Intermediate Accounting –MCQ
[ bold sentence are the answer]
1. In order to adopt an IFRS, the European Commission satisfies itself that the IFRS results in a true and fair view of the financial position and performance of an entity. Which TWO of the following organizations assist the European Commission with this decision? qAccounting Regulatory Committee (ARC) qInternational Accounting Standards Committee Foundation (IASCF) qEuropean Financial Reporting Advisory Group (EFRAG) q Standards Advisory Council (SAC)
2. Which ONE of the following is a statutory body that has responsibility for the endorsement of International Accounting Standards in the European Union? qEuropean Financial Reporting Advisory Group (EFRAG) qInternational Federation of Accountants (IFAC) qAccounting Regulatory Committee (ARC) q Committee of European Securities Regulators (CESR)
3. Which ONE of the following bodies is responsible for reviewing accounting issues that are likely to receive divergent or unacceptable treatment in the absence of authoritative guidance, with a view to reaching consensus as to the appropriate accounting treatment? qInternational Financial Reporting Interpretations Committee (IFRIC) qStandards Advisory Council (SAC) q International Accounting Standards Board (IASB) q International Accounting Standards Committee Foundation (IASC Foundation)
4. Trustees of the International Accounting Standards Committee Foundation are responsible for appointing members to which TWO of the following bodies? q International Financial Reporting Interpretations Committee (IFRIC) qStandards Advisory Council (SAC) qEuropean Financial Reporting Advisory Group (EFRAG) qAccounting Regulatory Committee (ARC)
5. Which ONE of the following is a private sector organization which is made up of key interest groups associated with financial reporting and consists of two bodies: q Technical Expert Group; and a Supervisory Board? qInternational Federation of Accountants (IFAC) q Standards Advisory Council (SAC) q European Financial Reporting Advisory Group (EFRAG) qAccounting Regulatory Committee (ARC)
6. The International Financial Reporting Interpretations Committee (IFRIC) issues interpretations as authoritative guidance. For which TWO of the following should IFRIC consider issuing an Interpretation? q Narrow, industry-specific issues qNewly identified financial reporting issues not specifically addressed in IFRSs q Issues where unsatisfactory or conflicting interpretations have developed, or seem likely to develop qAreas where members of the IASB cannot reach unanimous agreement
7. According to the Preface to International Financial Reporting Standards, which TWO of the following are objectives of the IASB? q To harmonize financial reporting between IFRS and US GAAP qTo work actively with national standard setters qTo promote the use and rigorous application of accounting standards q To harmonize financial reporting within the European Union
8. Which ONE of the following statements best describes the term 'liability'? qAn excess of equity over current assets qResources to meet financial commitments as they fall due q The residual interest in the assets of the entity after deducting all its liabilities qA present obligation of the entity arising from past events
9. Which ONE of the following statements best describes the term 'Assets '? qAn excess of equity over current assets qResources to meet financial commitments as they fall due q The residual interest in the assets of the entity after deducting all its liabilities qA present obligation of the entity arising from past events qA resource controlled by an entity “as a result of past events and from which future economic benefits are expected to flow” to the entity
10. Which ONE of the following statements best describes the term 'equity'? qAn excess of equity over current assets qResources to meet financial commitments as they fall due q The residual interest in the assets of the entity after deducting all its liabilities qA present obligation of the entity arising from past events qThe residual interest in an entity’s assets after deducting all its liabilities
11. Which ONE of the following statements best describes the term 'Income'? qAn excess of equity over current assets qResources to meet financial commitments as they fall due q The residual interest in the assets of the entity after deducting all its liabilities qA present obligation of the entity arising from past events qIncreases in economic benefits not resulting from contributions made by equity holders
12. Which ONE of the following statements best describes the term 'expenses'? qAn excess of equity over current assets qResources to meet financial commitments as they fall due q The residual interest in the assets of the entity after deducting all its liabilities qA present obligation of the entity arising from past events q Decreases in economic benefits not resulting from distributions to equity
13. Are the following statements regarding the term 'profit' true or false? (i) Profit is any amount over and above that required to maintain the capital at the beginning of the period. (ii) Profit is the residual amount that remains after expenses have been deducted from income.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
14. Which ONE of the following statements best describes the term 'financial position'? q The net income and expenses of an entity q The net of financial assets less liabilities of an entity q The potential to contribute to the flow of cash and cash equivalents to the entity q The assets, liabilities and equity of an entity
15. Which ONE of the following statements best describes the term 'going concern'? qWhen current liabilities of an entity exceed current assets q The ability of the entity to continue in operation for the foreseeable future q The potential to contribute to the flow of cash and cash equivalents to the entity q The expenses of an entity exceed its income
16. Which ONE of the following terms best describes the relationship of the assets, liabilities and equity of an entity? q Financial performance q Financial position q Future economic benefit q Obligation
17. Which ONE of the following terms best describes assets recorded at the amount that represents the immediate purchase cost of an equivalent asset? q Historical cost q Realizable value q Present value q Current cost.
18. Which ONE of the following terms best describes assets recorded at the amount that represents the discounting future cash flows to take account of the time value of money? q Historical cost q Realizable value q Present value q Present value.
19. Which ONE of the following is true of the qualitative characteristic of 'understandability' in relation to information in financial statements? q Users should be willing to study the information with reasonable diligence q Users are expected to have significant business knowledge q Financial statements should exclude complex matters q Financial statements should be fee from material error.
20. Which ONE of the following terms best describes information in financial statements that is neutral? q Understandable q Reliable q Relevant q Unbiased.
21. Which ONE of the following terms best describes the amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal? q Fair value q Realizable value q Residual value q Value in use.
22. Which ONE of the following terms best describes financial statements whose basis of accounting recognizes transactions and other events when they occur? q Accrual basis of accounting q Going concern basis of accounting q Cash basis of accounting q Invoice basis of accounting.
23. Which ONE of the following is the best description of 'reliability' in relation to information in financial statements? q Influence on the economic decisions of users q Inclusion of a degree of caution q Freedom from material error q Comprehensibility to users.
24. Which ONE of the following terms best describes information that influences the economic decisions of users? q Reliable q Prospective q Relevant q Understandable.
25. Are the following statements regarding 'recognition' true or false? (1) Recognition is the process of incorporating in the financial statements an item that meets the definition of an element. (2) Recognition is the process of determining the amounts at which elements of the financial statements are to be recognized.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
26. According to the IASB Framework for the preparation and presentation of financial statements, which TWO of the following are examples of 'expenses'? q A loss on the disposal of a non-current asset q A decrease in equity arising from a distribution to equity participants q A decrease in economic benefits during the accounting period q A reduction in income for the accounting period.
27. According to the IASB Framework for the preparation and presentation of financial statements, which TWO of the following are examples of 'expenses'? q Loss from earthquake q A decrease in equity arising from a distribution to equity participants q Loss on the operation on the whole sale division q A reduction in income for the accounting period.
28. According to the IASB Framework for the preparation and presentation of financial statements, which TWO of the following are examples of 'expenses'? q Loss due to flood damage q A decrease in equity arising from a distribution to equity participants q a decrease in economic benefits during the accounting period q a reduction in income for the accounting period.
29. IFRSs approved by the IASB include paragraphs in bold type and plain text. In relation to the IFRS paragraphs in bold type, are the following statements true or false? (1) Bold-type paragraphs should be given greater authority than the paragraphs in plain text. (2) Bold-type paragraphs indicate the main principles of the standard.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
30. Financial statements include a statement of financial position, a statement of comprehensive income and a statement of changes in equity. According to the Preface to international financial reporting standards, which TWO of the following are also included within the financial statements? q A statement of cash flows q accounting policies q An auditor's report q A directors' report.
31. As regards the relationship between IFRSs and the Framework for the preparation and presentation of financial statements, are the following statements true or false? (i) The Framework is a reporting standard. (ii) In cases of conflict, the requirements of the Framework prevail over those of the relevant IFRS.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
32. Which TWO of the following are listed in the IASB Framework as 'underlying assumptions' regarding financial statements? qThe financial statements are reliable qAny changes of accounting policy are neutral qThe financial statements are prepared under the accrual basis q The entity can be viewed as a going concern
33. Which TWO of the following statements concerning the provisions of the IASB Framework are correct? qThe Framework provides that transactions must be accounted for in accordance with their legal form qPrimary responsibility for the preparation and presentation of the financial statements of the entity rests with management q Financial statements must not exclude complex matters in order to achieve understandability qWhere any conflict arises between the Framework and an IAS, the requirements of the Framework prevail
34. According to the IASB Framework, which TWO of the following characteristics are described as principal qualitative characteristics that make the information provided in financial statements useful to users? qGoing concern qRelevance qAccrual qUnderstandability
35. Which of the following statements about the IASB Framework are correct? (1) The Framework deals with the qualitative characteristics of financial statements. (2) The Framework normally prevails over International Accounting Standards where there is a conflict between the two. (3) The Framework deals with the objectives of financial statements. qAll of them q Statement (1) and Statement (3) only q Statement (2) and Statement (3) only q Statement (1) and Statement (2) only
36. Are the following statements in relation to materiality true or false, according to IAS 1 Presentation of Financial Statements? (i) Materiality of items depends on their individual or collective influence on the economic decisions of users. (ii) Materiality of an item depends on its absolute size and nature.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
37. According to IAS 1 Presentation of Financial Statements, the notes with in the financial statements contain information in addition to that presented in which TWO of the following? qReport on sustainability qChairman Report qStatement of Financial Position qStatement of Financial Performance.
38. According to IAS 1 Presentation of Financial Statements, the notes with in the financial statements contain information in addition to that presented in which TWO of the following? qDirector’s Report qChairman’s Report qStatement of Cash Flow q Statement of Financial Position.
39. According to IAS 1 Presentation of Financial Statements, the notes with in the financial statements contain information in addition to that presented in which TWO of the following? qReport on sustainability qChairman Report qStatement of Financial Position qStatement of Financial Performance.
40. The purpose of accounting standards into identity proper accounting practices for the preparation of qIncome statement qFinancial Statement qBalance sheet qCash flow statement
41. . Accounting standards create a common understanding between qusers qprepares qnon of the above qboth A and B
42. IFRS are set on qPrinciple based approach qFramework based approach qRule based approach qnone of the above
43. IASCF was formed in qJuly 2001 as a profit organization qMarch 2001 as a profit organization qMay 2001 as a non profit organization qMarch 2001 as a non profit organization
44. Trustee of IASCE represent international group of qinvestor qcreditor quser qnone of the above
45. The Predecessor body of IASB is qIASC qIASB qFASB qGAP
46. Revenue is earned as qincreases in assets and decreases in liabilities qincreases in assets and increases in liabilities qdecreases in assets and increases in liabilities qdecreases in assets and decreases in liabilities
47. Share capital is an example of qAsset qliability qequity qincome
48. Assets are recorded at their original cost qHistorical cost qCurrent cost qrealizable value qpresent value
49. The objective of IAS is to set out the basis for the presentation of qfinancial statement qincome statement qcash flow statement qbalance sheet
50. IAS requires that the financial statements should be presented at least qannually qhalf-yearly qquarterly qmonthly
51. A revised version of IAS was issued in q2002 q2000 q2005 q2007
52. Which of the following is an element of statement of financial position? q Tax provision qtax expense qrevenue qtotal comprehensive income
53. Which if the following is an element of statement of comprehensive income qprovisions q finance costs qinventories qbiological assets
54. Changes in equity resulting from: qprofit or loss qcash withdraw qbet income qall of the above
55. Comparative information for the previous period should be qreserved qdisclosed qall of the above qnone of the above
56. Notes can be informed of qaggregation qpassive qnarrative qactive.
57. Intangible asset means qcan be traced qcan not be traced qcan see qnone of the above
58. What is the purpose of accounting standards: qrevenue equal expense qproper accounting practices for the proportion of financial statements qassets will be recorded as cost qnone of the above
59. Who are the external users qInvestor qEmployees qcreditors qall of the above
60. Matching principle means qrevenue equals expense qassets equals liability qequity equals dividends qnone of the above
61. Who are the internal information users- qcompany officers qlender qcreditor qinvestor
62. Who appoint IASB members? qFASB qIASCFq BASB qall of the above
63. ___ means that assets are recognized when they are receivable rather than when physically revived, and liabilities are recognized when they are payable rather than when actually paid. qGoing concept qAccrual concept qConsistency of presentation qAll of the above qNone of the above.
64. ____ is defined as representing faithfully the effects of transactions, other events, and conditions in accordance. qConsistency of presentation qgoing concept qFair presentation qAll of the above qNone of the above
65. __________ is the measurement that involves discounting future cash flows to take account of the time value of money qHistorical cost qSettlement value qPresent value qCurrent cost
66. __________According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qInvestment property qProvisions qNumber of shares authorized qShares in an entity owned by that entity
67. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qheld for sale qProvisions qNumber of shares authorized qShares in an entity owned by that entity
68. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? q property, plant and equipment qPetty cash qNumber of shares authorized qShares in an entity owned by that entity
69. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qCash and Cash equivalents qProperty, Plant and equipment analyzed by class qShare capital and reserves analysis by class q deferred tax liability.
70. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qDeferred tax assets qProvisions for tax qNumber of shares authorized qShares in an entity owned by that entity
71. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qInvestment property qBiological assets qNumber of shares authorized qShares in an entity owned by that entity
72. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qCash qProperty, Plant and equipment analyzed by class qShare capital and reserves analysis by class q Accrued vacation pay.
73. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qObligation under capital lease qLong term notes payable qNumber of shares authorized qShares in an entity owned by that entity
74. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qDeficit qstock owned in affiliated companies qNumber of shares authorized qShares in an entity owned by that entity
75. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qLong term investment in bonds qProperty, Plant and equipment analyzed by class qShare capital and reserves analysis by class q Bond sinking fund.
76. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qSecret process qBiological Assets qNumber of shares authorized qShares in an entity owned by that entity
77. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qTrade names qPrepayments qNumber of shares authorized qShares in an entity owned by that entity
78. According to IAS 1 Presentation of Financial Statements, which TWO of the following must be included in entity’s statement of Financial Position? qObligation under capital lease qProperty, Plant and equipment analyzed by class qShare capital and reserves analysis by class qBank borrowing
79.
80. Which TWO of the following are included in a complete set of financial statements, according to IAS1 Presentation of financial statements? qA statement by the board of directors of compliance with local legislation q A statement of changes in equity qSummarized statements of financial position for the last five years q A statement of cash flows
81. Are the following statements true or false, according to IAS1 Presentation of financial statements? (i) An entity presenting a single statement of comprehensive income should present a statement of changes in equity (ii) An entity presenting a separate income statement and a statement of comprehensive income should present a statement of changes in equity.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
82. In which section of the statement of financial position should cash that is restricted to the settlement of a liability due 18 months after the reporting period be presented, according to IAS1 Presentation of financial statements? (Select one answer) qCurrent assets q Equity qNon-current liabilities qNon-current assets
83. Are the following statements true or false, according to IAS1 Presentation of financial statements? (i) An entity presenting a single statement of comprehensive income should present a statement of cash flow (ii) An entity presenting a separate income statement and a statement of comprehensive income should present a statement of financial performance.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
84. In which section of the statement of financial position should employment taxes that are due for settlement in 15 months' time be presented, according to IAS1 Presentation of financial statements? (Select one answer) qCurrent liabilities q Current assets qNon-current liabilities q Non-current assets
85. In which section of the statement of financial position should Value added taxes that are due for settlement in 12 months' time be presented, according to IAS1 Presentation of financial statements? q Current liabilities q Current assets q Non-current liabilities qNon-current assets
86. The Oakes Company has a loan due for repayment in six months' time, but Oakes has the option to refinance for repayment two years later. Oakes plans to refinance this loan. In which section of its statement of financial position should this loan be presented, according to IAS1 Presentation of financial statements? qCurrent liabilities q Current assets qNon-current liabilities qNon-current assets
87. Are the following statements true or false, according to IAS1 Presentation of financial statements? (1) Biological assets should be shown in the statement of financial position. (2) Financial assets not disclosed in other headings below should be shown in the statement of financial position
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
88. Going concern means: qpreparation of financial statements by applying accrual concept q offsetting of the assets and liabilities against each other q assuming the business will continue to operate for the foreseeable future q none of the above.
89. To conceder an item materials entity should consider : qnature of the item q size of the item q both qnone of them
90. The statement of cash flow: q provide cash generation and utilization related information qis not a part of financial statement q is prepared for a particular day qis not useful for the investors.
91. FASB follows the: qrules based q principles based q both of them qnone of them.
92. FASB follows the: qrules based q principles based q both of them qnone of them.
93. IASCF was formed in: qMay, 2003 q March,2001 qJune, 2007 qSeptember, 2009
94. Are the following statements true or false, according to IAS 1 Presentation of Financial Statements? (i) Dividend should be recognized in the statement of changes in equity. (ii) A loss on disposal of assets should be recognized in the statement of comprehensive income.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
95. Are the following statements true or false, according to IAS 1 Presentation of Financial Statements? (i) Dividend should be recognized in the statement of changes in equity. (ii) A Profit on disposal of assets should be recognized in the statement of financial position.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
96. Are the following statements true or false, according to IAS 1 Presentation of Financial Statements? (i) Dividend should be recognized in the statement of comprehensive income. (ii) A loss on disposal of assets should be recognized in the statement of changes in equity.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
97. Are the following statements true or false, according to IAS 1 Presentation of Financial Statements? (i) Dividend should be recognized in the statement of financial position. (ii) A Profit on disposal of assets should be recognized in the statement of cash flow statement.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
98. Are the following statements true or false, according to IAS 1 Presentation of Financial Statements? (i) Provision should be recognized in the statement of comprehensive income. (ii) A revaluation surplus on non current assets should be recognized in the statement of changes in equity.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
99. Are the following statements true or false, according to IAS 1 Presentation of Financial Statements? (i) Deferred tax should be recognized in the statement of financial position. (ii) Cash and Cash equivalents should be recognized in the statement of cash flow statement.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
100.Are the following statements true or false, according to IAS 1 Presentation of Financial Statements? (i) Biological assets should be recognized in the statement of comprehensive income. (ii) The number of shares authorized for issue should be shown in the statement of financial position, or the statement of changes in equity or in the notes.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
101.Are the following statements true or false, according to IAS 1 Presentation of Financial Statements? (i) Deferred tax should be recognized in the statement of financial position. (ii) Non controlling interest should be recognized in the statement of cash flow statement.
Statement (i) Statement (ii)
qFalse False
q False True
q True False
q True True
102.According to the Preface to International Financial Reporting Standards, which TWO of the following are objectives of the IASB? q To harmonize financial reporting between IFRS and US GAAP q To work actively with national standard setters qTo promote the use and rigorous application of accounting standards qTo harmonize financial reporting within the European Union.
103. Which ONE of the following bodies is responsible for reviewing accounting issues that are likely to receive divergent or unacceptable treatment in the absence of authoritative guidance, with a view to reaching consensus as to the appropriate accounting treatment? q International Financial Reporting Interpretations Committee (IFRIC) q Standards Advisory Council (SAC) q International Accounting Standards Board (IASB) q International Accounting Standards Committee Foundation (IASCF)
104.IASB standard setting process include
(1) Consultation with SAC
(2) Issue of an Advising paper for public
A. False False
B. False True
C. True True
D. True False
