Accounting Seminar Final

Which of the following is not a component of cost of an asset? A. Purchase price B. Import duties C. Refundable sales tax D. Estimate of compulsory future dismantling costs

C. Refundable sales tax

An entity X has two reportable segments: A and B. The carrying amount of X's non-current assets is $1,200, out of which 500 is allocated to A and the rest is allocated to B. Recoverable amount of A's non-current assets is $520 and B's $650. What amount of impairment loss should the entity report on? A. $0 B. $20 C. $30 D> $50

D. $50

Ordinary shares outstanding during the period are A. Based on the outstanding shares in the previous period B. Based on the outstanding shares at the start of the period C. Based on the outstanding shares at the end of the period D. The weighted average number of shares outstanding during the period

D. The weighted average number of shares outstanding during the period

A company sells a particular product at 20 per unit plus sales tax of 2 per unit. During the year it sold 1000 units. How much revenue should it recognize as per IAS 18: A. 20,000 B. 18,000 C. 22,000 D. 40,000 E. 38,000

A. 20,000

A contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities is called... A. An equity instrument B. A financial instrument C. Secured loan D. Mortgage

A. An equity instrument

If an asset decreases in value, the decrease is noted as... A. An expense in the SOCI B. A decrease in the "revaluation surplus" in the SOFP C. A decrease in retained earnings in the SOFP D. As "valuation deficit" in the SOFP

A. An expense in the SOCI

The principal revenue producing activities of an entity are called A. Operating activities B. Investing activities C. Financing activities D. None of these

A. Operating activities

Basic EPS is calculated using the net profit of loss for the period attributable to A. Ordinary shareholders B. Preferred shareholders C. Debenture holders D. Secured creditors

A. Ordinary shareholders

Which of the following is a method of revenue recognition under IAS 18: A. Percentage of completion method B. Service Price method C. Delivery method D. Ownership method E. Percentage of payment method

A. Percentage of completion method

Following a rights issue, the comparative figure for the previous period should be adjusted as follows: A. Prior period EPS x (TERP/FV per share prior to right issue) B. TERP x (FV per share prior to rights issue/Prior period EPS) C. TERP x Prior period EPS D. Prior period EPS x (FV per share prior to rights issue/TERP)

A. Prior period EPS x (TERP/FV per share prior to rights issue)

Which of these is an allowable cost of an asset under IAS 16? A. Professional fees B. General overheads C. Initial operating losses D. Administration expenses

A. Professional fees

What is the net amount an entity expects to obtain for an asset at the end of its useful life? A. Residual life B. Depreciated value C. Present value D. Fair value

A. Residual value

Which of the following is not an example of a potential ordinary share? A. Standard preference share B. Convertible preferred share C. Share warrants D. Convertible debt

A. Standard preferred share

Where should basic EPS be represented in the financial statements? A. Statement of Comprehensive Income B. Statement of Financial Position C. Statement of Changes in Equity D. Notes to the financial statements

A. Statement of Comprehensive Income

What is an impairment loss? A. The amount by which the carrying amount of an asset exceeds the recoverable amount B. The amount by which the market value of an asset exceeds the net present value C. The difference between the fair value of an asset and the net realisable value of the asset D. The amount by which the carrying amount of an asset exceeds the book value

A. The amount by which the carrying amount of an asset exceeds the recoverable amount

Diluted EPS shows A. The expected EPS if all securities with an equity interset, exercise those interests B. The expected EPS if the share price falls C. The expected EPS if all loans are discharged D. The expected EPS if equity options and warrants are redeemed

A. The expected EPS if all securities with an equity interest, exercise those interests

According to IFRS 8, start up operations may be operating segments before earning revenues. A. True B. False

A. True

If the conversion of a potential ordinary share resulted in an increase in net profit per share, this should not be treated as dilutive. A. True B. False

A. True

An entity X has 3 reportable segments: A, B, and C. The revenue for segments A, B, and C for the reporting period is $5 million, $6.5 million, and $4.5 million respectively. These amounts include $2.3 million of intersegment revenue from B to A. There is also $2.4 million of other revenues not allocated to any segment. What amount of revenue should X report? A. $16 million B. $17.1 million C. $18.4 million D. $19.7 million

B. $17.1 million

A contract which gives rise to a financial asset is one entity a financial liability in another entity is called: A. An equity instrument B. A financial instrument C. A sale agreement D. A derivativ

B. A financial instrument

If an asset increases in value, the increase is noted as... A. An increase in net profit in the SOCI B. An increase in revaluation surplus in the SOFP and other comprehensive income in the SOCI C. An increase in retained earnings in SOFP D. An increase in "other profit" in SOCI

B. An increase in revaluation surplus in the SOFP and other comprehensive income in the SOCI

Which of the following relate to financial position in a set of financial statements? A. Assets, liabilities, income and expenses B. Assets, liabilities, and equity C. Income and expenses D. Income, expenses and liabilities

B. Assets, liabilities, and equity

If one large asset has a number of individual components with different useful lives, how should this be depreciated? A. Treat as one asset B. Break down into different parts C. Expense it all D. Treat as one asset, but disclose in the notes to the financial statements

B. Break down into different parts

A change in depreciation method is a... A. Change in accounting policy B. Change in accounting estimate C. Change in accounting method D. Change in accounting standard

B. Change in accounting estimate

Under IAS 16, which two subsequent accounting treatments are allowed subsequently to initial recognition? A. Cost model and present value model B. Cost model and revaluation model C. Fair value model and revaluation model D. Fair value model and cost model

B. Cost model and revaluation model

Which of the following events requires no adjustment to the prior period's EPS calculations? A. Bonus issue of shares B. Exercise of stock warrant C. Share split D. Reerse share split

B. Exercise of stock warrant

Revenue of entity shall be measured at: A. Cost of sales B. Fair value C. Cost of production D. Market value E. None of the above

B. Fair value

Under IAS 16, if assets are exchanged in an arms length, commercial transaction, their value will be measured at: A. Written down value B. Fair value C. Carrying value D. Net present value

B. Fair value

A conceptual framework sets out the detailed accounting and treatment of transactions and other items. A. True B. False

B. False

If ordinary shares are only partly paid, they should not be included as part of a basic EPS calculation. A. True B. False

B. False

Ordinary shares are equity instruments, which rank above all other classes of equity instruments. A. True B. False

B. False

Preference dividends, which remain unpaid at the end of the financial period, are not deducted from net profit when calculating Basic EPS A. True B. False

B. False

Private companies must present EPS on the face of their financial statments. A. True B. False

B. False

The purpose of depreciation is so an asset can be replaced at the end of its useful life. A. True B. False

B. False

How should an asset be initially recognised in the financial statements? A. Measure at market value B. Measure at cost C. Measure at net realisable value D. Measure at fair value

B. Measure at cost

Adjustments and eliminations made in preparing an entity's financial statements and allocations of revenues, expenses, and gains or losses shall be included in determining reported segment profit or loss _____ they are included in the measure of the segment's profit or loss that is used by the chief operating decision maker. A. Unless B. Only if C. Regardless of the fact that D. Even if

B. Only if

Which of the following securities do not influence diluted EPS? A. Equity shares not entitled to divdend, but which may in the future B. Ordinary preference shares C. Convertible loan stock D. Share options

B. Ordinary preference share

When it is _______ that future economic benefits associated with an asset will flow to the entity, and the costs can be ______ measured, it should be recognised as an asset. A. Possible, reasonably B. Possible, relaibly C. Probable, reliably D. Probable, reasonably

B. Possibly, reliably

When calculating diluted EPS, the basis EPS is adjusted by the ______ effect of dividends, interest, and other charges. A. Pre-tax B. Post-tax

B. Post-tax

When an asset is sold or disposed of, where is the gain or loss recognised? A. Asset disposal account B. Profit and loss C. Revaluation reserve D. Depreciation

B. Profit and loss

Shares are usually included in the weighted average number of shares from the date consideration is A. Received B. Receivable C. Discussed D. Agreed

B. Receivable

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, then revenue shall: A. Not be recognised B. Recognised to the extent of expenses recognised are recovreable C. Be deferred D. Recognised fully irrespective of the outcome E. None of the above

B. Recognised to the extent of expenses recognised are recoverable

Theoretical ex-rights price (TERP) is calculated when there is a A. Bonus issue B. Rights issue C. Stock split D. Reverse stock split E. All of these

B. Rights issue

When an item of property, plant, and equipment is revalued, what should be revalued? A. A selection of assets decided by management B. The whole class of assets to which it belongs C. The individual asset D. A selection of assets picked at random

B. The whole class of assets to which it belongs

When the seller retains an obligation for unsatisfactory performance not covered by normal warranty: A. They are said to have retained insignificant risk B. They are said to have retained significant risk and rewards of the sale C. They are said to have transferred the risk and reward of sale to the buyer D. They are said to have transferred performance risks to the buyer E. None of the above

B. They are said to have retained significant risk and rewards of the sale

Which of the following is not an asset that falls under the scope of IAS 16? A. Tangible assets B. Assets held for the production of supply of goods or services C. Assets held for sale in the normal course of business D. Assets expected to be used for more than one period

C. Assets held for sale in the normal course of business

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

Which of the following is not an advantage of having a conceptual framework of accounting? A. Development of accounting standards is subject to less political pressure B. A consistent balance sheet or income statement approach is used to setting standards C. Considers the needs of all users D. Avoids a mixed up approach to setting stanards

C. Considers the needs of all users

Under IAS 16, if an asset is idle.... A. Depreciation is paused B. Depreciation for the entire period does not apply C. Depreciation continues D. Depreciation is ignored

C. Depreciation continues

A company purchases land with an office building. The building has a useful life of 20 years. How should the land be depreciated? A. Depreciate over 20 years B. Depreciate over useful life of the land C. Don't depreciate the land D. None of these

C. Don't depreciate the land

Which of the following is not a purpose of a financial reporting conceptual framework? A. Development of new reporting practices B. Evaluation of existing reporting practices C. Enforcement of existing reporting practices

C. Enforcement of existing reporting practices

When the interest received has accrued partly before the acquisition and partly post acquisition, which of the following is recognised as revenue? A. Pre acquisition only B. Both pre acquisition and post acquisition C. Post acquisition only D. Proportionally between pre acquision and post acquisition E. None of the above

C. Post acquisition only

Revenue from sale of goods is recognised when: A. The goods have been delivered to the buyer B. The cash has been received for the sale of goods C. The signifcant risks and rewards of ownership have been transferred to the buyer D. Sale order has been received E. None of the above

C. The significant risks and rewards of ownership have been transferred to the buyer

A potential ordinary share is... A. An ordinary share, which has not been paid for B. A preferential share C. An authorised, but not issue ordinary share D. A financial instrument which may entitle the holder to ordinary shares

D. A financial instrument which may entitle the holder to ordinary shares

A conceptual framework for accounting is A. A set of financial statements B. A set of rules governing financial reporting C. A set of components of financial statements D. A set of principles underpinning financial reporting

D. A set of principles underpinning financial reporting

Which of the following statements define "operating segment"? A. It is a component of an entity for which discrete financial information is available B. It is a component of equity whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance C. It is a component of equity that is engaged in business activities from which it may earn revenues and incur expenses D. All of the above E. A and C

D. All of the above

Which of the following is not a chapter of the IASB Framework? A. The objective of financial statements B. The elements of financial statements C. Concepts of capital and capital maintenance D. Concepts of income and expenditure E. Recognition of the elements of financial statments

D. Concepts of income and expenditure

As per IAS 18, interest shall be recognised using the: A. Completed contract method B. Percentage of completion method C. Fair value method D. Effective interest method E. Accrued interest method

D. Effective interest method

What is the amount an asset could achieve if sold between knowledgeable, willing parties in an arms length transaction? A. Current value B. Net present value C. Written down value D. Fair value

D. Fair value

Which of the following is not a disadvantage of having a conceptual framework of accounting? A. It does not allow for different conceptual bases depending on the user B. It does not make the setting of accounting standards easier C. It may hamper the development of preparing accounting standards D. It may lead to inconsistent accounting practices

D. It may lead to inconsistent accounting practices

Which of the following is covered by IAS 16 - Property, Plant, and Equipment? A. Assets held for sale B. Biological assets related to agricultural activity C. Exploration assets D. Office buildings E. All of these

D. Office buildings

In an agency transaction: A. Only the revenue from sale is recognised B. Revenue from sale net of commission is recognised C. Commission is added to the sale value and the total is recognised D. Only commission is recognised E. None of the above

D. Only commission is recognised

Which of the following are components of Generally Accepted Accounting Practice (GAAP)? A. Stock exchange requirements B. Regional bodies (eg European Union directives) C. National accounting standards D. National company law E. All of these

E. All of these

Which of the following should be adjusted when calculating dilutive EPS? A. Finance charges payable on convertible debt B. Preference dividends payable on convertible preference shares C. Interest paid on convertible debt D. Payments to non discretionary employee profit sharing plans E. All of these

E. All of these

Dividends shall be recognised when: A. The dividend is actually received B. The investment is made C. The investment is sold D. There are adequate profits accruing in the business E. Shareholder's right to receive the payment is established

E. Shareholder's right to receive the payment is established

A Limited ships goods by sea to a foreign company, B Limited. As per the terms of the contract, any loss or damage to the goods until it reaches the factory of B Limited shall be borne by A Limited. In this case when does A Limited recognize revenue? A. When the goods leave the factory of A Limited B. When the goods are loaded on to the ship C. When the goods reach the country in which B is located D. When the goods are packed and ready for sale E. When goods reach the factory of B Limited

E. When goods reach the factory of B Llimited

A company sells a product priced at 100. Customers pay 80 upfront and 20 after one year from the date of sale. Based on past trends, there are no bad debts for the second payment by the customer. Which of the following amounts are recognised as revenue on sale? A. 100 B. 80 C. 20 D. 60 E. None of the above

A. 100

Under IAS 16, how often should the useful life of an asset be reviewed? A. At least at each financial year end B. Every six months C. At manager's discretion D. Never

A. At least at each financial year end

What is the amount an asset is recognised at in the SOFP less any accumulated depreciation or impairment losses? A. Carrying amount B. Residual value C. Impairment amount D. Fair value

A. Carrying amount

GAAP stands for: A. Generally accepted accounting principles B. Globally accepted accounting practice C. Generally allowable accounting principles D. Generally allowable accounting practice

A. Generally accepted accounting principles

Under IAS 16, which of the following is not allowable as a directly attributable cost of a machine? A. Initial test batches B. Site preparation C. Delivery D. Estimated dismantling costs

A. Initial test batches

Which of the following disclosures is not required when an asset is revalued? A. Name of valuer B. Basis used C. Effective date of revaluation D. Revaluation surplus E. Whether valuer was independent

A. Name of valuer

Cash payments to and on behalf of employees is an example of cash flows from A. Operating activities B. Financing activities C. Investing activities D. None of these

A. Operating activities

A lossmaking entity does not have to present EPS A. True B. False

B. False

Alternative methods of calculating EPS must never be presented A. True B. False

B. False

Conceptual frameworks limit the consistency and comparability of financial statements. A. True B. False

B. False

Platinum Limited had an after tax profit of $400,000 for the year. $80,000 of this was earned from the once off sale of machinery. During the period it paid dividends to the ordinary shareholders of $100,000 and $50,000 to preference shareholders. It had 1,000,000 ordinary shares in issue for the entire period. The basic earnings per share for Platinum Limited in the period is... A. 32c B. 33c C. 35c D. 17c

C. 35c

Does IFRS 8 allow an entity to combine information about operating segments into one reportable segment? A. Yes, if the operating segments have similar economic characteristics B. Yes, if the operating segments share the majority of the aggregation criteria listed in this IFRS C. Yes, if the operating segments do not meet the quantitative thresholds D. All of the above

D. All of the above

Royalties should be recognised on: A. Actual basis B. Cash basis C. Receipt basis D. Payment basis E. Accrual basis

E. Accrual basis

A reconciliation of the amounts of shares used to calculate basic EPS and diluted EPS should be provided. A. True B. False

A. True

Preference dividends are ____ the net profit figure, prior to calculating Basic EPS A. Added to B. Deducted from

B. Deducted from

Activities that result in changes in the size and composition of the equity capital and borrowings of an entity are called: A. Operating activities B. Investing activities C. Financing activities D. None of these

C. Financing activities

Revenue accruing to an entity includes: A. Investment capital flowing into an entity B. Dividends paid by entity C. Gross inflow of economic benefits of ordinary activities D. Proceeds from issue of stock and shares E. None of the above

C. Gross inflow of economic benefits of ordinary activities

Which of the following is not covered within the scope of IAS 18: A. Sale of goods B. Rendering of services C. Interest received D. Changes in the fair value of financial assets E. Dividends received from investments

D. Changes in fair value of financial assets

If an entity that is not required to apply this IFRS chooses to disclose information about segments that does not comply with this IFRS, it shall describe the information as segment information. A. True B. False

B. False