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    Comprehensive Accounting Review Center

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    linkin soy
    The document contains 7 multiple choice questions related to key concepts in financial accounting and reporting such as components of financial statements, fair presentation of financial statements, materiality, classification of current assets and liabilities, and operating cycle. The questions test understanding of accounting standards and principles like those set out in Philippine Financial Reporting Standards.

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    Comprehensive Accounting Review Center

    Uploaded by

    linkin soy
    78 views3 pages
    The document contains 7 multiple choice questions related to key concepts in financial accounting and reporting such as components of financial statements, fair presentation of financial statements, materiality, classification of current assets and liabilities, and operating cycle. The questions test understanding of accounting standards and principles like those set out in Philippine Financial Reporting Standards.

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    Original Title

    COMPREHENSIVE ACCOUNTING REVIEW CENTER

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    The document contains 7 multiple choice questions related to key concepts in financial accounting and reporting such as components of financial statements, fair presentation of financial statements, materiality, classification of current assets and liabilities, and operating cycle. The questions test understanding of accounting standards and principles like those set out in Philippine Financial Reporting Standards.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    78 views3 pages

    Comprehensive Accounting Review Center

    Uploaded by

    linkin soy
    The document contains 7 multiple choice questions related to key concepts in financial accounting and reporting such as components of financial statements, fair presentation of financial statements, materiality, classification of current assets and liabilities, and operating cycle. The questions test understanding of accounting standards and principles like those set out in Philippine Financial Reporting Standards.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    COMPREHENSIVE ACCOUNTING REVIEW CENTER

    Tuguegarao City, Cagayan 3502

    Financial Accounting and Reporting

    Constructive Accounting Part 1

    Theories:

    1. The components of the financial statements include all, except

    a. Balance sheet, income statement and cash flow statement

    b. Statement of changes in equity or statement of recognized gains and losses

    c. Notes, comprising a summary of significant accounting policies and other explanatory notes

    d. Additional statements such as environmental reports and value added statements

    2. Which is incorrect concerning fair presentation of financial statements?

    a. In virtually all circumstances, a fair presentation is achieved by compliance with applicable


    Philippine Financial Reporting Standards.

    b. Financial statements shall present fairly the financial position, performance and cash flows of an
    enterprise.

    c. An enterprise whose financial statements comply with PFRS shall make an explicit and
    unreserved statement of such compliance in the notes.

    d. Inappropriate accounting treatments are rectified either by disclosure of the accounting policies
    used or by note or explanatory material.

    3. Which is incorrect concerning the overall considerations in the preparation and presentation of
    financial statements?

    a. An enterprise shall prepare its financial statements, except for cash flow information, under the
    accrual basis of accounting.

    b. The presentation and classification of items in the financial statements shall be retained from
    one period to the next.

    c. Assets and liabilities, income and expenses, shall not be offset unless required or permitted by
    another PFRS.

    d. Comparative information need not be disclosed in respect of the previous period for all
    numerical information in the financial statements.
    4. Which is incorrect concerning the concept of materiality and aggregation?

    a. Materiality depends on the size and nature of the item judged in the particular circumstances of
    its omission or misstatement.

    b. Materiality provides that the specific disclosure requirements of a PFRS must be met even if the
    resulting information is not material.

    c. Items of a dissimilar nature or function shall be presented separately unless they are immaterial.

    d. Information is material if its nondisclosure could influence the economic decisions of users taken
    on the basis of the financial statements.

    5. An asset shall be classified as current when it satisfies any of the following criteria (choose the
    incorrect one).

    a. It is expected to be realized in or is intended for sale or consumption in the entity’s normal


    operating cycle.

    b. It is held primarily for the purpose of being traded.

    c. It is expected to be realized in more than twelve months after the balance sheet date.

    d. It is cash or a cash equivalent which is unrestricted from being exchanged or used to settle a
    liability for at least twelve months after the balance sheet date.

    6. The operating cycle of an enterprise

    a. Is set by the industry’s trade association usually on an average length of time for all firms which
    are members of the association.

    b. Is the time between the acquisition of assets for processing and their realization in cash or cash
    equivalents.

    c. Is the period of time normally elapsed from the time the enterprise expends cash to the time it
    converts trade receivables back into cash.

    d. Causes the distinction between current and noncurrent items to depend on whether they will
    affect cash within one year.

    7. A liability shall be classified as current when it satisfies any of the following criteria (choose the
    incorrect one)

    a. It is expected to be settled in the entity’s normal operating cycle.

    b. It is held primarily for the purpose of being traded.


    c. It is due to be settled within twelve months after the balance sheet date.

    d. The entity has an unconditional right to defer settlement of the liability for at least twelve
    months after the balance sheet date.

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