1.

Expenses are increases in assets, or decreases in liabilities, that result in increases in equity,
other than those relating to contributions from holders of equity claims.
- False
2. An asset or liability can exist even if the probability of an inflow or outflow of economic
benefits is low.
- True
3. An entity controls an economic resource if it has the present ability to direct the use of the
economic resource and obtain the economic benefits that may flow from it
- True
4. One of the purpose of the Conceptual Framework is to assist the preparers of financial
statements in interpreting the information contained in financial statements prepared in
compliance with IFRS.
- False
5. Generally, both quantitative and qualitative bases will be used in assessing the cost and
benefit whether a certain information will be provided, use and reported.
- True
6. An obligation is a duty or responsibility that an entity has a practical ability to avoid.
- False
7. Generally, the older the information is the less useful it is however, some information may
continue to be timely long after the end of a reporting period.
- True
8. Not all of an entity’s rights are assets of that entity.
- True
9. Financial information is capable of making a difference in decisions should have both
predictive and confirmatory value.
- False
10. The general purpose financial reports are not designed to show the value of a reporting
entity but they provide information that help estimate the value of the reporting entity.
- True
11. Income and expenses relate to an entity’s financial position while assets, liabilities, and
equity relate to financial performance.
- False
12. In case of conflict between the substance and form of a transaction or economic
phenomenon, the entity shall follow the form of the transaction in order to achieve faithful
representation.
- False
13. An economic resource is considered to have potential if it is likely that the it will produce
economic benefits.
- False
14. An obligation can meet the definition of a liability even if the probability of a transfer of an
economic resource is low.
- True
15. Forward looking information can be included in the financial statements.
- True
16. the financial statements of the business entity are separate and distinct from the financial
statements of the owners.
- Economic Entity Assumption
17. Which of the following statements is incorrect?
- A reporting entity should be a legal entity.
18. Financial statements provide information about transactions and other events viewed from
the perspective of the entity’s existing or potential investors, lenders or other creditors.
- False
19. The elements directly related to the measurement of financial performance are
- Income and Expenses
20. What is the only underlying assumption mentioned in the Conceptual Framework?
- Going Concern
21. Which underlying assumption assumption serves as the basis for preparing financial
statements at regular arbitrary or artificial points in time?
- Time Period
22. The elements directly related to the measurement of financial position are
- assets, liabilities and equity
23. Which basic accounting assumption is threatened by the existence of severe inflation in an
economy?
- monetary unit assumption
24. Which statement best describes the term going concern?
- the ability of the entity to continue in operation for the foreseeable future
25. Which of the following statements is incorrect?
- consolidated financial statements are designed to provide separate information about the
assets, liabilities, equity, income and expenses of any particular subsidiary
26. General purpose financial statements is a broader term than general purpose financial
reports.
- False
27. What are the elements of faithful representation?
- Completeness, neutrality, and freedom from error
28. It describes the objective of, and the concepts for, general purpose financial reporting.
- Conceptual Framework for Financial Reporting
29. It means that different knowledgeable and independent observers could reach consensus,
although not necessarily complete agreement, that a particular depiction is a faithful
representation.
- Verifiability
30. Which of the following is not always needed in order for there to be a complete depiction of
a group of assets?
- explanations of significant facts about the quality and nature of the items
31. Which is not a purpose of the Conceptual Framework?
- prescribe the basis for presentation of general purpose financial reports to ensure
comparability both with the entity’s financial reports of previous periods and with the
financial reports of other entities.
32. It means checking the inputs to a model, formula or other technique and recalculating the
outputs using the same methodology
- Indirect verification
33. Which of the following statements is false?
- The enhancing qualitative characteristics, either individually or as a group, can make
information useful even if that information is irrelevant or does not provide a faithful
representation of what it purports to represent.
34. Which of the following is not true?
- General-purpose reports are intended to show the actual and true value of the company in
order for the decision-makers to make a sound and economic decision.
35. It refers to the use of the same methods for the same items, either from period to period
within a reporting entity or in a single period across entities.
- Consistency
36. The Conceptual Framework provides the foundation for Standards that: (choose the
incorrect one)
- provide all of the information that existing and potential investors, lenders and other
creditors need and show the value of a reporting entity.
37. Which of the following is not true?
- A financial information is said to be relevant if it has predictive value or confirmatory
value.
38. Which of the following statements is true?
- General purpose financial reports do not and cannot provide all of the information that
existing and potential investors, lenders and other creditors need.
39. General purpose financial reports do not and cannot provide all of the information that
existing and potential investors, lenders and other creditors need.
- Prudence
40. Which of the following is an enhancing qualitative characteristic?
- Comparability
41. An entity shall classify a liability as current when the entity does not have an unconditional
right to defer settlement of the liability for at least twelve months after the reporting period.
- True
42. Retrospective adjustments and retrospective restatements are changes in equity
- False
43. Employment of inappropriate accounting policies can be rectified by sufficient disclosure
and explanation of such policies.
- False
44. Measuring assets net of valuation allowances is offsetting.
- False
45. An entity shall at all times not offset assets and liabilities or income and expenses.
- False
46. An entity classifying expenses by function shall disclose additional information on the nature
of expenses.
- True
47. An entity shall present, either in the statement of changes in equity or in the notes, the
amount of dividends recognized as distributions to owners during the period, and the
related amount per share
- True
48. When an entity decides to prepare interim financial statements, it must comply with the
structure and content requirements of PAS 1.
- False
49. When an entity presents current and non-current assets, and current and non-current
liabilities, as separate classifications in its statement of financial position, it shall classify
deferred tax assets (liabilities) as non-current assets (liabilities).
- True
50. Reclassification adjustments do not arise from revaluation surplus.
- True

51. An entity shall prepare all its financial statements using the accrual basis of accounting.
- False
52. It is the natural presentation that is used when expenses are presented as depreciation,
purchases of materials, transport costs, employee benefits and advertising costs
- True
53. Offsetting can be allowed when it reflects the substance of the transaction or other event
- True
54. Entities are precluded from using terminologies that are different from the terminologies
used in PAS 1.
- False
55. PAS 1 does not require the presentation of all assets and liabilities in the order of liquidity.
- True
56. An entity shall not present any items of income or expense as extraordinary items anywhere
in the financial statements.
- True
57. PAS 1 provides for an elaborate definition of non-current assets and liabilities.
- False
58. An entity need not provide a specific disclosure required by an IFRS if the information is not
material.
- True
59. An entity shall disclose comparative information in respect of the previous period for all
amounts reported in the current period’s financial statements.
- True
60. Since PAS 1 is designed for profit-oriented entities, it cannot be applied to non-profit-
oriented organizations or entities.
- False
61. International Financial Reporting Standards (IFRSs), as referred to in the Standards, pertain
to:
1. IFRS 1 to IFRS 17
2. IAS 1 to IAS 41
3. IFRIC and SIC Interpretations
- 1,2 and 3
62. A complete set of financial statements includes the following components, except:
- Reports and statements such as environmental reports and value added statements
63. Which of the following is not a component of other comprehensive income?
- impairment losses arising from the excess of the recoverable amount over an asset’s
carrying amount.
64. Which of the following statements is not true?
- PAS 1 applies to the structure and content of condensed interim financial statements
prepared in accordance with PAS 34, Interim Financial Reporting.
65. It provides narrative descriptions or disaggregation of items presented in the statement of
financial position, statement(s) of profit or loss and other comprehensive income, statement
of changes in equity and statement of cash flows and information about items that do not
qualify for recognition in those statements.
- Notes
 66. Which of the statements is false?
- The Statements of Retained Earnings is a required basic statement in financial reporting.
67. A complete set of financial statements includes:

I. notes, comprising a summary of significant accounting policies and other explanatory information;
and

II. a statement of financial position as at the beginning of the earliest comparative period when an
entity applies an accounting policy retrospectively or makes a retrospective restatement of items in
its financial statements, or when it reclassifies items in its financial statements.

- I and II
68. An entity shall no longer prepare financial statements on a going concern basis if:
- The entity intends to liquidate
69. In analyzing a company’s financial statements, which financial statement would a potential
investor primarily use to assess the company’s liquidity and financial flexibility?
- Balance sheet
70. Which of the following statements is false?
- An entity shall prepare financial statements on a going concern basis unless management
either intends to liquidate the entity or to cease trading, or has no realistic alternative but
to do so.
71. Which of the following offsetting is not allowed?
- Presenting on net basis material foreign exchange gains and losses
72. What must be disclosed in case management concludes that compliance with a requirement
in an IFRS would be so misleading that it would conflict with the objective of financial
statements set out in the Framework and the relevant regulatory framework allows a
departure? (choose the incorrect one)
- an explicit and unreserved statement that the entity’s financial statements have complied
with all the requirements of the IFRSs
73. Which entity is a going concern?
- None of these can be considered a going concern entity
74. The following are components of expenses, except
- Prepaid Expenses
75. Which of the following are acceptable methods for reporting comprehensive income under
IFRS?
1. One comprehensive income statement.
2. Two statements: an income statement and a comprehensive income statement.
3. In the statement of owner’s equity.
- Either 1 or 2
76. Which of the following should be classified as noncurrent?
- A liability in which the entity expects, and has the discretion, to refinance or roll over an
obligation for at least twelve months after the reporting period under an existing loan
facility.
77. Which of the following is true?
- If the refinancing on a long-term basis is completed on or before the end of the reporting
period, the obligation is going to be classified as noncurrent liability.
78. How many of the following statements is/are true?
1. An entity may use titles for the statements other than those used in PAS 1
2. An entity shall present the components of profit or loss in a separate statement of
comprehensive income.
3. Reports and statements presented outside the financial statements, such as environmental
reports and value added statements are outside the scope of IFRSs.
- 2
79. If management concludes that compliance with a requirement in an IFRS would be so
misleading that it would conflict with the objective of financial statements set out in the
Framework, but the relevant regulatory framework prohibits departure from the
requirement, the entity shall do the following, except:
- Make no changes and continue complying with the standard
80. Financial statements must be prepared at least
- Annually