PAS 1 – Presentation of Financial Statements c.

The statement of comprehensive income

more prominently than the other statements.
1. The components financial statements include all d. Each financial statement with equal
of the following, except prominence.
a. Statement of financial position
b. Income statement 9. "Fair presentation" is achieved by all of the
c. Statement of cash flows following, except
d. Statement of retained earning a. To comply with applicable PFRS.
b. To present information, including accounting
2. Which of the following must be included in the policies, in a manner that provides relevant,
component of the financial statements? reliable, comparable and understandable
a. A statement of retained earnings information'
b. Accounting policies c. To provide additional disclosures when
c. An auditor's report compliance with the requirements in PFRS is
d. A directors' report insufficient to enable users to understand the
entity's financial position and financial
3. A third statement of financial position at the performance.
beginning of the earliest comparative period is d. To rectify inappropriate accounting policies
required used either by disclosure or by note.
a. When an entity applies an accounting policy
retrospectively. 10. Items of dissimilar nature or function
b. When an entity makes a restrospective a. Must always be presented separately in
restatement of items in the financial financial statements
statements. b. Must not be presented separately in financial
c. When an entity reclassifies items in the statements
financial statements. c. Must be presented separately in financial
d. In all of the above cases. statements if material
d. Must be presented separately in financial
4. An entity shall prepare how many statements of statements even if immaterial
financial position as a result of retrospective
application, retrospective restatement and 11. Which of the following statements is incorrect
reclassification of items in financial statements? concerning the rule on "offsetting"?
a. Two a. An entity shall not offset assets and liabilities,
b. Three and income and expenses, unless required or
c. Four permitted by PFRS
d. One b. Measuring assets net of valuation allowance is
offsetting
5. Which of the following best describes "financial c. Gains and losses on disposal of noncurrent
position"? assets are reported by deducting from the
a. The income, expenses and net income or loss proceeds on disposal the carrying amount of
for a period. the asset and related selling expenses.
b. The assets, liabilities and equity at a d. Gains and losses arising from a group of
particular moment in time. similar transactions are reported on a net
c. The financial assets minus financial liabilities basis.
d. The total assets of an entity
12. When an entity changes the end of the reporting
6. The statement of financial position is useful for period longer or shorter than one year, an entity
analyzing all of the following, except shall disclose all of the following, except
a. Liquidity a. Period covered by the financial statements.
b. Solvency b. The reason for using a longer or shorter
c. Profitability period.
d. Financial flexibility c. The fact that amounts presented in the
financial statements are not entirely
7. The statement of financial position provides a comparable.
basis for all of the following, except d. The fact that similar entities in the
a. Computing rate of return geographical area in which the entity
b. Evaluating the capital structure of the entity. operates have done so.
c. Determining the increase in cash due to
operations. 13. An entity must disclose comparative information
d. Assessing the liquidity and financial flexibility for
of the entity. a. The previous comparable period for all
amounts reported.
8. An entity shall present b. The previous is comparable period for all
a. The statement of cash flows more narrative and descriptive information.
prominently than the other statements. c. The previous comparable period for all
b. The statement of financial position more amounts reported, and for all narrative and
prominently than the other statements. descriptive information, when it is relevant to
 an understanding of the current period's 20. An entity shall classify an asset as current under
financial statements. all of the following conditions, except
d. The previous two comparable periods for all a. The entity expects to realize, or intends to sell
amounts reported. or consume it within normal operating cycle
b. The entity holds the asset primarily for the
14. The presentation and classification of items shall purpose of trading.
be retained from one period to the next. c. The entity expects to realize the asset within
a. Consistency of presentation twelve months after the reporting period
b. Materiality d. The asset is cash or cash equivalent restricted
c. Aggregation to settle a liability for more than twelve
d. Comparability months after the reporting Period.

15. An entity can change the presentation and 21. When there is much variability, the operating
classification of items in the financial statements cycle is measured at
when a. The mean value
a. There is a significant change in the nature of b. The median value
the entity's operations c. Twelve months
b. A review that another presentation and d. Three years
classification would be more appropriate.
c. Required by PFRS 22. The basis for classifying assets as current or
d. All of these noncurrent is the period of time normally
required by to convert cash invested in
16. An entity must present additional line items in a a. Inventory back into cash, or i2 months,
statement of financial position when whichever is shorter.
a. Such presentation is relevant to an b. Receivables back into cash, or 12 months,
understanding of the entity's financial whichever is longer.
position. c. Tangible fixed assets back into cash, or 12
b. Such presentation is a generally accepted months, whichever is longer
practice in the sector in which the entity d. Inventory back into cash, or 12 months,
operates. whichever is longer.
c. Such presentation is required by the tax
authorities. 23. Which of the following should be classified as
d. Such presentation is relevant to an current asset?
understanding of the entity's financial a. Cash surrender value of a life insurance policy
performance. of which the entity is the beneficiary
b. Investment in equity securities for the
17. In presenting a statement of financial position, an purpose of controlling the issuing entity.
entity c. Cash designated for the purchase of property,
a. Must make the current and noncurrent plant and equipment.
presentation. d. Trade installment accounts receivable
b. Must present assets and liabilities in order of normally collectible in 18 months
liquidity.
c. Must choose either the current and 24. An entity shall classify a liability as current under
noncurrent or the liquidity presentation. all of the following conditions, except
d. Must make the current and noncurrent a. The entity expects to settle the liability within
presentation except when a presentation the normal operating cycle.
based on liquidity provides information that is b. The entity holds the liability primarily for the
reliable and more relevant. purpose of trading.
c. The liability is due to be settled within twelve
18. Current and noncurrent presentation provides months after the reporting period.
useful information when the entity d. The entity has an unconditional right to defer
a. Supplies goods or services within a clearly settlement of the liability for at least twelve
identifiable operating cycle months after the reporting period.
b. Is a financial position
c. Is a public utility 25. A financial liability that is due to be settled within
d. Is a nonprofit organization twelve months after the reporting period shall be
classified as noncurrent
19. A presentation of assets and liabilities in I. When it is refinanced on a long term basis on or
increasing or decreasing order of liquidity before the end of the reporting period.
provides information that is reliable and more II. When the entity had the discretion to refinance
relevant than a current and noncurrent or roll over the obligation for at least twelve
presentation for months after the reporting period under an
a. Financial institution existing loan facility
b. Public utility a. I only
c. Government-owned entity b. II only
d. Service provider c. Both I and II
d. Neither I or II
 32. Other comprehensive income includes all of the
26. When an entity breaches an undertaking under a following, except
long-term loan agreement on or before the end of a. Gain and loss arising from translating the
the reporting period with the effect that the financial statements of a foreign operation.
liability becomes payable on demand b. Gain and loss on remeasuring available for
I. The liability is classified as current if the sale financial asset at fair value.
lender has agreed after the reporting period c. The effective portion of gain and loss on
and before the issuance of the statements not hedging instrument in a cash flow hedge.
to demand payment as a consequence of the d. Dividend paid to shareholders.
breach
II. The liability is classified as noncurrent if the 33. These are amounts reclassified to profit or loss in
lender agreed on or before the end of the the current period that were recognized in other
reporting period to provide a grace period for comprehensive income in the current or previous
at least twelve months after the reporting period.
period within which to rectify the breach. a. Prior period errors
a. I only b. Reclassification adjustments
b. II only c. Unusual and irregular items
c. Either I or II d. Correcting entries
d. Neither I or II
34. Comprehensive income includes all of the
27. Which item is not a current liability? following, except
a. Unearned revenue a. Revenue and gains
b. Stock dividend distributable b. Expenses and losses
c. The currently maturing portion of long-term c. Preference share dividends
debt d. Unrealized gains and losses on derivative
d. Trade accounts payable contracts

28. Noncurrent liabilities include 35. Other comprehensive income must be displayed
a. Obligations not expected to be liquidated in
within the operating cycle. a. The equity section of the statement of
b. Obligations payable at some date beyond the financial position.
operating cycle. b. A second income statement.
c. Deferred income taxes and most lease c. The income statement.
obligations. d. The statement of retained earnings.
d. All of these.
36. An entity shall present an analysis of expenses
29. The two-statement approach of presenting using a classification based on
comprehensive income includes a. The nature of expenses.
I. A separate income statement showing the b. The function of expenses.
component of profit or loss. c. Either the nature of expenses or the function
II. A separate statement of comprehensive income of expenses within the entity, whichever
beginning with profit or loss plus or minus the provides information that is reliable and more
components of other comprehensive income. relevant.
a. I only d. Either the nature of expenses or the function
b. II only of expenses within the entity, whichever the
c. Both I and II entity would prefer to present.
d. Neither I nor II
37. Separate line items in an analysis of expenses by
30. It is the change in equity during a period resulting nature include
from transactions and other events, other than a. Purchases, transport costs, employee
those changes resulting from transactions with benefits, depreciation, extraordinary items.
owners in their capacity as owners. b. Purchases, distribution costs, administrative
a. Profit or loss costs, employee benefits, depreciation.
b. Comprehensive income c. Depreciation, purchases, transport costs,
c. Other comprehensive income employee benefits and advertising costs.
d. Share capital d. Cost of sales, administrative costs, transport
costs and distribution costs.
31. It comprises items of income and expense,
including reclassification adjustments, that are 38. Separate line items in an analysis of expenses by
not recognized in profit or loss as required or function include
permitted by other PFRS. a. Purchases, transport costs, employee
a. Comprehensive income benefits, depreciation, extraordinary items.
b. Other comprehensive income b. Purchases, distribution costs. administrative
c. Profit or loss costs, employee benefits, depreciation.
d. Retained profit c. Depreciation, purchases, employee benefits
and advertising costs.
 d. Cost of sales, administrative expenses and d. ls either voluntary or mandatory
distribution expenses.
46. Which of the following is not a method of
39. Information in the income statement helps users disclosing pertinent information?
to a. Supporting schedule
a. Evaluate the past performance of the entity. b. Parenthetical explanation
b. Provide a basis for predicting future c. Cross reference and contra item
performance. d. All of these are methods of disclosure
c. Assess the amount, timing and risk or pertinent information
uncertainty of future cash flows.
d. All of these. 47. Accounting policies disclosed in the notes qpically
include all of the following, except
40. What is the purpose of the notes to financial a. The cost flow assumption used
statements? b. The depreciation method used
a. To present information about the basis of c. Significant estimates made
preparation pf the financial statements and d. Significant inventory purchasing policies
the specific accounting policies used.
b. To disclose the information required by PFRS 48. Which of the following should be defined as
that is not statements. intentional distortions of financial statement?
c. To provide information that is not presented a. Errors
elsewhere in the financial statements but is b. Fraud
relevant to an understanding of the c. Errors and fraud
statements. d. Neither errors nor fraud
d. All of these.
49. The disclosure of accounting policies is important
41. What is the "first item'' presented in the notes to to financial statement readers in determining
financial statements? a. Net income for the year.
a. Statement of compliance with PFRS. b. Whether accounting policies are consistently
b. Summary of significant accounting policies. applied from year to year.
c. Supporting information for items presented in c. The value of obsolete items included in
the financial statements. ending inventory.
d. Other disclosures including contingent d. Whether the working capital position is
liabilities, unrecognized contractual adequate for future operations.
commitments and nonfinancial disclosures
ANSWERS:
42. An entity shall disclose in the summary of 1. D 10. C 19. A 28. D 37. C 46. D
2. B 11. B 20. D 29. C 38. D 47. D
significant accounting policies
3. D 12. D 21. C 30. B 39. D 48. B
a. The measurement basis used in preparing the 4. B 13. C 22. D 31. B 40. D 49. B
financial statements. 5. B 14. A 23. D 32. D 41. A
b. All the measurement bases specified in PFRS 6. C 15. D 24. D 33. B 42. C
7. C 16. A 25. C 34. C 43. C
irrespective of whether used or not.
8. D 17. D 26. C 35. B 44. B
c. The measurement basis and accounting 9. D 18. A 27. B 36. C 45. B
policies used. C

d. All of the accounting policy choices specified

in PFRS irrespective of whether used or not.

43. The presentation of notes to financial statements

in a systematic manner
a. Is voluntary
b. Is mandatory
c. Is mandatory as far as practicable
d. Depends on the industry

44. Disclosure of information about key sources of

estimation uncertainty and judgments
a. Is voluntary.
b. ls mandatory
c. Is either mandatory or voluntary
d. depends on the industry

45. The cross-reference between each line item in

the financial statements and any related
information disclosed in the notes to financial
statements
a. Is voluntary
b. Is mandatory
c. Depends on the industry