Myanmar CPA Part I (MAC) Feed

Question

Under the Conceptual Framework for Financial Reporting and Myanmar Financial Reporting Standards (MFRS), what are the two fundamental qualitative characteristics that financial information must possess to be useful to primary users?

Financial Accounting Reporting

Question · Easy

Question

A trading enterprise in Yangon purchases inventory on 1 October 2025 with an invoice price of 12,000,000 MMK, subject to a trade discount of 5% and settlement terms of 2/10, net 30. Freight-in costs paid by the buyer are 400,000 MMK, and import tariffs amount to 600,000 MMK. The enterprise pays within 10 days to take the settlement discount. Under IAS 2 / MFRS 2, at what initial cost should the inventory be recognized?

Financial Accounting Reporting

Question · Hard

Question

A Myanmar manufacturing company acquired specialized production machinery on 1 January 2023 for 50,000,000 MMK with an estimated useful life of 5 years and an estimated residual value of 5,000,000 MMK. The company applies the straight-line depreciation method. On 1 January 2025, after two full years of use, the company reassesses the machinery's remaining useful life to be 4 more years (total life 6 years) and reduces the estimated residual value to 2,000,000 MMK. What is the depreciation expense for the year ended 31 December 2025 under IAS 16 and IAS 8?

Financial Accounting Reporting

Question · Medium

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Question

Under IAS 38 (Intangible Assets), which of the following internal expenditures incurred by an enterprise may be recognized as an intangible asset on the statement of financial position?

Financial Accounting Reporting

Question · Easy

Question

On 31 December 2025, a chemical manufacturing company operating in an industrial zone in Yangon faces an environmental claim. Legal counsel advises that there is a 75% probability that the company will be found liable and required to pay 40,000,000 MMK in remediation costs within one year. There is a 25% chance of successful defense with zero payment. The risk-adjusted discount rate is negligible. Under IAS 37 (Provisions, Contingent Liabilities and Contingent Assets), how should the company treat this matter?

Financial Accounting Reporting

Question · Medium

Question

A telecommunications company in Mandalay enters into a contract on 1 January 2025 to sell a customer a smartphone and provide a 12-month data service package for an upfront total price of 600,000 MMK. The standalone selling price of the smartphone is 480,000 MMK and the standalone selling price of the 12-month data plan is 240,000 MMK. The phone is delivered immediately on 1 January 2025. Under IFRS 15 / MFRS 15, how much revenue should be recognized on 1 January 2025 upon delivery of the phone?

Financial Accounting Reporting

Question · Hard

Question

A lessee enters into a 3-year commercial warehouse lease in Yangon on 1 January 2025. Lease payments of 10,000,000 MMK are payable annually in arrears on 31 December each year. The interest rate implicit in the lease cannot be readily determined; the lessee's incremental borrowing rate is 10% per annum. The present value factor of an ordinary annuity of 1 MMK at 10% for 3 years is 2.4869. The lessee incurs initial direct legal costs of 500,000 MMK. Under IFRS 16 / MFRS 16, what is the initial carrying amount of the right-of-use (ROU) asset at 1 January 2025?

Financial Accounting Reporting

Question · Hard

Question

During the audit of a commercial firm in Nay Pyi Taw, the accountant prepares a bank reconciliation at 31 December 2025. The cash book shows a debit balance of 15,200,000 MMK. Unpresented cheques total 3,400,000 MMK, uncredited lodgements total 2,100,000 MMK, direct bank charges of 150,000 MMK appear on the bank statement but not in the cash book, and a direct customer transfer of 1,800,000 MMK was credited by the bank but not recorded in the cash book. What is the corrected cash book balance to be reported on the statement of financial position?

Financial Accounting Reporting

Question · Medium

Question

Under IAS 7 (Statement of Cash Flows), an enterprise operating under MFRS prepares its cash flows from operating activities using the indirect method. For the year ended 31 December 2025, profit before tax was 85,000,000 MMK. The records show depreciation expense of 12,000,000 MMK, gain on sale of equipment of 3,000,000 MMK, an increase in trade receivables of 5,000,000 MMK, an increase in inventory of 4,000,000 MMK, an increase in trade payables of 6,000,000 MMK, and income taxes paid of 14,000,000 MMK. What is the net cash flow from operating activities?

Financial Accounting Reporting

Question · Hard

Question

A public company in Myanmar has credit sales for 2025 of 180,000,000 MMK and cost of goods sold of 120,000,000 MMK. At 1 January 2025, trade receivables were 26,000,000 MMK and inventory was 18,000,000 MMK. At 31 December 2025, trade receivables are 34,000,000 MMK and inventory is 22,000,000 MMK. Assuming a 360-day year, what is the entity's inventory turnover period (in days) and receivables collection period (in days)?

Financial Accounting Reporting

Question · Hard

Question

Which of the following trial balance errors will cause the total of debit balances to differ from the total of credit balances, directly resulting in an entry to a suspense account?

Financial Accounting Reporting

Question · Medium

Question

Under IAS 20 (Accounting for Government Grants and Disclosure of Government Assistance), how should an enterprise account for a government grant received from the regional authorities to subsidize the purchase of environmental pollution control equipment?

Financial Accounting Reporting

Question · Medium

Question

On 31 December 2025, an entity discovers that inventory with a cost of 15,000,000 MMK has suffered water damage. The estimated normal selling price is 16,000,000 MMK. However, due to the damage, the entity can only sell the goods for 12,000,000 MMK after incurring repackaging and delivery costs of 1,500,000 MMK. Under IAS 2 / MFRS 2, at what value should this inventory be stated on the statement of financial position at 31 December 2025?

Financial Accounting Reporting

Question · Medium

Question

An entity acquires an investment property in Yangon on 1 January 2024 for 100,000,000 MMK and adopts the fair value model under IAS 40 / MFRS 40. At 31 December 2024, an independent professional valuation determines the property's fair value to be 115,000,000 MMK. At 31 December 2025, due to local commercial property fluctuations, the fair value is determined to be 108,000,000 MMK. How should the change in fair value for the year ended 31 December 2025 be recognized?

Financial Accounting Reporting

Question · Medium

Question

Under IAS 23 (Borrowing Costs), which of the following criteria must be satisfied for borrowing costs to be capitalized as part of the cost of an asset?

Financial Accounting Reporting

Question · Medium

Question

A company in Yangon purchases equipment on 1 January 2025 for 30,000,000 MMK. It incurs installation and testing costs of 2,000,000 MMK, delivery insurance of 500,000 MMK, staff training costs to operate the machine of 1,200,000 MMK, and initial administrative operating losses during the launch month of 800,000 MMK. The supplier grants a prompt payment discount of 600,000 MMK that was taken. Under IAS 16, what is the initial cost of the equipment to be recognized in property, plant, and equipment?

Financial Accounting Reporting

Question · Hard

Question

Under IAS 10 (Events after the Reporting Period), which of the following events occurring between the reporting date (31 December 2025) and the date the financial statements are authorized for issue (15 March 2026) is classified as an adjusting event?

Financial Accounting Reporting

Question · Medium

Question

Under Myanmar Standards on Auditing (MSA) / International Standards on Auditing (ISA) 200, what is the overall objective of the independent auditor in conducting an audit of financial statements?

Practical Auditing

Question · Medium

Question

Under ISA 315 (Identifying and Assessing the Risks of Material Misstatement), which of the following components is NOT one of the five interrelated components of internal control established by the COSO framework and adopted by auditing standards?

Practical Auditing

Question · Easy

Question

When assessing audit risk under ISA 200 and ISA 315, the audit risk model is expressed as Audit Risk (AR) = Inherent Risk (IR) * Control Risk (CR) * Detection Risk (DR). If an auditor evaluates Inherent Risk as HIGH and Control Risk as HIGH for the inventory existence assertion, what strategy must the auditor adopt regarding Detection Risk?

Practical Auditing

Question · Medium

Question

Under ISA 500 (Audit Evidence), which of the following types of audit evidence is generally considered the most reliable when verifying accounts receivable balances?

Practical Auditing

Question · Medium

Question

An auditor sets planning materiality at 50,000,000 MMK and performance materiality at 37,500,000 MMK (75% of planning materiality). During testing of trade payables, the auditor discovers an unrecorded liability of 10,000,000 MMK. The auditor also projects sampling misstatements of 15,000,000 MMK across other operational expenses. What does performance materiality represent under ISA 320?

Practical Auditing

Question · Hard

Question

During a receivables audit, the finance director offers to choose the customers to be contacted, send the confirmation requests, and collect the replies before forwarding them to the auditor. Under ISA 505, which response by the auditor is appropriate?

Practical Auditing

Question · Medium

Question

During the audit of a client's year-end inventory, the auditor observes the physical inventory count on 31 December 2025. Which of the following procedures specifically tests the 'Cut-off' assertion for purchases and inventory under ISA 501?

Practical Auditing

Question · Medium

Question

Under ISA 530 (Audit Sampling), an auditor applies monetary unit sampling to an accounts receivable population of 500,000,000 MMK. The sampling interval is calculated as 25,000,000 MMK. An account with a recorded book value of 40,000,000 MMK is audited, and the audit evidence reveals the true value is 30,000,000 MMK (an overstatement of 10,000,000 MMK). What is the projected misstatement for this logical sampling unit?

Practical Auditing

Question · Hard

Question

Under ISA 520 (Analytical Procedures), what is the mandatory requirement regarding the use of analytical procedures during an audit of financial statements?

Practical Auditing

Question · Easy

Question

An auditor evaluating an enterprise under ISA 570 (Going Concern) identifies significant financial distress, including consecutive operating losses, loan covenant breaches, and reliance on short-term borrowings. Management has formulated a realistic restructuring plan and adequately disclosed the material uncertainty in Note 24 of the financial statements. How should the auditor report on going concern?

Practical Auditing

Question · Medium

Question

Under ISA 580 (Written Representations), if management refuses to provide the written representation letters confirming their responsibility for the preparation of the financial statements and completeness of information provided to the auditor, what action must the auditor take?

Practical Auditing

Question · Medium

Question

Under ISA 560 (Subsequent Events), what is the auditor's active duty regarding facts that become known to the auditor after the date of the auditor's report but before the date the financial statements are issued to shareholders?

Practical Auditing

Question · Medium

Question

An auditor determines that an enterprise in Myanmar has failed to recognize an environmental decommissioning provision of 80,000,000 MMK required by IAS 37. Materiality is 20,000,000 MMK and total reported assets are 150,000,000 MMK. The misstatement is both material and pervasive to the financial statements as a whole. Under ISA 705, which opinion must the auditor express?

Practical Auditing

Question · Easy

Question

Under the Myanmar Accountancy Council Code of Ethics and the IESBA Code, what fundamental threat to independence arises when an audit firm generates 45% of its total annual gross recurring revenues from a single commercial audit client?

Practical Auditing

Question · Easy

Question

Under ISA 240 (The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements), which of the following is a mandatory audit procedure designed specifically to address the risk of management override of controls?

Practical Auditing

Question · Medium

Question

Under ISA 610 (Using the Work of Internal Auditors), in which of the following areas is the external auditor strictly prohibited from using internal auditors to provide direct assistance?

Practical Auditing

Question · Medium

Question

Under ISA 550 and IAS 24 (Related Party Disclosures), why are related party transactions considered an area of heightened inherent audit risk?

Practical Auditing

Question · Easy

Question

A factory in Yangon produces wooden furniture. Which of the following costs is correctly classified as a 'product cost' (inventoriable cost) under absorption costing rather than a 'period cost'?

Performance Management

Question · Medium

Question

A manufacturing company in Bago begins operations in 2025. It produces 10,000 units and sells 8,000 units at 5,000 MMK per unit. Variable manufacturing cost is 2,000 MMK per unit. Fixed manufacturing overhead for the year is 15,000,000 MMK (budgeted and actual). Fixed selling and administrative expenses total 6,000,000 MMK. There is no opening inventory. What is the difference between operating profit calculated under absorption costing and operating profit calculated under marginal (variable) costing?

Performance Management

Question · Hard

Question

A consumer goods manufacturer in Myanmar sells a household product for 10,000 MMK per unit. The variable cost per unit is 6,000 MMK. Annual fixed operating costs are 48,000,000 MMK. What is the annual break-even point in units and in sales revenue?

Performance Management

Question · Easy

Question

A company projects sales of 25,000 units of an agricultural tool at 20,000 MMK each. Fixed costs are 120,000,000 MMK and the variable cost ratio is 60%. What is the projected Margin of Safety expressed as a percentage of budgeted sales?

Performance Management

Question · Hard

Question

In standard costing, the standard quantity of direct material allowed for actual production was 4,000 kg at a standard price of 2,500 MMK per kg. Actual material purchased and used was 4,200 kg at an actual price of 2,400 MMK per kg. What are the Direct Material Price Variance and Direct Material Usage Variance?

Performance Management

Question · Hard

Question

A production department has a standard labor rate of 3,000 MMK per hour. For producing 1,500 units of output, the standard allows 2 hours per unit. Actual direct labor hours worked were 3,200 hours, and total actual labor cost was 9,280,000 MMK. What are the Direct Labor Rate Variance and Direct Labor Efficiency Variance?

Performance Management

Question · Hard

Question

Under Activity-Based Costing (ABC), a manufacturing company identifies a Quality Inspection cost pool totaling 24,000,000 MMK. The cost driver is the number of inspection runs, with 120 total inspections performed during the period. Product Alpha requires 30 inspection runs and produces 5,000 finished units. What is the quality inspection overhead cost allocated per unit of Product Alpha?

Performance Management

Question · Hard

Question

An enterprise is considering an investment in a modern warehouse packing facility costing 60,000,000 MMK. The facility will generate net annual cash inflows of 25,000,000 MMK at the end of each year for 3 years, with no terminal scrap value. The cost of capital is 10%. Discount factors at 10% are: Year 1 = 0.9091, Year 2 = 0.8264, Year 3 = 0.7513 (cumulative 3-year annuity factor = 2.4868). What is the Net Present Value (NPV) of the investment, and should it be accepted?

Performance Management

Question · Medium

Question

A capital project has an initial cash outlay of 100,000,000 MMK. When discounted at 12%, the NPV is +6,000,000 MMK. When discounted at 16%, the NPV is -4,000,000 MMK. Using linear interpolation, what is the approximate Internal Rate of Return (IRR) of the project?

Performance Management

Question · Hard

Question

A company in Mawlamyine is deciding whether to accept a special one-off order for 1,000 units of custom packaging. The customer offers a price of 4,500 MMK per unit. The normal cost card shows: Direct materials 2,000 MMK, Direct labor 1,500 MMK, Variable overhead 500 MMK, Fixed overhead absorbed 1,200 MMK (Total cost = 5,200 MMK). The company currently has spare factory capacity, and fixed overheads will not increase if the order is accepted. Direct labor is currently underutilized and workers are paid a guaranteed weekly wage with available idle time to complete the order at no additional cost. Direct materials must be purchased specifically for the order. What is the minimum relevant cost per unit to accept the special order?

Performance Management

Question · Hard

Question

A textile enterprise in Myanmar faces a shortage of skilled machine hours. It manufactures two products, Product X and Product Y. Data is as follows: - Product X: Selling price = 15,000 MMK; Variable cost = 9,000 MMK; Machine hours required = 2 hours - Product Y: Selling price = 22,000 MMK; Variable cost = 12,000 MMK; Machine hours required = 4 hours If machine hours are the sole binding limiting factor, which product should be prioritized in the production schedule?

Performance Management

Question · Medium

Question

A trading firm in Taunggyi has the following working capital metrics: Days Sales Outstanding (receivables collection period) = 45 days; Days Inventory Outstanding (inventory turnover period) = 60 days; Days Payables Outstanding (creditors payment period) = 35 days. What is the firm's Cash Conversion Cycle (Operating Working Capital Cycle)?

Performance Management

Question · Medium

Question

In financial management, what does the 'Matching Principle' (also known as the hedging approach) of working capital financing advocate?

Performance Management

Question · Easy

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