NEW
Font size
S
M
L
XL
Worksheets1. CPA Financial Accounting & Reporting Quick Revision Module 1
Total questions: 40
Worksheet time: 2hrs 0mins
Name
Class
Date
1.
What is the main aim of accounting
a)
To produce a trial balance
b)
To record every financial transaction individually
c)
To maintain ledger accounts for every asset and liability
d)
To provide financial information to users of such information
2.
Which of the following groups of users would primarily be interested in a company's annual published financial statements?
a)
Shareholders and suppliers
b)
Management and employees
c)
Shareholders and providers of finance
d)
General public, environmental pressure groups
3.
Are the following statements correct or incorrect 1.The shareholder is only interested in a statement of financial prospects, that is, an indication of future progres. 2. The supplier of goods on credit is only interested in a statement of financial position, that is, an indication of the current state of affairs
a)
Sh = Y, Su = Y
b)
Sh = Y Su = N
c)
Sh = N, Su = Y
d)
Sh = N, Su = N
4.
Which of the following statements concerning the International Accounting Standards Board (IASB) is correct? I. It develops and ultimately issues International Financial Reporting Standards (IFRSs). II The IASB is accountable to the IFRS Foundation
a)
I only
b)
II only
c)
Both I & II
d)
Neither I or II
5.
Which of the following statements is correct?
a)
The IASB appoints the Trustees of the IFRS Foundation
b)
The IFRS Foundation develops and issues Interpretations.
c)
The IFRS Interpretations Committee oversees the work of the IFRS Foundation
d)
The IFRS Advisory Council assists and advises the IASB in the process of developing IFRSs.
6.
Which of these statements are correct? I. The IASB has the objective of enforcing IFRS. II.The IASB is responsible for developing and issuing IFRS.
a)
I only
b)
II only
c)
Both I & II
d)
Neither I or II
7.
Which committee of the IASB provides guidance on the application of IFRS?
a)
IFRS Foundation
b)
IFRS Advisory Council
c)
IFRS Interpretations Committee
d)
International Accounting Standards Committee
8.
What is the correcct definition of GAAP?
a)
National accounting standards and company law
b)
National accounting standards, stock exchange rules and company law
c)
International accounting standards, company law and stock exchange rules
d)
National accounting standards, international accounting standards, stock exchange rules and company law
9.
Which of the following is an advantage of a company that prepares a set of financial statements under the regulatory framework?
a)
Lower costs of producing financial information
b)
Higher quality financial information is produced
c)
More financial information available for competitors
d)
Less disclosure of a company's activities in financial statements
10.
What is the correct order for the process of issuing a new IFRS by the IASB?
a)
Discussion Paper, Standard
b)
Exposure Draft, Discussion Paper, Review
c)
Exposure Draft, Discussion Paper, Standard
d)
Discussion Paper, Exposure Draft, Standard
11.
A conceptual framework is
a)
the proforma financial statements
b)
a list of key terms used by the IASB
c)
a theoretical expression of accounting standards
d)
a statement of theoretical principles which form the frame of reference for financial reporting.
12.
Which of the following is an advantage of a conceptual framework?
a)
A framework encourages standardised accounting practice.
b)
The framework does not simplify the preparation and implementation of standards.
c)
There are a variety of users, so not all will be satisfied with the content of the framework.
d)
There are a variety of accounting situations which mean flexibility in the accounting approach is needed.
13.
What is the name of the IASB's conceptual framework?
a)
Statement of Principles for Financial Reporting
b)
The Conceptual Framework for Financial Reporting
c)
The Conceptual Framework for the Disclosure of Financial Statements
d)
The Conceptual Framework for the Presentation of Financial Statements to Users
14.
What is the fundamental reason that financial statements are produced, according to the IASB's Conceptual Framework?
a)
To provide information to tax authorities
b)
To satisfy the requirements of external users
c)
To provide information for internal management
d)
To report on a company's performance to its national government
15.
Which of the following is not a use of financial statements prepared by a company?
a)
Reliable method of valuing the entity
b)
Decisions to buy, hold or sell equity investments
c)
Assessment of the security of amounts lent to the entity
d)
Assessment of management stewardship and accountability
16.
According to the Conceptual Framework, who are the most important users of general purpose financial reports?
a)
Investors and lenders
b)
Investors and employees
c)
Lenders and management
d)
Investors and the government
17.
If an accountant comes across a transaction that is not covered by a specific IFRS accounting standard, where should they initially look for guidance on accounting for that item?
a)
Listing authority regulations
b)
The requirements of IFRSs dealing with similar and related issues
c)
Company law
d)
Conceptual Framework
18.
Which of the following constitute a change of accounting policy according to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors?
a)
A change in depreciation method
b)
A change in the basis of valuing inventory
c)
Adopting an accounting policy for a new type of transaction not previously dealt with
d)
A revision to the carrying amount of a building carried at its revalued amount
19.
Which of the following items would not qualify for treatment as a change in accounting estimate, according to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors?
a)
Provision for obsolescence of inventory
b)
Correction necessitated by a material error
c)
A change in the useful life of a non-current asset
d)
A change in a previous provision for tax
20.
Applying the rules of IAS 8, which of the following would qualify as a change in accounting policy?
a)
Revising the depreciation method for a class of asset from straight line to reducing balance.
b)
Revising the valuation of inventory to first in first out from average cost.
c)
Amending the cut-off point for recognising an allowance for doubtful debts from receivables greater than 90 days old to receivables greater than 100 days old.
d)
Amending the provision for warranties so it is calculated on 5 per cent of sales rather than 10 per cent of sales.
21.
Under some circumstances, IAS 8 requires companies to adjust the financial statements of prior periods and re-state the balance on opening equity. Which of the following cases would such treatment be in accordance with IAS 8?
a)
A material decrease in the valuation of the opening inventory resulting from a change in legislation affecting the saleability of the company's products. This legislation was retrospective and was suddenly announced after the financial statements for the previous year had been agreed.
b)
The discovery of a significant fraud carried out during the year in an overseas subsidiary resulting in a write-down in the valuation of its assets at the period end.
c)
The company has material under-provision for corporation tax arising from the use of incorrect data by the tax advisors acting for the company.
d)
A deterioration in sales performance has led to the directors restating their general irrecoverable debt provision.
22.
Which of the following is an advantage of a principles based system of accounting standard setting?
a)
It always provides the answers.
b)
It discourages creative accounting.
c)
It results in greater comparability of financial statements.
d)
It needs to be supported by illustrative examples and interpretations.
23.
Which of the following statements is incorrect?
a)
Application of IFRS is presumed to result in financial statements that achieve a fair presentation.
b)
Under IFRS, all published financial statements are required to present fairly the financial position and financial performance of an entity.
c)
Application of IFRS whilst preparing a set of financial statements should ensure that they are completely accurate.
d)
Application of IFRS is presumed to result in financial statements that are more comparable.
24.
Which of the following statements represents a disadvantage of the use of accounting standards?
a)
Standards are a less rigid alternative to legislation.
b)
Standards may tend towards rigidity in applying the rules.
c)
Standards oblige companies to disclose their accounting policies.
d)
Standards reduce variations in methods used to produce accounts.
25.
Which of the following statements about going concern assumption is true?
a)
The going concern basis should only be used if an entity can prove that it has the resources necessary to continue trading.
b)
If an entity has any doubts over its ability to continue to trade, a basis other than going concern should be used.
c)
The going concern basis should be used if the entity is expected to continue in operation for the foreseeable future.
d)
The going concern basis should be used if the entity is expected to continue in operation for the next twelve months, but is looking to liquidate after that period.
26.
There are four enhancing qualitative characteristics of useful financial information. What are those characteristics?
a)
Going concern, accruals, completeness, verifiability
b)
Comparability, timeliness, verifiability, understandability
c)
Substance over form, neutrality, going concern, accruals
d)
Comparability, understandability, completeness, neutrality
27.
Which of these comments is correct, according to the IASB's Conceptual Framework for Financial Reporting?
a)
Materiality means that only items having a physical existence may be recognised as assets.
b)
A faithful representation of financial information can never include amounts based on estimates.
c)
Financial information prepared using accrual accounting provides a better basis for assessing an entity's performance than information based only on cash flows.
d)
To show faithful representation items should be complete, up to date and free from error.
28.
What is the accounting concept called that requires income and expenses to be matched in the period in which they occur, rather than when the cash is received or paid?
a)
Accruals
b)
Neutrality
c)
Materiality
d)
Faithful representation
29.
How many IFRS have been published by the IASB (excluding the IFRS for SMEs)?
a)
17
b)
29
c)
41
d)
43
30.
Which of the following is a benefit of harmonisation?
a)
Ability of investors to compare cross border financial statements
b)
Increased training of staff to deal with new accounting standards
c)
Amendment of tax systems in different countries to align with accounting requirements
d)
Different countries have different legal systems for accounting which need to be amended
31.
With which accounting body has the IASB carried out a joint project to develop several common accounting standards?
a)
The OECD
b)
The Standards Advisory Council
c)
The Financial Accounting Standards Board
d)
The Australian Accounting Standards Board
32.
What is the following statement a definition of? 'A present economic resource controlled by the entity as a result of past events.'
a)
Asset
b)
Equity
c)
Liabilty
d)
Expense
33.
Which of the following is the correct definition of a liability?
a)
The residual interest in the assets of the entity after deducting all its liabilities
b)
A present obligation arising from past events from which future economic benefits are expected to flow from the entity
c)
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
d)
A present obligation of the entity to transfer an economic resource as a result of past events
34.
What are the criteria for recognition of items in the financial statements according to the IASB's conceptual framework? I. Must meet the definition of an element of the financial statements. II. Must be measured reliably, III. Probable that there will be an inflow or outflow of future economic benefits and there is a past transaction. IV Must provide relevant information and a faithful representation of the transactions of the entity.
a)
IV only
b)
I and IV only
c)
II and III only
d)
I, II, III, and IV
35.
What items are recognised in the statement of profit or loss and other comprehensive income? I. Equity, II. Assets, III. Income, IV. Liabilities, V. Expenses
a)
III only
b)
I and V only
c)
III and V only
d)
I, II, III, IV and V
36.
Which of the following is an example of a current asset?
a)
Retained earnings
b)
Manufacturing licences
c)
Property, plant and equipment
d)
Motor vehicles held for sale as part of a trade
37.
Which of the following items are non-current assets? I. Land, II. Inventory, III. Bank loan, IV. Machinery
a)
I only
b)
I and IV only
c)
I, III and IV only
d)
II, III and IV only
38.
How is a bank overdraft classified in the statement of financial position?
a)
Current asset
b)
Current liability
c)
Non-current asset
d)
Non-current liability
39.
How should the balance of accounts payable be reported in the financial statements?
a)
As an expense
b)
As a current asset
c)
As a current liability
d)
As a non-current asset
40.
Which of the following is an example of a liability?
a)
Loan payable
b)
Inventory
c)
Receivables
d)
Plant and machinery
Reset
