IAS 1
Question 1
Which TWO of the following are included in a complete set of financial
statements, according to IAS1 Presentation of financial statements?
Select one or more:
a.
A statement by the board of directors of compliance with local legislation
b.
A statement of changes in equity
c.
Summarised statements of financial position for the last five years
d.
A statement of cash flows
The correct answers are: A statement of changes in equity, A statement of cash
flows
Question 2
Are the following statements true or false, according to IAS1 Presentation of
financial statements?
(1) An entity presenting a single statement of comprehensive income should
present a statement of changes in equity
(2) An entity presenting a separate income statement and a statement of
comprehensive income should present a statement of changes in equity
Statement (1) Statement (2)
Select one:
a.
False False
b.
False True
c.
True False
d.
True True
The correct answer is: True True
Question 3
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?
(select one answer)
Select one:
a.
Current liabilities
b.
Current assets
c.
Non-current liabilities
d.
Non-current assets
The correct answer is: Non-current liabilities
IAS 2
Question 4
According to IAS2 Inventories, which TWO of the following should be accounted
for in the cost of an item of inventory?
Select one or more:
a.
Material wasted due to a machine breakdown
b.
Import duties on shipping of inventory inwards
c.
Storage costs of finished goods
d.
Trade discounts received on purchase of inventory
The correct answers are: Import duties on shipping of inventory inwards, Trade
discounts received on purchase of inventory
Question 5
According to IAS2 Inventories, which of the following costs should be included in
inventory valuations?
Select one or more:
a.
Transport costs for raw materials
b.
Abnormal material usage
c.
Admin expenses
d.
Fixed production overheads
The correct answers are: Transport costs for raw materials, Fixed production
overheads
Question 6
How should import duties be dealt with when valuing inventories at the lower of
cost and net realisable value (NRV) according to IAS2 Inventories?
Select one:
a.
Added to cost
b.
Ignored
c.
Deducted in arriving at NRV
d.
Deducted from cost
The correct answer is: Added to cost
Question 7
The Coronet Company has a cost card in relation to an item of goods
manufactured as follows:
CU
Materials 70
Storage costs of finished goods 18
Delivery to customers 4
Irrecoverable purchase taxes 6
According to IAS2 Inventories, at what figure should the item be valued in
inventory?
Select one:
a.
CU88
b.
CU76
c.
CU98
d.
CU94
The correct answer is: CU76
Question 8
The Whimbrel Company has two products in its inventory which have costs and
selling prices per unit as follows:
Product X Product Y
CU CU
Selling price 200 300
Materials and conversion costs 150 180
General administration costs 30 80
Selling costs 60 70
Profit/(loss) (40) (30)
At the year end, the manufacture of items of inventory has been completed but
no selling costs have yet been incurred.
According to IAS2 Inventories, should these products be carried in Whimbrel's
statement of financial position at cost or net realisable value (NRV) rule?
Select one:
a.
Product Y : NRV
b.
Product X : NRV
c.
Product X : Cost
d.
Product Y : Cost
The correct answer is: Product X : NRV
IAS 8
Question 9
According to IAS8 Accounting policies, changes in accounting estimates and
errors, which ONE of the following terms best describes applying a new
accounting policy to transactions as if that policy had always been applied?
Select one:
a.
Retrospective application
b.
Retrospective restatement
c.
Prospective application
d.
Prospective restatement
The correct answer is: Retrospective application
Question 10
Are the following statements true or false, according to IAS8 Accounting policies,
changes in accounting estimates and errors?
An entity changes its accounting policy if
(1) it is required to do so by law.
(2) the change will result in providing reliable and more relevant information.
Statement (1) Statement (2)
Select one:
a.
False False
b.
False True
c.
True False
d.
True True
The correct answer is: True True
Question 11
Which TWO of the following should be treated as a change of accounting policy
according to IAS8 Accounting policies, changes in accounting estimates and
errors?
Select one or more:
a.
A new accounting policy of capitalising development costs as a project has
become eligible for capitalisation for the first time.
b.
A new policy resulting from the requirements of a new IFRS.
c.
To provide more relevant information, items of property, plant and equipment
are now being measured at fair value, whereas they had previously been
measured at cost.
d.
A company engaging in construction contracts for the first time needs an
accounting policy to deal with this
The correct answers are: A new policy resulting from the requirements of a new
IFRS., To provide more relevant information, items of property, plant and
equipment are now being measured at fair value, whereas they had previously
been measured at cost.
Question 12
During the year to 31 December 20X8 the following events occurred in relation
to The Saddleback Company.
(1) A counting error relating to the inventory at 31 December 20X7 was
discovered. This required a reduction in the carrying amount of inventory at that
date of CU28,000.
(2) The provision for uncollectible receivables at 31 December 20X7 was
CU30,000. During 20X8 CU50,000 was written off the 31 December 20X7
receivables.
According to IAS8 Accounting policies, changes in accounting estimates and
errors, what adjustment is required to restate Saddleback's retained earnings at
31 December 20X7?
Select one:
a.
Nil
b.
CU28,000
c.
CU30,000
d.
CU58,000
The correct answer is: CU28,000
Question 13
XYZ Inc. changes its method of valuation of inventories from weighted-average
method to first-in, first-out (FIFO) method. XYZ Inc. should account for this
change as:
Select one:
a.
A change in estimate and account for it prospectively.
b.
A change in accounting policy and account for it prospectively.
c.
A change in accounting policy and account for it retrospectively.
d.
Account for it as a correction of an error and account for it retrospectively.
The correct answer is: A change in accounting policy and account for it
retrospectively.
IAS 16
Question 14
Question 1
Not answered
Marked out of 1.00
Which ONE of the following statements best describes 'residual value'?
Select one:
a.
The estimated net amount currently obtainable if the asset were at the end of
its useful life
b.
The present value of estimated future cash flows expected to arise from the
continuing use of the asset and from its ultimate disposal
c.
The amount at which the asset could be exchanged between knowledgeable,
willing parties in an arm's length transaction
d.
The amount of cash or cash equivalents that could currently be obtained by
selling the asset in an orderly disposal
The correct answer is: The estimated net amount currently obtainable if the
asset were at the end of its useful life
Question 15
Which ONE of the following statements best describes the carrying amount of an
asset?
Select one:
a.
The cost (or an amount substituted for cost) of the asset less its residual value
b.
The amount at which the asset is recognised in the statement of financial
position after deducting any accumulated depreciation and accumulated
impairment losses
c.
The higher of the asset's net selling price and its value in use
d.
The fair value of the asset at the date of a revaluation less any subsequent
accumulated impairment losses
The correct answer is: The amount at which the asset is recognised in the
statement of financial position after deducting any accumulated depreciation
and accumulated impairment losses
Question 16
Are the following statements regarding the cost of an asset true or false,
according to IAS16 Property, plant and equipment?
(1) The cost includes cash equivalents paid to acquire an asset.
(2) The cost includes the fair value of any non-monetary consideration given to
acquire an asset.
Select one:
a.
Statement (1) : False
Statement (2) : False
b.
Statement (1) : False
Statement (2) : True
c.
Statement (1) : True
Statement (2) : False
d.
Statement (1) : True
Statement (2) : True
The correct answer is:
Statement (1) : True
Statement (2) : True
Question 17
According to IAS16 Property, plant and equipment, which TWO of the following
items should be capitalised into the cost of property, plant and equipment?
Select one or more:
a.
Cost of excess materials resulting from a purchasing error
b.
Cost of testing whether the asset works correctly
c.
Initial operating losses whilst demand builds up
d.
Cost of preparing the site for installation
The correct answers are: Cost of testing whether the asset works correctly, Cost
of preparing the site for installation
Question 18
The Lamprey Defence Company acquired an aeroplane in 20X5. At the time of
acquisition, the cost of the jet frame was CU6million and the additional cost of
the engine was CU600,000.
In 20X8, the engine was replaced with a new one costing CU1,100,000. At the
time of replacement, the accumulated depreciation to date on the jet frame was
CU1,750,000 and on the engine was CU400,000.
Using the principles outlined in IAS16 Property, plant and equipment, what
amount should be derecognised at the date of replacement?
Select one:
a.
CU200,000
b.
Nil
c.
CU600,000
d.
CU1,100,000
The correct answer is: CU200,000
IAS 23
Question 19
According to IAS23 Borrowing costs, which TWO of the following assets could be treated as
qualifying assets for the purpose of capitalising interest costs?
Select one or more:
a.
Investment property
b.
Investments in financial instruments
c.
Inventory of finished goods produced over a short period of time
d.
Power generation facilities
The correct answers are: Investment property, Power generation facilities
Question 20
According to IAS23 Borrowing costs, which ONE of the following statements about the
capitalisation of borrowing costs as part of the cost of a qualifying asset is true?
Select one:
a.
If funds come from general borrowings, the amount to be capitalised is based on the weighted
average cost of borrowing
b.
Capitalisation always continues until the asset is brought into use
c.
Capitalisation always commences as soon as expenditure of the asset is incurred
d.
Capitalisation always commences as soon as interest on relevant borrowings is being incurred
The correct answer is: If funds come from general borrowings, the amount to be capitalised is based
on the weighted average cost of borrowing
Question 21
According to IAS23 Borrowing costs, which of the following treatments are required for borrowing
costs incurred that are directly attributable to the construction of a qualifying asset?
Treatment (1) Recognise as an expense in the period incurred.
Treatment (2) Capitalise as part of the cost of the asset.
Select one:
a.
Treatment (1) only
b.
Either Treatment (1) or Treatment (2)
c.
Neither Treatment (1) nor Treatment (2)
d.
Treatment (2) only
The correct answer is: Treatment (2) only
IAS 24
Question 22
IAS 24 is a
Select one:
a.
Reclassification standard
b.
Disclosure standard
c.
Redrafting standard
d.
None of these
The correct answer is: Disclosure standard
Question 23
XYZ company preparing its annual financial statements, as per IAS 24 which one is related party to
the XYZ company?
Select one:
a.
Person has control or joint control with significant influence over XYZ Company
b.
Is a member of the key management personnel of the XYZ Company or of a parent of the XYZ
company
c.
Both above are related parties to XYZ Co
d.
None of these
The correct answer is: Both above are related parties to XYZ Co
Question 24
A personal loan taken by chief executive of a company financed by the same company
Select one:
a.
Is a related party transaction and to be disclosed in financial statements
b.
Is a related party transaction need not to be disclosed in financial statements
c.
Is not a related party transaction
d.
None of the above
The correct answer is: Is a related party transaction and to be disclosed in financial statements
IAS 36
Question 25
IAS 36 applies to which of the following assets?
Select one:
a.
Inventories.
b.
Financial assets
c.
Assets held for sale
d.
Property, plant, and equipment
The correct answer is: Property, plant, and equipment
Question 26
Goodwill and intangible assets with indefinite useful lives must be tested for impairment at least
Select one:
a.
every 2 year
b.
every 5 year
c.
every 1 year
d.
every 3 year
The correct answer is: every 1 year
Question 27
The Silvereye Company owns a non-current asset, which is damaged and is to be reviewed for
impairment, to which the following information relates:
CU
Current carrying amount 200
Fair value 220
Expected disposal costs 10
Value in use 205
According to IAS 36 Impairment of assets, what should be the carrying amount of the asset after the
impairment review?
Select one:
a.
CU200
b.
CU220
c.
CU210
d.
CU205
The correct answer is: CU200
IAS 37
Question 28
IAS 37 defines a provision as:
Select one:
a.
A liability which is not legally enforceable
b.
A liability which is legally enforceable
c.
A liability of uncertain timing or amount
d.
A reduction in the carrying amount of an asset
The correct answer is: A liability of uncertain timing or amount
Question 29
Should a provision be recognised in relation to:
(a) future operating losses?
(b) onerous contracts?
Select one:
a.
(a) No (b) No
b.
(a) Yes (b) No
c.
(a) Yes (b) Yes
d.
(a) No (b) Yes
The correct answer is: (a) No (b) Yes
Question 30
AVP Steel Ltd. had entered into a non-cancellable contract with Y Ltd. to purchase 10,000 units of
raw material at CU50 per unit at a contract price of CU5,00,000. As per the terms of
contract, AVP Steel Ltd. would have to pay CU60,000 to exit the said contract. AVP Steel Ltd. has
discontinued manufacturing the product that would use the said raw material. For that AVP Steel Ltd.
has identified a third party to whom it can sell the said raw material at CU45 per unit.
Provison to be accounted for by AVP Steel Ltd. ?
Select one:
a.
CU 45,000
b.
CU 50,000
c.
CU 60,000
d.
Contract does not provide a Provison
The correct answer is: CU 50,000
Question 31
Contingent liabilities are:
Select one:
a.
Always recognised in the statement of financial position
b.
Recognised in the statement of financial position unless the possibility of an outflow of economic
benefits is remote
c.
Disclosed in the notes unless the possibility of an outflow of economic benefits is remote
d.
Always disclosed in the notes to the financial statements
The correct answer is: Disclosed in the notes unless the possibility of an outflow of economic
benefits is remote
Question 32
Examine the following situations :
1. The company gives warranty on its [Link] companies past trend have shown that about 6%
of sale give rise to warranty claims.
2. The company has guaranteed the overdraft of another entity. The likelihood of a liability arising
from the guarantee is assessed as possible.
Select one:
a.
1. Disclose in notes 2. No action
b.
1. Create a provision 2. Disclose by notes
c.
1. Create a provision 2. Create a provision
d.
1. Disclose by notes 2. Disclose by notes
The correct answer is: 1. Create a provision 2. Disclose by notes
IAS 38
Question 33
Are the following statements true or false, according to IAS38 Intangible assets?
(1) The cost of an asset should include the amount of any cash or cash equivalents paid to acquire
the asset.
(2) The cost of an asset should include non-cash consideration measured at fair value.
Select one:
a.
Statement (1) : False
Statement (2) : False
b.
Statement (1) : False
Statement (2) : True
c.
Statement (1) : True
Statement (2) : False
d.
Statement (1) : True
Statement (2) : True
The correct answer is:
Statement (1) : True
Statement (2) : True
Question 34
Are the following statements in relation to development true or false, according to IAS38 Intangible
assets?
(1) The products being developed should have already been put into commercial production or use.
(2) Development involves the application of research findings.
Select one:
a.
Statement (1) : False
Statement (2) : False
b.
Statement (1) : False
Statement (2) : True
c.
Statement (1) : True
Statement (2) : False
d.
Statement (1) : True
Statement (2) : True
The correct answer is:
Statement (1) : False
Statement (2) : True
Question 35
A brand name that was acquired separately should initially be recognised, according to IAS38
Intangible assets, at
Select one:
a.
recoverable amount
b.
either cost or fair value at the choice of the acquirer
c.
fair value
d.
cost
The correct answer is: cost
Question 36
When an intangible asset is sold, the gain or loss is recognised…
Select one:
a.
in Equity
b.
in the Profit or Loss
c.
in the Statement of Financial Position
d.
in the Statement of Cash Flows
The correct answer is: in the Profit or Loss
IAS 40
Question 37
Which TWO of the following statements best describe owner-occupied property, according to IAS40
Investment property?
Select one or more:
a.
Property held for sale in the ordinary course of business
b.
Property held for use in the production and supply of goods or services
c.
Property held to earn rentals
d.
Property held for administrative purposes
The correct answers are: Property held for use in the production and supply of goods or services,
Property held for administrative purposes
Question 38
An investment property should be measured initially at
Select one:
a.
Cost
b.
Cost less accumulated impairment losses
c.
Depreciable cost less accumulated impairment losses
d.
Fair value less accumulated impairment losses
The correct answer is: Cost
Question 39
The Bentham Company purchased an investment property on 1 January 20X5 for a cost of
CU220,000. The property had a useful life of 40 years and at 31 December 20X7 had a fair value of
CU300,000.
On 1 January 20X8 the property was sold for net proceeds of CU290,000. Bentham uses the cost
model to account for investment properties. What is the gain or loss to be recognised in profit or
loss for the year ended 31 December 20X8 regarding the disposal of the property, according to
IAS40 Investment property?
Select one:
a.
CU86,500 gain
b.
CU81,000 gain
c.
CU10,000 loss
d.
CU10,000 loss
The correct answer is: CU86,500 gain
Question 40
A gain arising from a change in the fair value of an investment property for which an entity has opted
to use the fair value model is recognized in
Select one:
a.
Net profit or loss for the year
b.
General reserve in the shareholders’ equity
c.
Valuation reserve in the shareholders’ equity
d.
None of the above
The correct answer is: Net profit or loss for the year
Question 41
Transfers from investment property to property, plant, and equipment are appropriate
Select one:
a.
When there is change of use
b.
Based on the entity’s discretion
c.
Only when the entity adopts the fair value model under IAS 38
d.
The entity can never transfer property into another classification on the balance sheet once it is
classified as investment property
The correct answer is: When there is change of use
IFRS 15
Question 42
With regard to the definition of revenue given by IFRS15, which of the following statements is true?
Select one:
a.
Revenue includes cash received from borrowings
b.
Revenue includes cash received from share issues
c.
Revenue arises from ordinary activities only
d.
Revenue may arise from either ordinary activities or extraordinary activities
The correct answer is: Revenue arises from ordinary activities only
Question 43
Which of the following is an exception for application of IFRS 15?
a) Lease contracts
b) Insurance contracts
c) Pharmaceutical contracts
d) Financial audit contracts
e) All of the above
f) A and B
Select one:
a.
Lease contracts
b.
A and B
c.
All of the above
d.
A and D
The correct answer is: A and B
Question 44
A contract is wholly unperformed if…
a) The entity has not yet transferred any promised goods or services to the customer
b) The entity has not yet received any consideration in exchange for promised goods or services
c) The entity is not yet entitled to receive any consideration in exchange for promised goods or
services
d) All of the above
Select one:
a.
A and B
b.
A and C
c.
A and D
d.
All of the above
The correct answer is: All of the above
Question 45
According to IFRS 15, the asset is transferred to a customer…
a) When the asset is physically delivered to the customer’s premises
b) On the day specified by a contract with the customer
c) When the customer obtains control over it
d) On the day when the entity satisfies all performance obligations, specified in the contract with the
customer
Select one:
a.
Option A
b.
Option B
c.
Option C
d.
Option D
The correct answer is: Option C
Financial Instruments (IAS 32, IFRS 7, IFRS 9)
Question 46
In accordance with IAS 32 Financial instruments: Presentation, which ONE of the following types of
instrument is best described as a contract that evidences a residual interest in the assets of an entity
after deducting the liabilities?
Select one:
a.
Financial liability
b.
Guarantee
c.
Equity
d.
Financial asset
The correct answer is: Equity
Question 47
The scope of IFRS 9 includes all of the following items except:
Select one:
a.
Financial instruments that meet the definition of a financial asset.
b.
Financial instruments that meet the definition of a financial liability
c.
Financial instruments issued by the entity that meet the definition of an equity instrument.
d.
Contracts to buy or sell non financial items that can be settled net.
The correct answer is: Financial instruments issued by the entity that meet the definition of an
equity instrument.
Question 48
Which of the following is not a category of financial assets defined in IFRS 9?
Select one:
a.
Financial assets at fair value through profit or loss.
b.
at fair value through other comprehensive income
c.
amortised cost
d.
Held-for-sale investments.
The correct answer is: Held-for-sale investments.
Question 9
Not answered
Marked out of 1.00
Group Accounting (IAS 28, IFRS 3, IFRS 10, IFRS 12)
Question 49
Which of the following is not a valid condition that will exempt an entity from preparing
consolidated financial statements?
Select one:
a.
The parent entity is a wholly owned subsidiary of another entity.
b.
The parent entity’s debt or equity capital is not traded on the stock exchange.
c.
The ultimate parent entity produces consolidated financial statements available for public use that
comply with IFRS
d.
The parent entity is in the process of filing its financial statements with a securities commission.
The correct answer is: The parent entity is in the process of filing its financial statements with a
securities commission.
Question 50
Which of the following would normally indicate that an investor has significant influence over an
investee?
Select one:
a.
The investor owns 55% of the investee's ordinary shares
b.
The investor owns 21% of the investee's ordinary shares
c.
The investor has the right to appoint or remove members of the investee's key management personnel
d.
The investor has the right to direct the investee to enter into transactions for the investor's benefit
The correct answer is: The investor owns 21% of the investee's ordinary shares
