This quiz works best with JavaScript enabled. Home > Finance > Accounting > Financial Reporting > Financial Reporting – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Reporting Quiz 3 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Inventory cost is least likely to include: A) Production-relatedstorage costs. B) Costs incurred as a result of normal waste of materials. C) Transportation costs of shipping inventory to customers. D) None of above. Show Answer Correct Answer: C) Transportation costs of shipping inventory to customers. 2. Which is not information presented in the Statement of Financial Position? A) Ebitda. B) Assets. C) Liabilities. D) Equity. Show Answer Correct Answer: A) Ebitda. 3. From 2015 to 2019, what fraction of the total total cash flow from operations (previous answer) was spent on capital expenditures? A) 93.4%. B) 109.3%. C) 107.1%. D) 91.5%. Show Answer Correct Answer: C) 107.1%. 4. What role does financial reporting play in improving a company's credibility? A) It has no impact on the company's credibility. B) It provides irrelevant data to stakeholders. C) It demonstrates transparency and accountability to stakeholders. D) It allows the company to hide financial information. Show Answer Correct Answer: C) It demonstrates transparency and accountability to stakeholders. 5. Audit committee shall constitute minimum ..... directors where independent directors forming majority A) Four. B) Six. C) Five. D) Three. Show Answer Correct Answer: D) Three. 6. Money received from customers for products to be delivered in the future isrecorded as: A) Revenue and an asset. B) An asset and a liability. C) Revenue and a liability. D) None of above. Show Answer Correct Answer: B) An asset and a liability. 7. Information is said to be relevant if it can make a difference in the decisions made by users of the information. Based on the Financial Reporting Conceptual Framework, financial information can make a difference in decision making when it has the following values:(1) Estimated value (2) Comparative value (3) Historical value (4) Confirmatory value A) And (4). B) And (3). C) And (4). D) And (3). Show Answer Correct Answer: A) And (4). 8. Which statement tells you about the profit and loss of the company for the period? A) Cash flow statement. B) Income statement. C) Balance sheet. D) All of them. Show Answer Correct Answer: B) Income statement. 9. A Company issuing its annual financial reports within one month of the end of the year is an example of which enhancing quality of accounting information? A) Comparability. B) Timeliness. C) Understandability. D) Verifiability. Show Answer Correct Answer: B) Timeliness. 10. Norris Manufacturing has a current ratio of 1.3:1. The industry standard for companies similar to Norris Manufacturing is 2.5:1. This means that Norris Manufacturing: A) Lacks the ability to pay its current liabilities. B) Has a higher-than-average financial risk when compared to other firms in its industry. C) Has a lower-than-average financial risk when compared to other firms in its industry. D) Is operating efficiently because of its excessive cash flow. Show Answer Correct Answer: B) Has a higher-than-average financial risk when compared to other firms in its industry. 11. Which of the following is a key quality of a good financial report? A) Exaggerating financial achievements. B) Providing biased information to favor stakeholders. C) Presenting accurate and reliable financial information. D) Emphasizing future projections over past performance. Show Answer Correct Answer: C) Presenting accurate and reliable financial information. 12. Financial reports must accurately reflect financial conditions = free from error A) Correct. B) Salah. Show Answer Correct Answer: A) Correct. 13. What is the Return on Investments for 9M 2022 on Group items?ROI=(Net Return on Investment/Cost of Investment)*100%*Time effectAnnualization1st Q (12/3 =4) 2nd Q (12/6=2) 3rd Q (12/9=1, 3333) 4th Q (12/12=1) A) 2%. B) -5%. C) -3%. D) -2%. Show Answer Correct Answer: B) -5%. 14. It was formed last 2001 which replaces the International Accounting Standards Committee. A) FRSC. B) IASCB. C) ASC. D) FISH. Show Answer Correct Answer: B) IASCB. 15. Which concept states that "You have to report accounting info at regular intervals?" A) Entity. B) Conservatism. C) Reliability. D) Time-period. Show Answer Correct Answer: D) Time-period. 16. Viewed from the point of view of its function, accounting is defined as..... A) A tool for recording all transactions or events that occur within the company. B) An activity of providing important company financial data for parties who need it. C) A series of activities that include recording and reporting financial transactions that occur within the company. D) A collection of records regarding company financial transactions that occurred in a certain period. E) Overview of company finances as the responsibility of company leadership. Show Answer Correct Answer: B) An activity of providing important company financial data for parties who need it. 17. Which costs incurred with the purchase of property and equipment areexpensed? A) Delivery charges. B) Installation and testing. C) Training required to use the property and equipment. D) None of above. Show Answer Correct Answer: C) Training required to use the property and equipment. 18. Financial information must be complete, neutral and free from errors. This is in accordance with the characteristics of financial reports, namely: A) Accurate representation. B) Relevance. C) Comparability. D) Materiality. Show Answer Correct Answer: A) Accurate representation. 19. Which ONE of the following statements correctly describes the contents of the Statement of Financial Position? A) A list of ledger balances shown in debit and credit columns. B) A list of all the assets owned and all the liabilities owed by a business. C) A record of income generated and expenditure incurred over a given period. D) A record of the amount of cash generated and used by a company in a given period. Show Answer Correct Answer: B) A list of all the assets owned and all the liabilities owed by a business. 20. The "fundamental" qualitative characteristics are A) Relevance and reliability. B) Relevance and faithful representation. C) Timeliness and verifiability. D) Understandability and comparability. Show Answer Correct Answer: B) Relevance and faithful representation. 21. 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. 22. Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the A) Comparability characteristic. B) Relevance characteristic. C) Neutrality characteristic. D) Economic entity assumption. Show Answer Correct Answer: D) Economic entity assumption. 23. 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. 24. Collection of all accounts created for your business A) General Journal. B) Income Statement. C) General Ledger. D) Statement of Cash Flows. E) Balance Sheet. Show Answer Correct Answer: C) General Ledger. 25. 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. 26. 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. 27. ..... 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. 28. 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. 29. 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. 30. 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. ← PreviousNext →Related QuizzesAccounting QuizzesFinance QuizzesFinancial Reporting Quiz 1Financial Reporting Quiz 2Financial 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