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Quiz on FA Chapter 4 Quiz, created by meli ssa on 02/17/2019.

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FA Chapter 4 Quiz

Question 1 of 10

1

An entity shall present:

Select one of the following:

  • The statement of changes in equity following the statement of financial position

  • The statement of comprehensive income first and the statement of changes in equity last.

  • . If presented in two-statement format, the Income Statement immediately followed by the
    statement of comprehensive income

  • The statement of financial position more prominently than the other statements.

Explanation

Question 2 of 10

1

In accordance with IAS 1, which of the following statements is correct?

Select one of the following:

  • For the purpose of classifying assets and liabilities into current and non-current components, the entity’s operating cycle can be more than 12 months

  • . Intangible assets must be presented separately in the statement of financial position.

  • Assets and liabilities can be offset if they arise from the same transaction or event.

  • Assets and liabilities must be presented in the order of decreasing liquidity.

Explanation

Question 3 of 10

1

Which of the following entities appears not to be a going concern?

Select one of the following:

  • Company M’s management is unable to extend its long-term loan, and, given its losses
    in recent years, it is unlikely that it will be able to raise funds through other means to
    pay for the loan

  • Company K’s management intends to liquidate the entity

  • Company L’s management is being forced to cease the entity’s operations due to a major
    change in government policies.

  • . None of the three companies is likely to be a going concern

Explanation

Question 4 of 10

1

When the classification of items in its financial statements is changed, the entity:

Select one of the following:

  • Must not reclassify the comparative amounts unless absolutely necessary.

  • Must reclassify comparative amounts, unless it is impractical to do so.

  • Has an unrestricted choice whether to reclassify the comparative amount or not.

  • . Must preserve consistency in reporting, and no new reclassification should be allowed.

Explanation

Question 5 of 10

1

The information which must be provided so as to properly identify each component of
a set of financial statements does not include:

Select one of the following:

  • The name of the reporting entity

  • The presentation currency and level of rounding used.

  • The country in which the entity operates.

  • The date of the end of the reporting period or the period covered by the financial
    statements.

Explanation

Question 6 of 10

1

Items of dissimilar nature or function:

Select one of the following:

  • . Must be presented separately if they are material.

  • May be aggregated if accompanied by a note to the account explaining the breakdown

  • Must always be presented separately in financial statements

  • Must be aggregated until they are material.

Explanation

Question 7 of 10

1

Materiality depends on:

Select one of the following:

  • The nature of the omission or misstatement

  • The size of the omission or misstatement

  • . Both the nature and size of the omission or misstatement.

  • The higher of 10% of total assets and 10% of total revenue.

Explanation

Question 8 of 10

1

An entity must disclose comparative information for:

Select one of the following:

  • Only the immediate past financial period.

  • Only for material items on the financial statements

  • The previous comparable period for all amounts reported in the financial statements

  • The previous comparable period for all amounts reported in the financial statements, as
    well as any narrative and descriptive information

Explanation

Question 9 of 10

1

An entity’s equity may decrease during a financial period because:

Select one of the following:

  • Other comprehensive income was lower than net profit.

  • There was a new share issuance

  • Total comprehensive income was higher than net profit.

  • . Prior-period errors resulted from overstatement of the previous year’s profits.

Explanation

Question 10 of 10

1

The notes to the accounts can be used for the following, except for:

Select one of the following:

  • Explaining why a certain accounting standard was not followed.

  • Providing disclosures of items not shown on the face of financial statements.

  • Providing additional breakdown of line items on the face of financial statements.

  • Explaining the accounting policies used.

Explanation