WorksheetsFinancial Accounting 3
Total questions: 15
Worksheet time: 45mins
How does the Conceptual Framework define an asset?
A resource owned by an entity as a result of past events and from which future economic benefits are expected to flow to the entity
A resource over which an entity has legal rights as a result of past events and from which economic benefits are expected to flow to the entity
A resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity
A resource to which an entity has a future commitment as a result of past events and from which future economic benefits are expected to flow from the entity
Who issues International Financial Reporting Standards?
The government
The International Accounting Standards Board
The stock exchange
The IFRS Advisory Committee
Which of the following statements is/are true?
1- The IFRS Interpretations Committee is a forum for the IASB to consult with the outside world.
2 -The IFRS Foundation produces IFRSs. The IFRS Foundation is overseen by the IASB.
3 - One of the objectives of the IFRS Foundation is to bring about convergence of national accounting standards and IFRSs.
1 and 3 only
2 only
2 and 3 only
3 only
What is the role of the IASB?
Oversee the standard setting and regulatory process
Formulate international financial reporting standards
Review defective accounts
Control the accountancy profession
Which ONE of the following statements correctly describes how International Financial Reporting Standards (IFRSs) should be used?
To provide examples of best financial reporting practice for national bodies who develop their own requirements
To ensure high ethical standards are maintained by financial reporting professionals internationally
To facilitate the enforcement of a single set of global financial reporting standards
To prevent national bodies from developing their own financial reporting standards
Which of the following statements about provisions and contingencies is/are correct?
1 -A company should disclose details of the change in carrying amount of a provision from the beginning to the end of the year.
2-Contingent assets must be recognized in the financial statements in accordance with the prudence concept.
3- Contingent liabilities must be treated as actual liabilities and provided for if it is probable that they will arise.
All three statements are correct
1 and 3 only
2 and 3 only
3 only
Which of the following statements about contingent assets and contingent liabilities are correct?
1-A contingent asset should be disclosed by note if an inflow of economic benefits is probable.
2- A contingent liability should be disclosed by note if it is probable that a transfer of economic benefits to settle it will be required, with no provision being made.
3 -No disclosure is required for a contingent liability if it is not probable that a transfer of economic benefits to settle it will be required.
4 -No disclosure is required for either a contingent liability or a contingent asset if the likelihood of a payment or receipt is remote.
1 and 4 only
2 and 3 only
2, 3 and 4
1, 2 and 4
Which TWO of the following events which occur after the reporting date of a company but before the financial statements are authorized for issue are classified as adjusting events in accordance with IAS 10 Events after
the reporting period?
A change in tax rate announced after the reporting date, but affecting the current tax liability
The discovery of a fraud which had occurred during the year
The determination of the sale proceeds of an item of plant sold before the year end
The destruction of a factory by fire
Which one of the following would not be valid grounds for a provision?
A company has a policy has a policy of cleaning up any environmental contamination caused by its operations, but is not legally obliged to do so.
A company is leasing an office building for which it has no further use. However, it is tied into the lease for another year.
A company is closing down a division. The Board has prepared detailed closure plans which have been communicated to customers and employees.
A company has acquired a machine which requires a major overhaul every three years. The cost of the first overhaul is reliably estimated at $120,000.
Which of the following items does the statement below describe?
“A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non -occurrence of one or more uncertain future events not wholly within the entity's control”
A provision
A current liability
A contingent liability
A contingent asset
Which of the following material events after the reporting period and before the financial statements are approved by the directors should be adjusted for in those financial statements?
1-A valuation of property providing evidence of impairment in value at the reporting period
2-Sale of inventory held at the end of the reporting period for less than cost
3-Discovery of fraud or error affecting the financial statements
4 - The insolvency of a customer with a debt owing at the end of the reporting period which is still outstanding
All of them
1, 2 and 4 only
3 and 4 only
1, 2 and 3 only
IAS 10 Events after the reporting period regulates the extent to which events after the reporting period should be reflected in financial statements.
Which one of the following lists of such events consists only of items that, according to IAS 10, should normally be classified as non-adjusting?
Insolvency of an account receivable which was outstanding at the end of the reporting period, issue of shares or loan notes, an acquisition of another company
Issue of shares or loan notes, changes in foreign exchange rates, major purchases of non-current assets
An acquisition of another company, destruction of a major non-current asset by fire, discovery of fraud or error which shows that the financial statements were incorrect
Sale of inventory which gives evidence about its value at the end of the reporting period, issue of shares or loan notes, destruction of a major non-current asset by fire
Which of the following events between the reporting date and the date the financial statements are authorised for issue must be adjusted in the financial statements?
1 Declaration of equity dividends
2 Decline in market value of investments
3 The announcement of changes in tax rates
4 The announcement of a major restructuring
1 only
2 and 4
3 only
None of them
Which of the following is the correct definition of an adjusting event after the reporting period?
An event that occurs between the reporting date and the date on which the financial statements are authorised for issue that provides further evidence of conditions that existed at the reporting date
An event that occurs between the reporting date and the date on which the financial statements are authorised for issue that provides evidence of conditions that arose subsequent to the reporting date
An event that occurs after the date the financial statements are authorised for issue that provides further evidence of conditions that existed at the reporting date
An event that occurs after the date the financial statements are authorised for issue that provides evidence of conditions that arose subsequent to the reporting date
If a material event occurs after the reporting date but before the financial statements are authorised for issue outside the organisation, and this event does NOT require adjustment, what information should be disclosed in the financial statements?
The nature of the event and an estimate of the financial effect (or a statement that such an estimate cannot be made)
The nature of the event only
An estimate of the financial effect (or a statement that such an estimate cannot be made) only
No disclosure required
