Question

ACC206: Financial Reporting MCQ

1. International Financial Reporting Standards (IFRSs) are;

a. currently issued and administrated by the International Financial Reporting Interpretation Committee (IFRIC).

b. currently issued and administrated by the Financial Accounting Standards Board (FASB), an independent standard-setting board based in US.

c. currently issued and administrated by the International Federation of Accountants (IFAC).

d. currently issued and administrated by the International Accounting Standards Board (IASB), an independent standard-setting board based in London.

2. Which ONE of the following is a function of the International Financial Reporting Standards (IFRS) Foundation?

a. Assumes complete responsibility for the preparation and publication of International Financial Reporting Standards (IFRSs).

b. Oversees the work of the International Accounting Standards Board (IASB), the structure, and strategy, and has fund raising responsibility.

c. To inform the IASB of the views of organisations and individuals on major standard setting projects.

d. To review new financial reporting issues not yet covered by an IFRS.

3. Which of the following statements best describes the conditions which the FRS Framework identifies as necessary if the going concern basis is to be used for the preparation of financial statements?

I. The entity has no need to liquidate.

II. The entity has no intention to liquidate.

III. The entity has no need to cease trading.

IV. The entity has no intention to cease trading.

Group of answer choices

a. I, II and IV only

b. I, II and III only

c. I, III and IV only

d. I, II, III and IV

4. International Financial Reporting Standards (IFRSs) comprise the following standards and interpretation not yet amended or withdrawn:

I. International Financial Reporting Standards (IFRSs)

II. International Accounting Standards (IASs)

III. IFRIC Interpretations (IFRICs)

IV. SIC Interpretation (SICs)

Group of answer choices

a. Both I and II

b. I, II, III and IV

c. I only

d. I, II and III

5. The responsibility of setting international financial reporting standards (IFRSs) rests

a. IASB, FASB and the various National Accounting Standards Agencies.

b. solely on the Financial Accounting Standards Board (FASB).

c. on both the International Accounting Standards Board (IASB)and Financial Accounting Standards Board (FASB).

d. solely on the International Accounting Standards Board (IASB).

6. When information is important enough to the informed user, so that, if it was omitted or erroneous, it would make a difference in the user’s decision, it is:

a. material.

b. comparable.

c. timely.

d. understandable.

7. Which of the following definitions of fair value is closest to that defined in FRS 113 Fair Value Measurement?

a. None of the listed definitions.

b. It is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

c. It is the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date.

d. It is the price that would be paid to buy an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

8. The idea that financial statements should be free from bias is part of which characteristic?

a. Understandability.

b. Relevance.

c. Comparability.

d. Faithful representation.

9. The overriding criterion by which accounting information can be judged is that of

a.usefulness for decision making.

b.freedom from bias.

c.timeliness.

d.comparability.

10. Which of the following is a fundamental quality of useful accounting information?

a.Conservatism.

b.Comparability.

c.Faithful representation.

d.Consistency.

11. What is meant by consistency when discussing financial accounting information?

a.Information that is measured and reported in a similar fashion across points in time.

b.Information is timely.

c.Information is measured similarly across the industry.

d.Information is verifiable

12. Which of the following is an ingredient of faithful representation?

a.Predictive value.

b.Timeliness.

c.Neutrality.

d.Feedback value.

13. The following is not part of the process of developing a new International Financial Reporting Standard (IFRS):

a. Drafting an IFRS for public comment.

b. Publishing clarification of an IFRS where conflicting interpretations have developed.

c. Analysing the feedback received on a discussion paper

d. Issuing a discussion paper that sets out the possible options for a new standard.

14. For the presentation of the Statement of Financial Position, an entity makes the judgement about whether to present additional items separately on the basis of an assessment of:

I. the nature and liquidity of assets;

II. the function of assets within the entity; and

III. the amounts, nature and timing of liabilities.

a. I only

b. Both I and III

c. Both I and II

d. I, II and III

15. The Singapore Financial Reporting Standards (FRS) Conceptual Framework defines “equity” as:

a. residual interest in the assets of an entity after deducting its liabilities.

b. the sum of opening capital and profit.

c. amount of capital introduced by the owner of the business.

d. what a business owes its owner or owners.

16. The body to which the International Accounting Standards Board is responsible is:

1. The International Financial Reporting Standards (IFRS) Advisory Council

2. The IFRS Interpretations Committee

3. The Monitoring Board

4. The IFRS Foundation

17. Financial information exhibits the characteristic of consistency when

a. accounting entities give accountable events the same accounting treatment from period to period.

b. extraordinary gains and losses are not included on the income statement.

c. accounting procedures are adopted which give a consistent rate of net income.

d. expenses are reported as charges against revenue in the period in which they are paid.

18. Which of the following statements best describes the role of the International Financial Reporting Standards (IFRS) Advisory Council?

a. Chairs the meetings of the International Accounting Standards Board

b. Appoints members to the International Accounting Standards Board

c. Interprets the application of international standards

d. Advises the International Accounting Standards Board and the IFRS Foundation

19. An entity which complies with Singapore Financial Reporting Standards (FRSs) may depart from the requirements of a standard:

a. whenever it wishes to do so.

b. if compliance costs would be excessive.

c. if compliance would produce misleading information.

d. None of the listed options.

20. The International Accounting Standards Board is responsible for establishing:

a. the code of professional conduct for accountants.

b. the International Accounting Standards.

c. the International Financial Reporting Standards.

d. the generally accepted accounting principles.

21.ABC Ltd owns an asset that can be traded in four different locations, Markets 1 to 4. The number of trades in markets 1 to 4 are 38 trades, 33 trades, 30 trades and 40 trades respectively. The price of the asset in each of the markets is $32, $28, $25 and $31 respectively. The transaction cost in each of the markets is similar at $3. The transport cost is in each of the markets is $4, $4, $2 and $2 respectively. Under FRS 113 Fair Value Measurement, what is the fair value of this asset?

a. $28

b. $25

c. $31

d. $29

Answer 1

1. International Financial Reporting Standards (IFRSs) are

d. currently issued and administrated by the International Accounting Standards Board (IASB), an independent standard-setting board based in London.

2. Which ONE of the following is a function of the International Financial Reporting Standards (IFRS) Foundation?

b. Oversees the work of the International Accounting Standards Board (IASB), the structure, and strategy, and has fund raising responsibility.

3. Which of the following statements best describes the conditions which the FRS Framework identifies as necessary if the going concern basis is to be used for the preparation of financial statements?

d.  I, II, III and IV

A going concern is a business that functions without the threat of liquidation for the foreseeable future, which is usually regarded as at least the next 12 months. "Going concern" implies for the business the basic declaration of intention to keep operating its activities at least for the next year, which is a basic assumption for preparing financial statements that comprehend the conceptual framework of the IFRS. Hence, a declaration of going concern means that the business has neither the intention nor the need to liquidate or to materially curtail the scale of its operations.

Simply stated, a going concern is the ability of a business to meet its financial obligations when they fall due.

Continuation of an entity as a going concern is presumed as the basis for financial reporting unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements are prepared under the liquidation basis of accounting.

4. International Financial Reporting Standards (IFRSs) comprise the following standards and interpretation not yet amended or withdrawn:

a. IASB, FASB and the various National Accounting Standards Agencies.

6. When information is important enough to the informed user, so that, if it was omitted or erroneous, it would make a difference in the user’s decision, it is:

a. material.

7. Which of the following definitions of fair value is closest to that defined in FRS 113 Fair Value Measurement?

c. It is the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date.

8. The idea that financial statements should be free from bias is part of which characteristic?

c. Comparability. The information must be comparable to the financial information presented for other accounting periods, so that users can identify trends in the performance and financial position of the reporting entity.

9.The overriding criterion by which accounting information can be judged is that of:

d.comparability.

10.  Which of the following is a fundamental quality of useful accounting information?

c.Faithful representation.

11. What is meant by consistency when discussing financial accounting information?

a.Information that is measured and reported in a similar fashion across points in time.

12. Which of the following is an ingredient of faithful representation?

c.Neutrality.

13. The following is not part of the process of developing a new International Financial Reporting Standard (IFRS):

a. Drafting an IFRS for public comment.

14. For the presentation of the Statement of Financial Position, an entity makes the judgement about whether to present additional items separately on the basis of an assessment of:

I. the nature and liquidity of assets;

II. the function of assets within the entity; and

III. the amounts, nature and timing of liabilities.

All of the above

15. The Singapore Financial Reporting Standards (FRS) Conceptual Framework defines “equity” as:

a. residual interest in the assets of an entity after deducting its liabilities.

16. The body to which the International Accounting Standards Board is responsible is:

The IFRS Interpretations Committee

17. Financial information exhibits the characteristic of consistency when

a. accounting entities give accountable events the same accounting treatment from period to period.

18. Which of the following statements best describes the role of the International Financial Reporting Standards (IFRS) Advisory Council?

d. Advises the International Accounting Standards Board and the IFRS Foundation.

19. An entity which complies with Singapore Financial Reporting Standards (FRSs) may depart from the requirements of a standard:

a. whenever it wishes to do so.

20. The International Accounting Standards Board is responsible for establishing:

c. the International Financial Reporting Standards.

21. 21.ABC Ltd owns an asset that can be traded in four different locations, Markets 1 to 4. The number of trades in markets 1 to 4 are 38 trades, 33 trades, 30 trades and 40 trades respectively. The price of the asset in each of the markets is $32, $28, $25 and $31 respectively. The transaction cost in each of the markets is similar at $3. The transport cost is in each of the markets is $4, $4, $2 and $2 respectively. Under FRS 113 Fair Value Measurement, what is the fair value of this asset?

d. $29