VTA-257: STATEMENT oF FINANCIAL POSITION & NOTES To THE FINANCIAL STATEMENTS Aa D 10. Sources. PAS 1/PAS L0/PAS 24/PAS 37/Applicable AICPA/Various test banks The statement of financial position of a reporting entity presents a structured summary of the +8 Assets, liabilities and equity at the reporting date b, Cash receipts and payments of cash during the period ©. Profits and losses not reported in income of the period 4. Revenue and expenses arising during the reporting period Which of the following is an essential characteristic of an asset? a. An asset is tangible b. An asset is obtained at a cost An asset provides future economic benefits d. The claims to an asset's benefits are legally enforceable Which of the following statements best describes a liabllity? a. An excess of equity over current asset =D. Apresent obligation of the entity arising from past events ¢, Resources to meet financial commitments as they fall due d. The residual interest in the assets of the entity after deducting all of its llabilities Under PAS 1, assets in the statement of financial position are broadly classified into @. Current and non-current . Depreciable and non-depreciable b. Tangible and intangible d. Monetary and non-monetary Under PAS 1, which of the following does not refer to a current asset? a. It is held primarily for the purpose of being traded b. It is @ cash or cash equivalent restricted for more than 12 months from BS date C. It is expected to be realized within twelve months after the balance sheet (BS) date d. It is expected to be realized, sold or consumed within the entity’s normal operating cycle Under PAS 1, which of the following does not describe a current liability? +a, It is held primarily for the purpose of being traded +b. It is expected to be settied within the entity's normal operating cycle ¢. It is due to be settied within twelve months after the balance sheet date d: The entity has an unconditional right to defer settlement of the lability for at least twelve months after the balance sheet date When an entity BREACHES an undertaking under a long-term loan agreement with the effect that the lability becomes payable on demand, the liability is classified as ‘8, Current, only if the lender demands immediate payment as a consequence of the breach “b. Current, even if the lender has agreed not to demand payment as a consequence of the breach ¢. Non-current, only if the lender demands immediate payment as @ consequence of the breach d. Non-current, even if the lender has agreed not to demand payment as a consequence of the breach The REFINANCING (rolling over) of a currently maturing long-term debt completed on or before the balance sheet date requires that such debt be classified as a a. Current liability *b. Non-current liability ¢. Current liability or non-current liability, at the option of the debtor d. Non-adjusting event and be disclosed in the notes to the financial statements The REFINANCING (Folling over) of a currently maturing long-term debt of an entity completed after the balance sheet date but before the FS are authorized for issue requires that such debt be classified as @ ‘a. Current liability, if the refinancing is at the discretion of the entity owing the debt *b, Current liability, the discretion of the entity to refinance the debt notwithstanding @ Non-current liability, i the refinancing is at the discretion of the entity owing the debt d. Non-current liability, if the refinancing is not at the discretion of the entity owing the debt Offsetting of assets and liabilities is &. Allowed in all cases c. Allowed unless not permitted by PERS. b. Not allowed in all cases J Not allowed unless permitted by PFRSSTATEMENT of FINANCIAL POSITION & NOTES to the FS 4-11, The balance shect format wherein asset section 1s shown side-by-side with liabilities & equity section, ’@ Account form © Functional presentation ’b. Report form 4. Natural presentation P12, Which of the following is not an acceptable presentation of the statement of financial position? Assets presented in the order of liquidity 1D. Non-controting interests presented within equity Provisions presented as part of the lability section 18. Deferred tax liabilities presented as part of current Habilities & 13, Which is not required to be presented as a line item on the tace of the statement of financial position? Biological assets c._Investment property Contingent thatnlity 4. Investments accounted under equity method B 14. An obligation is not a contingent lability but should be recognized as a provision when @, Obligation Is unusual in nature and occurs infrequently : Amount 1s measurable and settlement of obliqation 1s probable ¢. Amount is measurable and settlement of obligation is frequent d, Obligation 18 unusual in nature and settlement of obligation 1s probable These provide narrative description or disaggregation of items disclosed on the face of the financial & statements and information about items that do not qualify for recognition. a. Financial reports 2 Notes to the financial statements 1b, Value-added statements d. Summary of significant accounting policies () 16. What is the purpose of information presented in notes to the financial statements? a. To present management's responses to auditor comments, b. To correct improper presentation in the financial statements. *¢. To provide disclosures required by generally accepted accounting principles. d. To provide recognition of amounts not included in the total of the financial statements 17. The application of Philippine Financial Reporting Standards, with additional disclosures if necessary, 's presumed to result in financial statements that achieve a. Agaregation c. Comparable information b, Fair presentation 4. Consistency of presentation 18. What is the normal order of presenting the notes to the financial statements? 1A). Statement of measurement basis and accounting policies applied 8). Supporting information or computation for line tems presented and aggregated in the FS ©) Statement of compliance with Philippine Financial Reporting Standards (PERS) 1D) Commitments, contingencies, and other required financial and non-financial disclosures. a. CBD “f CABD >. CAD @ BAD B19. Which is not included in the ‘accounting policies’ section of the notes to the FS? ‘a. The measurement basis used in preparing the FS by’ The supporting computation for items aggregated on the face of the FS “¢, The accounting policies used that are relevant to an understanding of the FS 4. Whether company is using FIFO or weighted average method for costing inventory C20, An entity is required to present the following non-financial disctosures, except a. Domicile and legal form of the entity D. Description of the nature of entity's operation Names of major shareholders and board members d. Name of parent and ultimate parent of the group of companies ~ © 21, Under PAS 24, related parties do not include a. Affiates b. Associates € Entities that have a common director d, Key management personnel and thelr close family members 1-22. Which ofthe folowing is nota related party as envis, > a. A director of the entity ‘ Rech inta, b. The parent company of the entity €, The som of the chief executive officer of the entity 4. Ashareholder ofthe entity that holds 19% stake th the entityINE DS Ute Kowritan Suthoot of Cbcoiteta ences TAsL0f ‘STATEMENT of FINANCIAL P OSITION & NOTES to the FS (23. When a related party transaction has oc« * statements the following information, except The nature of the related party relationship The amount of rel: ited party transaction (if any) | The method of pricing for the related party transaction } The amount of outstanding balance ana’ any related provision for bad + Jebts (if any) fred, an entity shall disclose in tlre notes to the financial ange B 24. Relationships between pare nts and subsidiaries shall be disclosed Only if there have bi2en transactions bets ven these related parties Even if there have bien no transactions Lietween these related parties c. Only if there have ben transactions be tween these related parties and the amount is substantially matenal 4. Only if there nave bev2n transactions betwieen these related parti be settled in normal bussiness terms : and the amount is to D 25. PAS 24 requires disclosure of compensation of ky management personnel. Which of the following would not be considered as a compensation for this purpose? ‘a. Short-term benefits Termination benefits b. Share-based payments ge Reimbursement of 0 st-of-pocket expenses C26. Under PAS 10, events after the BS date (reporting period) are favorab'e and unfavorable events that occur between the ‘a. BS date and blind date b. BS date and FS issue date ©. BS date and the date when F'3 are authorized t'or issue d. The date when FS are author zed for issuance . nd FS issue date B 27. The financial statements are authorized for issue when a. Mthe FS are made avaliable to shareholders 8. The board of airectors reviews the I'S and authorizes them for issue 2 The shareholders approve the Fal their annua. stockholders’ meeting . The approved FS are filed with a go /e-nment reulatory body (e.2., SEC) A 28. These are post-BS events that provide evide v:e of conditions that existed at the BS date. & Adjusting events c. Favorable events b. Non-adjusting events d. Extraordinary events 4 29. These are post-85 events that are indicativ> concitions that arose after the BS date, 2. Adjusting events that require certair disclosures in the rotes b. Non-adyusting events that require certa n disclosures in the notes ¢. Adjusting events that require adjustmer t of amounts recognized in the FS d. Non-adyusting events that require adjustmer't of amounts recognized in the FS (,30,Dividends declared by the entity after BS date shail ie treated as a(n) 2. Adjusting event £. Non-adjusting event b. Contingent event © Extraordinery event PAs 10 Events after Balance Shee: Date (Reporting Perioa) Indicate ‘AE the post-B5 event ws classified a8 an a cjusting eve ot verwise, Indicate ‘NE’ (non-adjusting event), [NE] 31) Announcement of a plan to discontinue operations ‘AE | 32) Bankruptcy of a customer that occurs after the BS date HE | 33) A major business combination after Bt; date HE__| 34) Abnormally large changes in asset prices or foreign @ «change rates Lae | 35) Destruction ota mayor production plant by tre AE | 36) Sale of inventories after BS date that ‘nay give evidence about their net realizable value [-AE_“| 32) Discovery of fraud or errors that show the FS are incorrect HE | 38) Major common share transactions and potential common share transactions after BS date [NE 39) Expropriation of major assets by the government LAE | 40) Determination after BS date of the profit sharing or bonus payment if the enterprise has the present obligation at BS date to make such payment