CFAS Final Review: PAS Standards and Applications
After analyzing whether the entity must derecognize an item or not, and upon determining that
derecognition is not sufficient to achieve relevance and faithful representation, the entity should*
1/1
not recognize any income or expense either on the retained component or transferred component.
recognize any income or expense either on the retained component or transferred component. - correct
answer ✔✔not recognize any income or expense either on the retained component or transferred
component.
In which of the following transactions will result in the recognition of one asset and the derecognition of
another asset?*
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purchase of inventories on account
purchase of equipment for cash
payment of accounts to suppliers
collection of the proceeds from bank loans - correct answer ✔✔purchase of equipment for cash
Which of the following situations can a liability be recognized for Wonyoung Company?*
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Wonyoung Company signs a letter of intent to purchase goods worth P5.2 million from Yujin Company.
The goods will be delivered in six months.
Rei Trading pays Wongyoung Company in advance for goods amounting to P8 million to be delivered
throughout the year.
Leeseo invests P5 million in Wonyoung, expecting to earn a profit on this investment as stockholder.
Wonyoung Company's lawyers estimate that it is probable that Wonyoung will have to pay damages on
account of a patent infringement suit although the amount cannot yet be ascertained. - correct answer
✔✔Rei Trading pays Wongyoung Company in advance for goods amounting to P8 million to be delivered
throughout the year.
All items which meet the definition of the elements of financial statements should always be included in
the financial statements.*
,1/1
True
False - correct answer ✔✔False
In which of the following transactions will result in the derecognition of both an asset and a liability?*
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purchase of inventories on account
purchase of equipment for cash
payment of accounts to suppliers
collection of the proceeds from bank loans - correct answer ✔✔payment of accounts to suppliers
Which of the following will increase total assets?*
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expiration of insurance
purchase of equipment for cash
payment of accounts to suppliers
collection of the proceeds from bank loans - correct answer ✔✔collection of the proceeds from bank
loans
Before derecognizing an asset, there is a need to check if the entity might continue to control that asset.
If this is so, then*
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the item remains to be an asset of the entity
the item ceases to be an asset of the entity
the item becomes the asset of the other party.
the item may be partially derecognized by the entity - correct answer ✔✔the item remains to be an
asset of the entity
It is the process of capturing for inclusion in the statement of financial position or the statement(s) of
financial performance an item that meets the definition of the elements of financial statements.*
, 1/1
Recognition
Measurement
Presentation
Derecognition - correct answer ✔✔Recognition
Only items that meet the definition of income and expense are recognized in the statement of financial
performance.*
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True
False - correct answer ✔✔True
The Conceptual Framework does not provide any concept, principle or rule for the removal of all or part
of a recognized asset or liability from an entity's statement of financial position because it is always up to
the decision of management who is primarily responsible for the preparation of the financial statements.
- correct answer ✔✔False
In which of the following transactions will result in the recognition of an asset and the recognition of a
liability?*
1/1
purchase of inventories on account
purchase of equipment for cash
payment of accounts to suppliers
collection of customers' accounts - correct answer ✔✔purchase of inventories on account
Revenues, expenses, contributions from and distributions to holders of equity claims are reflected in the
statement of financial performance. This statement is
TRUE
FALSE - correct answer ✔✔False
After analyzing whether the entity must derecognize an item or not, and upon determining that
derecognition is not sufficient to achieve relevance and faithful representation, the entity should*
1/1
not recognize any income or expense either on the retained component or transferred component.
recognize any income or expense either on the retained component or transferred component. - correct
answer ✔✔not recognize any income or expense either on the retained component or transferred
component.
In which of the following transactions will result in the recognition of one asset and the derecognition of
another asset?*
1/1
purchase of inventories on account
purchase of equipment for cash
payment of accounts to suppliers
collection of the proceeds from bank loans - correct answer ✔✔purchase of equipment for cash
Which of the following situations can a liability be recognized for Wonyoung Company?*
1/1
Wonyoung Company signs a letter of intent to purchase goods worth P5.2 million from Yujin Company.
The goods will be delivered in six months.
Rei Trading pays Wongyoung Company in advance for goods amounting to P8 million to be delivered
throughout the year.
Leeseo invests P5 million in Wonyoung, expecting to earn a profit on this investment as stockholder.
Wonyoung Company's lawyers estimate that it is probable that Wonyoung will have to pay damages on
account of a patent infringement suit although the amount cannot yet be ascertained. - correct answer
✔✔Rei Trading pays Wongyoung Company in advance for goods amounting to P8 million to be delivered
throughout the year.
All items which meet the definition of the elements of financial statements should always be included in
the financial statements.*
,1/1
True
False - correct answer ✔✔False
In which of the following transactions will result in the derecognition of both an asset and a liability?*
1/1
purchase of inventories on account
purchase of equipment for cash
payment of accounts to suppliers
collection of the proceeds from bank loans - correct answer ✔✔payment of accounts to suppliers
Which of the following will increase total assets?*
1/1
expiration of insurance
purchase of equipment for cash
payment of accounts to suppliers
collection of the proceeds from bank loans - correct answer ✔✔collection of the proceeds from bank
loans
Before derecognizing an asset, there is a need to check if the entity might continue to control that asset.
If this is so, then*
1/1
the item remains to be an asset of the entity
the item ceases to be an asset of the entity
the item becomes the asset of the other party.
the item may be partially derecognized by the entity - correct answer ✔✔the item remains to be an
asset of the entity
It is the process of capturing for inclusion in the statement of financial position or the statement(s) of
financial performance an item that meets the definition of the elements of financial statements.*
, 1/1
Recognition
Measurement
Presentation
Derecognition - correct answer ✔✔Recognition
Only items that meet the definition of income and expense are recognized in the statement of financial
performance.*
1/1
True
False - correct answer ✔✔True
The Conceptual Framework does not provide any concept, principle or rule for the removal of all or part
of a recognized asset or liability from an entity's statement of financial position because it is always up to
the decision of management who is primarily responsible for the preparation of the financial statements.
- correct answer ✔✔False
In which of the following transactions will result in the recognition of an asset and the recognition of a
liability?*
1/1
purchase of inventories on account
purchase of equipment for cash
payment of accounts to suppliers
collection of customers' accounts - correct answer ✔✔purchase of inventories on account
Revenues, expenses, contributions from and distributions to holders of equity claims are reflected in the
statement of financial performance. This statement is
TRUE
FALSE - correct answer ✔✔False
