5. Statement of Comprehensive Income

Question 1

A structured Financial Statement that shows the financial performance of a business entity for a given period.

Answer 1

Statement of Comprehensive Income

Question 2

Describe Income

Answer 2

• increases in economic benefits in the form of inflows
• enhancement of assets
• decreases of liabilities
• increases in equity (other than those relating to contributions from equity participants)

Question 3

Describe Expenses

Answer 3

• decreases in economic benefits in the form of outflows
• depletion
• incurrences of liabilities
• decrease in equity (other than those relating to distribution to equity participants)

Question 4

It is probable that any future economic benefit associated with the item will flows to or from the entity and the item has a cost or value that can be measured with reliability.

Answer 4

Recognition of Incomes and Expenses

Question 5

True or False:

In Cash basis, Income is recognized when revenue has been earned already where it can be measured reliably and has some sufficient degree of certainty.

Answer 5

False : Accrual basis

Question 6

True or False:

In Accrual basis, Expense is recognized when it’s incurred already where it can be measured reliably and has some
sufficient degree of certainty.

Answer 6

True

Question 7

Methods of Recognizing Expense

Answer 7

(1) Matching cost with revenue
(2) Systematic and Rational Allocation
(3) Immediate Recognition
(4) Non-matching Principle

Question 8

Approach in the Determination of Profit

Answer 8

(1) Capital Maintenance Approach
a.) Financial Capital Maintenance
b.) Physical Capital Maintenance

(2) Transaction Approach

Question 9

is the traditional method of determining net income or profit in accordance with the Philippines Accounting Standards

Answer 9

Transaction Approach

Question 10

Arises in the course of the ordinary activities of an entity and is referred to by a variety of different names.

It includes sales, fees, interests, dividends, royalties,
and rent.

Answer 10

Revenue

Question 11

Represent other items that meet the definition of income and may or may not arise in the course of the ordinary activities of an entity.

Answer 11

Gains

Question 12

represent increases in economic benefits and as such are not different in nature from revenue.

Answer 12

Gains

Question 13

True or False:

Gains may arise from the disposal of non – current assets.

Answer 13

True

Question 14

True or False:

Gains are presented separately in the income statement

Answer 14

True

Question 15

Encompasses losses as well as those expenses that arise in the course of the ordinary activities of the entity.

Answer 15

Expenses

Question 16

represent other items that meet the definition of expenses and may or may not arise in the course of the ordinary activities of an entity.

Answer 16

Losses

Question 17

True or False:

PAS 1, paragraph 99, provides that an entity shall present an analysis or expenses recognized in profit or loss using a classification based on either the function of expenses or their
nature within the entity, whichever provides information that is
reliable and more relevant.

Answer 17

True

Question 18

The income statement may be presented in two ways, namely;

Answer 18

(1) Functional
(2) Natural

Question 19

Under this method, expenses are aggregated according to their nature.

Answer 19

Nature of Expense Method

Question 20

Under this method, an entity classifies expenses according to their function (cost of sales, distribution costs, administrative costs, and other functional classifications)

Answer 20

Function of Expense Method

Question 21

True or False:

Presenting income statement separately is not allowed provided it a separate comprehensive income will be presented.

Answer 21

False ; allowed

Question 22

Two Presentation of Statement of Comprehensive Income

Answer 22

(1) Single Statement of profit and loss and other comprehensive income statement

(2) Two Statement: Comprising
a.) statement of profit or loss
b.) statement of comprehensive
income

Question 23

is income less expense, excluding components of other comprehensive income

Answer 23

Profit or Loss

Question 24

True or False:

Income and expenses are usually recognized in profit or loss unless:

a. They are items of other comprehensive income; or

b. They are required by other PFRS to be recognized outside of profit or loss.

Answer 24

Both are True

Question 25

Profit or loss section shows line items that present the following amounts for the period:

Answer 25

►Revenue presenting, separately interest revenue.
► Finance costs
► Gains and losses arising from derecognition of financial assets at
amortized costs.
► Impairment losses and impairment gains on financial assets.
► Gains and losses on reclassification of financial assets from amortized cost
or fair value through profit other comprehensive income to fair value
through profit or loss.
► Share in the profit or loss of associate and joint ventures.
► Tax expenses; and
► Result of discontinued operations.