Financial-Accounting-and-Reporting PDF Exam Material 2023 Realistic Financial-Accounting-and-Reporting Dumps Questions
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NEW QUESTION # 51
The International Accounting Standards Board's Conceptual Framework for Financial Reporting for the preparation and presentation of financial statements is concerned with the information needs of most users, but not for each possible user.
Which one of the following stakeholders would not be one of the users that the Conceptual Framework is concerned about?
- A. potential investors in the company
- B. a company's executive management
- C. members of the public who have small investment holdings in the company
- D. governments and regulatory bodies
Answer: B
NEW QUESTION # 52
An agent is answerable under the contract to the agent's principal and must account for the resources of the agent's principal and the money the agent has gained working on the principal's behalf. In the context of agency, this definition describes an agent's
- A. fiduciary duty.
- B. relationship.
- C. contract.
- D. accountability.
Answer: D
NEW QUESTION # 53
Financial information is reliable if it
I)prefers substance over legal form.
II)is neutral and without any material error.
III)is complete and has been made with prudence.
IV)is understandable to those with no knowledge of accounting.
- A. I, II and III only
- B. I, III and IV only
- C. II, III and IV only
- D. I, II and IV only
Answer: A
NEW QUESTION # 54
In the context of a regulatory framework, a principles-based system
- A. is a rule-driven approach.
- B. provides a theoretical basis with broad terms of reference.
- C. removes any element of judgement by providing clear requirements.
- D. attempts to cover specific eventualities.
Answer: B
NEW QUESTION # 55
Which one of the following statements is correct about using judgement in the financial reporting process?
- A. A true and fair view cannot be assured if individual judgement is allowed.
- B. Judgement can be allowed in the statement of comprehensive income but not in the statement of financial position.
- C. Accountants should not be allowed to use their own judgement.
- D. Use of individual judgement is required to choose between alternative methods available within accounting standards.
Answer: D
NEW QUESTION # 56
Current cost accounting reflects an approach to capital maintenance based on maintaining which one of the following?
- A. profitability of the business
- B. financial capability of the business
- C. operating capability of the business
- D. cost of assets in the business
Answer: C
NEW QUESTION # 57
According to the IASB's Conceptual Framework, the key reason general purpose financial statements are produced is to satisfy the information needs of
- A. management.
- B. capital providers.
- C. employees.
- D. internal users.
Answer: B
NEW QUESTION # 58
Which one of these concepts suggests that stock prices react to new information almost instantly?
- A. bargaining power
- B. incentive substitution
- C. efficient market
- D. market power
Answer: C
NEW QUESTION # 59
Which one of the following statements is correct in relation to presenting the financial position of an entity?
- A. Solvency is the availability of cash over the long-term, while liquidity is the availability of funds over the short-term to meet financial commitments as they fall due.
- B. Liquidity is the ability to repay long-term financial commitments, whereas solvency is the ability to repay short-term commitments.
- C. Solvency is the availability of total assets over a long-term, while liquidity is the availability of total assets over the short-term to meet financial commitments as they fall due.
. - D. Liquidity represents cash holdings, while solvency is long-term profitability.
Answer: A
NEW QUESTION # 60
Which one of the following practices is not considered creative accounting?
- A. aggressive earnings management
- B. trading in derivatives
- C. window dressing
- D. profit smoothing
Answer: B
NEW QUESTION # 61
JK Ltd intentionally over-valued its closing inventories to increase profitability for the year 20X8. This would help them to better price a planned share issue in 20X9. By doing this they have breached the concept of
- A. understandability.
- B. completeness.
- C. neutrality.
- D. substance over form.
Answer: C
NEW QUESTION # 62
As per the International Accounting Standards Board conceptual framework, which of the following holds the primary responsibility for preparing and presenting financial statements?
I)owners
II)auditors
III)directors
- A. I and II only
- B. I only
- C. II and III only
- D. III only
Answer: D
NEW QUESTION # 63
The IASB evaluates the merits of adding a potential item to its agenda mainly by reference to the needs of
- A. regulatory authorities.
- B. investors.
- C. tax agencies.
- D. suppliers.
Answer: B
NEW QUESTION # 64
Which of the following represents a principal-agent relationship?
I.
shareholders-auditors
II.
shareholders-management
III.
security exchange-company
IV.
board of directors-employees
- A. I, II and III only
- B. II, III and IV only
- C. I, II and IV only
- D. I, II, III and IV
Answer: C
NEW QUESTION # 65
In relation to financial statements, the 'true and fair override' indicates that
- A. departure is allowed from accounting standards under specific instances to show a fair presentation.
- B. accounting standards must be complied with under all circumstances.
- C. statements need not always be true and accurate.
- D. the true and fair requirement need not be complied with by certain industries.
Answer: A
NEW QUESTION # 66
A decision has been made to change the value of a major non-current asset, upon which depreciation is based, from original cost to a revalued amount. This results in a change in
- A. measurement basis and must be disclosed.
- B. accounting estimate and must be disclosed.
- C. accounting estimate and does not need to be disclosed.
- D. measurement basis and does not need to be disclosed.
Answer: A
NEW QUESTION # 67
Which one of the following financial statements helps provide information about factors that might affect an entity's liquidity or solvency?
- A. statement of profit or loss and other comprehensive income
- B. notes to the financial statements
- C. statement of changes in equity
- D. statement of cash flows
Answer: D
NEW QUESTION # 68
According to IASB's Conceptual Framework, an expense is a decrease in economic benefits in the form of
I.
outflows.
II.
decreases of assets.
III.
incurrences of liabilities.
IV.
contributions to equity holders.
- A. I, II and III only
- B. I, III and IV only
- C. II, III and IV only
- D. I, II and IV only
Answer: A
NEW QUESTION # 69
Generally accepted accounting practice recognises revenue when
- A. goods are produced.
- B. customers order goods.
- C. cash is received for the goods.
- D. goods are dispatched to the customer.
Answer: D
NEW QUESTION # 70
A multinational company is converting the methodology of reporting by its subsidiaries in various countries to make it uniform with the requirements of the International Financial Reporting Standards (IFRS). While changing the reporting methodologies, accountants have to apply certain judgments.
Which one of the following is not a valid motivation for decision making on reporting methodologies?
- A. to comply with the information demands of government bodies in home country
- B. to present the financial statements in a manner that is understood by most users
- C. to be consistent with the methodologies followed in the home country of the company
- D. to present the company's financial performance in the most favourable way
Answer: D
NEW QUESTION # 71
Which of the following are the stated objectives of the International Accounting Standards Board (IASB)?
I)Enforce accounting standards.
II)Develop accounting standards.
III)Work for convergence of accounting standards.
- A. I and II only
- B. I only
- C. III only
- D. II and III only
Answer: D
NEW QUESTION # 72
Liquidity of a company is based on its ability to
- A. meet long term commitments.
- B. meet short term commitments.
- C. buy back shares.
- D. pay dividends to shareholders.
Answer: B
NEW QUESTION # 73
In a stock market that displays strong efficiency, share prices reflect all available
- A. public and inside information.
- B. public information.
- C. information about past changes in share prices.
- D. information about future expansion plans.
Answer: A
NEW QUESTION # 74
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