You correctly answered 13 out of 30 questions with an accuracy of 43.33%.

You gained 190 experience points!

Question 1
Entities which are holders of secondary licenses issued by a regulatory agency are not
considered as SMEs. Which of the following is not among this type of entities?
Securities dealer/broker and mutual fund companies
Public utility companies
Commercial banks, investment houses, and finance companies

Insurance and pre-

need companies
Theory of Accounts - SME (Easy)

Question 2
Consolidated financial statements of SMEs must include the financial statements of the
entity and its
Controlled special purpose entities
special purpose entities

Subsidiaries

Subsidiaries and controlled

Associates

Theory of Accounts - SME (Average)

Question 3
In the separate FS of a parent company that qualifies as SME, investment in
subsidiaries is accounted for by using
Cost less impairment or equity method

Cost less impairment, equity method or

fair value with changes in fair value recognized in profit or loss

value with changes in fair value recognized in profit or loss
fair value with changes in fair value recognized in profit or loss
Theory of Accounts - SME (Easy)

Equity method or fair

Cost less impairment or

Question 4
Entities considered as holders of secondary licenses issued by a regulatory agency are
not considered as SMEs. Which of the following is not among this type of entities?
Insurance and pre-need companies
Commercial banks, investment houses and
finance companies

Security dealer/broker and mutual fund companies

Public

utility companies
Theory of Accounts - SME (Easy)

Question 5
If an SME is unable to make a reliable estimate of the useful life of an intangible asset,
the life is presumed to be
Five years
Twenty years

Indefinite

Ten years

Theory of Accounts - SME (Easy)

Question 6
Which of the following is not considered as a basic financial instrument for SMEs?
Cash and bank accounts
Options and warrants
Commercial paper and bills
Bonds and loans payable
Theory of Accounts - SME (Easy)

Question 7
When is (was) the effective date of application of PFRS for SMEs in the Philippines?
03 December 2013
01 January 2013
13 October 2013
01 January 2013
Theory of Accounts - SME (Average)

Question 8
All business combinations entered into by SMEs shall be accounted for by applying the

Equity method
method

Pooling-of-interest method

Purchase of pooling-of-interest

Purchase method

Theory of Accounts - SME (Easy)

Question 9
If an SME is unable to make a reliable estimate of the useful life of an intangible asset,
the life is presumed to be
Indefinite
Twenty years

Ten years

Five years

Theory of Accounts - SME (Easy)

Question 10
Under certain conditions, it is permitted for SMEs to replace both Statement of
Comprehensive Income and Statement of Changes in Equity with
Statement of Retained Earnings
Statement of Income
Statement of Changes
in Equity-Related Transactions

Statement of Income and Retained Earnings

Theory of Accounts - SME (Easy)

Question 11
Which of the following entities must not describe its financial statements as being in
compliance with the PFRS for SMEs even if it is allowed by law to prepare its financial
statements in accordance with PFRS for SMEs?
I
II
III

An entity whose shares are traded in a public market

An entity whose debt instruments(but nit its shares) are traded in a public market
An entity that is in the process of issuing its debt instruments (but not its shares) fro trading
in a public market
I and II only
I and III only
I, II and III
II and III only
Theory of Accounts - SME (Average)

Question 12
What model is required in accounting for basic financial instruments of SMEs??
Cost model
Revaluation model
Fair value model
Amortized cost model
Theory of Accounts - SME (Average)

Question 13
An entitys first financial statements that conform to the PFRS for SMEs are presented
for the year ended 31 December 20X4. Those financial statements include only one
year of comparative information (i.e., 20X3). The entitys financial statements for the
year ended 31 December 20X3 were presented in accordance with local GAAP. The
entity is required to explain how the transition from the previous financial reporting
framework to the PFRS for SMEs affected its reported financial position, financial
performance and cash flows. To comply with this requirement, an entitys first financial
statements that conform to the PFRS for SMEs must present a number of
reconciliations. Which one of the following four reconciliations is not required to be
disclosed?
A reconciliation of its profit or loss in accordance with its previous financial reporting
framework for 20X3 to its profit or loss in accordance with the PFRS for SMEs for 20X3
A reconciliation of its profit or loss in accordance with its previous financial reporting
framework for 20X4 to its profit or loss in accordance with the PFRS for SMEs for 20X4
A reconciliation of its equity under its previous financial reporting framework to its
equity in accordance with the PFRS for SMEs at 31 December 20X3

A reconciliation

of its equity under its previous financial reporting framework to its equity in accordance
with the PFRS for SMEs at 1 January 20X3
Theory of Accounts - SME (Difficult)

Question 14
Which of the following is not considered as other financial instrument for SMEs?

Investments in non-convertible and non-puttable shares

Investments in convertible and puttable shares

Derivatives

Hedging instruments

Theory of Accounts - SME (Average)

Question 15
The following statements are based on intangible assets of SMEs:
All intangible assets including goodwill are considered to have finite life.
Useful life of an intangible asset is presumed to be 20 years if a reliable
estimate cannot be made
True, false
False, true
True, true
False, false
Theory of Accounts - SME (Difficult)

Question 16
If an SME is unable to make a reliable estimate of the useful life of an intangible asset,
the life is presumed to be
Twenty years
Ten years

Indefinite

Five years

Theory of Accounts - SME (Average)

Question 17
Which of the following is not a part of Other Comprehensive Income for SMEs?
Some actuarial gains and losses
Some foreign exchange translation gains and
losses

Some gains and losses of available-for-sale securities

Some changes in

fair values of hedging instruments

Theory of Accounts - SME (Average)

Question 18
Which of the following accounting treatments is not allowed under PFRS for SMEs?

Borrowing costs related to a qualifying asset being expensed

associates accounted by cost or fair value model
accounted for under the revaluation model

investment in

Property, plant and equipment

Goodwill being amortized over a period of

10 years.
Theory of Accounts - SME (Average)

Question 19
What model is required in accounting for other financial instruments for SMEs?
Fair Value model
Revaluation model
Cost model
Amortized cost model
Theory of Accounts - SME (Average)

Question 20
Based on Philippine SEC rules, which is not among the criteria to qualify as SMEs?
Entities with total liabilities between P 3 million and P 250 million
Entities with
total assets between P 3 million and P 350 million
of secondary licenses issued by a regulatory agency

Public utility companies or holder

Entities which are not in the

process of filing FS for purposes of issuing any class of instrument in a public market
Theory of Accounts - SME (Easy)

Question 21
Entities which are holders of secondary licenses issued by a regulatory agency are not
considered as SMEs. Which of the following is not among this type of entities?
Public utility companies
Insurance and pre-need companies
Commercial
banks, investment houses and finance companies
mutual fund companies
Theory of Accounts - SME (Average)

Securities dealer/broker and

Question 22
An entity shall disclose in the summary of significant accounting policies:
the measurement basis used on preparing the financial statements
all of the
measurement bases and the accounting policy choices available to the entity (ie
specified in the PFRS for SMEs) irrespective of whether they were used by the entity in
preparing its financial statements
the measurement basis (or bases) used in
preparing the financial statements and the accounting policies used that are relevant to
an understanding of the financial statements.
all the measurement bases and the
accounting policy choices available to the entity irrespective of whether they were used
by the entity in preparing its financial statements.
Theory of Accounts - SME (Average)

Question 23
Investment property of SMEs whose fair value cannot can be measured reliably without
undue cost or effort shall be accounted for as
Property, plant and equipment using revalued amounts
for sale using the lower of carrying amount or net selling price
using revalued amounts

Non-current assets held

Investment property

Property, plant and equipment using cost-depreciation-

impairment model
Theory of Accounts - SME (Average)

Question 24
Under certain conditions, it is permitted for SMEs to replace both Statement of
Comprehensive Income and Statement of Changes in Equity with a single
Statement of Changes in Equity-Related Transactions
Statement of Income
Statement of Income and Retained Earnings

Statement of Retained Earnings

Theory of Accounts - SME (Average)

Question 25
Which of the following is not true concerning size criteria for SMEs?
The floor for both assets and liabilities of an SME is P3,000,000

If an SME is

using the fiscal year as its accounting period, the entity shall apply the size criteria using
the audited financial statements of the immediately preceding year
The ceiling for
total liabilities of an SME is P250,000,000

The amount of total assets and total

liabilities shall be based on the entitys audited financial statements on December 31,
2010
Theory of Accounts - SME (Average)

Question 26
The following statements are from PFRS of SMEs
I
PPE of SEMs shall be accounted for using the cost model or revaluation model
II
Investment properties of SMEs shall be accounted for using the cost model or fair value model
III
Intangible assets of SMEs shall be accounted for using the cost model or revaluation model
All statements are true
All statements are false
Only statement II is true
Only statement I is true
Theory of Accounts - SME (Difficult)

Question 27
The following statements are based on PFRS for SMEs:
I
II

SMEs are entities that do not have public accountability.

SMEs are entities that publish general purpose financial statements for external
users.
III
SMEs are entities that publish special purpose financial for internal users.
Only statement 1 is true
Only statement 3 is false
Only statement 2 is true
Only statement 1 is false

Theory of Accounts - SME (Average)

Question 28
SMEs shall present
The statement of financial position more prominently than other statements
statement of comprehensive income more prominently than other statements
statement of cash flows more prominently than other statements

The
The

Each financial

statement with equal prominence

Theory of Accounts - SME (Easy)

Question 29
The following statements are based on PFRS for SMEs:
I

An entity has public accountability of its debt or equity instruments are traded
in a public market
II
An entity has public accountability if it is in the process of issuing debt or
equity instruments for trading in a public market.
III
An entity has public accountability if it holds assets in a fiduciary capacity for a
broad group of outsiders as one of its primary businesses
True, false, true
True, false, false
True, true, true
True, true, false
Theory of Accounts - SME (Average)

Question 30
An entity is not publicly accountable must make an explicit and unreserved statement of
compliance with the PFRS for SMEs:
If the entity complies with the national GAAP based on PFRS for SMEs with some
specific differences
PFRS for SMEs

If the entity complies with the vast majority of the requirement of

If the entity complies with all the requirements of PFRS for SMEs

If the entity complies with full PFRS

Theory of Accounts - SME (Difficult)