This quiz works best with JavaScript enabled. Home > Accounting > Financial Reporting > Financial Reporting – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Reporting Quiz 5 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The fundamental qualitative characteristics of financial information are: A) Relevance and faithful representation. B) Relevance and comparability. C) Faithful representation and comparability. D) Verifiability and understandability. Show Answer Correct Answer: A) Relevance and faithful representation. 2. Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the A) Economic entity assumption. B) Relevance characteristic. C) Comparability characteristic. D) Neutrality characteristic. Show Answer Correct Answer: A) Economic entity assumption. 3. Which of the following is not a role of The Conceptual Framework (The Framework)? A) It is the foundation that standard-setters use when developing accounting standards. B) It enables the external auditors to evaluate compliance with IFRS and then form an opinion. C) It enables consistency when the existing accounting standards do not provide guidance on a particular issue. D) It is an alternative to the detailed accounting standards as it is much easier to understand by users of financial statements. Show Answer Correct Answer: D) It is an alternative to the detailed accounting standards as it is much easier to understand by users of financial statements. 4. Collection of all accounts created for your business A) General Journal. B) General Ledger. C) Income Statement. D) Balance Sheet. E) Statement of Cash Flows. Show Answer Correct Answer: B) General Ledger. 5. Changing the method of inventory valuation should be reported in the financial statements under what qualitative characteristic of accounting information? A) Comparability. B) Consistency. C) Verifiability. D) Understandability. Show Answer Correct Answer: B) Consistency. 6. Interim financial reports released by a company are most likely to be: A) Monthly. B) Unaudited. C) Unqualified. D) None of above. Show Answer Correct Answer: B) Unaudited. 7. ..... company will not be counted for the purpose of maximum number of directorship A) Private Company. B) Government Company. C) Sec-8 Company. D) None of the above. Show Answer Correct Answer: C) Sec-8 Company. 8. Cooper Corporation has a ratio of stockholders' equity to liabilities of 3.15 for the current year. The ratios for the past two years were 2.10 and 2.35, respectively. Which would most likely explain the significant change from the prior year to the current year? A) Cooper Corporation expanded its current facilities in the current year. B) Cooper Corporation had sales that decreased dramatically over the past three years. C) Cooper Corporation used proceeds from a short term note to reduce accounts payable. D) Cooper Corporation issued and received payment for a substantial amount of common stock. Show Answer Correct Answer: D) Cooper Corporation issued and received payment for a substantial amount of common stock. 9. The information provided by a balance sheet item is limited because of uncertainty regarding: A) Measurement of its cost or value with reliability. B) The change in current value following the end of the reporting period. C) The probability that any future economic benefit will flow to or from theentity. D) None of above. Show Answer Correct Answer: B) The change in current value following the end of the reporting period. 10. The final basis change will cause a 50 M USD decrease in reserve. How will the Basis Change affect Balance Sheet? A) Liability increase by 50 M USD. B) Owner's equity decrease by 50 M USD. C) Both Liability and Owner's Equity increase by 50 M USD. D) Both Liability and Owner's Equity decrease by 50 M USD. E) Liability increase by 50 M USD and Owner's Equity decrease by 50 M USD. Show Answer Correct Answer: E) Liability increase by 50 M USD and Owner's Equity decrease by 50 M USD. 11. Most businesses use double entry accounting A) True. B) False. Show Answer Correct Answer: A) True. 12. At 30 June 20X2 a company had $ 1m 8% loan notes in issue, interest being paid half-yearly on 30 June and 31 December.On 30 September 20X2 the company redeemed $ 250, 000 of these loan notes at par, paying interest due to that date. On 1 April 20X3 the company issued $ 500, 000 7% loan notes, interest payable half-yearly on 31 March and 30 September. What figure should appear in the company's statements of profit or loss for interest payable in the year ended 30 June 20X3? A) $ 88, 750. B) $ 82, 500. C) $ 65, 000. D) $ 73, 750. Show Answer Correct Answer: D) $ 73, 750. 13. The company records its customers' demands even though the court process has not yet been completed = full disclosure A) Correct. B) Salah. Show Answer Correct Answer: A) Correct. 14. If an adjustment includes an entry to Accumulated Depreciation, which type of adjustment is it? A) Estimate. B) Deferral. C) Accrual. D) Cull. Show Answer Correct Answer: B) Deferral. 15. The portion of capital in subsidiary companies which is the right of non-controlling shareholders is presented as..... A) Equity. B) Long term liabilities. C) Non-fixed assets. D) Short-term liabilities. Show Answer Correct Answer: A) Equity. 16. Kleen-Up Company has a receivables turnover ratio of 9.2 for the current year and 10.7 for the prior year. Based on these ratios, management decides to increase the late payment charge imposed on clients when bills are not paid on time. Why did Kleen-Up make this change? A) Collections of receivables are taking more time, and an increase in the late payment charge should increase timely payments by customers and increase the receivables turnover ratio. B) The receivables turnover ratio is decreasing, which reflects that Kleen-Up is reducing the time it takes for customers to pay. C) Customers are paying faster and Kleen-Up is charging more to increase revenues. D) Kleen-Up is eliminating sales on account for the future. Show Answer Correct Answer: A) Collections of receivables are taking more time, and an increase in the late payment charge should increase timely payments by customers and increase the receivables turnover ratio. 17. Under PFRS for Small Entities, any changes in accounting estimates are accounted for A) Retroactively by adjusting opening balance of retained earnings. B) Retroactively by adjusting ending balance of retained earnings. C) Prospectively by including it in Profit or Loss. D) Prospectively but need to restate the financial statements. Show Answer Correct Answer: C) Prospectively by including it in Profit or Loss. 18. The creative chief executive of a corporation who is personally responsible for numerous inventions and innovations is not reported as an asset on the corporation's balance sheet. The accounting principle/guideline that prevents the corporation for reporting this person as an asset is A) Cost. B) Going concern. C) Conservation. D) None of above. Show Answer Correct Answer: A) Cost. 19. On which financial statement would the Dividends account appear? A) Balance Sheet. B) Income Statement. C) Retained Earnings Statement. D) Statement of Cash Flows. Show Answer Correct Answer: C) Retained Earnings Statement. 20. The objective of financial reporting according to PSAK 1 is..... A) As a reference for users of financial reports in interpreting the information presented in financial reports. B) As a reference for auditors in providing opinions regarding whether financial reports are prepared in accordance with financial accounting standards. C) As a reference for the accounting standards drafting committee in carrying out its duties. D) Providing information about the financial position, financial performance and cash flow of an entity that is useful for most users of financial reports in making economic decisions. Show Answer Correct Answer: D) Providing information about the financial position, financial performance and cash flow of an entity that is useful for most users of financial reports in making economic decisions. ← PreviousNext →Related QuizzesAccounting QuizzesFinancial Reporting Quiz 1Financial Reporting Quiz 2Financial Reporting Quiz 3Financial Reporting Quiz 4Financial Reporting Quiz 6Financial Reporting Quiz 7Financial Reporting Quiz 8Financial Reporting Quiz 9Financial Reporting Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books