T7 Online Practice Questions and Answers

What is one of the main purposes of the International Financial Reporting Interpretations Committee (IFRIC)?

A. Provide guidance on reporting issues not specifically addressed in International Accounting Standards Board (IASB)'s standards

B. Provide advice to International Accounting Standards Board (IASB) on priorities

C. Monitor International Accounting Standards Board (IASB)'s effectiveness, raise funds, and approve budget

D. Discuss the roles and responsibilities of the International Accounting Standards Board (IASB) and its advisory groups

What is the main objective of IAS 19?

A. To prescribe the accounting and disclosure for employee benefits

B. To prescribe the timing of payments

C. To draw a distinction between long and short term benefits

D. To draw a distinction between a defined contribution and defined benefit plan

Company XYZ does not disclose any information in the notes to their financial statements unless the value of the information to users exceeds the expense of gathering it. Which constraint of Level 3 of the conceptual framework does this represent?

A. Cost

B. Materiality

C. Expense

D. Disclosure

To estimate how much the employees have earned for their work in the current and prior periods in order to attribute the benefit to the periods of service and to incorporate estimates about demographics and financial variables into calculations, a company must utilize what method?

A. Re-measurement method

B. Fair value method

C. Net present value method

D. Projected unit credit method

Recognition of revenue when earned and the matching of expenses when incurred describes which of the following practices?

A. Business accounting

B. Cash basis accounting

C. IASB accounting

D. Accrual accounting

How do noncurrent assets (long-term assets) differ from current assets?

A. Noncurrent assets cannot be easily converted to cash within a year

B. Noncurrent assets are not affected by the fiscal year

C. Noncurrent assets cannot be easily converted to cash within two years

D. Noncurrent assets can only be converted to cash until the subsequent fiscal year

Which of the following best defines the term "asset"?

A. The residual interest in the assets of the entity after deducting all its liabilities.

B. A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity

C. A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits

D. Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants

Neutral and complete are ingredients of which of the following fundamental characteristics of accounting information?

A. Faithful representation

B. Relevance

C. Predictive value

D. Comparability

What is the reconciliation of the beginning and ending balances of stockholders' equity accounts called?

A. Statement of Financial Position

B. Statement of Income

C. Statement of Cash Flows

D. Statement of Stockholders' Equity

A US-based company reports information about pending lawsuits in the notes to its financial statements. This is an example of which basic principle of accounting?

A. Full disclosure

B. Expense recognition

C. Going concern

D. Constraints