Formative. PAS 1 & PAS 2 PDF

CARIÑO, JENGIE FAITH 111CFAS September 20, 2024 Formative.PAS 1 & PAS 2...

CARIÑO, JENGIE FAITH 111CFAS September 20, 2024 Formative.PAS 1 & PAS 2 24% (6/25) 1. What is the p ima y objective of PAS 2? 0/1 POINT A To presc ibe the accounting treatment for invento ies B To dete mine the fair value of financial inst uments C To outline the presentation of financial statements D To establish guidelines for revenue recognition 2. Invento ies are measured at the lower of: 0/1 POINT A Cost and fair value B Cost and net realizable value C Fair value and net realizable value D Cost and market value 3. Which of the following costs is included in the cost of invento ies? 0/1 POINT A Selling costs B Administrative overheads C Impo t duties and transpo t costs D Abno mal waste 4. Net realizable value is defined as: 0/1 POINT A The estimated selling p ice in the ordina y course of business less the estimated costs of completion and the estimated costs necessa y to make the sale B The fair value of the invento y C The histo ical cost of the invento y D The replacement cost of the invento y 5. Which cost fo mula is NOT allowed under PAS 2? 0/1 POINT A First-in, first-out FIFO B Weighted average cost C Last-in, first-out LIFO D Specific identification 6. Which of the following is NOT considered invento y under PAS 2? 0/1 POINT A Raw mate ials B Work in progress C Finished goods D Prope ty, plant, and equipment 7. How should w ite-downs to net realizable value be accounted for? 0/1 POINT A As an expense in the pe iod the w ite-down occurs B As a reduction in equity C As a defe red expense D As a liability 8. Which of the following statements is t ue about the reversal of invento y w ite-downs? 1/1 POINT A Reversals are not allowed under any circumstances B Reversals are allowed and should be recognized in the income statement C Reversals should be recognized directly in equity D Reversals are allowed only if the invento y is sold 9. What is the p ima y objective of PAS 1? 0/1 POINT A To presc ibe the basis for presentation of general-purpose financial statements B To dete mine the fair value of financial inst uments C To outline the recognition of revenue D To establish guidelines for invento y valuation 10. Which of the following is NOT a component of financial statements under PAS 1? 0/1 POINT A Statement of financial position B Statement of profit or loss and other comprehensive income C Statement of changes in equity D Statement of invento y valuation 11. Under PAS 1, how should an entity present its financial position? 0/1 POINT A By listing assets and liabilities in order of liquidity B By listing assets and liabilities in alphabetical order C By listing assets and liabilities in order of magnitude D By listing assets and liabilities in order of acquisition 12. Which of the following is required to be disclosed in the notes to the financial statements under PAS 1? 1/1 POINT A The accounting policies used B The fair value of all assets C The market value of invento y D The histo ical cost of prope ty, plant, and equipment 13. What is the purpose of the statement of changes in equity? 1/1 POINT A To show the changes in an entity’s cash flows B To show the changes in an entity’s financial position C To show the changes in an entity’s equity du ing a pe iod D To show the changes in an entity’s liabilities 14. Which of the following is NOT a required disclosure under PAS 1? 0/1 POINT A The entity’s name and the pe iod covered by the financial statements B The presentation cu rency C The level of rounding used in presenting amounts D The market value of all assets 15. Under PAS 1, how should an entity present its income and expenses? 1/1 POINT A By function or by nature B By order of magnitude C By order of acquisition D By liquidity 16. Which of the following is NOT considered pa t of manufactu ing overhead? 0/1 POINT A Indirect mate ials B Facto y utilities C Direct labor D Depreciation on facto y equipment 17. Which of the following would be classified as an indirect cost in a manufactu ing company? 0/1 POINT A Wages of assembly line workers B Cost of raw mate ials C Sala y of the facto y manager D Cost of shipping finished goods 18. In a pe iod of ising p ices, which invento y cost flow assumption will result in the highest net income? 0/1 POINT A FIFO B LIFO C Specific identification D Weighted average 19. In the gross profit method, if the gross profit rate is 40% and sales are P500,000, what is the estimated cost of goods sold? 0/1 POINT A 200,000 B 300,000 C 400,000 D 500,000 20. If a company w ites down its invento y, what is the impact on the cost of goods sold COGS ? 0/1 POINT A COGS decreases B COGS remains unchanged C COGS increases D COGS is eliminated 21. Where is WIP invento y typically recorded in the financial statements? 0/1 POINT A As an expense in the income statement B As a liability on the balance sheet C As an asset on the balance sheet D As revenue in the income statement 22. Which of the following is NOT a component of WIP invento y? 1/1 POINT A Direct labor B Facto y rent C Raw mate ials D Finished goods 23. Which accounting p inciple is associated with the lower of cost or net realizable value ule? 0/1 POINT A Revenue recognition p inciple B Matching p inciple C Conse vatism p inciple D Consistency p inciple 24. Which of the following scena ios would require an invento y w itedown under the LCNRV ule? 0/1 POINT A The market value of invento y increases above its cost B The cost of invento y decreases below its net realizable value C The net realizable value of invento y falls below its cost D The selling p ice of invento y increases 25. Which of the following best desc ibes the perpetual invento y system? 1/1 POINT A Invento y records are updated continuously as transactions occur. B Invento y records are updated only at the end of the accounting pe iod. C Invento y is counted physically at regular inte vals. D Invento y is never counted physically.