FA Chapter 4 Quiz

meli ssa
Quiz by , created 9 months ago

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

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meli ssa
Created by meli ssa 9 months ago
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Question 1

Question
An entity shall present:
Answer
  • 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.

Question 2

Question
In accordance with IAS 1, which of the following statements is correct?
Answer
  • 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.

Question 3

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

Question 4

Question
When the classification of items in its financial statements is changed, the entity:
Answer
  • 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.

Question 5

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

Question 6

Question
Items of dissimilar nature or function:
Answer
  • . 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.

Question 7

Question
Materiality depends on:
Answer
  • 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.

Question 8

Question
An entity must disclose comparative information for:
Answer
  • 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

Question 9

Question
An entity’s equity may decrease during a financial period because:
Answer
  • 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.

Question 10

Question
The notes to the accounts can be used for the following, except for:
Answer
  • 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.