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    Proficiency - Theory

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    MJ Yacon
    The document contains summaries of key points from various accounting standards relating to topics like statement of cash flows, employee benefits, income taxes, earnings per share, bonds payable, liabilities, share investments, receivables, loans receivable, bank reconciliation, and the conceptual framework. It provides definitions, classifications, and indicates whether statements about each topic are true or false.

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    Proficiency - Theory

    Uploaded by

    MJ Yacon
    81 views3 pages
    The document contains summaries of key points from various accounting standards relating to topics like statement of cash flows, employee benefits, income taxes, earnings per share, bonds payable, liabilities, share investments, receivables, loans receivable, bank reconciliation, and the conceptual framework. It provides definitions, classifications, and indicates whether statements about each topic are true or false.

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    Proficiency_-Theory

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    The document contains summaries of key points from various accounting standards relating to topics like statement of cash flows, employee benefits, income taxes, earnings per share, bonds payable, liabilities, share investments, receivables, loans receivable, bank reconciliation, and the conceptual framework. It provides definitions, classifications, and indicates whether statements about each topic are true or false.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    81 views3 pages

    Proficiency - Theory

    Uploaded by

    MJ Yacon
    The document contains summaries of key points from various accounting standards relating to topics like statement of cash flows, employee benefits, income taxes, earnings per share, bonds payable, liabilities, share investments, receivables, loans receivable, bank reconciliation, and the conceptual framework. It provides definitions, classifications, and indicates whether statements about each topic are true or false.

    Copyright:

    © All Rights Reserved
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    of 3

    PROFICIENCY: THEORY OF ACCOUNTS

    PAS 7- STATEMENT OF CASH FLOWS


    I. PAS 7 requires the presentation of information about
    historical changes in cash and cash equivalents of an
    entity by means of a statement of cash flows.
    II. An entity requires presenting a statement of cash flows as
    a supporting part of its primary financial statement.
    ANSWER: True, False (integral)

    PAS 19R – EMPLOYEE BENEFITS


    I. When an entity amends a pension plan, past service cost
    should be reported as an expense in the period the plan is
    amended.
    II. In rare circumstances, when a retirement benefit plan has
    attributes both defined benefit plan and defined
    contribution plan, the plan is deemed as defined
    contribution plan.
    ANSWER: True, False (benefit)
    PAS 12- ACCOUNTING FOR INCOME TAX
    MGS Company shall record an unrealized gain as a:
    TYPE OF DIFFERENCE CLASSIFICATION
    Temporary Liability

    PAS 33- EARNINGS PER SHARE

    I. When an entity chooses to disclose in separate financial


    statement, it must present such EPS in the notes to
    financial statements.
    II. When an entity chooses to disclose EPS on both, separate
    and consolidated financial statements, the disclosure
    required by the standard is to present only on the basis
    of consolidated information.
    ANSWER: False (separate financial statement), True

    BONDS PAYABLE
    I. In bond refunding transaction, the excess of the carrying
    amount over the retirement price is a gain on early
    retirement of bonds payable.
    II. In a treasury bond transaction, the excess of the carrying
    amount of the bonds payable over the reacquisition price
    is reported as gain on acquisition of treasury bonds.
    ANSWER: False (extinguishment), True

    LIABILITIES
    A. An entity operates a chemical plant and has a public policy
    of making good any damage caused to the environment. Which
    would give rise to a provision?
    ANSWER: A chemical spill from a chemical plant has caused
    harm to the surrounding wildlife.

    I. A containers deposit account is usually classified as a


    non-current liability.
    II. Gift certificates payable is a non-current liability and
    when the said certificate is redeemed, sales account will
    be credited.
    ANSWER: False (current), True

    SHARE INVESTMENT
    I. When a stock right is accounted for “not separately” and
    then sold, gain or loss on sale of stock is recognized.
    II. When stock rights are received by the shareholder and
    accounted for separately, the original investment is
    credited.
    ANSWER: False (no gain or loss to be recognized), True

    RECEIVABLE FINANCING
    I. Accounts receivable-assigned is credited whenever final
    settlement is made between the assignor and the assignee
    whether it be notification of non-notification.
    II. When assignment is non-notification and there is collection
    of the accounts receivable a “debit to Notes Payable-Bank”
    is necessary.
    ANSWER: True, False (Cash)

    LOANS RECEIVABLE
    I. If the origination fees are not chargeable against the
    borrower, the fees are known as indirect origination cost.
    II. The indirect origination cost are deferred and also
    amortized over the life or term of the loan.
    ANSWER: False (direct), False (direct)

    BANK RECONCILIATION
    Which is/are true regarding bank overdrafts?
    I. It is stated that generally overdrafts are not permitted
    in the Philippines.
    II. When an entity maintains two or more accounts in one bank,
    in an overdraft, such overdraft can be offset against the
    other account with a credit balance.
    III. Overdraft can also be offset with other bank account, if
    immaterial.
    IV. Bank overdraft net of other bank account is used when
    credit balance is greater than debit cash balance.
    ANSWER: True, False (debit), True, True

    I. The impact of erroneous debit by the bank to the company’s


    account will result to overstatement of the cash balance
    account.
    II. The impact of an erroneous charge to the company’s account
    and corrected in the same month will overstate the receipts
    column.
    ANSWER: False (understatement), True

    CONCEPTUAL FRAMEWORK

    I. To be fair in presentation, an information must be


    predictive and confirmatory.
    II. Financial statement users assumed to have no reasonable
    knowledge and business and financial accounting matters.
    ANSWER: False, False (reasonable knowledge)

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