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1. When shares with par value are sold, the proceeds shall be credited to the a. Share capital account b. Share premium c. Retained earnings d. Share capital account to the extent of the par of the shares issued with any excess being reflected in share premium 2. When shares without par value are sold, the excess proceeds over stated value shall be credited to a. Income b. Retained earnings c. Share premium d. Share capital 3. If shares are issued for noncash consideration, the shares issued shall be measured by a. Fair value of the shares issued b. Par value of the shares issued c. Fair value of the consideration received d. Carrying amount of the consideration received 4. If shares are issued to extinguish a financial liability, what is the initial measurement of the shares issued? a. Par value of the shares issued b. Fair value of the shares issued c. Fair value of liability extinguished d. Book value of the shares issued 5. When shares are issued for services received, the measure is equal to a. Fair value of the services b. Par value of the shares issued c. Book value of the shares issued d. Fair value of the shares issued 6. Treasury shares shall be recorded at cost irrespective of whether these are acquired below or above par value. The cost of treasury shares acquired for noncash consideration is usually measured by a. Fair value of the noncash consideration given b. Carrying amount of the noncash asset surrendered c. Par value of the shares d. Book value of the shares 7. The total cost of treasury shares shall be reported as a. Deduction from shareholders’ equity b. Asset c. Deduction from retained earnings d. Deduction from share premium 8. If treasury shares are reissued for noncash considearation, the proceeds shall be measured by a. Fair value of the treasury shares b. Fair value of the noncash consideration received c. Carrying amount of the noncash consideration received d. Book value of the treasury shares 9. Which of the following statements is incorrect concerning treasury shares? a. Treasury shares shall be recorded at cost irrespective of whether acquired below or above par value. b. The total cost of treasury shares shall be deducted from equity. c. Treasury shares may be recognized as financial asset d. Gain or loss on sale of treasury shares shall not be included in profit or loss. 10. “Loss” from sale of treasury shares shall be charged to a. Loss on sale of treasury shares to be reported as other expense b. Retained earnings and then share premium from treasury shares c. Share premium from treasury shares and then retained earnings d. Share premium from original issuance, share premium from treasury shares and then retained earnings 11. Gains and losses on retirement of treasury shares shall not be included in profit or loss. If the retirement results in a gain, such gain shall be credited to a. Share premium b. Retained earnings c. Share capital d. Income 12. Loss on retirement of treasury shares shall be debited to a. Retained earnings

b. Share premium from treasury shares and then retained earnings c. Share premium from treasury share, share premium from original issuance and then retained earnings

d. Share premium from original issuance, share premium from treasury shares and then retained earnings 13. it is issuance by an entity of its own shares to its shareholders without consideration and under conditions indicating that such action is prompted mainly by a desire to increase the number of shares outstanding for the purpose of effecting a reduction in unit market price. a. Share split b. Reverse share split c. Stock dividend d. Recapitalization 14. Subscriptions receivable and other receivables from sale of shares which are not collectible currently shall be presented as a. Deduction from the related subscribed share capital under shareholder’s equity b. Current asset c. Long-term investment d. Other asset 15. Deposits on subscriptions to a proposed increase in share capital shall be reported as a. Part of liabilities b. Part of shareholders’ equity c. Memorandum only d. Part of retained earnings 16. A redeemable preference share is a preference share I. That provides for mandatory redemption by the issuer for a fixed or determinable amount at a future date. II. That gives the holder the right to require the issuer to redeem the instrument for a fixed or determinable amount at a future date. a. I only b. II only c. Both I and II d. Neither I nor II 17. A redeemable preference share must be redeemed at the option of a. Issuer b. Holder c. Either issuer or holder d. Neither the issuer nor holder 18. A redeemable preference share is a. An equity instrument b. A financial liability c. Either an equity instrument or a financial liability d. Neither an equity instrument nor a financial liability 19. A redeemable preference share shall be classified in the statement of financial position as a. Current liability b. Noncurrent liability c. Either current liability or noncurrent liability depending on redemption date d. Component of shareholders’ equity 20. Dividend paid on redeemable preference share shall be accounted for as a. Direct deduction from retained earnings b. Interest expense as component of finance cost c. Component of other comprehensive income d. Deduction from share premium 21. When collectibity is reasonably assuredm the excess of the subscription price over the stated value of the no-par subscribed share capital shall be recorded as a. No par share capital b. Share premium when the subscription is recorded c. Share premium when the subscription is collected d. Share premium when the share capital is issued. 22. During the current year, shares were subscribed for a price in excess of par value. A total of 20% of the subscription price was collected as down payment with the remaining 80% due next year. Collectibility is assured. At the current year-end, the shareholders’ equity would report share premium for the excess of the subscription price over the par value of the shares subscribed and a. Share capital issued for 20% of the par value of shares subscribed. b. Share capital issued for the par value of the shares subscribed.

c. Subscribed share capital for 80% of the par value of the shares subscribed.

d. Subscribed share capital for the par value of the shares subscribed. 23. When treasury shares are purchased for more than par value, what account or accounts shall be debited? a. Treasury shares for the par value and share premium for the excess of purchase price over the par value. b. Share premium for the purchase price c. Treasury shares for the pruchase price. d. Treasury shares for the par value and retained earnings for excess of the purchase price over the par value. 24. The purchase of treasury shares a. Decreases shares authorized b. Decreases shares issued c. Decreases shares outstanding d. Has no effect on shares outstanding 25. Treasury shares were acquired for cash at more than par value, and then subsequently sold for cash at more than acquisition price. What is the effect on share premium from treasury shares? Purchase of treasury shares Sale of treasury shares a. Increase Increase b. Decrease No effect c. No effect Increase d. No effect No effect 26. Which of the following statements best describes the net effect on retained earnings of the purchase aned subsequent sale of treasury shares? a. Retained earnings may never be increased but sometimes decreased b. Retained earnings may never be increased or decreased c. Retained earnings sometimes may be increased but never be decreased. d. Retained earnings account is always affected unless the sale price is exactly equal to cost. 27. At the date of the financial statements, shares issued would exceed shares outstanding as a result of a. Declaration of share split b. Declaration of a stock dividend c. Purchase of treasury shares d. Payment in full of subscribed shares 28. Which of the following statements in relation to treasury shares is true? a. No reference need be made to donated treasury shares since the acquisition of such shares does not restrict retained earnings. b. Treasury shares and unissued shares can be reported as total shares not outstanding with no distinguishing comments. c. Treasury shares shall be reported as a deduction, at cost, from the total paid in capita. d. Treasury shares shall be reported as a deduction, at cost, from the total shareholders’ equiry, and the restriction on retained earnings occasioned by their acquisition must also be stated. 29. How would a share split affect each of the following? Asset Shareholders’ equity a. Increase Increase b. No effect No effect c. No effect Increase d. Increase No effect 30. How would a share split in which the par value per share decreases in proportion to the number of additional shares issued affect each of the following? Share premium Retained earnings a. Increase No effect b. No effect No effect c. No effect Decrease d. Increase Decrease 31. Nonstock dividends shall be recognized as liabilities on the a. Date of declaration b. Date of record c. Date of payment d. Date of issuing check 32. When shareholders may elect to receive cash in lieu of stock dividend, the amount to be charged to retained earnings is equal to a. Optional cash dividend b. Fair value of the shares c. Par value of the shares

d. Book value of the shares

33. Treasury shares may be reissued as dividends, in which case what amount should be charged to retained earnings? a. Cost of the treasury shares b. Par value of the treasury shares c. Fair value of the treasury shares on the date of declaration d. Fair value of the treasury shares on the date of issuance 34. If the stock dividend is less than 20%, how much of the retained earnings should be capitalized? a. Par value of the shares b. Fair value of the shares on the date of declaration c. Fair value of the shares on the date of record d. Fair value of the shares on the date of issuance 35. An entity issued what is called a “20% stock dividend” on its share capital. At what amount per share should retained earnings be reduced for this transaction? a. Zero because no entry is made b. Par value c. Fair value at the declaration d. Fair value at the date of issuance 36. Which of the following statements is true concerning stock dividends? I. A stock dividend does not give rise to any change in either the entity’s assets or the shareholders’ proportionate interest therein. II. Stock dividends should be recorded on the date declared a. I only b. II only c. Both I and II d. Neither I nor II 37. In closely held entities, if stock dividends are declared, retained earnings shall be capitalized at a. Par or stated value b. Book value c. Fair value on date of declaration d. Fair value on date of issue 38. In certain cases, stokc dividends are declared on the basis of a proposed increase in authorized share capital, the application for which has been filed but not yet approved by SEC at the end of reporting period. Under these circumstances, which may not be done? a. The proposed increase and such dividend declaration generally shall not be reflected in the statement of financial position prior to SEC approval. b. These matters shall be disclosed in the notes to financial statements. c. If the proposed increase is approved by SEC after the end of reporting period but before the issuance of the statements, the new authorized share capital may be presented and the stock dividend may be shown as part of issued share capital. d. A note to the financial statements is unnecessary to disclose the fact that the proposed increase and dividend declaration have been reflected in the financial statements. 39. Which of the following statements is incorrect concerning retained earnings? a. Appropriated retained earnings shall be clearly distinguished from unappropriated retained earnings. b. A deficit is a debit balance in retained earnings. c. A deficit in retained earnings shall be presented as an asset d. When the deficit exceeds the total of the other capital account balances, the excess is a capital deficiency. 40. Appropriations of retained earnings, if reflected in separate account, shall be reported as a. Component of equity as part of share premium b. Component of equity as part as total retained earnings c. Component of total liabilities as current liability d. Component of total liabilities as noncurrent liability 41. The liability to pay a dividend shall be recognized when the dividend is appropriately authorized and is no longer at the discretion at the entity, which is the date I. When declaration of dividend by management or the board of directors is approved by relevant authority, for example, the shareholders, if the jurisdiction requires such approval. II. When the dividend is declared by management or the board of directors if the jurisdiction does not require further approval. a. I only b. II only c. Either I or II

d. Neither I nor II

42. An entity shall measure a liability to distribute noncash asset as dividend to its owners at a. Carrying amount of the asset distributed b. Fair value of the asset distributed c. Either the carrying amount or fair value of the asset distributed d. Neither the carrying amount nor fair value of the asset distributed 43. An entity shall review and adjust the carrying amount of the dividend payable at the end of each reporting period and at the date of settlement with any changes in the carrying amount of the dividend payable recognized. a. In equity as adjustment to the amount of distribution b. In profit or loss c. As adjustment of general reserve d. As component of other comprehensive income 44. When an entity settles the property dividend payable, it shall recognize the difference between the carrying amount of the asset distributed and the carrying amount of the dividend payable in a. Profit or loss b. Other comprehensive income c. Equity d. Retained earnings 45. An entity shall measure a noncurrent asset classified as held for distribution to owners at a. Carrying amount b. Fair value less cost to distribute c. Lower of carrying amount and fair value less cost to distribute d. Higher of carrying amount and fair value less cost to distribute 46. An entity declared a cash dividend on its share capital in December of the current year, payable in January of the next year. Retained earnings would a. Increase on the date of declaration b. Not be affected on the date of declaration c. Not be affected on the date of payment d. Decrease on the date of payment 47. The actual total amount of a cash dividend to be paid is determined on the date of a. Record b. Declaration c. Declaration or date of record, whichever is earlier d. Payment 48. A dividend which is a return to shareholders of a portion of their original investment is a. Liquidating dividend b. Patronage dividend c. Liability dividend d. Participating dividend 49. An entity declared and paid a liquidating dividend. This distribution resulted in a decrease in a. Neither paid in capital nor retained earnings b. Both paid in capital and retained earnings c. Retained earnings and no effect on paid in capital d. Paid in capital and no effect on retained earnings 50. An entity declared a dividend, a portion of which was liquidating. How would this declaration affect contributed capital and retained earnings, respectively? a. Decrease and No effect b. Decrease and Decrease c. No effect and Decrease d. No effect and No effect 51. The issuer shall directl charge retained earnings for the par value of the shares issued in a. Two for one share split b. Share options c. Twenty percent stock dividend d. Share appreciation right 52. The issuer should charge retained earnings for the fair value of shares issued in a a. 1 for 5 stock dividend b. 1 for 8 stock dividend c. 4 for 1 share split d. 2 for 1 share split 53. If the issuing entity has only one class of share capital, a transfer from retained earnings to share capital

equal to the fair value of the shares issued is ordinarily a characteristic of

a. Either a stock dividend or a share split b. Neither a stock dividend nor a share split c. A share split but not a stock dividend d. A stock dividend but not a share split 54. The peso amount of total shareholders’ equity remains the same when there is a. Issuance of preference shares in exchange for convertible debentures b. Issuance of nonconvertible bonds with share warrants c. Declaration of a stock dividend d. Declaration of a cash dividend 55. How would the declaration and subsequent issuance of a 10% stock dividend affect each of the following when the fair value of the shares exceeds the par value of the shares? Share capital Share premium a. No effect No effect b. No effect Increase c. Increase No effect d. Increase Increase 56. Unlike a share split, a stock dividend requires a formal journal entryin the accounting records because a. Stock dividends increase the relative book value of an individual’s shareholdings b. Stock dividends increase the shareholders’ equity in the issuing entity. c. Stock dividends are payable on the date they are declared. d. Stock dividends represent a transfer form retained earnings to share capital. 57. Which of the following would not affect retained earnings? a. Conversion of preference shares into ordinary shares. b. Share split c. Reissue of treasury shares d. Stock dividend 58. How would retained earnings be affected by the declaration of stock dividend and share split, respectively? a. Decrease and Decrease b. No effect and Decrease c. No effect and No effect d. Decrease and No effect 59. When a dividend is declared and paid in stock a. Total shareholders’ equity does not change. b. Total shareholders’ equity decreases. c. The current ratio increases. d. The amount of working capital decreases. 60. Undistributed stock dividends shall be reported as a. A current liability b. An addition to share capital outstanding c. A reduction in total shareholders’ equity d. A note to financial statements 61. These are transactions in which the entity receives goods or services as consideration for equity instruments of the entity, including shares and share options. a. Equity settled share-based payment transactions b. Cash settled share-based payment transactions c. Equity payment transactions d. Cash payment transactions 62. For equity settled share-based payment transactions, the entity shall measure the goods or services received and the corresponding increase in equity I. Directly, at the fair value of the goods or services received. II. Indirectly, by reference to the fair value of the equity instruments granted, if the fair vlaue of the goods or services received cannot be estimated reliably. a. I only b. II only c. Both I and II d. Neither I nor II 63. It is the difference between the fair value of the shares to which the counterparty has the right to subscribe and the price the counterparty is required to pay for those shares. a. Fair value b. Intrinsic value c. Market value

d. Book value

64. It is the date on which the entity and another party agree to a share-based payment arrangement, being when the entity and the counterparty have a shared understanding of the terms and conditions of the arrangement. a. Grant date b. Measurement date c. Exercise date d. End of reporting period 65. What is the date on which the fair value of the equity instrument granted is measured? a. Measurement date b. Grant date c. Exercise date d. End of reporting period 66. For transactions with employees and other providing similar services, the fair value of the equity instrument granted is measured on a. Exercise date b. Grant date c. End of reporting period d. Beginning of the year of grant 67. It is a contract that gives the holer the right, but not the obligation, to subscribe to the entity’s shares at a fixed or determinable price for a specified period of time. a. Share option b. Share warrant c. Share appreciation right d. Share split 68. If the share options do not vest until the employee completes a specified service period, the compensation is a. Not recognized as expense b. Recognize as expense immediately c. Recognized as expense over the service or vesting period d. Recognized as expense over a reasonable period not exceeding 10 y...