This quiz works best with JavaScript enabled. Home > Accounting > Financial Reporting > Financial Reporting – Quiz 20 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Reporting Quiz 20 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The Audit Oversight Board (AOB) is established under Part 111A of the Securities Commission Act 1993. A) TRUE. B) FALSE. Show Answer Correct Answer: A) TRUE. 2. Which ONE of the following statements describes faithful representation, a qualitative characteristic of faithful representation? A) Revenue earned must be matched against the expenditure incurred in earning it. B) Having information available to decision-makers in time to be capable of influencing theirdecisions. C) The presentation and classification of items in the financial statements should stay the same fromone period to the next. D) Financial information should be complete, neutral and free from error. Show Answer Correct Answer: D) Financial information should be complete, neutral and free from error. 3. Which of the following is not a basic accounting concept is..... A) Konsep Entitas Bisnis (Business Entity). B) Business Unity Concept. C) Concept of Continuity (Going Concern). D) Full Disclosure Concept. Show Answer Correct Answer: D) Full Disclosure Concept. 4. What are the Financial Statement Assertions covered by FR-21? A) Accuracy and Validity. B) Completeness and Accuracy. C) Accuracy and Restricted Access. D) Completeness and Validity. Show Answer Correct Answer: B) Completeness and Accuracy. 5. Which of the following are TRUE of partnerships?1. The partners' individual exposure to debt is limited.2.Financial statements for the partnership by law must be produced and made public.3.A partnership is not a separate legal entity from the partners themselves. A) 1 and 2 only. B) 2 only. C) 3 only. D) 1 and 3 only. Show Answer Correct Answer: C) 3 only. 6. Which module could not generate a report A) Policy. B) Workinbox. C) Leads. D) Inbound Email. Show Answer Correct Answer: D) Inbound Email. 7. Which of the following is an appropriate method of computing free cash flow to the firm? A) Add operating cash flows to capital expenditures and deduct after-tax interest payments. B) Add operating cash flows to after-tax interest payments and deduct capital expenditures. C) Deduct both after-taxinterest payments and capital expenditures fromoperating cash flows. D) None of above. Show Answer Correct Answer: B) Add operating cash flows to after-tax interest payments and deduct capital expenditures. 8. Which is one of the elements of a financial report that describes a company's profit/loss position, namely? A) Cash flow statement. B) Profit or loss report. C) Financial position report. D) All are correct. Show Answer Correct Answer: B) Profit or loss report. 9. PURPOSE OF THE CONCEPTUAL FRAMEWORK (used as a reference): A) Financial report preparation committee in carrying out its duties. B) The auditor provides an opinion regarding whether the financial statements are in accordance with generally accepted accounting principles. C) Users of financial reports in interpreting the information presented in financial reports. D) All Statements are correct. Show Answer Correct Answer: D) All Statements are correct. 10. The income statement is best used to evaluate a company's: A) Financial position. B) Sources of cash flow. C) Financial results from business activities. D) None of above. Show Answer Correct Answer: C) Financial results from business activities. 11. In which of the following transaction, sale of loan portfolio is not treated as true sale and are not derecognised from books of accounts: A) Direct Assignment Transaction. B) Pass through certificate Transaction. Show Answer Correct Answer: B) Pass through certificate Transaction. 12. The financial statements of DN Properties have reflected a rate earned on average total assets for the past three years of 11.2%, 12.1%, and 13.4%. Industry statistics show that businesses similar to DN Properties typically have a rate earned on average total assets between 11.0% and 15.0%. Based on the given information, which statement is correct? A) DN Properties struggles to put its assets to profitable use. B) DN Properties needs to sell assets to reduce the rate to below 11.0%. C) DN Properties is using its assets in a way that is increasing net income but is still failing to meet acceptable industry standards. D) DN Properties is improving its use of assets for increasing profitability and is operating near the same level as similar companies in the industry. Show Answer Correct Answer: D) DN Properties is improving its use of assets for increasing profitability and is operating near the same level as similar companies in the industry. 13. Parker Industries has a debt ratio of 48.2%. The industry average for companies similar to Parker is 43.5%. This means that Parker likely: A) Will avoid any difficulty with its creditors. B) Will be viewed as having high creditworthiness. C) Has less liquidity than other firms in the industry. D) Has greater than average financial risk when compared to other firms in its industry. Show Answer Correct Answer: D) Has greater than average financial risk when compared to other firms in its industry. 14. An entity granted a share appreciation right to the CEO on January 1, 2022. After a 3-year service, the employee is entitled to receive a cash equal to the appreciation in share price over the market value on January 1, 2022. The market value on January 1, 2020 is the predetermined price for the purpose of determining the compensation. The share option right has the following terms:Service period-January 1, 2022-December 31, 2024Number of shares-100, 000Exercise date-January 1, 2025The quoted prices of the entity's share are:January 1, 2022-150December 31, 2022-155December 31, 2023-152December 31, 2024-160What is the debit entry on December 31, 2023? A) Salaries Expense 200, 000. B) Salaries Expense 33, 333. C) Salaries Expense 166, 667. D) Salaries Expense 500, 000. Show Answer Correct Answer: B) Salaries Expense 33, 333. 15. Which of the following is the principle that a company must recognize revenue in the period in which it is earned, it is not considered earned until a product or service has been provided? A) Cost principle. B) Revenue recognition principle. C) Expense recognition (matching) principle. D) Full disclosure principle. Show Answer Correct Answer: B) Revenue recognition principle. 16. US generally accepted accounting principles are currently developed by which entity? A) The Securities and Exchange Commission. B) The Financial Accounting Standards Board. C) The Public Company Accounting Oversight Board. D) None of above. Show Answer Correct Answer: B) The Financial Accounting Standards Board. 17. What is the primary purpose of financial reporting? A) To provide insights into a company's financial performance and position. B) To create competition among businesses. C) To assess employee satisfaction. D) To attract new customers. Show Answer Correct Answer: A) To provide insights into a company's financial performance and position. 18. Shareholders' equity reported on the balance sheet is most likely to differ fromthe market value of shareholders' equity because: A) Historical cost basis is used for all assets and liabilities. B) Some factors that affect the generation of future cash flows are excluded. C) Shareholders' equity reported on the balance sheet is updated continuously. D) None of above. Show Answer Correct Answer: B) Some factors that affect the generation of future cash flows are excluded. 19. An audit committee is A) Composed of internal auditors. B) Composed of members of the audit team. C) Composed of members of a company's board of directors who are not involved in the day-to-day operations of the company. D) A committee composed of persons not associating in anyway with the client or the boardof directors. Show Answer Correct Answer: C) Composed of members of a company's board of directors who are not involved in the day-to-day operations of the company. 20. Which of the following is not a contributory factor towards faithful representation? A) Consistency. B) Neutrality. C) Completeness. D) Freedom from error. Show Answer Correct Answer: A) Consistency. ← PreviousNext →Related QuizzesAccounting QuizzesFinancial Reporting Quiz 1Financial Reporting Quiz 2Financial Reporting Quiz 3Financial Reporting Quiz 4Financial Reporting Quiz 5Financial Reporting Quiz 6Financial Reporting Quiz 7Financial Reporting Quiz 8Financial Reporting Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books