99 CFAS- Final Exam Questions with Correct Answers. Rated A

99 CFAS- Final Exam Questions with Correct Answers If doing so eliminates or reduces an accounting mismatch >>>Under what condition can an entity classify financial asset that meets the amortized cost criteria at FVPL ...

99 CFAS- Final Exam Questions with Correct Answers If doing so eliminates or reduces an accounting mismatch >>>Under what condition can an entity classify financial asset that meets the amortized cost criteria at FVPL? Integral part of the entity's basic financial statements >>>An entity shall prepare and present a statement of cash flows as Cost of designing product for specific customers >>>Costs incurred in bringing the inventory to the present location and condition include C. Production of agricultural produce >>>Biological transformation results from asset changes through all of the following, except A. Procreation B. Degeneration C. Production of agricultural produce D. Growth D. Biological asset and agricultural produce >>>Agricultural activity results in which of the following type of asset? A. Neither biological, asset nor agricultural produce B. Agricultural produce C. Biological asset D. Biological asset and agricultural produce Inventory >>>Consumable stores or supplies to be consumed in the production process are reported as B. to rectify inappropriate accounting policies >>>Which of the following is not a purpose of the notes? A. to present information about the basis of preparation of the financial statements and the specific accounting policies B. to rectify inappropriate accounting policies C. to disclose the information required by PFRSS that is not presented elsewhere in the financial statements D. to provide information that is not presented elsewhere in the financial statements but is relevant to an understanding of any of the financial statements. C. Entity A considers the items included in these line items as dissimilar and cannot be included in material classes of similar items and are also individually immaterial towarrant separate presentation. >>>The financial statements of Entity A shows line items described as "Other current assets," "Other noncurrent liabilities," and "Miscellaneous expenses." Which of the following is correct? 1/1 A. Entity A considers the items included in these line items as individually material but with dissimilar nature or function. B. This manner of presenting items is unacceptable under PAS 1. C. Entity A considers the items included in these line items as dissimilar and cannot be included in material classes of similar items and are also individually immaterial to warrant separate presentation. D. Entity A considers the items included in these line items as comprising a material class of similar items. Other Comprehensive Income >>>This term comprises items of income and expense including reclassification adjustments, that are not recognized in profit or loss as required or permitted by PFRS. More than the face amount of the bond >>>When an investor purchased a bond between interest dates at a premium, the cash paid to the seller is D. Systematic allocation of administrative overhead >>>The costs of conversion of inventory include all of the following, except 1/1 A. Costs directly related to the units of production, such as direct labor B. Systematic allocation of variable production overhead C. Systematic allocation of fixed production overhead D. Systematic allocation of administrative overhead Accrual Basis >>>On Day 1, a customer buys goods from Entity A and promises to pay the sale price on Day 30. Entity A recognizes sales revenue on Day 1 rather than on Day 30. This is an application of which of the following accounting concepts? B. All of these statements are true. >>>Which statement is true when a financial asset at FVOCI is reclassified to FVPL? 1/1 A. The cumulative gain or loss previously recognized in OCI is reclassified to profit or loss. B. All of these statements are true. C. The fair value at reclassification date becomes the new carrying amount. D. The financial asset continues to be measured at fair value. C. Payment of taxes >>>Which of the following events is not considered an exchange or reciprocal transfer? A. Purchase of inventory on account B. Lending money to another entityC. Payment of taxes D. Payment of loan payable Charge to expense for the period >>>What is the treatment for abnormal freight in? The price that would be received to sell the asset at the measurement date. >>>Fair value of an asset should be based upon 20x1, None; 20x2, Operating or Financing >>>Entity A declares cash dividends in 20x1 and pays the dividends in 20x2. How should Entity A report the dividends paid in the statement of cash flows for 20x1 Deducted from inventory, whether taken or not >>>Theoretically, cash discounts permitted on purchased raw materials should be Are accounted for at fair value for all transfers >>>Transfers of investments between categories Prospectively, at the beginning of the period after the change in the business model. >>>Reclassifications of investments between categories are accounted for D. All of these statements are true about bearer plant. >>>Which statement is true in relation to bearer plant? A. The agricultural produce is usually presented as current asset unless it takes more than one year to mature. B. The bearer plant and the related agricultural produce are accounted as two separate assets. C. The bearer plant is a noncurrent asset. D. All of these statements are true about bearer plant. Indirect method >>>This method of presenting cash flows from (used in) operating activities involves adjusting accrual basis profit or loss for the effects of changes in operating assets and liabilities and effects of non-cash items. C. Cash inflow from repayment of loan. >>>Which of the following is included in the investing activities section of the statement of cash flows? A. Acquisition and sale of short-term investments in cash equivalents. B. Acquisition and sale of items of property, plant and equipment that are routinely manufactured in the entity's ordinary course of business and are to be held for rentals and reclassified to inventories when the assets cease to be rented and become held for sale. C. Cash inflow from repayment of loan. D. Acquisition and sale of investments in held for trading securities.Recognized in profit or loss >>>When a debt investment at amortized cost is reclassified to FVPL, the difference between the previous carrying amount and fair value at reclassification date is B. The settlement of a liability at an amount below or above its carrying amount. >>>A gain or loss may arise from which of the following? A. The conversion of bonds into the entity's own equity instrument. B. The settlement of a liability at an amount below or above its carrying amount. C. The purchase, sale, issue or cancellation of the entity's own equity instruments. D. The initial recognition of the debt and equity components of a compound financial instrument. Time Period >>>Preparing financial statements at least annually is an application of which of the following accounting concepts? Increases the amount a buyer must pay. >>>Accrued interest on bonds that are purchased between interest dates 40,000 >>>Entity A has an account receivable of P200,000 from Entity B. In addition, Entity A also has an account payable of P160,000 to Entity B. The account receivable is due in 30 days while the account payable is due in 90 days. Entity A intends to settle first the account receivable. If Entity A has a legal right of set-off, how much account receivable will be shown in its statement of financial position? Fair value at reclassification date >>>When a debt investment at FVPL is reclassified to amortized cost, what is the new carrying amount at amortized cost? B. Key management personnel involved in preparing the summary of significant accounting policies >>>Which of the following is not a required disclosure of accounting policies? A. The measurement basis used in the financial statements B. Key management personnel involved in preparing the summary of significant accounting policies C. The nature of operations and the policies that the users of the financial statements would expect to be disclosed D. Disclosures required by PFRS Record income when the fair value increases. >>>The fair value option allows an entity to A discount >>>The interest income for the year would be higher if the bond was purchased atC. Recoverable purchase taxes >>>Which of the following should not be taken into account when determining the cost of inventory? A. Import duties on shipping of inventory inward B. Storage costs of part-finished goods C. Recoverable purchase taxes D. Trade discounts A premium >>>The interest income for the year would be lower if a bond is purchased at C. Must possess all of these characteristics. >>>A bearer plant is a living plant that A. Has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales. B. Is used to bear produce for more than one period. C. Must possess all of these characteristics. D. Is used in the production or supply of agricultural produce. B. All of these statements are true about biological assets. >>>Which statement is true about biological assets? A. Where there is production cycle of more than one year for biological asset, separate disclosure is encouraged for physical change and price change. B. All of these statements are true about biological assets. C. When fair value cannot be determined reliably, the biological asset shall be measured at cost less accumulated depreciation and impairment losses. D. Biological assets are measured at fair value less cost of disposal. Fair value less cost of disposal >>>Agricultural produce as it grows on bearer plant is measured at the end of each reporting period prior to harvest at At rate higher than the stated interest rate >>>Bonds usually sell at a discount when investors are willing to invest in bonds To provide disclosures required by generally accepted accounting principles >>>What is the purpose of information presented in the notes to financial statements? B. According to PAS 32, a contract is an equity instrument if it may result in the receipt or delivery of the entity's own equity instruments. >>>Which of the following statements is incorrect? A. An intention to settle a financial asset and a financial liability on a net basis without the legal right to do so is not sufficient to justify offsetting because the rights and obligations associated with the individual financial asset and financial liability remain unaltered.B. According to PAS 32, a contract is an equity instrument if it may result in the receipt or delivery of the entity's own equity instruments. C. The PAS 32 definition of "equity" reflects the basic accounting equation of "Assets - Liabilities = Equity." D. Entity A issues a compound financial instrument for P 1 million. If the fair value of the liability component without the equity feature is P800,000, the value to be assigned to the equity component is P200,000. Reports gains and losses in income. >>>The fair value option Inventory >>>A property developer must classify properties that it holds for sale in the ordinary course of business as Cost of purchase, cost of conversion and other cost incurred in bringing the inventory to the present location and condition. >>>The cost of inventory is the sum of B. The instrument is a financial liability because when the holder exercises its redemption right, Entity A does not have the unconditional right to avoid making the payment. >>>Entity A issues an instrument that is re-purchasable by delivering cash or another financial asset. However, Entity A's contractual obligation to repurchase the instrument is conditional on the holder (the counterparty) exercising its right to redeem. Which of the following statements is correct from the perspective of Entity A? A. The instrument is classified as a financial liability only up to the extent of the probability that the holder will exercise its right to redeem the instrument. B. The instrument is a financial liability because when the holder exercises its redemption right, Entity A does not have the unconditional right to avoid making the payment. C. Entity A initially classifies the instrument as an equity instrument. However, when the holder exercises its redemption right, the instrument is reclassified to financial D. liability. E. The instrument is an equity instrument because Entity A's contractual obligation to deliver cash or another financial asset is conditional on the holder exercising its right to payment. C. Machinery acquired by a manufacturing entity for use in the production process >>>Which of the following should not be reported as inventory? A. Shares and bonds held for resale by a brokerage firm B. Partially completed goods held by a manufacturing entity C. Machinery acquired by a manufacturing entity for use in the production process D. Land acquired for resale by