International Accounting Test!
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Questions and Answers
- 1.
What does IFRIC stand for?
- A.
International Financial Reporting Issues Committee
- B.
International Financial Recommendation and Interpretations committee
- C.
International Financial Reporting Interpretation Committee
- D.
International Financial Reporting Issues Council
Correct Answer
C. International Financial Reporting Interpretation CommitteeExplanation
The correct answer is International Financial Reporting Interpretation Committee. This committee is responsible for providing guidance on the interpretation and application of International Financial Reporting Standards (IFRS). They address accounting issues that are not specifically addressed in the IFRS framework and provide clarification on existing standards.Rate this question:
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- 2.
Which of the following accounting practices is not permitted by the IAS?
- A.
Capitalization of development expenditure
- B.
The LIFO method of inventory valuation
- C.
Capitalization of certain types of leases
- D.
Capitalization of goodwill
Correct Answer
B. The LIFO method of inventory valuationExplanation
The LIFO (Last-In, First-Out) method of inventory valuation is not permitted by the International Accounting Standards (IAS). The IAS requires the use of either the FIFO (First-In, First-Out) method or the weighted average cost method for inventory valuation. LIFO assumes that the most recently purchased items are sold first, which can result in a mismatch between the reported cost of inventory and its current market value. The IAS believes that FIFO or weighted average cost methods provide a more accurate representation of the cost of inventory.Rate this question:
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- 3.
According to Gray’s (1988) theory, conservatism is most closely associated with:
- A.
High individualism and low uncertainty avoidance
- B.
Strong collectivism and strong uncertainty avoidance
- C.
Low power distance and high individualism
- D.
High power distance and low uncertainty avoidance
Correct Answer
B. Strong collectivism and strong uncertainty avoidanceExplanation
According to Gray's (1988) theory, conservatism is most closely associated with strong collectivism and strong uncertainty avoidance. This means that individuals who are conservative tend to prioritize group harmony and conformity, and they also have a strong preference for clear rules, structure, and stability in order to minimize uncertainty and ambiguity.Rate this question:
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- 4.
Communist accounting was based on:
- A.
Needs of economic and production planning
- B.
Making specified profits as a monopoly producer
- C.
Returning profits to the state as an investor
- D.
The requirements as laid down by the Chartered Russian Accounting Professionals
Correct Answer
A. Needs of economic and production planningExplanation
Communist accounting was based on the needs of economic and production planning. In a communist system, the state controlled all means of production and distribution, so it was essential to have an accounting system that could accurately track and plan for the allocation of resources. This type of accounting focused on meeting the economic needs of the state and ensuring efficient production processes. It was not concerned with making profits as a monopoly producer or returning profits to the state as an investor, as these concepts were not applicable in a communist system. The requirements of the Chartered Russian Accounting Professionals are not mentioned and therefore not relevant to the explanation.Rate this question:
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- 5.
Which of the following are cultural values developed by Hofstede?
- A.
Professionalism
- B.
Statutory control
- C.
Power distance
- D.
Conservatism
Correct Answer
C. Power distanceExplanation
Hofstede developed the cultural value of power distance. Power distance refers to the extent to which less powerful members of a society accept and expect power to be distributed unequally. It measures the level of inequality and hierarchy within a society. Hofstede's research identified power distance as one of the dimensions that influence cultural values and behavior in different countries.Rate this question:
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- 6.
What does IASC (formed in 1973) stand for?
- A.
International Accounting Standards Committee
- B.
International Accounting Standards Commission
Correct Answer
A. International Accounting Standards CommitteeExplanation
IASC stands for International Accounting Standards Committee. This organization was formed in 1973 and was responsible for developing and promoting international accounting standards.Rate this question:
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- 7.
What year IFRS (International Financial Reporting Standards) was formed in?
- A.
2002
- B.
2003
- C.
2001
- D.
2004
Correct Answer
A. 2002Explanation
IFRS (International Financial Reporting Standards) was formed in 2002. This global accounting standard was developed by the International Accounting Standards Board (IASB) to provide a common framework for financial reporting across different countries. It aims to enhance transparency, comparability, and consistency in financial statements, making it easier for investors and stakeholders to understand and analyze financial information. The formation of IFRS in 2002 marked a significant milestone in the harmonization of accounting standards worldwide.Rate this question:
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- 8.
Main purpose of IFRS (IASC before 2002)?
- A.
UNIFORMITY in Accounting Principles Internationally
- B.
Objectivity in Accounting Principles Internationally
- C.
Matching principle in Accounting Principles Internationally
Correct Answer
A. UNIFORMITY in Accounting Principles InternationallyExplanation
The main purpose of IFRS (IASC before 2002) is to achieve uniformity in accounting principles internationally. This means that the standards aim to establish a common set of rules and guidelines that can be followed by companies across different countries, ensuring consistency and comparability in financial reporting. By promoting uniformity, IFRS helps facilitate international trade and investment, as it allows investors, analysts, and other stakeholders to easily understand and compare financial information from different countries.Rate this question:
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- 9.
China implemented IFRS (for all listed companies) in:
- A.
January 2007
- B.
January 2008
- C.
January 2009
Correct Answer
A. January 2007Explanation
China implemented IFRS (International Financial Reporting Standards) for all listed companies in January 2007. This means that from that date onwards, Chinese listed companies were required to prepare and present their financial statements in accordance with the IFRS framework. This adoption of IFRS by China aimed to enhance transparency, comparability, and quality of financial reporting in the country, aligning it with global accounting standards.Rate this question:
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- 10.
In what year Europe has adopted IFRS first time (International Financial Reportin Standards)?
- A.
Year ended 31 December 2006
- B.
Year ended 31 December 2007
Correct Answer
A. Year ended 31 December 2006Explanation
Europe adopted IFRS for the first time in the year ended 31 December 2006.Rate this question:
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- 11.
USA - Financial Accounting Standards Board (FASB) is:
- A.
Public-sector organization that determines accounting standards
- B.
Private-sector organization that determines accounting standards
Correct Answer
B. Private-sector organization that determines accounting standardsExplanation
The correct answer is "Private-sector organization that determines accounting standards." This means that the Financial Accounting Standards Board (FASB) is an organization that is independent of the government and is responsible for establishing and improving financial accounting and reporting standards for private-sector companies in the United States.Rate this question:
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- 12.
USA. SEC - The Securities and Exchange Commission is
- A.
A government agency - underpins FASB`s authority
- B.
A non government agency - underpins FASB`s authority
Correct Answer
A. A government agency - underpins FASB`s authorityExplanation
The correct answer is a government agency - underpins FASB's authority. The Securities and Exchange Commission (SEC) is a government agency that regulates the securities industry in the United States. It has the authority to establish accounting standards for publicly traded companies through its oversight of the Financial Accounting Standards Board (FASB). The SEC's role in underpinning FASB's authority ensures that accounting standards are set in accordance with the needs of the securities industry and the protection of investors.Rate this question:
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- 13.
How many steps US GAAP implement in asset impairment?
- A.
Single-step impairment
- B.
Two-step impairment
- C.
Tree-step impairment
Correct Answer
B. Two-step impairmentExplanation
US GAAP implements a two-step impairment process for assessing asset impairment. In the first step, the entity determines if there is an indication of impairment by considering events or changes in circumstances. If an indication exists, the entity proceeds to the second step, which involves comparing the carrying amount of the asset to its fair value. If the carrying amount exceeds the fair value, an impairment loss is recognized. This two-step approach ensures that impairment is appropriately assessed and recognized in financial statements.Rate this question:
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- 14.
US GAAP permits LIFO?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
US GAAP (Generally Accepted Accounting Principles) does permit the use of LIFO (Last-In, First-Out) inventory valuation method. LIFO assumes that the most recently purchased or produced items are sold first, which can result in a lower cost of goods sold and higher taxable income during periods of inflation. However, it is important to note that LIFO is not allowed under International Financial Reporting Standards (IFRS).Rate this question:
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- 15.
Which standards are non-specific about the timing and measurement of recognition; lacks industry-specific guidance?
- A.
IFRS
- B.
US GAAP
Correct Answer
A. IFRSExplanation
IFRS (International Financial Reporting Standards) is a set of accounting standards that are used globally. Unlike US GAAP (Generally Accepted Accounting Principles), IFRS does not provide specific guidance on the timing and measurement of recognition, and it also lacks industry-specific guidance. This means that IFRS allows for more flexibility and interpretation when it comes to recognizing and measuring financial transactions, which can vary across different industries and countries.Rate this question:
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- 16.
Debt covenant (agreement) violations must be cured by fiscal year end.
- A.
IFRS
- B.
US GAAP
Correct Answer
A. IFRSExplanation
Under IFRS, debt covenant violations must be resolved and cured by the end of the fiscal year. This means that any breaches or non-compliance with the terms and conditions of debt agreements must be rectified before the financial year ends. This requirement ensures that companies adhere to the terms of their debt agreements and take necessary actions to address any violations within a specific timeframe. US GAAP may have different requirements or guidelines regarding the treatment of debt covenant violations.Rate this question:
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- 17.
What is the barrier to International harmonisation?
- A.
USA
- B.
Comparability
- C.
Easier/Cheaper investment
- D.
Lower Audit cost
Correct Answer
A. USAExplanation
The correct answer is USA because the United States has its own set of accounting standards known as Generally Accepted Accounting Principles (GAAP), which differ from the International Financial Reporting Standards (IFRS) used by many other countries. This creates a barrier to international harmonization as companies operating in different countries may have to prepare separate financial statements according to the different accounting standards, making it difficult to compare and analyze financial information across borders.Rate this question:
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- 18.
Invest in an index-based portfolio, ignore company information. What investment strategy is it?
- A.
Active
- B.
Passive
- C.
Mixed
Correct Answer
B. PassiveExplanation
The correct answer is "Passive" because investing in an index-based portfolio means following a passive investment strategy. This strategy involves investing in a broad market index, such as the S&P 500, and holding the same securities in the same proportion as the index. It does not involve actively selecting individual stocks or analyzing company information. Instead, it aims to replicate the performance of the overall market.Rate this question:
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- 19.
Why invest internationally?
- A.
Portfolio diversification internationally
- B.
Growth industries
- C.
Market move similarly but not with perfect correlation
Correct Answer(s)
A. Portfolio diversification internationally
B. Growth industries
C. Market move similarly but not with perfect correlationExplanation
Investing internationally offers several benefits. One of the main reasons is portfolio diversification. By investing in different countries, you can spread your investment risk across various economies and industries, reducing the impact of any single market downturn. Additionally, investing in growth industries in other countries can provide opportunities for higher returns. Lastly, while markets may move similarly, they do not have a perfect correlation. This means that international investments can provide a hedge against domestic market fluctuations, further diversifying your portfolio.Rate this question:
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- 20.
What are the Benefits of foreign listing?
- A.
Need to raise additional equity finance
- B.
Local stock market too small or lacks liquidity
- C.
Overcome national barriers
- D.
Control and oversight systems
- E.
Registration & Regulation
- F.
Listing to provide equity finance for overseas acquisition
Correct Answer(s)
A. Need to raise additional equity finance
B. Local stock market too small or lacks liquidity
C. Overcome national barriers
F. Listing to provide equity finance for overseas acquisitionExplanation
Foreign listing provides several benefits. Firstly, it allows companies to raise additional equity finance, which can be used for various purposes such as expansion or investment. Secondly, if the local stock market is small or lacks liquidity, foreign listing provides access to larger and more liquid markets, attracting more investors. Thirdly, it helps overcome national barriers, allowing companies to expand their reach and tap into international markets. Lastly, listing can provide equity finance specifically for overseas acquisitions, enabling companies to fund their expansion plans.Rate this question:
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- 21.
What are the Costs of foreign listening?
- A.
Underwriting (insurance)of new offers
- B.
Registration and regulation
- C.
Initial disclosure requirements
- D.
Control & oversight systems
- E.
Clearance & settlements of share deals
- F.
Local stock market too small or lacks liquidity
Correct Answer(s)
A. Underwriting (insurance)of new offers
B. Registration and regulation
C. Initial disclosure requirements
D. Control & oversight systems
E. Clearance & settlements of share dealsExplanation
This answer lists the costs associated with foreign listening, which include underwriting (insurance) of new offers, registration and regulation, initial disclosure requirements, control and oversight systems, and clearance and settlements of share deals. These costs are necessary for companies to comply with the regulations and requirements of foreign stock markets when listing their shares. Additionally, the answer mentions that a local stock market may be too small or lack liquidity, which can also be a cost or disadvantage for companies considering foreign listing.Rate this question:
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- 22.
Have a look at facts about London Stock Exchange:
- A.
Accept all EU accounting under "mutual(relative) recognition"
- B.
Don`t accept Japanese accounting
- C.
Accepts US GAAP and IASs(International Accounting Standards)
- D.
Strong element of foreign listing in London.
Correct Answer(s)
A. Accept all EU accounting under "mutual(relative) recognition"
C. Accepts US GAAP and IASs(International Accounting Standards)
D. Strong element of foreign listing in London.Explanation
The London Stock Exchange accepts all EU accounting under "mutual(relative) recognition", which means that companies listed on the exchange that follow EU accounting standards are accepted. Additionally, the exchange accepts US GAAP and IASs (International Accounting Standards), which allows companies following these standards to be listed. Furthermore, there is a strong element of foreign listing in London, indicating that many non-UK companies choose to list on the London Stock Exchange.Rate this question:
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- 23.
SEC (The Securities & Exchange Commission) regulates not all of listing on US exchanges?
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The SEC (Securities and Exchange Commission) does regulate all listings on US exchanges. The SEC is responsible for enforcing federal securities laws and ensuring that companies follow regulations and disclose accurate information to investors. This includes overseeing the listing process and monitoring the trading activities of listed companies. Therefore, the correct answer is False.Rate this question:
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- 24.
Meaning of "transparency" that users are fully informed on:
- A.
Process of preparing information
- B.
Procedures, e.g. data collection
- C.
Assumptions
- D.
Assurance/audit
Correct Answer(s)
A. Process of preparing information
B. Procedures, e.g. data collection
C. Assumptions
D. Assurance/auditExplanation
Transparency refers to the state of being fully informed or being able to see through something. In the context of the given options, transparency means that users are fully informed about the process of preparing information, the procedures involved (such as data collection), the assumptions made, and the assurance or audit processes in place. This implies that users have access to all the necessary information and can understand the entire process and its components.Rate this question:
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- 25.
Evaluation of transparency. Standard & Poor`s gives transparency and disclosure score based on:
- A.
Assumption.
- B.
Audit.
- C.
Ownership structure and investor relations.
- D.
Financial transparency and disclosure.
- E.
Board and management structure and processes.
Correct Answer(s)
C. Ownership structure and investor relations.
D. Financial transparency and disclosure.
E. Board and management structure and processes.Explanation
Standard & Poor's evaluates transparency by considering various factors such as ownership structure and investor relations, financial transparency and disclosure, and board and management structure and processes. These factors play a crucial role in determining the level of transparency and disclosure provided by a company. By assessing these aspects, Standard & Poor's can provide a score that reflects the company's transparency and helps investors make informed decisions.Rate this question:
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- 26.
What does the Remuneration report consist?
- A.
What are the senior managers/directors earning from the company?
- B.
Does their performance justify the remuneration?
- C.
Disclosure of policy for payment
- D.
Disclosure of amounts received by each
Correct Answer(s)
A. What are the senior managers/directors earning from the company?
B. Does their performance justify the remuneration?
C. Disclosure of policy for payment
D. Disclosure of amounts received by eachExplanation
The Remuneration report consists of several components. It includes information about what senior managers/directors are earning from the company, whether their performance justifies the remuneration, the disclosure of the policy for payment, and the disclosure of the amounts received by each individual. This report provides transparency and accountability regarding the compensation of senior executives and ensures that their pay is in line with their performance and the company's policies.Rate this question:
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- 27.
Operation of IASB?
- A.
Head office in London
- B.
14 members, technical expertise
- C.
Issues Standards (IFRS)and interpretations
- D.
IFRICs (International Financial Reporting Interpretation Committee)
- E.
Standard Advisory Council - wide geographical representation
Correct Answer(s)
A. Head office in London
B. 14 members, technical expertise
C. Issues Standards (IFRS)and interpretations
D. IFRICs (International Financial Reporting Interpretation Committee)
E. Standard Advisory Council - wide geographical representationExplanation
The IASB operates with its head office in London and consists of 14 members who have technical expertise. They are responsible for issuing Standards (IFRS) and interpretations, as well as overseeing the International Financial Reporting Interpretation Committee (IFRICs). Additionally, the IASB has a Standard Advisory Council that ensures wide geographical representation.Rate this question:
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- 28.
What does IAS 2 (Inventories) stand for?
- A.
Lower of cost and net realizable value
- B.
Costs include purchase cost, conversion cost and other costs to bring to present condition and location
- C.
FIFO or average cost
- D.
LIFO is permitted
Correct Answer(s)
A. Lower of cost and net realizable value
B. Costs include purchase cost, conversion cost and other costs to bring to present condition and location
C. FIFO or average costExplanation
IAS 2 (Inventories) stands for Lower of cost and net realizable value. This means that inventories should be valued at the lower of their cost or their net realizable value. Additionally, the costs included in the valuation of inventories should cover the purchase cost, conversion cost, and other costs necessary to bring the inventories to their present condition and location. The method of valuing inventories can be either FIFO (First-In, First-Out) or average cost.Rate this question:
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- 29.
In what year SEC allows foreign private issuers to report using IFRS, dropping the GAAP reconciliation requirement?
- A.
2005
- B.
2007
- C.
2009
Correct Answer
B. 2007Explanation
In 2007, the SEC allowed foreign private issuers to report using IFRS, dropping the GAAP reconciliation requirement. This means that foreign companies could now report their financial statements using International Financial Reporting Standards (IFRS) without having to reconcile them to Generally Accepted Accounting Principles (GAAP). This change aimed to reduce the burden on foreign companies and promote consistency in financial reporting across different jurisdictions.Rate this question:
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- 30.
What are the Barriers to International Harmonisation?
- A.
Actual implementation of full Standards or all Standards may not occur.
- B.
Culture
- C.
USA
- D.
Initial costs of implementation (management,...)
- E.
Difficult to chose the enforcer of international standards
- F.
Global investors
- G.
Job mobility
Correct Answer(s)
A. Actual implementation of full Standards or all Standards may not occur.
B. Culture
C. USA
D. Initial costs of implementation (management,...)
E. Difficult to chose the enforcer of international standardsExplanation
The barriers to international harmonization include the actual implementation of full standards or all standards may not occur, cultural differences, the influence of the USA, the initial costs of implementation, the difficulty in choosing the enforcer of international standards, the concerns of global investors, and job mobility. These factors can hinder the process of achieving harmonization across different countries and industries, making it challenging to establish consistent standards and practices on an international level.Rate this question:
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- 31.
What authority does regulate all listings on US exchanges?
- A.
SEC (Securities and Exchange Commission)
- B.
ADR (American Depository Receipt)
- C.
US GAAP
Correct Answer
A. SEC (Securities and Exchange Commission)Explanation
The correct answer is SEC (Securities and Exchange Commission). The SEC is the regulatory authority that oversees and regulates all listings on US exchanges. They ensure that companies comply with the necessary regulations and disclosure requirements to protect investors and maintain the integrity of the market. The SEC plays a crucial role in maintaining transparency and fairness in the US stock market.Rate this question:
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- 32.
What factors explain the choice of listing?
- A.
Size of company in domestic market.
- B.
Importance of foreign sales.
- C.
Importance of investment in foreign countries.
- D.
Importance of foreign employees for the company.
- E.
Language of the country.
Correct Answer(s)
A. Size of company in domestic market.
B. Importance of foreign sales.
C. Importance of investment in foreign countries.
D. Importance of foreign employees for the company.Explanation
The factors that explain the choice of listing include the size of the company in the domestic market, the importance of foreign sales, the importance of investment in foreign countries, and the importance of foreign employees for the company. These factors are likely to influence a company's decision to list its shares on a stock exchange. The size of the company in the domestic market indicates its financial strength and market presence, while foreign sales and investment signify its global expansion and growth opportunities. Additionally, having foreign employees can provide the company with cultural and linguistic expertise, which may be beneficial in international operations.Rate this question:
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- 33.
What are the IASB (International Accounting Standards Board) objectives?
- A.
Highly quality, understandable and enforceable standards.
- B.
Promote use and rigorous(strict)application.
- C.
Convergence of national accounting standards and IAS to high-quality solutions.
Correct Answer(s)
A. Highly quality, understandable and enforceable standards.
B. Promote use and rigorous(strict)application.
C. Convergence of national accounting standards and IAS to high-quality solutions.Explanation
The objectives of the IASB (International Accounting Standards Board) are to establish highly quality, understandable, and enforceable accounting standards. They also aim to promote the use and rigorous application of these standards. Additionally, the IASB seeks to converge national accounting standards with International Accounting Standards (IAS) in order to provide high-quality solutions.Rate this question:
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- 34.
What IAS 8 (Accounting Policies, Estimates, and Errors) stands for?
- A.
Importance of consistency(logicality).
- B.
Change accounting policy if required by standard or give more relevant and reliable information.
- C.
Restate prior period to adjust changes in policies and errors.
- D.
Changes in estimates in current year`s income.
- E.
If revalued must be regular.
- F.
Impairment test
Correct Answer(s)
A. Importance of consistency(logicality).
B. Change accounting policy if required by standard or give more relevant and reliable information.
C. Restate prior period to adjust changes in policies and errors.
D. Changes in estimates in current year`s income.Explanation
IAS 8 (Accounting Policies, Estimates, and Errors) stands for the importance of consistency in accounting practices. It emphasizes the need to maintain logicality and uniformity in applying accounting policies. However, if a standard requires or if it provides more relevant and reliable information, a change in accounting policy may be necessary. Additionally, prior period financial statements should be restated to adjust for changes in accounting policies and errors. Changes in estimates should be reflected in the current year's income.Rate this question:
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- 35.
What is IAS 16 (Property, Plant & Equipment) stands for?
- A.
Cost model or Revaluation model.
- B.
If revalued must be regular.
- C.
Systematic depreciation under cost model
- D.
Impairment tests for loss of value (IAS 36)
- E.
Disclose policies, depreciation methods and lives, acquisition, disposals, revaluation, commitments, impairments.
- F.
Importance of consistency.
- G.
Change accounting policy if required by standard or give more relevant and reliable information.
Correct Answer(s)
A. Cost model or Revaluation model.
B. If revalued must be regular.
C. Systematic depreciation under cost model
D. Impairment tests for loss of value (IAS 36)
E. Disclose policies, depreciation methods and lives, acquisition, disposals, revaluation, commitments, impairments.Explanation
The correct answer for this question is a combination of different aspects related to IAS 16 (Property, Plant & Equipment). It includes the cost model or revaluation model, regular revaluation if chosen, systematic depreciation under the cost model, impairment tests for loss of value as per IAS 36, and the disclosure of various policies, depreciation methods and lives, acquisition, disposals, revaluation, commitments, and impairments. The importance of consistency is emphasized, and it is mentioned that a change in accounting policy should only be made if required by the standard or if it provides more relevant and reliable information.Rate this question:
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- 36.
What does IAS 36 stand for?
- A.
Property, Plant & Equipment
- B.
Inventories
- C.
Impairment
- D.
Intangible Assets
Correct Answer
C. ImpairmentExplanation
IAS 36 stands for Impairment. This International Accounting Standard provides guidelines for the recognition, measurement, and disclosure of impairments of assets. Impairment occurs when the carrying amount of an asset exceeds its recoverable amount, and this standard sets out the procedures to assess and recognize such impairments. It applies to all assets except for those covered by other specific standards. Therefore, IAS 36 is the correct answer as it represents the specific accounting standard related to impairment.Rate this question:
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- 37.
What does IAS 38 stand for?
- A.
Intangible Asset
- B.
Impairment
- C.
Inventories
Correct Answer
A. Intangible AssetExplanation
IAS 38 stands for Intangible Asset. IAS refers to International Accounting Standard, and IAS 38 specifically deals with the accounting treatment and recognition of intangible assets. Intangible assets are non-physical assets that lack physical substance but have value, such as patents, copyrights, trademarks, and goodwill. This standard provides guidelines for recognizing, measuring, and disclosing intangible assets in financial statements, ensuring consistent and accurate reporting of these assets across different organizations.Rate this question:
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- 38.
What does IAS 38 stand for?
- A.
Intangible Asset.
- B.
R&D.
- C.
Impairment
- D.
Property, Plant & Equipment.
Correct Answer(s)
A. Intangible Asset.
B. R&D.Explanation
IAS 38 stands for International Accounting Standard 38, which specifically deals with the accounting treatment of intangible assets. Intangible assets are non-physical assets that lack physical substance but have value, such as patents, copyrights, trademarks, and goodwill. This standard provides guidelines on how to recognize, measure, and disclose intangible assets in financial statements. The answer "Intangible Asset" is correct because it accurately represents the subject matter of IAS 38. The answer "R&D" is also correct because research and development costs are specifically addressed within this standard.Rate this question:
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- 39.
What does IAS 38 (R&D) stand for?
- A.
Research is an expense.
- B.
Development cost must be capitalized under specified condition.
- C.
Some reversals allowed but not goodwill.
Correct Answer(s)
A. Research is an expense.
B. Development cost must be capitalized under specified condition.Explanation
IAS 38 (R&D) stands for International Accounting Standard 38 (Research and Development). According to this standard, research is considered an expense, meaning that the costs incurred in conducting research activities are recognized as an expense in the period they are incurred. On the other hand, development costs must be capitalized under specified conditions. This means that if certain criteria are met, the costs incurred in developing an asset (such as a new product or technology) should be recorded as an asset on the balance sheet rather than as an expense on the income statement. It is important to note that while some reversals of capitalized costs are allowed, this does not apply to goodwill.Rate this question:
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- 40.
What does IAS 2 stand for?
- A.
Inventories.
- B.
Accounting Policies, Estimates and Errors.
- C.
Impairment.
Correct Answer
A. Inventories.Explanation
IAS 2 stands for Inventories. This International Accounting Standard provides guidelines for the recognition, measurement, and disclosure of inventories. It outlines the methods for valuing inventories, such as the cost or net realizable value, and provides guidance on the cost formulas to be used. This standard ensures that inventories are accounted for consistently and accurately, allowing for comparability between different entities.Rate this question:
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- 41.
Is it true that IAS 38 Recognize intangible assets, whether purchased or self-created if probable benefits and cost estimated reliably?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
According to IAS 38, intangible assets should be recognized, whether they are purchased or self-created, if it is probable that future economic benefits will be generated and the cost of the asset can be reliably estimated. This means that if there is a high likelihood of obtaining benefits from the intangible asset and the cost can be accurately determined, it should be recognized on the financial statements. Therefore, the statement "True" is correct.Rate this question:
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- 42.
What is Flexibility stands for?
- A.
Relationship between company law and tax law.
- B.
Formats of financial statement.
Correct Answer
A. Relationship between company law and tax law.Explanation
The correct answer is "Relationship between company law and tax law." This answer suggests that flexibility refers to the connection or correlation between company law and tax law. It implies that the two areas of law are interrelated and influence each other in terms of regulations and obligations imposed on companies regarding taxation. This understanding highlights the importance of considering both company law and tax law when making decisions and implementing strategies in a business context.Rate this question:
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- 43.
The UK. What does TRANSPARENCY cosist of?
- A.
Notes to accounts
- B.
Segmental reporting
- C.
Narrative Reporting
- D.
Directors` remuneration details
- E.
Stricter rules on provision
- F.
Change to amortization of goodwill
Correct Answer(s)
A. Notes to accounts
B. Segmental reporting
C. Narrative Reporting
D. Directors` remuneration detailsExplanation
The correct answer consists of notes to accounts, segmental reporting, narrative reporting, and directors' remuneration details. These elements are all components of transparency in financial reporting. Notes to accounts provide additional information and explanations about the financial statements. Segmental reporting breaks down the financial information by different business segments. Narrative reporting includes written explanations and analysis of the financial statements. Directors' remuneration details disclose the compensation received by the company's directors. Together, these elements contribute to a clearer and more comprehensive understanding of the company's financial position and performance.Rate this question:
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- 44.
China. What year Deng Xiaoping allowed marked-based approach?
- A.
1984
- B.
1992
- C.
2000
- D.
1980
Correct Answer
B. 1992Explanation
In 1992, Deng Xiaoping allowed a market-based approach in China. This decision marked a significant shift in the country's economic policies. Prior to this, China had been following a more centralized and planned economic system. By embracing market reforms, Deng Xiaoping aimed to stimulate economic growth, attract foreign investments, and modernize China's economy. This move played a crucial role in China's transformation into one of the world's largest and fastest-growing economies.Rate this question:
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- 45.
What does Narrative reporting in thr USA consit of?
- A.
Management discussion and analysis.
- B.
Market risk disclosure.
- C.
Pro-forma (non-GAAP)financial statements
- D.
Internal control
- E.
Assumptions
- F.
Process of preparing information.
Correct Answer(s)
A. Management discussion and analysis.
B. Market risk disclosure.
C. Pro-forma (non-GAAP)financial statements
D. Internal controlExplanation
Narrative reporting in the USA consists of several components. Management discussion and analysis is a key part of narrative reporting, as it provides an overview of the company's financial performance and future prospects. Market risk disclosure is also included, which involves disclosing any risks related to market conditions that may affect the company's financial position. Pro-forma (non-GAAP) financial statements are another component, which are prepared to show the company's financial results based on certain assumptions or hypothetical scenarios. Internal control is also part of narrative reporting, as it involves the processes and procedures implemented by the company to ensure the reliability of financial reporting.Rate this question:
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- 46.
The USA does not permit upward revaluation?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because the USA does not permit upward revaluation. Upward revaluation refers to the increase in the value of a country's currency in relation to other currencies. The USA follows a policy of allowing market forces to determine the value of its currency, rather than intervening to artificially increase its value. Therefore, upward revaluation is not permitted in the USA.Rate this question:
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Current Version
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Nov 16, 2023Quiz Edited by
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Feb 19, 2012Quiz Created by
Kir08
Management Financial And Cost Accounting MCQs With Answers
Management Financial And Cost Accounting MCQs With Answers
SAP S/4HANA for Financial Accounting Associates - Mini
SAP S/4HANA for Financial Accounting Associates - Mini
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