This quiz works best with JavaScript enabled. Home > Finance > Accounting > Financial Reporting > Financial Reporting – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Reporting Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. This concept means not overstating assets, owner's equity, and revenues, and not understating liabilities and expenses A) Time-period. B) Entity. C) Conservatism. D) Materiality. Show Answer Correct Answer: C) Conservatism. 2. Organizations involved in Harmonization Efforts A) Association of South East Asian Nations (ASEAN). B) International Accounting Standards Committee(IASC)-dissolved in 2001. C) International Organization of Securities Commissions (IOSCO). D) A, B, C true. Show Answer Correct Answer: D) A, B, C true. 3. A warehouse fire destroyed $ 5 million worth of uninsured inventory. What is the change to Global's book value of equity? A) Increase by $ 5 million. B) Increase by $ 10 million . C) Decrease by $ 5 million. D) No change. Show Answer Correct Answer: C) Decrease by $ 5 million. 4. Accounting Standards Council was created in what year? A) 1971. B) 1982. C) 1961. D) 1981. Show Answer Correct Answer: D) 1981. 5. Accounting provides the information necessary to carry out activities efficiently and evaluate the activities of an entity. This is an understanding of accounting in terms of..... A) Prosedur. B) Recording. C) Activity. D) Classification. E) User. Show Answer Correct Answer: E) User. 6. Which of the following expenditures is a capital expenditure? A) Purchase of raw material. B) Rent. C) Depreciation. D) Purchase of plant. Show Answer Correct Answer: D) Purchase of plant. 7. Accounting that prepares reports, payments, or tax returns is called: A) Financial Accounting. B) Management accounting. C) Tax accounting. D) Government accounting. E) Budget accounting. Show Answer Correct Answer: C) Tax accounting. 8. What is matching principle? A) Record revenue when a service is provided to the customer, whether or not you collect the money due at the moment. B) You must report enough information for insiders to make an informed decision about the company. C) Accountants identify and measure all expenses incurred during the period and match the expenses against revenues earned. D) You stick with the same accounting principles and approach from one period to the next. Show Answer Correct Answer: C) Accountants identify and measure all expenses incurred during the period and match the expenses against revenues earned. 9. Which is correct? A) IAS10 income Taxes. B) IAS12 income Taxes. C) IAS8 income Taxes. D) IAS14 income Taxes. Show Answer Correct Answer: B) IAS12 income Taxes. 10. 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 credit entry on December 31, 2024 A) Salaries Expense 1, 000, 000. B) Accrued Salaries Payable 800, 000. C) Salaries Expense 800, 000. D) Accrued Salaries Payable 1, 000, 000. Show Answer Correct Answer: B) Accrued Salaries Payable 800, 000. 11. Deferred Tax on actuarial gain of gratuity is created through: A) Profit and Loss Account. B) Profit and Loss appropriation account. C) Other Comprehensive Income. D) None of above. Show Answer Correct Answer: C) Other Comprehensive Income. 12. The following are assets in a long-term liability account, except A) Deferred tax liabilities. B) Rent payable-minus current portion. C) Employee benefits liabilities. D) Long-term debt that matures in 1 year. Show Answer Correct Answer: D) Long-term debt that matures in 1 year. 13. The function of Financial Reporting Foundation (FRF) are:i. To review the performance of the MASBii. To be responsible for the financing arrangements and operations of the MASBiii. to perform any other function as the Minister may prescribe by order published in the Gazette. Without limiting the generality of functions of the FRF in subsection iv. to provide its views to the MASB on any matter which the MASB seeks to undertake or implement in relation to the MASB's functions under section 7 of the Act A) I and ii. B) Iii and iv. C) I, ii, and iv. D) All above. Show Answer Correct Answer: D) All above. 14. Jacob, Rosie, and Isabella are studying for their business exam. They come across a financial statement that provides information about a company's assets, liabilities, and shareholders' equity. What is this statement called? A) Cash Flow Statement. B) Balance Sheet. C) Statement of Financial Position. D) Statement of Income. Show Answer Correct Answer: B) Balance Sheet. 15. What were the ISAs that were used in case 2 to decide the type of audit opinion to be issued by the auditing firm? A) ISA 315 and 330. B) ISA 700 and 705. C) ISA 240 and 250. D) ISA 530 and 580. Show Answer Correct Answer: B) ISA 700 and 705. 16. Information that allows users to know whether amounts owed to them will be paid, is an aspect of financial statements that is the focus of users of these financial statements: A) Investor. B) Government. C) Employee. D) Suppliers and other business creditors. Show Answer Correct Answer: D) Suppliers and other business creditors. 17. What is the limit of number of directors in a public company? A) 20. B) 3. C) 15. D) 10. Show Answer Correct Answer: D) 10. 18. Term to describe the amount of an expense due in an accounting period which is unpaid at the end of that period A) Accrual. B) Prepayment. C) Unpaid income. D) Expense. Show Answer Correct Answer: A) Accrual. 19. Disadvantages of Harmonization: A) Significant differences in current standards and the political burden of eliminating differences. B) Overcoming "Nationalism" and tradition and May not provide significant benefits. C) Will cause "Standards Overload" for some companies and varying Standards that can be accepted from different places. D) A, B, C are all true. Show Answer Correct Answer: D) A, B, C are all true. 20. The adjusting entry to record an accrued revenue results in which of the following types of accounts being debited and credited? A) Asset/Revenue. B) Expense/Asset. C) Asset/Liability. D) Expense/Liability. Show Answer Correct Answer: A) Asset/Revenue. 21. Arthur, Florence, and Max are studying for their business exam. They come across a question about financial statements. They want to know which financial statement provides information about a company's sources of income and expenses. Can you help them? A) Statement of Financial Position. B) Statement of Income. C) Cash Flow Statement. D) Balance Sheet. Show Answer Correct Answer: B) Statement of Income. 22. Interest paid is classified as an operating cash flow under: A) US GAAP but may be classified as either operating or investing cash flows under IFRS. B) IFRS but may be classified as either operating or investing cash flows under US GAAP. C) US GAAP but may be classified as either operating or financing cash flows under IFRS. D) None of above. Show Answer Correct Answer: C) US GAAP but may be classified as either operating or financing cash flows under IFRS. 23. Listed below are some characteristics of financial information.1. Relevance2. Consistency3. Faithful representation4. AccuracyWhich TWO of these are qualitative characteristics of financial information according to the IASB'sConceptual Framework for Financial Reporting? A) 1 and 2. B) 2 and 4. C) 3 and 4. D) 1 and 3. Show Answer Correct Answer: D) 1 and 3. 24. A receivables ledger control account had a closing balance of $ 8, 500. It contained a contra to the payables ledger of $ 400, but this had been entered on the wrong side of the control account.What should be the correct balance on the control account? A) $ 7, 700 debit. B) $ 8, 100 debit. C) $ 8, 400 debit. D) $ 8, 900 debit. Show Answer Correct Answer: A) $ 7, 700 debit. 25. An expenditure which benefits only the current period is known as: A) Deferred expenditure. B) Current expenditure. C) Revenue expenditure. D) Capital expenditure. Show Answer Correct Answer: C) Revenue expenditure. 26. What is a possible danger if politics plays too big a role in developing IFRS? A) Financial reporting standards that are issued that are not truly generally accepted. B) Individuals may influence the standards. C) User groups become active. D) The IASB delegates its authority to elected officials. Show Answer Correct Answer: A) Financial reporting standards that are issued that are not truly generally accepted. 27. Which of the following are not enhancing qualitative characteristics of useful financial information as identified in The Conceptual Framework?Item 1 PredictiveItem 2 InfluencingItem 3 ComparableItem 4 Relevance A) I, II, and III only. B) I, II and IV only. C) I, III and IV only. D) II, III and IV only. Show Answer Correct Answer: B) I, II and IV only. 28. Which statement is incorrect regarding the Conceptual Framework for Financial Reporting? A) Serves as a guide in developing future PFRSs. B) Serves as a guide in resolving accounting issues that are not addressed directly in existing PFRSs. C) Is not a PFRS and hence does not define standards for any particular measurement or disclosure issue. D) Prevails in cases where there is conflict with a PFRS. Show Answer Correct Answer: D) Prevails in cases where there is conflict with a PFRS. 29. Which of the following elements of financial statements is most closely related to measurement of financial position? A) Equity. B) Income. C) Expenses. D) None of above. Show Answer Correct Answer: A) Equity. 30. Revenue is recognized in the accounting period in which the settlement of the obligation has been carried out/fulfilled A) Correct. B) Salah. Show Answer Correct Answer: A) Correct. ← PreviousNext →Related QuizzesAccounting QuizzesFinance QuizzesFinancial Reporting Quiz 1Financial 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