Intermediate Accounting 3

Showing 76-117 of 117 answers

The primary responsibility for the preparation of the financial statements is reposed in

Management of the entity Correct

The residual interest in the assets of the entity after deducting all of the liabilities is known as

equity Correct

The statement of financial position may be presented either showing current/ non-current distinction (classified) or based on liquidity (unclassified) PAS 1 Presentation of Financial Statements encourages the

either a or b Correct

The total equity of D Co. at the beginning of the period was P 100. during the period D Co. reports total comprehensive income of P 40 and declares total dividends of P 10. The net change in equity during the period is an

FALSE Correct

These are the cumulative net earnings or profit of a firm which may be unappropriated and appropriated.

retained earnings Correct

These are the funds contributed by shareholders equal to the par or stated value.

share capital Correct

These are the present obligations of an entity arising from past transactions or events the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

Liabilities Correct

These are the resources controlled by the entity as a result of past transactions or events and from which future economic benefits are expected to flow to the entity.

Assets Correct

This is the formal statement that shows the movement in the elements or components of the shareholders’ equity.

Statement of Changes in Equity Correct

This means a new accounting policy to transactions, other events and conditions as if that policy had always been applied.

retrospective application Correct

Tiny Company started operations at the beginning of current year. The entity failed to recognize accruals and prepayments at end of the reporting period. The income before tax, accrual and prepayments at the end of the current year are:

P 1,415,000 Correct

Under the indirect method, which of the following items would be added to profit to arrive at cash flows from operating activities?

decrease in accounts receivable Correct

Universal Company reported the following unadjusted current assets and shareholders’ equity at year-end:

P 7,500,000 Correct

What is the objective of financial statements?

To provide information about the financial position, financial performance and changes in financial position useful to a wide range of users. Correct

What is the primary purpose of the statement of cash flows?

To provide information that is useful in assessing the ability of the entity to generate cash and cash equivalents. Correct

What is the purpose of reporting comprehensive income?

To report a measure of overall entity performance Correct

When preparing a statement of cash flows using the indirect method, the amortization of trademarks should be reported as a/an

addition to profit to arrive at a cash flows from operating activities Correct

When there is much variability in the duration of entity’s normal operating cycle, the operating cycle is measured at

Twelve months Correct

Where the financial statements for a single year are being presented, a prior period error recognized in the current year ordinarily should

be shown as an adjustment of the balance of retained earnings at the start of the current year. Correct

Which method is acceptable in the presentation of the income statement?

Either I or II Correct

Which of the following changes during a period is not a component of ?

Treasury share, at cost Correct

Which of the following information is not specifically a required disclosure in relation to financial statements?

Names of major shareholders of the entity. Correct

Which of the following is a characteristic of a change in accounting policy?

shall be reported by retrospectively adjusting the financial statements for all years reported, and reporting the cumulative effect of the change in income for all preceding years as an adjustment to the beginning balance of retained earnings for the earliest year reported. Correct

Which of the following is classified as an operating activity in the statement of cash flows?

Cash receipts and payments from contracts held for dealing or trading purposes Correct

Which of the following is included in a complete set of financial statements?

A statement of changes in equity Correct

Which of the following is not a non-current investment?

Franchise Correct

Which of the following is presented as an operating activity?

cash advances and loans made by financial institutions Correct

Which of the following statements best describes prospective application?

Applying a new accounting policy to transactions occurring after the date at which the policy is changed. Correct

Which of the following statements in relation to interim financial reporting is true?

Both statements are true Correct

Which of the following statements is incorrect concerning assets?

In determining existing of an asset, the right of ownership is essential. Correct

Which of the following statements is incorrect regarding interim financial reporting?

Decline in inventory shall be deferred to future interim periods. Correct

Which of the following statements is true concerning interim financial reporting?

Both statements are true Correct

Which of the following statements is true?

To the extent practicable, an entity must correct a prior period error retrospectively in the first financial statements authorized for issue after its discovery. Correct

Which of the following terms cannot be used to describe a line item in the statement of comprehensive income

Extraordinary item Correct

Which of the following would appear only in the statement of cash flows using the indirect method?

depreciation expense Correct

Which of the following would be classified as an investing activity

sale of financial assets at fair value through . Correct

Which should be classified as a non-current asset?

Plant expansion fund Correct

Which statement indicates a going concern?

None of the choices would indicate going concern. Correct

Winner Company has estimated that total depreciation expense for the year ended December 31, 2020 will amount to P 500,000, and that 2020 year-end bonuses to employees will total P 1,200,000.

P 850,000 Correct

Winner Company provided the following information at year end:

P 4,000,000 Correct

Would the following be added to or deducted from profit when reporting cash flow from operating activities using the indirect method?

The depreciation expense is added and increase in accounts receivable is deducted. Correct

Younger Company reported the following assets at year-end:

P 2,700,000 Correct