original entey and posting i othe ledger C.ssigning an amount of value to an accountable event and reporting it in the financial staterneats D. _joumnalizing and posting an accountable event and including it in the trial balance torals Which of the following statements about the concept Of measurement or valuation in Accounting, is (are) true? 1. Under current GAAP, as a general rule, the primary basis of meisurement of assets upon acquisitior is, historical cost. HL. ‘There ate some instances when assets ae initially measured on the basis of fair value IIL, All monetary assets should be measured at Pair value IV. The final valuation of assets and Uabiltes in the balance sheet are a mixture of costs and values A. Land Honky Co J, Hand IV only = B. Land IT oily D. 1.0L I ang IV 33. Which of the following concepts of accounting income is inant? A. ‘The comprehensive income concept allows the inclusion of recognized holding gains and losses in. the computation of the net income or loss for the accounting period. B. ‘The measurement of income is affected by the basis of accounting for evenue and expenses, that is, exsh basis, modified cash or accrual basis. “The statement of comprehensive income includes both realized and tecognized gains and Josscs but not the effect of changes in accounting policies and riot period etrors D. Under G.\AP, the twanstctions approach is used to record revenues, expenses, gains and losses throughout the reporting, period. 34. Which of the following statements about “other comprehensive income” section of the Stavement of Gomprehensive income (SCI) is fare fale? 1. ‘The amouint of revaluation surplus reported in the other'comprehensive income section of the SCI must be the same as the amount of revaluation surplus ending balance in the general ledger H. oreign exchange gains and losses-asising from purchase of property and equipment should be reported under the other comprehensive income section of the SCI IML. Unrealized gain or loss on change in value of Investment Property should be presented in other comprehensive income section of the SCT IV. Only the custent year’s untealized gain or loss on change in value of Financial Assets thiough Equity should be shown under other comprehensive income section of the cement of Comprehensive Income A. Land TI only BIT and IV only C.1, Wand Wonly D.1,T, Wand 1 35. Shift Inc, bought a private jet for the use of its top-ranking officials. ‘The cost of the private jet is PIS. million and can be depteciated either using a composite useful life or useful lives of its ‘major components. It is expected to be used over a period of 10 yeats. The engine of the jet has a useful life of 5 yeais. ‘The private jet’s tires are replaced every 2 years. ‘The private jet will be depreciated using the straight line method over