IFRS
T/F The IASB requires all entities to produce interim financial statements.
False Only Public companies including companies whose debt securities are traded on stock exchange
The preparation of the financial statements is the responsibility of: a. The Finance Director. b. The external auditors. c. The Board of Directors. d. The internal audit department.
The Board of Directors.
- The main financial performance statement is: a. The statement of profit or loss and other comprehensive income. b. The statement of financial position. c. The statement of cash flows.
a The statement of profit or loss and other comprehensive income
On 31 December year N, a company has partly-completed inventory with a cost to date of 26 300 euros. It is expected that further costs of 8 900 euros will be incurred in order to complete the inventory. It will then be sold for 47 500 euros. Selling costs will be 2 000 euros. The cost and the net realizable value of this inventory at 31 December 2013 are: a. 26 300 euros and 36 600 euros. b. 26 300 euros and 38 600 euros. c. 35 200 euros and 45 500 euros. d. 35 200 euros and 47 500 euros.
a. 26 300 euros and 36 600 euros. voir formule
Q69. [IAS 7] How will be recognized a depreciation expense on a patent in the statement of cash flows using the indirect method ? It will be: a. Added to the net income of the period in Cash flow from operating activity. b. Deducted from the net income of the period in Cash flow from operating activity. c. A cash inflow in cash flow from investing activity. d. A cash outflow in cash flow from investing activity.
a. Added to the net income of the period in Cash flow from operating activity.
Q83. [IAS 10] - Events that provide evidence of conditions that existed at the end of the reporting period are called... a. Adjusting events. b. Non-adjusting events
a. Adjusting events.
[IAS 2] - A property developer classifies properties held for sale in the ordinary course of business as: a. An inventory item. b. A property, plant and equipment. c. A financial asset. d. An investment property.
a. An inventory item.
- How often should financial statements be prepared ? a. At least annually. b. No more than annually. c. As often as the company requires. d. Monthly.
a. At least annually.
Which of the following is a current liability? a. Bank overdraft. b. Long-term financial debt. c. Preference shares. d. Retained earnings.
a. Bank overdraft.
[IAS 7] What are internal sources of cash? a. Cash inflows from operating activities. b. Cash inflows from financing activities. c. Cash inflows from investing activities. d. All of the above.
a. Cash inflows from operating activities.
One of the main advantages of standardization in financial reporting is: a. Comparability between accounting periods and between entities. b. The production of prudent financial statements. c. Increased flexibility in financial reporting. d. The use of creative accounting practices.
a. Comparability between accounting periods and between entities. Il existe 2 autres : (2) a reduction in the cost of preparing consolidated financial statements for multinational firms (3) the improved reliability and credibility of financial reports.
IAS 2] - Which of the following items should be included in the cost of inventories? a. Conversion costs. b. The cost of abnormal wastage of materials and labour. c. Selling costs. d. The cost of storing finished goods.
a. Conversion costs.
Q25. [IAS 1] - What type of asset is expected to be realized in the normal course of business; or is held primarily for trading purposes; or is cash or a cash equivalent a. Current asset. b. Non-current asset. c. Intangible asset. d. Long term investments
a. Current asset.
Q68. [IAS 7] - Which of the following is not a cash outflow for the firm ? a. Depreciation. b. Dividends. c. Interest payments. d. Taxes.
a. Depreciation.
[IAS 7] How would the repayment of debt principal be classified? a. Financing outflow. b. Investing inflow. c. Operating outflow. d. Operating inflow.
a. Financing outflow.
To avoid obsolescence a perishable produce retailer arranges produce in such a way that a customer is most likely to purchase the oldest inventory first. The cost formula which is the most appropriate for the entity is: a. First-in-first out (FIFO). b. Last-in-first-out (LIFO). c. Weighted average cost. d. All of the above.
a. First-in-first out (FIFO).
Q63. [IAS 7] - Which of the following items could appear in a company's statement of cash flows ? (I) Dividends received. (II) Proposed dividend. (III) Proceeds from issue of shares. (IV) Irrecoverable debts written-off. a. I and III only. b. II and IV only. c. I, II and IV only. d. I, III and IV only
a. I and III only.
Q89. [IAS 11] - When should irrecoverable contract costs be expensed ? a. Immediately. b. Amortized over the life of the contract. c. At management's discretion. d. Never
a. Immediately.
Q94. [IAS 11] - When the contract costs are likely to exceed contract revenue, then the losses shall be recognized... a. Immediately. b. Within the same period. . Within the next period. d. When the losses are actually incurred.
a. Immediately.
[IAS 2] - Fixed production overheads are those... a. Indirect costs of production that remain constant regardless of the volume of production. b. Direct costs attributable to the product or service that remain constant regardless of the volume of production. c. Indirect costs of production that vary directly with the volume of production. d. Direct costs attributable to the product or service that vary regardless of the volume of production.
a. Indirect costs of production that remain constant regardless of the volume of production.
- Which of the following terms is used to describe an asset held for more than 12 months ? a. Non-current asset. b. Current asset. c. Non-current liability. d. All of the above.
a. Non-current asset.
- Which of the following is not a required disclosure under IAS 1 ? a. Number of employees. b. Assets held for sale. c. Provisions. d. Intangible assets.
a. Number of employees.
Q70. [IAS 7] The statement of cash flows segregates cash inflows and outflows by: a. Operating, financing, and investing activities. b. Operating and financing activities. c. Operating and investing activities. d. Financing, and investing activities.
a. Operating, financing, and investing activities.
The word "entity" as used by the IASB refers to: a. Profit-oriented organizations only. b. Companies only. c. Not-for-profit organizations only. d. Corporations only
a. Profit-oriented organizations only.
Q104. [IAS 16] - What is the net amount an entity expects to obtain for an asset at the end of its useful life ? a. Residual value. b. Depreciated value. c. Present value. d. Fair value
a. Residual value.
[IAS 8] - A change in accounting policy which does not result from the initial application of an international standard must normally be accounted for: a. Retrospectively. b. Prospectively. c. Either retrospectively or prospectively. d. Prospectively unless it is impracticable to do so.
a. Retrospectively.
- General storage costs must be expensed. a. True. b. False.
a. True.
Q65. [IAS 7] - Bank overdrafts are generally regarded as a component of an entity's cash and cash equivalents. a. True. b. False.
a. True.
Q96. [IAS 11] - If the contracts outcome cannot be reliably estimated, no profit should be recognized. a. True. b. False.
a. True.
[IAS 2] - When actual production output is abnormally high, the fixed overheads allocated should be reduced. a. True. b. False.
a. True.
Q84. [IAS 10] - The liquidation of a major customer after the period end is an adjusting event. a. True. b. False.
a. True. client déjà existant avant la clôture donc => événement passé => adjusting event
The primary users of general-purpose financial reports are: a. Investors and employees. b. Investors and lenders. c. Employees and lenders. d. Investors and customers
b Investors (present and potential) and lenders use that information to make decisions about buying, selling or holding equity ...
Where in a company's financial statements are dividends paid found? a. The statement of financial position b. The statement of changes in equity c. The statement of profit or loss and other comprehensive income d. The statement of profit or loss and the statement of changes in equity
b The statement of changes in equity
The company manufactures and sells adhesive warning signs for workplaces. The stock of signs was included in the closing inventory as of 31 December 2020 at a cost of 50 euros per pack. During the final audit the auditors noted that the subsequent selling price for the inventory at 15th January 2021 was 40 euros per pack. Furthermore, inquiry reveals that during the physical stock take, a water leakage has damaged the signs and glue. Accordingly, in the following week, the company spent a total of 15 euros per pack for repairing and reapplying the glue to the signs. The net realizable value and inventory write-down / (loss) amount to... a. 40 euros and 10 euros respectively. b. 25 euros and 25 euros respectively. c. 35 euros and 25 euros respectively. d. 30 euros and 15 euros respectively.
b. 25 euros and 25 euros respectively.
Q93. [IAS 11] - The change in forecasted contract revenue or costs is... a. A change in accounting policy. b. A change in accounting estimate. c. An error. d. None of these.
b. A change in accounting estimate.
Which of the following is not a component of a complete set of financial statements? a. A statement of changes in equity. b. A management commentary. c. A set of notes. d. A statement of cash flows.
b. A management commentary
Q103. [IAS 16] - A company pays 40 000 euros to replace a major component of a factory machine. The faulty component that is replaced is sold for 2 000 euros. The carrying amount of the machine just before this replacement occurs is 450 000 euros, of which 10 000 euros relates to the faulty component that is being replaced. The revised carrying amount of the machine after the replacement occurs and the profit or loss on disposal of the faulty component are: a. Carrying amount 490 000 euros, Loss 8 000 euros. b. Carrying amount 480 000 euros, Loss 8 000 euros. c. Carrying amount 480 000 euros, Loss 10 000 euros. d. Carrying amount 490 000 euros., Profit 2 000 euros.
b. Carrying amount 480 000 euros, Loss 8 000 euros.
Q66. [IAS 7] - Cash inflows and outflows arising from operating activities do not include: a. Cash receipts from the sale of goods and services b. Cash receipts from the sale of property, plant and equipment c. Cash payments to employees d. Cash payments to suppliers for goods and services
b. Cash receipts from the sale of property, plant and equipment
Which of the following is not a minimum item on the face of the statement of comprehensive income ? a. Revenue. b. Deferred tax. c. Profit or loss. d. Total comprehensive income.
b. Deferred tax.
Q81. [IAS 10] - Evidence of a permanent and major deterioration of property value prior to year-end is a nonadjusting event. a. True. b. False
b. False
Q87. [IAS 10] - The company is preparing the financial statements for the period to 31 December 2020. On 7 January 2021, its sales representative crashed his company car, writing it off. Unfortunately, the vehicle was uninsured at the time of the crash. Mercury's CFO would like to write off the value of the vehicle in the financial statements to 31 December 2020. May he do this? a. True. b. False
b. False
Inventory held in different geographical locations may use different cost models. a. True. b. False.
b. False.
Q82. [IAS 10] - A customer issues legal proceedings against a company shortly after the end of its financial reporting period. Is it an adjusting event ? a. True. b. False.
b. False.
Q86. [IAS 10] - An announcement of a major restructuring of a company is an adjusting event. a. True. b. False.
b. False.
Unallocated fixed overheads may be applied to the inventory valuation at the end of the financial period. a. True. b. False.
b. False. En expense
Q91. [IAS 11] - If previously recognized contract revenue becomes uncollectable, the amount should be recognized as a deduction from revenue in the current period. a. True. b. False.
b. False. cf doubtful debts
Q88. [IAS 10] - Financial statements should be adjusted to take account of any events occurring between the end of the reporting period and the date when the financial statements are authorized for issue. a. True. b. False.
b. False. uniquement les events matériels très significatifs qui ont
Which sections of an annual report do IFRSs apply to ? a. Management report. b. Financial statements. c. Auditors report. d. Entire annual report
b. Financial statements.
[IAS 8] - An entity may change one of its accounting policies: a. Whenever it wishes to do so. b. If this would result in the provision of reliable and more relevant information. c. If this would reduce the cost of preparing the financial statements. d. Never.
b. If this would result in the provision of reliable and more relevant information.
How would the sale of a building be classified? a. Financing inflow. b. Investing inflow. c. Operating outflow. d. Operating inflow
b. Investing inflow.
[IAS 2] - Which of the following cost models is not permitted under IAS 2 ? a. First in, First out (FIFO). b. Last in, First out (LIFO). c. Weighted average. d. Actual cost
b. Last in, First out (LIFO).
Q85. [IAS 10] - Events that arise after the financial statements are published are... a. Adjusting events. b. Non-adjusting events
b. Non-adjusting events
Fixed production overheads should be allocated to items of inventory on the basis of ____ production capacity. a. Actual. b. Normal. c. Abnormal. d. Estimated
b. Normal.
- Which of the following are examples of current assets ? a. Motor vehicles. b. Prepayments. c. Share premium. d. Goodwill.
b. Prepayments.
[IAS 8] - A change in an accounting estimate should be accounted for: a. Retrospectively. b. Prospectively. c. Either retrospectively or prospectively. d. Retrospectively unless it is impracticable to do so
b. Prospectively.
[IAS 2] - How are unallocated overheads treated ? a. Recognize as an expense so long as there is a profit in the current period. b. Recognize as an expense in the period in which they are incurred. IFRS c. Treated as a deferred expenditure. d. Capitalized with the cost of inventories.
b. Recognize as an expense in the period in which they are incurred. IFRS
Q90. [IAS 11] - Which of the following costs cannot be allocated to a construction contract cost ? a. Material used in construction. b. Selling costs c. Rectification or adjustment of works. d. Design work
b. Selling costs
- Inventories include... a. Equipment used in the ordinary course of business. b. Tangible assets lying in the store, which are intended for sale. c. Machinery used in the production process which is for sale. d. Materials and supplies used for maintaining property, plant and equipment.
b. Tangible assets lying in the store, which are intended for sale.
An outflow of cash would result from which of the following? a. The increase in a liability account. b. The decrease in a liability account. c. The increase in an equity account. d. The decrease in an asset account other than cash.
b. The decrease in a liability account.
[IAS 2] - The FIFO cost formula assumes that: a. The inventory items which are sold or consumed are those acquired most recently. b. The inventory items which are sold or consumed are those acquired longest ago. c. The inventory items which are sold or consumed are a mixture of those acquired in the last 12 months. d. Newer inventory items are sold or consumed before older inventory items.
b. The inventory items which are sold or consumed are those acquired longest ago.
The raw materials imported from China worth 100 000 euros. They paid 8 000 euros as import duties and 2 000 euros as import taxes (the import taxes were subsequently refunded by the local government). They paid 15 000 euros for transportation of the materials from China and another 2 000 euros as port handling charges for loading the materials at China. Marketing expenses were 1 000 euros and the general administrative overheads amounted to 2 000 euros. What will be the value of inventories ? a. 127 000 euros. b.125 000 euros. c. 128 000 euros. d. 130 000 euros.
b.125 000 euros.
Items of financial information are material if: a. They are insignificant. b. They could not influence the economic decisions made by the users of financial statements. c. They could influence the economic decisions made by the users of financial statements. d. They are aggregated with other item
c They could influence the economic decisions made by the users of financial statements.
IAS 2] - At reporting date, the carrying amount (cost) of raw materials amounts to 200 euros. Its replacement cost is 130 euros. The estimate selling price of finished good = 300 euros, estimate costs to convert the raw material into finished good = 100 euros and the estimate costs to sell the finished good = 50 euros. The company shall recognize an impairment loss of: a. Nihil. b. 70 euros. c. 50 euros. d. 170 euros.
c. 50 euros. Carrying amount = coût d'acquisition estimated sellinge price of finished good - estimate cost to convert - cost to sell = 150 Cost - NRV = 50
[IAS 2] - The company had inventory with a cost of 10 000 euros as at 31 December 2020. The net realizable value of this inventory is estimated at 9 000 euros as at 31 December. One week later, the inventory is sold for 7 000 euros. If the financial statements are finalized on 14 February 2021, what value should be assigned to this inventory ? a. 10 000 euros. b. 9 000 euros. c. 7 000 euros. d. None of these.
c. 7 000 euros.
Q101. [IAS 16] - Which of the following items qualifies as property, plant and equipment? a. A machine bought for resale to a customer. b. A machine bought for use during a single accounting period. c. A machine bought for use in more than one accounting period. d. Computer software bought for use in more than one accounting period.
c. A machine bought for use in more than one accounting period.
The elements of financial statements which relate to financial position are: a. Income and expenses. b. Income, expenses and equity. c. Assets, liabilities and equity. d. Assets, liabilities, income and expenses.
c. Assets, liabilities and equity.
Q61. [IAS 7] - Which of the following is not a heading for cash flows ? a. Cash flows from operating activities. b. Cash flows from investing activities. c. Cash flows from normal activities. d. Cash flows from financing activities.
c. Cash flows from normal activities.
Q62. [IAS 7] - Which of the following is not a heading for cash flows under IAS 7? a. Cash flows from operating activities. b. Cash flows from investing activities. c. Cash flows from normal activities. d. Cash flows from financing activities.
c. Cash flows from normal activities.
Q67. [IAS 7] - Which of the following is not a cash inflow or outflow arising from financing activities? a. Cash proceeds of a share issue. b. Cash proceeds from issuing debentures. c. Cash payments to acquire equity of other entities. d. Cash repayments of amounts borrowed.
c. Cash payments to acquire equity of other entities.
Which of the following is not a requirement in the financial statements under IAS 1 ? a. Name of the entity. b. Whether accounts cover a single entity or a group. c. Chairman's commentary on performance. d. Accounting period and presentation currency
c. Chairman's commentary on performance.
[IAS 2] Inventory excludes : a. Goods purchased for resale. b. Finished goods produced. c. Construction works in progress. d. Raw Materials.
c. Construction works in progress.
- Which of the following is not a component of a Statement of Financial Position? a. Non-current assets. b. Inventories. c. Cost of goods sold. d. Retained Earnings.
c. Cost of goods sold.
Q95. [IAS 11] - A construction contract in which the contractor is reimbursed for pre-defined costs, plus a percentage of these or a fixed fee mark-up, is called... a. Fixed price contract. b. Pre-defined contract. c. Cost plus contract. d. Negotiated contract.
c. Cost plus contract. = cout interne + mark up (marge) = CA
Q92. [IAS 11] - Which of the following is not a cost relating to a construction contract? a. Wages for site supervisors. b. Costs of machine rental. c. Depreciation of idle machinery. d. Costs of materials used.
c. Depreciation of idle machinery.
Which one of the following is a correct statement ? a. Assets and liabilities must be presented broadly in the order of their liquidity. b. Assets and liabilities can be offset if they result from the same transaction or event. c. Intangible assets must be presented separately in the statement of financial position. d. Even if less than 12 months, the length of an entity's operating cycle must be disclosed.
c. Intangible assets must be presented separately in the statement of financial position.
Q50. [IAS 2] - Inventories are stated at: a. Lower of cost and carrying value. b. Lower of fair value and net realizable value. c. Lower of cost and net realizable value. d. Cost of production
c. Lower of cost and net realizable value.
Which of the following disclosures are not required in relation to share capital on the statement of financial position ? a. Number of shares authorized. b. Number of shares issued and fully paid. c. Names of individual shareholders. d. Nominal value of shares.
c. Names of individual shareholders.
[IAS 2] - Inventory should be measured at the lower of cost and _____. a. Present value. b. Market value. c. Net realizable value. d. Fair value.
c. Net realizable value. = Expected sell price - total producing and selling price
The accumulated profits (minus any losses) held by an entity are called: a. Provisions. b. Equity. c. Retained earnings. d. Shareholders' funds.
c. Retained earnings.
[IAS 2] - The company is in the business of procuring a specific type of machine and sells them to international markets. During the year, the Company bought four machines costing 120 000 euros, 140 000 euros, 130 000 euros and 100 000 euros respectively. During the year it sold only one machine for 140 000 euros and follows the FIFO method of valuation. Which of following statements is true ? a. The cost of Inventory is 370 000 euros and the cost of sales is 100 000 euros. b. The cost of Inventory is 390 000 euros and the cost of sales is 140 000 euros. c. The cost of Inventory is 370 000 euros and the cost of sales is 120 000 euros. d. The cost of Inventory is 370 000 euros and the cost of sales is 490 000 euros.
c. The cost of Inventory is 370 000 euros and the cost of sales is 120 000 euros. Premier entré premier sorti
. [IAS 2] - Which of the following items cannot be included in the cost of inventories? a. Irrecoverable import duties payable on the acquisition of inventories. b. Fixed production overheads. c. The cost of abnormal wastage of materials and labour. d. Variable production overheads.
c. The cost of abnormal wastage of materials and labour.
[IAS 7] An inflow of cash would result from which of the following? a. The decrease in an equity account b. The increase in an asset account other than cash. c. The decrease in an asset account other than cash. d. The decrease in a liability account
c. The decrease in an asset account other than cash.
The main purpose of the statement of changes in equity is : a. To show an entity's assets, liabilities and equity at the end of an accounting period. b. To show an entity's income, expenses and profit for an accounting period. IFRS - Answers 196 QCM page 4 of 27 c. To show how each component of an entity's equity has changed during an accounting period. d. To show an entity's total equity at the end of an accounting period.
c. To show how each component of an entity's equity has changed during an accounting period.
- A current asset or liability is expected to be recovered or settled within: a. Three months. b. Six months. c. Twelve months. d. Twenty-four months.
c. Twelve months.
When is offsetting permitted under IAS 1 ? a. Always. b. Never. c. When required or permitted under an IFRS. d. When approved by the board of directors.
c. When required or permitted under an IFRS.
The enhancing qualitative characteristics of financial information include: a. Relevance and faithful representation. b. Comparability and understandability. c. Relevance and timeliness. d. Understandability and faithful representation.
comparability, understandability. Il existe 2 autres : verifiability, timeliness and
The notes to the financial statements should provide information: a. About the entity's accounting policies. b. As required by international standards, if not presented elsewhere in the financial statements. c. Which is relevant to an understanding of the financial statements. d. All of the above
d. All of the above
Which of the following must be disclosed on the face of the statement of financial position? a. Property, Plant and Equipment b. Provisions. c. Non-controlling interests. d. All of the above
d. All of the above
[IAS 7]Which of the following current assets is included in the adjustment of net income to obtain cash flow from operating activities? a. Inventory. b. Accounts receivable. c. Prepaid expenses. d. All of the above.
d. All of the above.
Q64. [IAS 7] - Which of the following is not a characteristic of an entity's cash equivalents, as defined by international standard IAS7 a. A short-term investment b. A highly liquid investment c. An investment which is readily convertible into known amounts of cash d. An investment which is subject to significant risk of changes in value
d. An investment which is subject to significant risk of changes in value
- Which of the following is not a requirement of a current liability ? a. Expected to be settled in the entity's operating cycle. b. Held primarily for trading. c. Expected to be settled within 12 months of reporting period. d. Entity holds an unconditional right to defer settlement for over 12 months after reporting period.
d. Entity holds an unconditional right to defer settlement for over 12 months after reporting period.
The abbreviation "GAAP" stands for a. Globally accepted accounting practice. b. Generally accepted accounting practice. c. Globally accepted accounting principles. d. Generally accepted accounting principles.
d. Generally accepted accounting principles.
[IAS 2] - The estimated selling price in the ordinary course of business less estimated cost of completion and estimated cost of sale is called... a. Market value. b. Fair value. c. Current value. d. Net realizable value
d. Net realizable value
Which of the following is not contained in the notes to the financial statements ? a. A statement of compliance with IFRS. b. Measurement basis used. c. Details of specific accounting policies used. d. Numbers of employees.
d. Numbers of employees.
How would revenue from sales of goods and services be classified? a. Operating outflow. b. Investing inflow. c. Financing outflow. d. Operating inflow.
d. Operating inflow.
Which of the following costs must be expensed ? a. Costs of purchase that are paid to the suppliers of raw materials. b. Import duties on raw materials that are paid to the authorities. c. Variable production overheads that are allocated to each unit based on actual usage. d. Selling and distribution overheads incurred in the ordinary course of busines
d. Selling and distribution overheads incurred in the ordinary course of busines
[IAS 2] - The net realizable value of inventories is defined as: a. Selling price. b. Cost price c. Selling price less costs of completion. d. Selling price less costs of completion and selling costs.
d. Selling price less costs of completion and selling costs.
Q102. [IAS 16] - The "carrying amount" of an item of property, plant and equipment generally refers to: a. The cost of the item. b. The replacement cost of the item. c. The depreciable amount of the item. d. The amount at which the item is recognized in the financial statements
d. The amount at which the item is recognized in the financial statements
The information which must be provided so as to properly identify each component of a set of financial statements does not include: a. The name of the reporting entity. b. The presentation currency used. c. The level of rounding used. d. The country in which the entity operates.
d. The country in which the entity operates.
- The fundamental qualitative characteristics of financial information are: a. Relevance and faithful representation. b. Relevance and comparability. c. Faithful representation and comparability. d. Verifiability and understandability
relevance and faithful representation