PAS 1 Presentation of financial

performance
1. The major financial statements include all, except

a. Statement of financial position

b. Statement of changes in financial position
c. Statement of comprehensive income
d. Statement of changes in equity.

 
2. The major financial statements include all, except

a. Statement of financial position

b. Income statement
c. Statement of cash flows
d. Statement of retained earnings 
 
3. What is the objective of financial statements?

a. To provide information about the financial position, financial performance and cash flows
of an entity that is useful to a wide range of users in making economic decisions.
b. To present a statement of financial position and a statement of comprehensive income.
c. To present relevant, reliable, comparable and understandable information to investors.
d. To present financial statement in accordance with all applicable standards

4. Financial statements must be prepared at least

a. Annually
b. Quarterly
c. Semi-annually
d. Every two years

 
5. When entity changed the end of reporting period longer or shorter than one year, the
entity shall disclose all, except

a. Period covered by the financial statements

b. The reason for using a longer or shorter period
c. The fact that amounts presented are not entirely comparable
d. The fact that similar entities have done so

6. When there is much variability, the operating cycle is measured at

a. The mean value
b. Tue median value
c. Twelve months
d. Three years

7. The operating cycle of an entity

a. Is the time between the acquisition of materials entering into a process and their
realization in cash
b. Is the period of time, normally elapsed in converting trade receivables cack into cash
c. Is a period of one year
d. Refers to the seasonal variation experienced by entities

 
8. An entity shall classify an asset as current under all of the following conditions,
except

a. The entity expects to realize the asset or intends to sell or consume it within the entity’s normal
operating cycle
b. The entity holds the asset for the purpose of trading.
c. The entity expects to realize the asset within twelve months after the reporting period
d. The asset is cash or a cash equivalent that is restricted to settle a liability for more than
twelve months after the reporting period.
 
9. An entity shall classify a liability as current when under all of the following conditions,
except

a. The entity expects to settle the liability within the entity’s normal operating cycle.
b. The entity holds the liability primarily for the purpose of trading.
c. The liability is due to be settled within twelve months after the reporting period.
d. The entity has an unconditional right to defer settlement of the liability for at least twelve
months after the reporting period.
 
10. Which obligations are classified as current even if these are due to be settled after
more than twelve months from the end of the reporting period?

a. Trade payable and accruals for employee and other operating cost.
b. Current portion of interest-bearing liabilities
c. Bank overdrafts
d. Dividends payable
Correct answer
a. Trade payable and accruals for employee and other operating cost.

 
11. Current and noncurrent presentation of assets and liabilities provides useful
information when the entity

a. Supplies goods or services within a clearly identifiable operating cycle

b. Is a financial institution
c. Is a public utility
d. Service provider

 
12. A presentation of assets and liabilities in increasing or decreasing order of liquidity
provides information that is reliable and more relevant than a current and noncurrent
presentation for

a. Financial institution
b. Public utility
c. Manufacturing entity
d. Service provider
Correct answer
a. Financial institution

 
13. In the Philippines, the common practice is to present in the statement of financial
position

a. Current assets before noncurrent assets, current liabilities before noncurrent liabilities and
equity after liabilities.
b. Noncurrent assets before current assets, noncurrent liabilities before current liabilities and equity
after liabilities.
c. Current assets before noncurrent assets, noncurrent liabilities before current liabilities and equity
after liabilities
d. Noncurrent assets before current assets, current liabilities before noncurrent liabilities and equity
after liabilities.

 
14. A financial liability due within twelve months after reporting period shall be classified
as noncurrent

a. When it is refinanced on a long-term basis before the issue of financial statements.

b. When the entity has no discretion to refinance for at least twelve months.
c. When it is refinanced on a long-term basis after the end of reporting period.
d. When it is refinanced on a long-term basis on or before the end of reporting period
Correct answer
d. When it is refinanced on a long-term basis on or before the end of reporting period

 
15. When an entity breaches under a long-term loan agreement on or before the end of
the reporting period with the effect that the liability becomes payable on demand, the
liability is classified as

a. Current under all circumstances

b. Noncurrent under all circumstances
c. Current if the lender has agreed after the reporting period and before the issuance of the
statements not to demand payment as a consequence of the breach.
d. Noncurrent if the lender agreed after the reporting period to provide a grace period for at least
twelve months after the reporting period.

16. In presenting a statement of financial position, an entity

a. Must make the current and noncurrent presentation.
b. Must present assets and liabilities in order of liquidity
c. Must choose either the current and noncurrent or the liquidity presentation, meaning free choice of
presentation.
d. Must make the current and noncurrent presentation, except when a presentation based on
liquidity provides information that is reliable and more relevant
Correct answer
d. Must make the current and noncurrent presentation, except when a presentation based on
liquidity provides information that is reliable and more relevant

 
17. Assets to be sold, consumed or realized as part of the normal operating cycle are
a. Current assets
b. Noncurrent assets
c. Classified as current or noncurrent in accordance with other criteria
d. Noncurrent investments

 
18. Liabilities that an entity expects to settle within the normal operating cycle are
classified as
a. Noncurrent liabilities
b. Current or noncurrent liabilities in accordance with other criteria
c. Current liabilities
d. Equity

 
19. In which section of the statement of financial position should cash that is restricted
for the settlement of a liability due 18 months after the reporting period be presented?
a. Current assets
b. Equity
c. Noncurrent liabilities
d. Noncurrent assets
Correct answer
d. Noncurrent assets

 
20. In which section of the statement of financial position should employment taxes that
re due for settlement in 15 months’ time be presented?
a. Current liabilities
b. Current assets
c. Noncurrent liabilities
d. Noncurrent assets

21. An entity has a loan due for repayment in six months’ time but the entity has the
option to refinance for repayment two years later. The entity plans to refinance this loan,
in which section of the statement of financial position should this loan be presented?
a. Current liabilities 
b. Current assets
c. Noncurrent liabilities
d. Noncurrent assets
Correct answer
c. Noncurrent liabilities

 
22. Which of the following must be included on the face of the statement of financial
position?
a. Investment property
b. Number of shares authorized
c. Contingent asset
d. Shares in an entity owned by that entity

 
23. Which of the following is not required to be presented as minimum information on
the face of the statement of financial position?
a. Investment property
b. Investment accounted under the equity method 
c. Biological asset
d. Contingent liability
Correct answer
d. Contingent liability

 
24. Which of the following must be included as a line item in the statement of financial
position?
a. Contingent asset
b. Property, plant and equipment analysed by class
c. Share capital and reserves analysed by class
d. Deferred tax liability
 
 25. Which statement about the statement of financial position is not true?
a. Biological assets should be reported in the statement of financial position.
b. The number of shares authorized for issue should be reported in the statement of financial
position or the statement of changes in equity or in the notes.
c. Provisions should be recognized in the statement of financial position.
d. A revaluation surplus on a noncurrent asset in the current year should be recognized in
the income statement.