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Mocr< CPA Bo,qnp ExamtNATtoN


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LJneler the Conceptual Franrework 1or Fir.rancial Reporting 20t0, what are the two lundamental qualitative
c haracteristi cs of accou nti n g in lbrnr ation')
c. Reliabilit_v- and understandability
a. Relevancc and prudence
b. Reliability and conservatism
,-d,' Relevance and laithful rcprc'sentation
tror hedging purposes, derivative instruments may be broadly designated as either
a. Cost hedge or lhir value hedge
F.' Fair value hedge or cash l1ow hedge
d- Fair value hedge or nrarket hedge
b. Cost hedge or cash florv hedge
What is rhe correct sequence in dealing with the national budget for various government agencies'?

a.
b.
c.
d.

Allocation, appropriation, liquidation, obligation


Appropriation, allocation, obligation, liquidation

Obligation, appropriation. liquidation. allocation


Appropriation, obligation, ailocation, liquidation
A bank reconciliation is prepared monthly in order fbr the enterprise to
c. Crirrect bank errors
4 Arrive at thc correct cash balancc
d. Correct book errors
h. Unearth an-v undctccted caslt fraud
Current tax expetrse plus deferred tax expense is
c. l-ax deductible expense
a. A meaningless sum
None of these
d.
,b.' lncome tax expense
payment
partly in equity shires and partly in debeniures of the
seller
accepts
and
the
purchases
atuilding
An entity
entit-v. This transastion should be treated in the cash flow staternent as follows
a -l'he purchase of the building should he investing cash outilow and the issuance of shares and the
debentures financing cash outllows
b. 'Ihe purchase of the building should be investing cash outflow and the issuance ol debentures
fin;incing cash outflows while the issuahce of shares investing cash outflow
c. 'fhis does not belong in a cash flow statetnent and should be disclosed only in the notes to the tinancial
statements

4.
7

8.
Cg.
C
C

Ignore thc transaction totally sincc

it is a non-cash transaction. No mention is required in either the

i:ash florv statement or in the notes to the flnancial statements


Which of the following reports is not a component of the financial statements according to PAS l?
Director's repoft
Balance sheet
Notes to the financial statements
Statement of change s in

a.
b.

-{
d.

equity

A t,olttntur.\, hea{th und v,elfare organization is required to prcpare

a: Statcment of functional expetlses


a. Staternent of changes in cquitl'
d. Staternent of management responsibility
inconrc
comprchensive
oi
b. Statement
Accounting concepts are NO1'derived from which clf the following?
[.aws of nature
a. [nductivc rcasoning
b.

,s:
d.

Experience

Pragnratism (practicality)

10.'I'heclassificationofaleaseaseitherctperatingorlinancelease isbasedon

a.
b.
.c.
d.

The length of the lcase

l'he economic lif'e of the

asset

The transier of the risks and rcwards of ownership


The minimum lease paynrents being at least 50% of the tair value
I l. When it is impracticable to deternrine the efJbct of an eror for all prior periods, the entity
a. Restates comparative inlirrmation prospectively ltom the earliest date practicable
b. Restates col-nparative infbrmation prospectively up to the latest date practicable
pa Restates comparative infbrrnation retrospcctively fiom the earliest date practicable
d. Restates comparative intbrmation retrospectively up to the latest date practicable
12. An SME, whose onl,"- changes to its equity in the periods tbr which flnancial statements are presented arise from profit
or lqs;. payment of dividends. corrections of prior period error and changes in acc<lunting policy

Has the option to present a statement

of

incorne and retained earnings in place

comprehensive inconre

b. ls required to prosent a statement


c.
d.
A
C

r-rf incomc and retained earnings

ol a statement of

in place of a

statement

comprehensive income
Should presenl on a statemclrt ol incorne
ls required to present a statement of comprehcrtsive income

13. Apropertydevelopermustclassifypropertiesthatitholdslbrsaleintheordinarycorlrseofbusinessas

c. I]inancial asset
lnventory'
d. Investrncntproperty
Property, plant and eqtriPment
14. As a mininrunt requirement. interim linancial reports should include
a. A balance sheet and statenrent ol'cornprehe'nsive income
b. A complete set of flnancial statetnents pursuant to PAS I
g.' A condensed set of financial statements and selected explanatory notcs
.-r.
b.

d.

A condensed balance sheet and statement of corrrprehettsive ittcome

o1'

-rhlEORY

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A

TA Mock Exam
of ACCOUNTS Mock CpA Board Exarnination (page 2)

15. Once a government agency receives Noticc


Modiiled Disbursement System" anrJ crcdit
a. NCA - Local Government

b.

of

NCn - National Covcrnmenl

Cash Allocation (NCA).

c.
d.

16. The level of rounding used in the financial staterne,tts refers


,

-:*:.

b.
c.
d.

it

shall clebit "Cash-National Treasury.

Subsidy lncome Local Government


Subsidy lrrcome --National Government
tct

I'he truncation of the amounts prcsented

The abbreviation of words r-rsed


-l-he
shortening of the notes by removing comparative numbers
The presentation ofa concise financial report rather than a full iinancial report
I 7' Which of the following organizations is responsible for setting International Financial Reporting Standards?
i,
a. Financial Accouriting Standards Board
c. International Acoountirrg Standards Committee
tr,.
.d. International Accounting Standards Board
\p,argo Financial Accounting Comrnittee
Corporation prepares its financial staternents in accordance with PFRS. Which of the following items is
/ts
t
''required disclosure on the income statement?
p. R.evenues, cost ofgoods sold, and advertising expense
b. Finance costs, tax expense, and income
c. Operating expense, non-operating expenses, ancl extraordinary itenry
d. Gross profit, operaling profits, and nct profit
19. An entity that is not publicly accountable rnust make an explicit and unreserved statement of compliance with the

PIjltS lbr SMEs:


a. lf the entity ccmplies with-all the requirements of PFI{S for SMEs.
b. II'the entity complies with the vast majority of the requirements of PFRS tbr SMEs.
c. If the entity complies with the national G,AAP based on PF RS for SMEs with sorne specific differences.
d. lf the entity complies \.vith full PFR.Ss.

20. lf

_
A" -

i /r. 'nt

an entity does not prepare interirn financial reports, then


1'he year-end financial statements (FS) are deemed nol to comply with PFRS

a.
b:'
c.
d.

The year-end FS compliance with PFRS is nct affected


year-end FS will not be acceptable under local legislation
Interim financial reports should be included in the year-end F'S
what amount is a financial asset or financial liability meisured on initial recognition?
a. Fair value" For items that are not measured at fair value through profit or loss, transaction costs are
also included in the initial measurernent
b. The consideration paid (received) for the llnancial asse't (financial liability)
9. Acquisition costs, which is the consideration paid plus any directly atffibutable costs

d.

Zero

22. Which of the following methods is used in PFRS to account for

define<1 benefit pension plans?


Projected-unit-credit method.
c. Accumulated benefits method.
Benefif-years-of-servicemethod
d. Vested years of service method.
Which of the fbllowing situations violates the concept of reliability?
a. Data on segments having the same expected risks and growth rates are reported to analysts estimating

..a:
b.

23.

1-he

b.
c.

.future profits
Financial statements are issued nine rnonths late

Management reports to stockholders new pr<{ects ,.rndertaken, buf the financial siatements nevsr
report the project results
I FS includes a propefty with a carrying amount increa,sed to marag,ement's estimate of rnarket value
24. For companies that prepares financial statements in accordance with FFRS, plant. properry. and equipment should be
valued using which models?
A
?' The cost model or the revaluation model.
b. The cost model or the fair value nrodel.
c. 'fhe cost model or the fair value through profit or loss model.
d. The revaluation model or the fair value model.
25. By applying the definition provided in FAS 21. whish itenr rvill tre regarrled as a monetary item?
D
a. Property, plant and equiprnent
lnventory
b. Land and buildings
Accounts receivable
26. According to the Conceptual Framework, thc two criteria reqpired fbr incorporating items into the income statement
or statement of financial position are that:
ts
a. lt meets the definition of relevance and reliabiliq,r.
__b, It meets the definition of an element and can be measured reliablv.
c. It satisfies the criterion of capital maintenance.
d. It meets thq requirements of comparability and consistency.
27. I'FRS requires changes in accounting principles to be repo$ed
B
a. On a prospective basis.
c. By restating ttre finaneial statements.
-b. On a retrospective basis.
d. By a cur,uriative adjustment on the income statement.
28. The major classification of expenses in government accounting include all of the following, excep{
B
q. Personal services
c. Maintenance ancl operating exprses
d. Financial expenses
h. Selling expenses

c.
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THEORY of ACCOUNTS Mock CPA Board Examination (Page 3)

30. Wtrlcn glthe fbllowing

a.
b"
c. .
i:

Cl

i0.

A
3i

statements regardirrg accounting concepts or theoly is incorrect?


Accounting concepts are human-made
Accountiug concepts are components ol'accounting thcory
Accounting theory has <Ieveloped primarily in response to government regulation

Accountin! theoiy can be defined as a coherent set

of hypothetical,

conceptual and pragmatic

principles.
]'hese are govemment grants whose primary condition is that an entity qualilving for them should purchase, construct'
or otherwise acquire long-ternt assets.
c. Covernment gi[i
a. Grants related t0 assets
Govemnrentappropriation
d.
income
to
b. Grants related
to
is
systems
cash
control
o1'most
A ma.ior objective
a. Ensure that current obligations are met
-tr. Ilnsure that excess cash does not exist
c, Eltsure that unused cash is invested

d.

Hnsure the sat'eguarding of cash

32. Exchange differences arising frorn tronslatior of financial statements of a foreign entity arc

e.
b.
c.
d.

Recognized directt;- in retained earnings


Recognized as accumulated translation adjustments in protit or loss
Recognized as accumulated translation adjustments in the equity section
Capitalized iltht: clifference:i resulted fiom severe devaluation of a currency
tlll. Which of the flnancial statement should an investor primarily use to assess the amounts, timing, and uncertainty of
investing and financing activities of ABC C--onrpany?
c. Statement of changes in equitY
Staternent of comprehensive inconte
d. Statentent of ctsh flows
Staternent of financial position
which
tax rates are used?
34. ln computing the change in detbrred tax accounts,
.!i-'
ftnacted future tax rates
Current tax rate
Past years' tax rates
d.
rates
Bstimated future tax
inclucle
services
personal
-15. Lln<ler NCAS.
a. lraveling, training. seminar, telephone. internet, staff development
cl
b. A<lvertising. rent, insurance and gasolirre
c. Salarics. ol]o*un.., ancl boiruses
d.' Bank charges, interest, losses on tbreign exchange transactions
of the
36. tjnder PFRS 2, a*cash-settled share-based pay,ment (e.g.. share appreciation rights) will increase which
statement'/
ftrllowing elements of the financial

a.
b.

(:

a.
b.

a. Income
b. Asser

'ci
d.

t'iabilitY

I'.quitv

37. Accordirrg to the Conceptual Framework of Accounting,, which of the following is not a constraint of
reliable information?

a. 'I'imeliness
_.b. Neutrality

c.
d.

re

levant and

Balance between benefit and cost


Balance between qualitative characteristics

,.f0., Wttictr of tt',. fotto* ingis not necessarily rcgartled as nonprotit organizations?
B

''

"
D

a. Cooperatives
h. PartnershiPs

37. lhe

c. Net realizable value


d. Prescnt value of luture cash flows
Clurrent cost
38. Transaction costs that are directly attributable to the issuance ofnew shares should be
a.
b.c.
d.

'

ExpensedirnmediatelY

Deducted from equitY


Charged to retained earnings
Deducted from equity, net of any related incorne tax benefit
l'his accounting objective emphasizes the importance of the lncorne Statement,as it is geared toward proper income or
performance determination of the enterprise.
Residual equity theory
a. Entity theorY

c.

d' F'und theory


Proprietary theory
.
40. Significant changei in the market value ol'trading securities occurring afler the balanee sheet date should
a. Be considere<I in the valuation of the securities at balance sheet date and disclosed I the notes to
financial statements
b. Be treated as a prior period error in next year's financial statements
g_. Not be consideied in the valuation o[the securities at balance sheet date but disclosed in the notes to
b.

,d.

financial statements

Result in an adjustment.of the rnarket value used in the lower of cost or market valuatiorr at balance
sheet date

l'abor unions

to report a long-term payable requiring a commitment to pay money at a

b.

39.

Country clubs

determinable future date is


a. General Price level

D'-

measurement basis olten used

.g:
'd'

reports noncurrent assets as the I'irst item on ils balance shect- This is an example
tmpropei statemenl prsentation
9': lndustry practice
Substance over tbrrn
d'
Conservatism

41. A public utility

a.
b.

ol

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TA Mock Exam

THEORY cf ACCOUNTS Mock CPA Board Examination (page 4)

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.i2. Which is not an objective of the New Covernment Accounting

a.
b.

"p..

f -r tl.

System?

Simplify governrnent accounting


Confbm to International Financial Reporting Standards
Cornply with the requirements of International Monetary Board

(ienerate periodic and relevant financial repofts for better monitoring or performance

l'i.i. -,.Whcre a business transaction requires a direct adjusfment to an equity u.count, the tax effect is adjusted against:

b" tax expense


d. cash
.,14. Which of the following statements best describes tlre rernr guing concern?
\.;
e. -lhe expenses of an entity exceed its income
b. When current liabilities of an entity exceed current assets
c. 'Ihe ability of the entitv to continue in operatiorr lor the foreseeable f'uture
d. The potential to contribule to the flow of cash and cash equivalents to the entity
.15. An entity that presents its first PFRS financial statements is known as

a.
b.

Originating
Provisional

entity
presenter

c.
d.

First-time adopter
Initial financial reporter
46. Which one ot'the following is not a source o{'generally accepted accounting principles in the Philippines?
C
.a. Existing practices in the Philippines
b. Available literature on the topic or suLrject under study
c. Pronouncements by the Association of CPAs in Public Practice
d. Statements, recommendations, studies, or standards issued by standard-setting bodies such as the
International Accounting Standards Board and the F'inancial ,Accounting Standards Board
47. When the revaluation model is used lor reporting PPE, the gain or loss should be included in:
C
a. lncome for the period,
b. Gain liom revaluation on the income statement.
c. A revaluation surplus account in other comprehensive income,
d. An extra<lrdinary gain or loss on the income statement.
4B. A change in accounting policy should be applied
B
.i. Retrospective only
c. Prospectively only
b. Retrospectivelyandprospectively
d. Currently only
'49.
According to PAS 37, for which of the folbwing should a provision be recognized?
D a. . Future operating losses
c. Reduction in fair value of financial instrumcnts
b. Obligations under insurance contracts
d. Obligation for plant deconrmissioning costs
-50. Which is not a requisite of 'reliability' of financial statements?
D
a. The statements are presented in accordance with GAAP
b. The statements are examined by independent auditors who prepare adequate statements
c. An effective system of internal control is maintained
n: Income tax returns are properly filed
51. What is the inherent justification underlying the concept ol'potential ordinary shares (diluters) in UPS compurarion?
ll
a. .. Cost-benefit
c. Materiality
b. Substance over form
d. 'l'imeliness
52. Uider percentage of completion method, the Progre.ss Billings account is a ', .
A
c. Noncurnent liability account
_z:" Cantra current asset account
b. Contra noncurrent asset account
d. Revenue account
53. ln the case of grants related to an assel. which of these treatments is prescribed by PAS 20'l
B
a. Record the grant at a nominal value in the first year and write it off in the subsequent year
"b. Either set up the grant as deferred income or deducf it in arriving at the carrying amount of the asset
c. Record the grant at fair value in the first year and take it to inconrc in the subsequent year
d. l'ake it to the income statement and disclose it as an extraorrlinary gain
54. A small and medium-sized entity must measure its property, plant and equipmenr after initial recognition at

a.
b.
c.

Cost
Cost less any accumulated depreciation less any accumulated impairment losses
Cost less any accumulated depreciarion less any accumulated impairnrent losses plus the cost of day-

d.

to-day servicing
Cost plus the cost of day-to-day servicing

55. Which of the following are acceptable

I)
ll)

a.
b.

III)
I

met.hods for reporting comprehensive incorne uniler PFRS?

One comprehensive income stai-ement.


Two statements: an income staterment and a comprehensive income statement.
In the statement of owners' equity.

only.
ll only

I and

c.
d.

I, II. and lll

I and ttt onty


56. Clenda Corporation prepares its financial statements in accr:rdance with PFRS. Glenda must report finance costs on
. ,, r,1 ,
the statement of cash flows: p,r-,.. r.'r,i :
,

a.
b.
- c.
d.

ln operating activities.
Either in operatin! activities or financing o"iiuiri"r.

In financing activities.
In investing activities or financing activities.

TA Mock Exam

THEORY of ACCOUNTS Mock CPA Board Examination (Page 5)

36. Which of the fbllowing is the tirst step within hierarchy of guidance to which management ref'ers, and whose
applicability at consiclers. when selecting accounting policies?

a.
.
V:
c.

Consider the most recent pronouncentents of other standard-setting bodies to the extent they do not conflict
lvith PFRS or the Conceplual Framework.
Apply a standard fronr PFRS if it specifically retates to the transaction, event, or condition.
Consir1er the applicability of the definitions, recognition criteria, and rneasurement concepts in the
C

d.

nceptual I;r

am ewor k.

Apply the requirements in PFRS dealing with similar and related issues.

use of govemment funds?


c.
No obligations shall exceed allotment
, No allotment shall exceed appropriation
obligation
No liquidation shall excced
"il All of the choices
to the land is not transt'erred, the lease is trealed as if
ancl
the
title
land
and
buildings
18. Where there is a lease of
(-'
finance
leases
are
buildings
land
and
a. Both
b. Both land and buildings are operating leases
.c. l-and is operating leascl building is tinance lease
d. [,and is finance lease; building is operating lease
.i9. The results of discontinued operations should be presented a single amount in the
a. statement of changes in equitY
D
b. income statementln juxtaposition with incorne from continuing operations
. income statement, before tax, separately liom income from continuing operations
. c.
.d. incclme statement, after tax, separate[y from income from continuing operations
,40. An accountant uses creative skills and judgment when he or she
D
n. Attest to the fairness of presentation of t-inancial condition and performance of an entity
b. lnterprets the information presented in the financiat statements through ratios and trend analysis
c. Applies the rules of debit and credit
d. Pertbrrns the functions described (a) and (b) above but not function (c)
41. Which of the tbllowing is true regarding reporting deferred taxes in the financial statements?
a. De{erred tax aisets and liabilities are classitied as current and noncurrent based on their expiration date.
B
b.' Dcferred tax assets and liabilities nray be classified only as noncurrent.
c. Det'erred tax assets are netted with deferred tax liabilities to arrive at one amount presentetl on the balance

17. What are the rules on the

a.
b.

slteet.

d.

Deferre6 taxes of one jurisdiction are oft'set against another jurisdiction in the nctting process.
is a criterion that must be met in order for an item to bc recognized as an intangible asset other

42. Which of the tblorving


than goodwill?

'l'he item's lair value can be measured reliabll'.


The item is part of the entity's activities aimed at gaining new scientific or technical knowledge.
The item is expecrcd to be used in the production or supply of goods or services.
d.- The itern is identifiable and lacks physical substance.
4j. According to PAS 24, which one of the fottowing is not a related parq, of AIIC Company?
a. . A shareholder of ABC Company owning 30% of the ordinary share capital
B
b: An entity providing banking facilities to Atlc Company
c. Key management personnel of ABC Company
d. An associate of ABC ComPanY
44. 't'he excess of the fair value of leased property at the inception oithe lease over its cost or carrying amount should be
classified by the lessor as
a. Unearned income liom a sales-type lease
C

a.
b.
c.

b.
c.
d.

Uneamed incorne fiom a direct-tlnancing lease

Manufacturer's or dealer's profit from a sales-type lease


Manufacturer's or dealer's profit fiom a direct-financing lease
45. The tbllowing statements are based on the Conceptual Framework of Accounting:
Stqtemenl 1: The Conceptual Framework is a repo(ing stand4ld' ''
Statement 1L' In cases of conflict, the requirements of the Coriceptual Framework prevail over those of the PFRS.
Statement ill: The Conceptual lrramework states that trahsaction must be accounted for according to their legal form.
c. Statement I is true; statements ll and lll are false
a. All of the statements are true
d. Statements I and III are truel statement ll is false
false
are
the
statements
of
b. All
(Opcrating
Segments):
8
the
PFRS
based
orr
are
statements
following
]'he
46.
An entity shall report separately infonnation about an operating segment that meets any <,rf the following quantitative
.

thresholds:
Stalement 1j lts repo$ed revenue, including hoih sales to external customers and intersegtnent sales, is l0% or more of
the combined revenue, internal and external, of all operating segments'
Statement 1/: The absolute amount of its repoited profit or loss is l07o or more of the greater, in absolute amounl, of
(l) combined reported profit of all operating segments that did not repon a loss and (2) combined reported loss of all

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orth.e combined assers c,ran operatins sesn,ents


true?
are
statcments
Which of the fbregoing

a.
b.

I only

Il onlY

c.
d.

I and II

I. ll and lll

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TA Mock Exam

IHEORY of A.CCOIJNTS Mock CpA Board Examination (page 6)

'i .i. The fr'rllowin,e statements are

based bn the PAS I (Presentation of Financial Statements) i


The number of shares authorized ftrr issue shall be shorvn in the statement of financial position or the
statement of changes in equity or in the notes to the financiai statements.
Statement 11,' An entity presenting a separate income statement and a statement of comprehensive income shall present
a statement of changes in equity.
Statemeitt lll: An income statentent is prepared under the "natural presentation" when it presents expenses based on
iogislics. marketing and production.
Vr'hich olthe lbregoing statements are true'.)
a" I onlv
I and Itr

Stitan ?nt

(-r

b. il onlv
-l.he

4ll.

c.
d.

l. Il and III

c.
d"

Only statement
C)nly statement

following staternents are based on the PAS 29 (Financial Repoiting in I{yperinflationary Economies);
Stslement /: ,The financial statements of an entity whose functional currency is the currency of a hyperinflationary
economy shall be stated in terms of measuring unit current at the end of the reportjng period (balance sheet date).
Siatement ll.' 'l'hc gain or loss on the net monetary position shall be included in profit or loss and separately disclosed.
'*atement 11l: When an economy ceases to bc hyperinflationary, an entity shall trcat the amounts expressed in the
measuring unit current at the end of the reporting period as the basis lor carrying amounts in the subsequent financial
stater]1ents.

A
Il

1.'

il:
b.

All of the statements are true


0nly statement I is true

49. An example of a nominal contra account is

a.
b.

Freight-ln

ll is true
lll is false

c.
d.

Premium on bond liability


Accumulated depreclation
Sales returns and allowances
50. When an entity chooses the revaluation rnodel as its accounting policy for measuring property, plant, and equipment,
which olthe following statemenrs is con'ect'.)
a. When an asset is revalued, the entire class of property, piant, and equipment to which that asset

'

b.
c.
d.

belongs must be revalued.


When an asset is revalued, individual assets within a class of property. plant, and equipment to which
that asset belongs can be revalued.
Revaluation of property, plant, and equipment must be rnade at least every three years.

Increases in an asset's carrying value as a result nl' the first revaluation must be recognized as a
component of p'ofit or loss.
51. Which of the following is usually N0'l'discloscrt in the selected explanatory notes tbr an interinr finalcial reporr?
C
a. Accounting policies and methods
c. Nature olentity's operations
b. Events after the interim period
d. Seasonality or cyclicality of interim operalions
-52. Retrospective application of a change in accounting policy means:
D
a. Applying a new accounting policy to transactions, other events and conditions, identitled bcfore the date
when the financial statements arc authorized fbr issue, as if that policy had always been applied.
b. Applying a new accounting policyr to transactions" other vents and conditions occurring between the date
as at which the policy is changed and the date when the tlnancial statements are authorized for issle.
c. Applying a new accounting policv to transactions, other evenls ancl conclitions occurring a{1er the date as
at which the policy is changed.
d. Applying a new accounting policy to transactions, other events and conditions as if that policy hacl
always been applied.
53. According to the Conceptual Framework. the financial statement eloneit that is defined as incrcases in cconomic
benefits during the accounting pcriod in the {brm of inflows or enhancenrents of assets cr decreases of liabilities rhat
result in increases in equity, other than those relating to contributions from equity participarrts. is:

a.
b.

c.

Revenue
Income

Prol'its

54. Which of the tbllowing is not used in accounring ,rr!,'rrr,rfi)lrl, in a,rsociates

D
A
B

entities of SMEs?
a. Cost model
b. Equity method

c.
d.

an<l

interests in joinrtlt c:ontrolletl

F-air value ntodel

Revaluation mo<iel
-55. Which is the minimum reporting requirenient fbr a company fhat is preparing its first PFRS financial statements'l
a. Three statements of financial position
c. One statement of comprehensive income.
b. Two statements ol'financial position.
d. One statement of cash flows"
56. Recording the adjusting entry for depreciation has the same efTect as recording the ad.iusting entry fbr

a.
b.

57. Changes in accounting policies

a.

c.
d.

An unearned revenue

A prepaid expensc
Permitted

if

An accrued expense
An accrued incorne

are:

the change

will result in a more rcliable and more relevant presentation of the financial

statements.

b.
o.
d.

Pcrmitted if the entity encounters nw transactions. events, or conditions that are substantively different
{iom existing or previous transactions.
Required on material transactions, il'the entity had previously accounted lbr similar, though imnraterial,
transactions under an unacceptable accounting method.

Required if an alternatc accountins policy gives rise to a material change in assets, liabilities. or the
currcnt year net income.

RcIA -Th R^,*t, Srl,""t

TA Mock Exam

Auar^'"1a,*,7

"[
THEORY of ACCOUNTS Mock CPA Board.Examination (Page 7)
i'72.ltJncler If Rlcl 19, how should an entity
r* , liability (in the <.rrder of priority)?

meLsure

I) Fair value of the equity initrunrents issued 'l


ll) Fair value of the liabilities extinguished 2lll) Carrying amount of the liability issued . $

a.
b.

I, II,

lll

il, ilt,

i'Z:.' When a government official disbuises funds


A'- -a. Technical malversation

b:

equity insffuments issued to extinguish al! or part of a financial

g;
d.

II, I, III
t, IIt, II

beyond the approved budget, the

c.

An administrative

otlcial may be charged with


caser

Craft and cormption


d. Estafa
14. Which of the fbllowing is not considered an economic entity?

a.
b"
. c.
d.

SM Group ol'Companies

ABS-CIIN toundation,

a chaiitable institution
Lions Cluh lnternational. a civic organization
Chris James, a Quezon City resident who owns a chain of beauty salons
75. An entity that acquires an intangible asset may use the revaluation mctdel lbr subsequent measurement only ifi
B
a. 'fhe useful life il'the intangible asset can be reliabiy detennined.
b. 'An active markel exists ibr the intangible asset.
c. The cost of the intangible asset can be measured reliably.
d. The intangible.asset is a monetary asset.
76. linder PAS 12. deferred tax assets and liabilities should be re;lorted in the balance sheet
C
a. As cument and not-current assets and liabilities depending the balance shect classification of the
related tax basis of the temporary clifference
'
b. , As current and non-current depending on the order ol'liquidity br rnaturity
e:" As non-current asset and qon-curent liability
'd. Always net non-current asset or net non-current liatrility
,
?7. When total debit exceeds toial credit inthe httlunc'c.yhect columns of the workshcct. this indicates
Net loss
c. lero profit
-b1- Net income
d. No mehningful amount
'78. tJnder IFRIC 13, the award credits granted to customers under a "customer loydlty prograrn" is often described as

a,

A'-

a.
b.

Points

c.

Llredits

Awards
d. Royalty
79. Which of the fbllowing statements aLrou{ financial statements is inconect?
D
a. They provide information about the financjal position. performance, and cash flows of un enrerprise
that is useful to a wide range of users in making economic decisions
' b. They are the primary responsibility of the rnanagement of the enterprise
'
c. They show the results of ,he stewardship of the management for the resources entrusted to it by the
capital providgrs
are prepared at least annually and are directed to both the common and specilic inlbrmation
_d.'
' They
needs o1'a wide range ol'stal.ement usL'rs,
80. Lessor shall recognize asset held under a flnance lease as a receivable at an anroun{ cqual to
Gross investment in the lease
c. Cross rentals
Net investment in the lease
d. Residual value, guaranteed or not
...8 l. .'Which prepares the national govemment buclget?
A 'Executive department
c. Judicial departmcnr
-bl. Legislative deparfment
d. All three branches of gr;vernnrent
82. Which of the fdllowing gains and losses can an entity elect (an accounti;rg policy chcice.) to recoglrize in other
comprehensive income (i.e. in total cornprehensive income outside of prolit or loss)'.)
C
a. Losses from discontinued operations
b. Cains and loises arising on translating the financial statements of a fbreigrr operation
er- Actuaiial gains and losses of deflrred benefit plans
d. Gains and losses that managemenr considers extraordinary items
83. Which of the following accounts is recognized uncler single-entry bookkeeping system ?

'a.
-. !.'' a.

$4'
C \-"

4 Cash
b. Merchandise inventory
'lJnder
a.
b.

c.
d.

Property and equfmenr


'
Salaries expense,
IFRIC 12, the private concession operator shall recognize infrastructure asset as

Intangible asiet
c. Either intangibb ;;;r,;;; ;nancial asset
Financial
asset
-&- Neither intangible assei nor tjnancial asset
./..-..-..
Wtrictr of the following about note disclosures are considered mandatory(requirecl) rather than voluntary (optional)?
ItS.
t'i,
Di$closure of infJmation about key sources of estimation uncertainty.
Il. Disclosure of information about.iudgment that flranagement has madi in th-e process of applying accounting
policies.
lll. l'he presentation of noles to the financial slatelnents in a systcrnatic manner.
lV. The cross-refbrence between each line in the financial statements and any related infonnation disclosed in the
no.tes to the financial statemehts.
D
: ?{.' I and ll only
c. l, Il and lll only
b. lll and iV only
d" I. ll. Ill and IV

RcSA -T& fuua,u,

|rf"d 4 A"rp,^**,*,r

TA Mock Exam

THEORY of ACCOUNTS Mock CPA Board Examination (page B)

',86. Which of the following is not a function of the Commission on Audit?


i- "' -'-- '
?. It is the gtlvernment body that prescribes the use of New (iovernment'Accounting System (NCAS)

b" It keeps the general accoullts of the governments.


c. It is charged with responsibility and approval of accounting system for government agencies {DBM}
I
.
d.
It prepares that annual FS of the national and local govemmerlts, agencies including COCCT.
.,
87. Accounting that recognizes changes in tlrc purchasing power of money is known as
A
a. Price-level accounting
c. Current value accounting
b. Historical accounting
d. Traditional accounting
'''

f)

88. What

is the reasonable upper

a. Two
- b. Five

limit for the nurnber of operating segments that an entity must disclose?

c.
.*:
,4.

Ten
I til'

c.

Supreme Court

Si.x

89. I'hePresidentcannotcontractorguaranteeforeignloansonbehalfoftheRepublicwithoutthepriorconcurrenceof

a.
b"

Monetary board

Philippire Congress
d. Bangko Sentral ng pilipinas
90. A bond or similar instrument convertible by the holder into a fixed number of ordinary shares of the entity is
(a. en cqtiity instrument
z Acompound financialinitrument
b. A primary financial insffument
d. A derivative financial instrument
, 9l I Which information should be disclosed in relatjon to dsrivative contracts?
C
a. . " Fair value only
c. Bqth fair value and notional amount
'b. Notional ainount onlv
d. Neither fair value nor notional amount

92. tsudget execurion refers to


'a' It is the enactment of the general appropriation bill into law by Congress.
authorization}
y lt is the intplementation of the government budget by different departments{budget
and release of allotments
c. It involves the comparison of performance with predeternined government plans and evaluation of

expenditures and performance. {budget accountability}


It is the authorization from DBM to an agency to incur obligation up to.a specified amount that must
be within the legislative appropriation. {allotment}
How is goodwill arising on the acquisition of an associate dealt with in the financial statements?

d"

93.

a.
b.
c.
d.

It is amortized
Ir is tested for impairment periodically
It is written offagainst profit or loss
Coodwill is not recognized separatcly within the carrying amount of the investment
94- Under IFRIC I7, an entity shall measure a liability to distribute noncash asset as dividend to irs owners
1i.e., property
dividend as a noncash distribution to shareholders) at
B
a' Carrying amount of the asset to be distributed c. Higher amount between (a) and (b)
b.
Iair value of the asset to be distributed
d. Lower amount between (a) and (b)
,-^\ - _
It
is
a
scheme
dgveloped
participating
to
encourage
companies
reduce emission of greenhouse gases to specified
[95.\

\ -

levels.

a.
b.

Carbon Emission Scheme


o. Cap and'frade Scheme
Environmental Accounting
d, Creenhouse Effect Accounting
96. Which of the following statements best describes the National Budget System?
D
a. It consists of the methods and practices of the government for planning. programrning alrd budgeting
b. It includes the adoption of sound economic and fiscal policies
c. lts primary concern is'the availability and use of money to provide the necessary services expected of
the government
.d- All ofthe foregoing statements describe the National Budget System
97.' Under PFRS I I, what is thi method of accounting for investment in joint venture?
B
a. Cost method
_s: Fair value method
d. Consolidation method
- b. Equity method
98- Ordinary shares issued as part of business combination are included in the EpS computation ftom
A" .
a. The date of acquisition
c. The midpoint of the aciounting year
b. The end ofthe accounting period
d. The beginning ofthe accountine period
99. under PFRS 9, an entity shall measure a note after initial recognition at
C
- a'
Amortized cost
c. Elther amortized cost or fair vahle thru p/L
b. Fair value thru P/L
d. Either amortized cosr o, iuir rutr" thru OCI
l0O.NGAS is applicable to all of the following, except
B
a. GOCCs
c. Cities and municipalities
$. Barangays
d. Departments and government agencies

(flE N D x-r
-

ERRAI|UM/CLARIFICAT|ON
retained eamings to contributed capital (i.e.. total equity does not change); hence, answer should
be

e(not

.B').