Professional Documents
Culture Documents
IFRS 5 covers:
(i) The classification, measurement and presentation of assets held for sale.
(ii) The classification and presentation of discontinued operations.
(iii) The impairment of long-lived assets to be held and used.
1. i
2. ii
3 iii
4 i-ii
2. Assets that meet the criteria to be classified as held for sale are measured
1. Carrying amount.
2. Fair value, less costs to sell.
3. The lower of 1 and 2.
4. The higher of 1 and 2.
3. For assets that meet the criteria to be classified as held for sale depreciation
on such assets:
1. Ceases.
2. Is reversed.
3. Is charged to discontinue operations.
4. Classified as adjunct account
1. i
2. ii
3. iii
4. i- ii
5. i- iii
1. i
2. ii
3. iii
4. i- v
5. i- vi
6. i vii
10. If the criteria are met after the balance sheet date, a bank shall:
1. Classify a non-current asset as held for sale in those financial statements.
2. When those criteria are met, after the balance sheet date, but before the
approval of the financial statements for issue, the bank shall disclose the
information in the notes.
3. Classify a non-current asset as discontinued operations in those financial
statements.
at the date on which it ceases to be used, the bank shall present the results and cash
flows of the disposal group as:
1. Discontinued operations.
2. Held for sale.
3. Continuing operations.
12. If a newly acquired asset is held for sale, the asset or disposal group will be
measured at:
1. Cost.
2. Fair value, less costs to sell.
3. The lower of 1 and 2.
4. The higher of 1 and 2.
_____3. The retroactive approach with no restatement is used for which of the following:
a. Correcting errors and making estimate changes.
b. Changing inventory cost flow assumptions (FIFO, LIFO) when only opening balances
can be reconstructed.
c. Changing to the completed-contract method of accounting for long-term contracts to
conform to industry norms when prior years can be reconstructed.
d. Correcting errors affecting prior years income.
_____5. When accounting changes or error corrections are recorded, certain disclosures are
usually required. A description of the effect of the change on the financial statements of
the current and prior periods is required disclosure except for:
a. Change in accounting policy.
b. Change in accounting estimate.
c. Correction of an error.
d. None of the above.
_____6. When a company changes its method of amortization of an asset because of a change in
economic conditions, the change should be accounted for:
a. Retroactively with restatement of prior years.
b. Retroactively without restatement of prior years.
c. All in the year of the change.
d. Over the remaining service life of the asset.
_____7. Quick Company changed revenue recognition methods for accounting purposes and
correctly computed a cumulative effect before tax of $600 (reduces income). The tax rate
is 30%. The change is a temporary difference between accounting and taxable income.
The entry to record the change in accounting principle includes:
a. Credit accounts receivable $420.
b. Debit future income tax asset $180.
c. Debit income tax payable $420.
d. Debit retained earnings $600.
_____ 8. Fido Dog Food Company changed its method of accounting for inventory from Average
Cost to FIFO in 20x5 for both tax and financial accounting purposes. Tax returns were
refiled. The 20x4 ending inventory was $40,000 under Average Cost and $55,000 under
FIFO. Fido discloses 20x4 and 20x5 results comparatively. The tax rate is 30%. The entry
to record the change in accounting principle includes:
a. Credit future income tax liability $4,500.
b. Debit retained earnings $10,500.
c. Credit income tax payable $4,500.
d. Debit income tax receivable $4,500.
_____ 9. An asset purchased 1 January 20x4, costing $10,000, with a 10-year useful life and no
salvage value, was amortized under the straight-line method during its first three years.
During 20x7, the total useful life was re-estimated to be 17 years. What is the amount of
amortization expense in 20x8?
a. $462
b. $412
c. $464
d. $500
_____10. Which of the following is not appropriate when it is discovered that a 5-year insurance
premium payment 2 years ago was debited to insurance expense?
a. A credit to prepaid insurance.
b. A retroactive restatement of the income statement of the previous year.
c. A retroactive restatement of the balance sheet of the previous year.
d. A footnote explaining the impact of the error on net income and
earnings per share of the current year.
_____11. The Great Company understated its inventory by $5,000 at the end of
20x4. If the error was discovered early in 20x5 after the 20x4 books have
been closed, which of the following will be appropriate to correct the
error? (Ignore income tax effect.)
a. A debit to inventory and a credit to retained earnings of $5,000.
b. A cumulative effect of $5,000 presented on the retained earnings
statement for 20x5.
c. A deduction of $5,000 from the beginning balance of retained earnings
in the statement of retained earnings for 20x5.
d. None of the above.
_____12. If the error described in question 11 is discovered after the 20x5 books have been closed,
the discovery of the error will require: a.
a. a debit to inventory of $5,000.
b. a $5,000 adjustment in the 20x6 income statement.
c. a debit to prior year adjustment.
d. none of the above.
_____13. During 20x5, Yamma Company discovered that its inventories were overstated by
$10,000 and $20,000 at the end of 20x4 and 20x5, respectively. If the 20x5 books are still
open, these errors will be corrected by debiting retained earnings, effect of error, and
crediting inventory at:
a. $0
b. $10,000
c. $20,000
d. $30,000
_____14. Assume the same data as in question 13, except that those errors were discovered after
the 20x5 books were closed. These errors will be corrected by debiting retained earnings,
effect of error, and crediting inventory account at:
a. $0.
b. $10,000.
c. $20,000.
d. $30,000.
(1) The opening capital is ascertained by preparing:
(a) Cash book(b) Creditors A/c
(c) Debtors A/c
(d) Opening statement of affairs. (T)
(2) A single entry system it:
(a) Complete and scientific system(b) Incomplete and
unscientific (T)
(c) Incomplete and scientific
(d) Complete and unscientific
(3) Single entry system has effect:
(a) One effect (T) (b) Tow effect(c) Three effect
(d) None of the above
(4) In single entry system, it is not possible to prepare:
(a) Receipts and payments A/c(b) Trial balance (T)
(c) Balance sheet
(d) Account sales
(5) A single entry system is usually adopted by:
(a) Company (b) Partnership(c)
Government (T) (d) None of above
(6) Single entry system is must suited where:
(a) Cash transactions are many (T) (b) Credit transactions are
many.(c) Cash & credit transactions are more.
(d) None of the above
(7) Capital can be obtained by preparing:
(a) Cash book (b) Statement of affairs (T) (c)
Debtors A/c (d) Creditors A/c
(8) Credit sale can be obtained by preparing:
(a) Cash book (b) Statement of affairs(c) Debtors
A/c (T) (d) Creditors A/c
(9) Credit purchase can be calculated by preparing:
(a) Cash book (b) Statement of affairs(c) Debtors
A/c (d) Creditors A/c (T)
(10) Cash in hand can be obtained by preparing:
(a) Cash book (T) (b) Statement of affairs(c) Debtors A/c
(d) Creditors A/c
(11) In single entry system profit is calculated as follows:
(a) Opening Capital + Drawing + Fresh Capital- Ending capital
(b) Capital at the end Drawing Fresh capital
- Opening capital
(c) Capital at the end + Drawing Fresh capital.
-Opening capital (T)
(d) None of the above
(12) In single entry system only accounts are opened:
(a) Personal A/c(T) (b) Real A/c(c) Nominal A/c
(d) Real & Nominal A/c
(13) Single entry system cannot be a maintained by:
(a) Joint stock company (T) (b) Partnership A/c(c) Sole-tradership
A/c (d) All of these
(14) Single entry system of book keeping is generally followed by:
(a) Small business (T) (b) Non trading(c) Large business
(d) None
(15) A statement of assets and liabilities prepared under the single entry
system is called:
(a) Balance sheet (b) Financial statement(c) Cash
statement (d) Statement of affairs (T)
(16) Net worth of an organization means the excess of its total assets over
total:
(a) Expenses (b) Incomes(c)
Liabilities (T) (d) Both (a) and (b)
(17) Which one of is most likely to have the lowest rate of stock turn:
(a) Jeweler (T) (b) Green grocer(c) Super market (d)
News agent
(18) If a stores mark up is 25% the margin must be:
(a) 5% (b) 15%(c)
10% (d) 20% (T)
(19) If the rate of G.P on sale is 20% and cost of goods, sold is Rs. 100,000,
then amount of G.P will be equal to:
(a) Rs. 20,000 (b) Rs. 25,000 (T) (c) Rs.
35,000 (d) Rs. 15,000
(20) Bad-debts written off always affect the:
(a) Debtors A/c (T) (b) Creditor A/c (c) Cash A/c
(d) None of these