Intermediate Accounting 3 Page 1 of 5

Preliminary Examination

VISION
Bestlink College of the Philippines is committed to provide and promote quality education
with a unique, modern and research-based curriculum with delivery systems geared towards excellence.

MISSION
To produce self-motivated and self-directed individual who aims for academic excellence,
God-fearing, peaceful, healthy and productive successful citizens.

COLLEGE OF HOSPITALITY AND BUSINESS MANAGEMENT

DEPARTMENT OF ACCOUNTING INFORMATION SYSTEM
FIRST SEMESTER: A. Y. 2020-2021

Prelim Examination
AE322: INTERMEDIATE ACCOUNTING 3

General Directions: All answers should be written in the test booklet. Do not mark/ write the questionnaire.

Multiple Choice: Read each sentence/ situation carefully and select the BEST answer among the choices
and write its corresponding letter.

1. It means that the new accounting policy is applied to events and transactions occurring after the date at
which the policy is changed.
A.Retrospective Method C. Prospective Application
B.Retrospective Application D. Prospective Method

2. It is a formal statement showing the three elements comprising financial position, namely assets,
liabilities and equity
A.Statement of Financial Position C. Trial Balance Statement
B.Statement of Comprehensive Income D. None of the above

3. A present economic resource controlled by the entity as a result of past events.

A.Asset C. Equity
B.Liabilities D. None of the above

4. It is defined as a present obligation of an entity to transfer an economic resource as a result of past

events.
A.Asset C. Equity
B.Liabilities D. None of the above

5. It is the residual interest in the assets of the entity after deducting all of the liabilities.
A.Asset C. Equity
B.Liabilities D. None of the above

6. It is the ability of the entity to meet currently maturing obligations.

A.Liquidity C. Past Events
B.Solvency D. Future Events

7. Provide narrative description or disaggregation of items presented in the financial statements and
information about items that do not qualify for recognition.
A.Notes to Income Statement C. Notes to Financial Position
B.Notes to Financial Statement D. Notes to Shareholders’' Equity

8. Its purpose is to provide the necessary disclosures required by Philippine Financial Standards.
A.Notes to Income Statement C. Notes to Financial Position
B.Notes to Financial Statement D. Notes to Shareholders’' Equity

9. The summary of significant accounting policies shall disclose the following

A.The measurement basis used C. Both a and b
B.The accounting policies used D. None of the above

10. Parties are considered to be related if one party has

 Intermediate Accounting 3 Page 2 of 5
Preliminary Examination
A.The ability to control the other party C. Joint control over the entity.
B.The ability to exercise significant influence over the other party D. All of the above

11. Have a great impact on an entity’s reported earnings

A.Accounting Change C. Accounting Estimate
B.Accounting Policy D. Accounting Period

12. An adjustment of the carrying amount of an asset or a liability, or the amount of the periodic
consumption of an asset.
A.Accounting Change C. Change in Accounting Policy
B.Change in Accounting Policy D. Change in Accounting Period

13. A change in measurement basis is a change in accounting policy and not a change in
accounting estimate.
A.True C. Either a and b
B.False D. Neither a and b

14. The effect of a change in accounting estimate shall be recognized currently and prospectively
by including it in income or loss of
A.The period of change if the change affects that period only. C. Both a and b
B.The period of change and future periods if the change affects both. D. None of the above

15. It is accounted for as a change in accounting estimate

A.Change in appreciation method C. Change in appreciation process
B.Change in appreciation method D. Change in depreciation process

16. Are the specific principles, bases, conventions, rules and practices applied by an entity in preparing
and presenting financial statements.
A.Accounting Change C. Accounting Estimate
B.Accounting Policy D. Accounting Period

17. Are essential for a proper understanding of the information contained in the financial statements
A.Accounting Change C. Accounting Estimate
B.Accounting Policy D. Accounting Period

18. A change in accounting policy shall be made only when

A.Required by an accounting standard or an interpretation of the standard.
B.The change will result in more relevant and faithfully represented information about the financial position,
financial performance and cash flows of the entity.
C.Both a and b
D.None of the above

19. It is applying a new accounting policy to transactions, other events and conditions as if that policy
had always been applied
A.Retrospective Method C. Prospective Application
B.Retrospective Application D. Prospective Method

20. It is ownership directly or indirectly through subsidiaries of more than half of the voting power of
an entity.
A.Power C. Control
B.Significant Influence D. Joint Control

21. It is an asset that does not meet the definition of a current asset.
A.Current Asset C. Noncurrent Asset
B.Current Liabilities D. Noncurrent Liabilities

22. It is a group of assets to be disposed of, by sale or otherwise, together as a group in a single
transaction, and liabilities directly associated with those assets that will be transferred in the transaction.
A.Garbage group C. Trash group
B.Disposal group D. Discard group
 Intermediate Accounting 3 Page 3 of 5
Preliminary Examination
23. A noncurrent asset shall be classified as held for sale if the following conditions are present
A.The asset or disposal group is available for immediate sale in present condition
B.The sale must be highly probable
C.Both a and b
D.None of the above
24. An entity shall measure a noncurrent asset or disposal group classified as held for sale at the lower of
carrying amount or fair value less cost of disposal.
A.True C. Either a and b
B.False D. Neither a and b

25. If the fair value less cost of disposal is lower than carrying amount of the asset or disposal group, the
writedown to fair value less cost of disposal is treated as an impairment loss
A.True C. Either a and b
B.False D. Neither a and b

26. It is defined as a component of an entity that either has been disposed of or is classified as held for
sale
A.Discounted Operation C. Not discounted Operation
B.Discontinued Operation D. Not discontinued Operation

27. The discounted operation is accounted for as a disposal group classified as held for sale.
A.True C. Either a and b
B.False D. Neither a and b

28. A component of an entity is classified as discontinued operation of the date

A.When the entity has actually disposed of the operation.
B.When the operation meets the criteria to be classified as held for sale.
C.Both a and b
D.None of the above

29. PFRS 5, paragraph 12, prohibits the retroactive classification as a discontinued operation when
the discontinued criteria are met after the end of reporting period.
A.True C. Either a and b
B.False D. Neither a and b

30. The component of an entity must be available for immediate sale in the present condition and the sale
must be highly probable.
A.True C. Either a and b
B.False D. Neither a and b

31. Identifies a function and not necessarily a manager with a specific title.
A.Head operating decision maker C. Owner operating decision maker
B.President operating decision maker D. Chief operating decision maker

32. PFRS 8 sets out the requirements for disclosure of information about operating segments.
A.True C. Either a and b
B.False D. Neither a and b

33. PFRS 8 shall apply to the separate or individual financial statements of an entity and to
the consolidated financial statements of a group with a parent
A.True C. Either a and b
B.False D. Neither a and b

34. Two or more operating segments may be aggregated into “one reportable segment” to achieve
the “75% of entity external revenue” threshold.
A.True C. Either a and b
B.False D. Neither a and b

35. The operating segments to be aggregated must have similar economic characteristics and share
a majority of the five aggregation criteria.
A.True C. Either a and b
 Intermediate Accounting 3 Page 4 of 5
Preliminary Examination
B.False D. Neither a and b

36. An entity shall disclose the following for ach reportable operating segment:
A.General information about the operating segment
B.Information about profit or loss, including specified revenue and expenses included in the measure of
profit or loss
C.Information about segment assets and segment liabilities and the basis of measurement
D.All of the above

37. An entity shall disclose the following general information an operating segment:
A.Factors used to identify the reportable segments
B.Types of products and services from which each reportable segment derives revenue
C.Both a and b
D.Neither a and b

38. Are additional information that is required to disclose by all entities if such information is not provided as
part of the reportable segment information.
A.Entity-large disclosures C. Entity-wide disclosure
B.Entity-huge disclosures D. Entity-big disclosure

39. An entity shall disclose the following geographical information:

A.Revenue from external customers in the entity’s company of domicile, and in all foreign operations in
total.
B.Separate disclosure of material revenue from external customers in an individual foreign country.
C.Both a and b
D.None of the above

40. A major customer is defined as a single external customer providing revenue which amounts to 10%
or
more of an entity’s external revenue.
A.True C. Either a and b
B.False D. Neither a and b

41. It means the preparation and presentation of financial statements for a period of less than and year.
A.Calendar Financial Reporting C. Interim Financial Reporting
B.Year Financial Reporting D. Operation Financial Reporting

42. What is the meaning of SEC?

A.Securities and Entities Commission C. Securities and Entities Corporations
B.Securities and Exchange Corporations D. Securities and Exchange Commission

43. Which are the two views on interim financial reporting?

A.Internal view and External view C. Dependent view and Independent view
B.Integral view and Independent view D. Prospective view and Retrospective view

44. It is that each interim period is an integral part of the annual accounting period.
A.Internal view C. Dependent View
B.Integral view D. Independent view

45. It is that each interim period is considered a discrete or separate accounting period with status equal
to a fiscal year.
A.Internal view C. Dependent View
B.Integral view D. Independent view

46. Paragraph 25 of Appendix B of PAS 34 provides that inventories are measured for interim
financial reporting by the same principles as at financial year-end.
A.True C. Either a and b
B.False D. Neither a and b

47. Certain costs are expected to be incurred irregularly during the financial year, such as
charitable contribution and employee training cost.
 Intermediate Accounting 3 Page 5 of 5
Preliminary Examination
A.True C. Either a and b
B.False D. Neither a and b

48. Depreciation and amortization for an interim period shall be based only on assets owned during
that interim period.
A.True C. Either a and b
B.False D. Neither a and b

49. A bonus is anticipated for interim purposes if and only if

A.The bonus is a legal obligation or past practice would make the bonus a constructive obligation for which
the entity has no realistic alternative but to make the payment
B.A reliable estimate of the obligation can be made
C.Both a and b
D.None of the above

50. Gain or loss from disposal of property, gain or loss from discontinued operation and other gain or loss
shall not be allocated over the interim periods.
A.True C. Either a and b
B.False D. Neither a and b

Prepared:

MR. RYAN F. JURILL, CPA, MBA

Associate Professor I, BSAIS

Noted by:

DR. JOAN O. BAYANI, LPT

Program Head, BSAIS