IFRS Standards: The Quiz

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Paul Pacter
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Quizzes Created: 2 | Total Attempts: 171,003
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  • 1/216 Questions

    A statement of financial position is required as part of a complete set of IFRS financial statements.

    • True
    • False
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About This Quiz

You will be asked to answer 10 true-false questions selected randomly from a pool of over 200 questions. The questions are based on the information in the 2017 edition of ‘Pocket Guide to IFRS® Standards:The Global Financial Reporting Language’ (the “Guide”). For most questions, the answer is contained directly in the Guide. For some questions, the Guide includes enough information to enable an ‘educated guess’ at the answer.
In answering the questions:
-- assume that the amounts involved are material,
-- assume normal circumstances rather than a possible exceptional case, and
-- base your answer on the latest version of full IFRS Standards unless the question specifically asks about the IFRS for SMEs® Standard.
You will be able to review your answers before final submission. After you submit your answers, you will immediately get a grade and be shown the correct answers. If you quit before answering all 10 questions, you will not be graded.

The questions and answers have not been reviewed or approved by the International Accounting Standards Board or IFRS Foundation and should not be relied on as an official interpretation of IFRS Standards.

Entire quiz © Copyright IFRS Foundation. All rights reserved.
By taking this quiz you consent to the IFRS Foundation processing and storing any personal details you provide in accordance with the Foundation's Terms and Conditions and Privacy and Cookies Policy on its website.

IFRS Standards: The Quiz - Quiz

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  • 2. 

    Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 16 Property, Plant and Equipment.

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  • 3. 

    Because companies seek capital at the best price wherever it is available, and investors and lenders seek investment opportunities wherever they can get the best returns commensurate with the risks involved, investors and lenders need financial information that is relevant, reliable and comparable across borders.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The explanation for the given correct answer is that companies seek capital at the best price wherever it is available, and investors and lenders seek investment opportunities wherever they can get the best returns commensurate with the risks involved. In order to make informed decisions, investors and lenders need financial information that is relevant, reliable, and comparable across borders. This ensures that they can assess the potential risks and returns of investments in different countries and make optimal investment decisions.

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  • 4. 

    Many academic studies of the use of IFRS Standards have concluded that IFRS Standards have improved efficiency of capital markets or promoted cross-border investment.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    For example, see Ann Tarca, 'The Case for Global Accounting Standards: Arguments and Evidence'. http://www.ifrs.org/Use-around-the-world/Documents/Case-for-Global-Accounting-Standards-Arguments-and-Evidence.pdf.

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  • 5. 

    Consolidated financial statements are the financial statements of a group of companies in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Yes. See IFRS 10 Consolidated Financial Statements.

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  • 6. 

    A summary of significant accounting policies must be included in the notes to IFRS financial statements.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Required by IAS 1 Presentation of Financial Statements.

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  • 7. 

    If an item of property, plant, and equipment is impaired, the entity must reduce that item’s carrying amount to its recoverable amount, and recognise an impairment loss.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 36 Impairment of Assets.

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  • 8. 

    IFRS Standards are developed by the International Accounting Standards Board, which operates under the independent, public-interest IFRS Foundation and is not an agency of any government.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The explanation for the given correct answer is that IFRS Standards are indeed developed by the International Accounting Standards Board (IASB). The IASB operates independently under the IFRS Foundation, which is a public-interest organization and not affiliated with any government agency. Therefore, the statement is true.

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  • 9. 

    The mission of the IFRS Foundation is to develop, in the public interest, a single set of high quality global accounting standards that bring transparency, accountability and efficiency to financial markets around the world.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The mission of the IFRS Foundation is to develop a single set of high-quality global accounting standards that bring transparency, accountability, and efficiency to financial markets worldwide. This implies that the statement is correct, as it aligns with the stated mission of the foundation.

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  • 10. 

    Under IFRS Standards, when one company (the parent) controls another company (the subsidiary), the parent is required to prepare consolidated financial statements (with limited exceptions).

    • True

    • False

    Correct Answer
    A. True
    Explanation
    This is the core principle in IFRS 10 Consolidated Financial Statements.

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  • 11. 

    Under IFRS Standards, the objective of financial reporting is to provide financial information about a company that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to that company.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See Chapter 1 'The objective of financial reporting' in The Conceptual Framework for Financial Reporting.

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  • 12. 

    Under IFRS Standards, in a business combination the acquiring company generally recognises the assets acquired, and the liabilities assumed, at their fair values on the acquisition date.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IFRS 3 Business Combinations.

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  • 13. 

    Once a new IFRS Standard or major amendment has been in place for several years, the International Accounting Standards Board conducts a Post-implementation Review to assess whether the Standard is achieving its objective and, if not, what amendments should be considered.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See the IASB Due Process Handbook available on its website.

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  • 14. 

    The use of one set of high quality standards by companies throughout the world improves the comparability and transparency of financial information and reduces financial statement preparation costs.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement suggests that using one set of high-quality standards globally benefits companies by making financial information more comparable and transparent, and also reduces the costs associated with preparing financial statements. This implies that having a standardized framework for financial reporting allows for easier analysis and understanding of financial information, leading to more informed decision-making by stakeholders. Additionally, using a common set of standards eliminates the need for companies to adapt their financial reporting practices to different jurisdictions, thus reducing the costs involved in complying with multiple reporting requirements.

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  • 15. 

    Under IFRS 16 Leases, a lessee recognises an asset representing its right to use the underlying leased asset and a liability representing its obligation to make lease payments.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IFRS 16 Leases.

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  • 16. 

    More than 100 jurisdictions currently require IFRS Standards for all or most domestic listed companies.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See the profiles on use of IFRS Standards in jurisdictions around the world on the IFRS Foundation's website: www.ifrs.org then click on 'Who Uses IFRS?'

    Rate this question:

  • 17. 

    Under IFRS Standards, a company must disclose information about its relationships and transactions with related parties and about compensation of key management personnel.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 24 Related Party Disclosures.

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  • 18. 

    In a 2012 report, the Trustees of the IFRS Foundation reaffirmed their belief that a single set of IFRS Standards is in the best interests of the global economy.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The report is on the IFRS Foundation's website. Go to 'About us' then 'IFRS Foundation' then 'Governance and oversight' then 'Strategy Review '.

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  • 19. 

    At the end of each reporting period an entity must translate foreign currency monetary items (such as cash, investments, and accounts receivable and payable) at the closing exchange rate (the rate at the end of the reporting period).

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 21 The Effects of Changes in Foreign Exchange Rates.

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  • 20. 

    A company that adopts IFRS Standards for the first time must measure and disclose how the transition from its previous national standards to IFRS Standards affected the entity’s reported financial position, financial performance, and cash flows.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IFRS 1 First-time Adoption of International Financial Reporting Standards.

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  • 21. 

    Under IFRS Standards, inventories are normally measured at the lower of cost and net realisable value.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 2 Inventories.

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  • 22. 

    If an IFRS Standard does not specifically address a particular kind of transaction, IFRS Standards require management to use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

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  • 23. 

    Under IFRS Standards, revenue from providing services to a customer is typically recognised over a period of time--the period in which the services are provided.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IFRS 15 Revenue from Contracts with Customers.

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  • 24. 

    For statement of cash flows, operating activities are the principal revenue-producing activities of the entity.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 7 Statement of Cash Flows.

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  • 25. 

    Good accounting standards enable capital markets to allocate funds more efficiently.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Good accounting standards enable capital markets to allocate funds more efficiently by providing reliable and transparent financial information. These standards ensure that financial statements are prepared in a consistent and accurate manner, allowing investors to make informed decisions. With reliable accounting information, investors can assess the financial health and performance of companies, which helps in the efficient allocation of funds. Additionally, good accounting standards promote trust and confidence in the financial markets, attracting more investors and facilitating capital flow.

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  • 26. 

    In most of the jurisdictions that have adopted IFRS Standards, the auditor’s report refers to conformity with International Financial Reporting Standards.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See the profiles on use of IFRS Standards in jurisdictions around the world on the IFRS Foundation's website: www.ifrs.org then click on 'Who Uses IFRS?'

    Rate this question:

  • 27. 

    IFRS Standards require that share-based payment transactions, including the issue of shares and share options, must be recognised in the financial statements.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IFRS 2 Share-based Payment.

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  • 28. 

    Derivative financial instruments ('derivatives') can be assets or liabilities under IFRS Standards.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments.

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  • 29. 

    Under IFRS Standards, inventories must be written down to net realisable value if net realisable value is below cost.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 2 Inventories.

    Rate this question:

  • 30. 

    If a country does not have a stock exchange, it does not benefit from IFRS Standards.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    IFRS Standards (including the IFRS for SMEs Standard) are designed to provide relevant and reliable information for all investment, lending, and credit decisions, not just investment decisions by stock exchange investors. Many non-public companies use IFRS Standards.

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  • 31. 

    The requirements in IFRS Standards (Standards and mandatory application guidance) are available for free download on the IFRS Foundation's website.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The requirements in IFRS Standards (Standards and mandatory application guidance) are available for free download on the IFRS Foundation's website.

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  • 32. 

    A company that adopts IFRS Standards for the first time in 2016 must also restate the disclosures relating to 2015 that are included in the notes to its 2016 financial statements (with some exceptions).

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IFRS 1 First-time Adoption of International Financial Reporting Standards.

    Rate this question:

  • 33. 

    An automobile dealer sells new cars alone, sells car maintenance service alone, and sells a package of a new car plus full maintenance service for three years, five years, or as long as the buyer owns the car. When it sells a package of a new car plus a period of full maintenance service, IFRS Standards require the dealer to account for the car sale separately up front and account for the service revenue over the service period.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IFRS 15 Revenue.

    Rate this question:

  • 34. 

    An IFRS Foundation study of over 140 jurisdictions found that over 80% of the jurisdictions already require the use of IFRS Standards by all or most public companies.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The given statement is true. According to an IFRS Foundation study, more than 80% of jurisdictions already have a requirement for the use of IFRS Standards by all or most public companies. This indicates that a majority of countries have adopted IFRS as the accounting standard for their public companies.

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  • 35. 

    The International Accounting Standards Board publishes its proposed Standards for public comment in a document called an ‘Exposure Draft’.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The International Accounting Standards Board (IASB) releases its proposed Standards for public feedback through an 'Exposure Draft'. This document allows stakeholders and the public to review and provide comments on the proposed Standards before they are finalized and implemented. Therefore, the statement that the IASB publishes its proposed Standards in an 'Exposure Draft' is true.

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  • 36. 

    A company purchased a license to use, for five years, computer software developed by another company. Under IFRS Standards the license is recognised as an asset and its cost amortised over the five years.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Under IAS 38 Intangible Assets, intangible assets with finite lives are amortised.

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  • 37. 

    The International Accounting Standards Board monitors the implementation of new or amended IFRS Standards to identify any implementation problems that may need to be addressed by an IFRIC Interpretation or a narrow-scope amendment to the Standard.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because the International Accounting Standards Board (IASB) is responsible for overseeing the implementation of new or amended International Financial Reporting Standards (IFRS). This includes monitoring the application of these standards to identify any issues that may arise during implementation. If any problems are identified, the IASB may address them by issuing an IFRIC Interpretation or making a narrow-scope amendment to the standard. This ensures that the standards are effectively implemented and any potential issues are resolved.

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  • 38. 

    Under IFRS Standards, assets classified as 'held for sale' must be presented separately in the statement of financial position.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

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  • 39. 

    The European Union Accounting Regulation requires that all European companies whose securities trade in a regulated securities market must use IFRS Standards as adopted by the EU in their consolidated financial statements.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    You can find the Regulation here: http://ec.europa.eu/internal_market/accounting/legal_framework/regulations_adopting_ias/index_en.htm

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  • 40. 

    The comment letters that the International Accounting Standards Board receives on discussion documents and Exposure Drafts are public documents, available on the IFRS Foundation website.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The links are on the individual project pages. The 'Work Plan' has one page with links to all projects since 2006.

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  • 41. 

    Most of the listed companies on the main board of the stock exchange in Switzerland use IFRS Standards.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See the profiles on use of IFRS Standards in jurisdictions around the world on the IFRS Foundation's website: www.ifrs.org then click on 'Who Uses IFRS?'

    Rate this question:

  • 42. 

    Under IFRS Standards, a company applies the same accounting policies in quarterly and half-yearly reports as in its most recent annual report.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 34 Interim Financial Reporting.

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  • 43. 

    A statement of cash flows is required as part of a complete or condensed set of financial statements included in an interim financial report prepared under IFRS Standards.  

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 34 Interim Financial Reporting.

    Rate this question:

  • 44. 

    A deferred tax asset is recognised for the carryforward of unused tax losses and unused tax credits to the extent that it is probable that the company can use those carryforwards to reduce future tax payments.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 12 Income Taxes.

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  • 45. 

    An intangible asset is an identifiable non-monetary asset without physical substance.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 38 Intangible Assets.

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  • 46. 

    A warranty obligation is an example of a provision under IFRS Standards.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

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  • 47. 

    The International Accounting Standards Committee (IASC) began setting International Accounting Standards (now known as IAS Standards) in 1973.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The International Accounting Standards Committee (IASC) did indeed start setting International Accounting Standards (now known as IAS Standards) in 1973. This indicates that the statement is accurate and true.

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  • 48. 

    Under IFRS Standards, the recoverable amount of recognised goodwill must be estimated each year, and an impairment loss is recognised if the recoverable amount is less than the carrying amount.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Under IFRS Standards, the recoverable amount of recognised goodwill must be estimated each year. This means that companies need to assess the value of their goodwill annually to determine if it is still recoverable. If the estimated recoverable amount is less than the carrying amount (the value at which the goodwill is recorded on the balance sheet), an impairment loss must be recognized. This ensures that the carrying amount of goodwill is not overstated and reflects its true value in the financial statements. Therefore, the statement "Under IFRS Standards, the recoverable amount of recognised goodwill must be estimated each year, and an impairment loss is recognized if the recoverable amount is less than the carrying amount" is true.

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  • 49. 

    If a contract with a customer requires an entity to deliver two distinct goods or services, it must recognise revenue separately for each of the two goods or services when they are delivered to the customer--even if the customer pays a single lump-sum amount up front.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    See IFRS 15 Revenue from Contracts with Customers.

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  • Mar 22, 2023
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