Test I - True or False (Write the word TRUE if the statement is true and the word FALSE if the statement is false)

PAS 7 - Cash Flow Statement

1. Only transactions that have affected cash and cash equivalents are included in the statement of cash flows. Non-cash transactions are excluded and disclosed only.
2. Cash flows relating to income and expenses are normally classified as investing activities in the statement of cash flows.
3. Non-financial institutions have the option of classifying interest income received as either investing activities or operating activities.
4. Cash flows are presented in the statement of cash flows into four activities.

Test II -MULTIPLE CHOICE ( THEORY AND COMPUTATIONAL)

PAS 7 - Cash Flow Statements

1. Which of the following cash flows is presented in the operating activities section of a statement of cash flows?

a. Cash receipts from issuing shares or other equity instruments and cash payments to redeem them

b. Cash receipts from issuing notes, loans, bonds and mortgage payable and other short-term or long-term borrowings, and their repayments

c. Cash receipts from the sale of goods, rendering services, or other forms of income.

d. Cash payments by a lessee for the reduction of the outstanding liability relating to a lease.

2. Entity A had the following balances at Dec. 31, 20x1:

Cash in bank 35,000

Cash in 90-day money market account 75,000

Treasury bill, purchased 11/1/x1 maturing 1/31/x2 350,000

Treasury bill, purchased 12/1/x1, maturing 3/31/x2 400,000

How much is the cash and cash equivalents to be reported in Entity A's Dec. 31, 20x1 statement of financial position

a. 110,000 c. 460,000 (35k+75K+350K)

b. 385,000 d. 860,000

3. In the statement of cash flows of a non-financial institutions, interest expense paid is presented under

a. Operating activities c. financing activities

b. Investing activities d. a or c

PAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

1. A change in measurement basis is most likely a

a. Change in accounting policy c. error

b. Change in accounting estimate d. any of these

2. A correction of prior period error is accounted for by

a. Retrospective application c. prospective application

b. Retrospective statement d. impracticable application

3. Which of the following is a change in accounting estimate?

a. Change from the cost model to the fair value model of measuring investment property

b. Change in business model for classifying financial assets resulting to the reclassification of a financial asset from being measured at amortized cost to fair value.

c. Change in the method of recognizing revenue from long-term construction contracts

d. Change in the depreciation method, useful life or residual value of an item of property, plant and equipment

4. These result from new information or new developments.

a. Changes in accounting estimates

b. Changes in accounting policies

c. Correction of errors

d. All of these

5. The effect of which of the following is presented in profit or loss in the current period (or current and future periods, if both are affected) rather than as an adjustment to the opening balance of retained earnings.

a. Correction of a prior period error

b. Change in accounting policy

c. Change in accounting estimate

d. All of these

PAS 10 - Events after the Reporting Period

1. According to PAS 10, these are events that provide evidence of conditions that existed at the end of the reporting period.

a. Events after the reporting period c. adjusting events

b. Non-adjusting events d. all of these

2. Which of the following events after the reporting period are treated as adjusting events?

a. A significant decline in the fair value of investment in stocks

b. A litigation arising from an accident that occurred after the reporting period.

c. Declaration of dividends after the reporting period

d. Discovery of prior-period fraud or errors.

3. Entity A's inventories on Dec. 31, 20x1 have a cost of P100,000 and a net realizable value of P80,000. Shortly after Dec. 31, 20x1, but before the financial statements were authorized for issue, the inventories were sold for a net sale proceeds of P70,000. The correct valuation of Entity A's inventories in the Dec. 31, 20x1 FS is

a. 100,000 c. 70,000

b. 80,000 d. any of these

4. According to PAS 10, non-adjusting events after the reporting period

a. require adjustments of amounts in the financial statements

b. do not require adjustments of amounts in the FS, but are disclosed in the notes.

c. Do not required adjustments of amounts in the FS, but are disclosed in the notes if they are material.

d. Are ignored.

5. ABC Co. completes the draft of its Dec. 31, 20x1 year-end FS on Jan. 31, 20x2. On March 1, 20x2, the management of ABC Co. authorizes the FS for issue to its supervisory board. The supervisory board is made up solely of non-executives and includes representatives of employees and other outside interests. The supervisory board approves the FS on March 10, 20x2. The FS are made available to shareholders and others on March 14, 20x2. The shareholders approve the FS at their annual meeting on March 23, 20x2 and the FS are then filed with a regulatory body on April 1, 20x2. For purposes of PAS 10, what is the date of authorization of the FS?

a. March 1, 20x2 c. March 14, 20x2

b. March 10, 20x2 d. March 23, 20x2