ACC206: Financial Reporting MCQ

1. International Financial Reporting Standards (IFRSs) are;

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

b. currently issued and administrated by the FinancialAccounting Standards Board (FASB), an independent standard-settingboard based in US.

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

d. currently issued and administrated by the InternationalAccounting Standards Board (IASB), an independent standard-settingboard based in London.

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

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

b. Oversees the work of the International Accounting StandardsBoard (IASB), the structure, and strategy, and has fund raisingresponsibility.

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

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

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

I. The entity has no need to liquidate.

II. The entity has no intention toliquidate.

III. The entity has no need to ceasetrading.

IV. The entity has no intention to ceasetrading.

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) comprisethe following standards and interpretation not yet amended orwithdrawn:

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 financialreporting standards (IFRSs) rests

a. IASB, FASB and the various National Accounting StandardsAgencies.

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, sothat, if it was omitted or erroneous, it would make a difference inthe user’s decision, it is:

a. material.

b. comparable.

c. timely.

d. understandable.

7. Which of the following definitions of fair value is closestto 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 orpaid to transfer a liability in an orderly transaction betweenmarket participants at the measurement date.

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

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

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

a. Understandability.

b. Relevance.

c. Comparability.

d. Faithful representation.

9. The overriding criterion by which accounting information canbe 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 usefulaccounting information?

a.Conservatism.

b.Comparability.

c.Faithful representation.

d.Consistency.

11. What is meant by consistency when discussing financialaccounting information?

a.Information that is measured and reported in a similar fashionacross 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 faithfulrepresentation?

a.Predictive value.

b.Timeliness.

c.Neutrality.

d.Feedback value.

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

a. Drafting an IFRS for public comment.

b. Publishing clarification of an IFRS where conflictinginterpretations have developed.

c. Analysing the feedback received on a discussion paper

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

14. For the presentation of the Statement of Financial Position,an entity makes the judgement about whether to present additionalitems 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 ofliabilities.

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) ConceptualFramework defines “equity” as:

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

b. the sum of opening capital and profit.

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

d. what a business owes its owner or owners.

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

1. The International Financial Reporting Standards (IFRS) AdvisoryCouncil

2. The IFRS Interpretations Committee

3. The Monitoring Board

4. The IFRS Foundation

17. Financial information exhibits the characteristic ofconsistency when

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

b. extraordinary gains and losses are not included on the incomestatement.

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

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

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

a. Chairs the meetings of the International Accounting StandardsBoard

b. Appoints members to the International Accounting StandardsBoard

c. Interprets the application of international standards

d. Advises the International Accounting Standards Board and theIFRS Foundation

19. An entity which complies with Singapore Financial ReportingStandards (FRSs) may depart from the requirements of astandard:

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 responsiblefor 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 differentlocations, Markets 1 to 4. The number of trades in markets 1 to 4are 38 trades, 33 trades, 30 trades and 40 tradesrespectively. The price of the asset ineach of the markets is $32, $28, $25 and $31respectively. The transaction cost ineach of the markets is similar at $3. Thetransport cost is in each of the markets is$4, $4, $2 and $2 respectively. Under FRS113 Fair Value Measurement, what is the fair value of thisasset?

a. $28

b. $25

c. $31

d. $29