1.) [S1] A share split increases the number, par value and market value of the shares. [S2] From the point of view of the investor, redemption of the shares is an impairment of the investment.*

a. Only S1 is true.

b. Only S2 is true.

c. Both S1 and S2 are true.

d. Both S1 and S2 are false.

2.) A major advantage of the retail inventory method is that it*

a. Permits companies which use it to avoid taking an annual physical inventory.

b. Gives a more accurate statement of inventory cost than other methods.

c. Hides costs from customers and employees.

d. Provides a method for inventory control and facilitates determination of the periodic inventory.

3.) The irrevocable election to present subsequent changes in the fair value in other comprehensive income is applicable to*

a. Financial asset measured at amortized cost.

b. Investment in equity instrument that is not held for trading.

c. Financial asset measured at fair value.

d. Investment in equity instrument that is held for trading.

4.) If there is evidence that an impairment loss on loan receivable has been incurred, the loss is equal to the*

a. Excess of the principal amount of the loan over its carrying amount.

b. Excess of the carrying amount of the loan over the principal amount of the loan.

c. Excess of the present value of cash flows related to the loan, over the carrying amount of the loan receivable

d. Excess of the carrying amount of the loan receivable over the present value of the cash flows related to the loan

5.) Transaction costs include*

a. Financing costs

b. Debt premiums or discounts

c. Internal administrative costs

d. Fees and commission paid to agent, levies by regulatory authorities, transfer taxes and duties

6.) [S1] When cash is received in lieu of stock dividends, there may be a gain on sale of the financial asset. [S2] When dividends were distributed using stocks from another corporation, it is appropriately called as a property dividend.*

a. Only S1 is true.

b. Only S2 is true.

c. Both S1 and S2 are true.

d. Both S1 and S2 are false.

7.) [S1] Animals in zoos are accounted for as biological assets because they are living animals. [S2] Bearer plants and the fruits growing on them are accounted as biological assets if they are available for sale.*

a. Only S1 is true.

b. Only S2 is true.

c. Both S1 and S2 are true.

d. Both S1 and S2 are false.

8.) When share dividends of a different class are received*

a. No formal entry is made but only a memorandum

b. A new investment account is debited and the original investment account is credited

c. A new investment account is debited and dividend income is credited

d. Cash is debited and dividend income is credited

9.) The use of a discount lost account implies that cost of a purchased inventory is*

a. Invoice price

b. Invoice price less the purchase discount allowable whether taken or not

c. Invoice price less purchase discount taken

d. List price

10.) A financial assets include all of the following, EXCEPT*

a. Trade accounts receivable

b. Cash in bank

c. Prepaid expenses

d. Loans receivable

11.) The use of the gross profit method assumes*

a. Inventory values have not increased from previous years.

b. The amount of gross profit is the same as in prior years.

c. The relationship between selling price and cost of goods sold is similar to prior years.

d. Sales and cost of goods sold have not changed from previous years.

12.) Loans and receivables are*

a. Nonderivative financial assets with fixed or determinable payments that are not quoted in an active market

b. Nonderivative financial assets with fixed or determinable payments that are quoted in an active market

c. Nonderivative financial assets without fixed or determinable payments that are not quoted in an active market

d. Nonderivative financial assets without fixed or determinable payments that are quoted in an active market

13.) Subsequent to initial recognition, loans and receivables shall be measured at*

a. Amortized cost using the straight-line method

b. Amortized cost using the effective interest method

c. Cost

d. Fair value

14.) [S1] The direct write-off method of bad debts requires a journal entry when the receivables become doubtful of collection. [S2] An aging of accounts receivable makes use of the income statement approach of estimating bad debts expense.*

a. Only S1 is true.

b. Only S2 is true.

c. Both S1 and S2 are true.

d. Both S1 and S2 are false.

15.) How should sales staff commission be dealt with when valuing inventories at LCNRV?*

a. Deducted from cost

b. Added to cost

c. Ignored

d. Deducted in arriving at NRV

16.) During periods of rising prices, when the FIFO method is used, a perpetual inventory system would*

a. Result in a lower ending inventory than a periodic inventory system

b. Not be permitted

c. Result in higher ending inventory than a periodic inventory system

d. Result in the same ending inventory as a periodic inventory system

17.) Which of the following is not a financial instrument?*

a. Cash deposited in bank

b. Gold bullion deposited in bank

c. A perpetual debt instrument, meaning no maturity date that pays interest annually extending into the indefinite future.

d. Ordinary share capital issued by the entity.

18.) If purchases were made under terms of (a) trade discount of 20%, (b) credit terms of 2/10, n/30, and (c) shipping terms of FOB shipping point, freight collect, which of the following sentences are FALSE?*

a. If the entity paid on the tenth day, it would only pay 98% of the invoice price.

b. If the entity uses the perpetual inventory method, shipping cost would be recorded as a debit to

Freight-in and a credit to cash.

c. The entity will pay for its freight-in on the purchase.

d. The invoice price is only 80% of the list price.

19.) Which of the following should be EXCLUDED in the computation of Trade and Other Current Receivables?*

a. Special deposits on contract bids that is collectible in nine months' time

b. Accrued income on rent and royalties

c. Collectible from an officer without an agreed settlement date

d. Advances from customers which are immaterial

20.) What is the effect of share split-up?*

a. Decrease in number of shares and decrease in cost per share

b. Decrease in number of shares and increase in cost per share

c. Increase in number of shares and decrease in cost per share

d. Increase in number of shares and increase in cost per share