/ © The Review School of Accountancy Final Pre-Board Examination 12 April 2014 10:30 AM - 12:00 NN A Reory, of scons DY, it Select’ the correct answer for each of the following Mack only one. answer for each item by shading the box gerresponding to the letter of your choice on the answer sheet provided. STRICTLY NO ERASURES ALLOWED. Use pencil no. 2 only. SetB D A+ which choice correctly desceibes the following statements? Statement I: If an entity cannot distinguish the research phase from the development phase, it should treat an expenditure on a project as if it were incurred in the research phase only and recognize an expense accordingly. © Statement II: Tf it is difficult to distinguish between a change in accounting estimate and a change in accounting policy, then the change is treated as a change in estimate and must be accounted for currently and prospectively.- Statement III: In raze circunstances, when a retitenent benefit plan has attributes of both defined benefit plan and defined contribution plan, the plan is deemed as a defined contribution plan. a. Only statement 1 i3 false b. only statement 11 is true €. Only statement IIT is true & only statement I1r is false B 2. wnicn is ene correct order of the following steps in the accounting cycle? Step 1: Preparation of financial statements : Step 2: Making closing entries in the general journal Step 3: Posting transaction entries in the general ledger Step 4: Making reversing entries in the general journal ae 23/4/21 b. 3/1/24 e. 2,4,3/1 a. 3,1,4,2 By 2¢ wnicn of the following terms is not descriptive of smes? a. Private entities “Listed companies : C. Small and medium-sized entities @! Non-publicly accountable entities Which of the following shall be treated as part of PPE according to PAS 38 on intangible assets? Operating system b. Application software c. Digitally stored database _ 4. Outsourced online program At the inception of the lease contract, the lease term to he equivalent to 55% of the economic life of the le. but the lease contract contains a bargain purchase lessee should record the lease as 4. Neither asset nor liability Asset but not Liability Asset and liability Exponse is determined ased property option. TheSes ¢ fon. Ba. TeoRy oF accounts al Pre-Board Examination (May 2014 Batch) NN Page 2 For equity-settled share-based payment transactions, the entity shall measure the goods or services received and the corresponding increase in equit: Statenent I: Directly at fair value of the goods or service received Statement IZ: Indirectly, by reference to the fair value of the equity instruments granted, if the fair value of the goods oF services received cannot be estimated reliably ~ a. Only statement I is true b. Only statement Ir is true Both statements I and If are true ‘a. Neither of the statements is true Based on PIC rules (June 2013), the cost of demolition of unwanted building purchased as part of a parcel of land shall be charged to a. Profit or loss b. Profit. or loss (preferred treatment); cost of land (alternative treatment) Cost of land (preferred treatment); cost of new building {alternative treatment) di Cost. of new building (preferred treatment): cost of land (alternative treatment) which of the following is the proper way to report a contingent asset when its realization is virtually certain? a. AS an asset 'b. Disclose only ¢, As unearned revenue 4. Research and development PERS 13 on “Fair Value Measurement” sets the rules on 1) How to measure fair value iI) What to measure at fair value IIT) When to measure fair value Tv) How to account for subsequent changes in fair value av I only “p. I and Ir ec: I, II and 111 d. I, TIE and IV What item appears first on the statement of cash flows prepared using the gixect method? a. Net income b. Depreciation “ c., Retained earnings > Cash receipts from customers Which, of the following is not listed under the “faithful representation” characteristic of financial information based on the Conceptual Framework of Financial Reporting? a. Prudence ‘| Neutrality’ c- Completeness . d. Freedom from error Determine the true statement regarding IFRS when referred collectively. ‘a. The term “IAS” generally covers “IFRS” 6. The term “IFRS” generally covers “IAS” cc. The term “IAS” generally covers “IFRIC” ¥ d. The term “IFRIC” generally covers “IFAS” ¥Poa re mee Eaton 12 April 2014 * 10:30 AM to 3% owe) ee Page 3 5 A 13. The Following are based on PAS 24 (Related Party Disclosure): Buss ies Statement r: items of a except when separate the effects of of the entity. Statement II: Disclosures that related party transactions were made fon terms equivalent to those that prevail in arms jength trapsactions are made only if such terms can be substantiated. True, true b. True, false ©. False, true d. False, false similar nature may be disclosed in aggregate disclosure is necessary for an understanding of (islated party transactions on the financial statements a. Fair value of the assets distributed b. Carrying amount of the assets distributed ©. .gither “the carrying amount or fair value of the assets distributed a. Neither the carrying amount nor fair value of the assets distributed ch of the following is ameng those listed under PAS 29 as indicators of hyperinflation according to PAS 29? a. People prefer to keep their wealth in monetary assets b. People prefer to keep their wealth in relatively stable foreign \*" currency c. Interest, rates, wages and prices are not linked to a price index d. The cumulative inflation rate over five years exceeds or is approaching 100% bonds is purchased at a. In between interest payment dates b. At the face value of the bonds A discount A premium a 1 Cyptetn:parenecanip, a. Management consists of the board of directors b. Profits are always divided equally among partners €. Dissolution results when a partner leaves the partnership ‘a. No partner is liable for more than a proportion of the company’s debts 18. other than financial liabilities measured at fair value through profit or loss, how are financial liabilities subsequently measured under PFRS? ; 2. Fair value if acceptable to the entity. bt Amortized cost using the effective interest rate method. c, Amortized cost using the stated interest rate of the debt. S. The amount of undiscounted cash that would be required to settle the obligation at the end of thé reporting period. 7 /A9. Under PFRS 11, joint arrangements that are joint ventures (which were ‘jointly controlled entities’ under the PAS 31) are accounted for undex 2. Cost method in accordance with PAS 39 Ww. Equity method in accordance with PAS 28 7, ERE Me method in accoraance with PRRs 9 4. Proportionate consolidation method in accordance with PAS 31