International Financial Reporting Standards Quiz! Trivia

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Questions: 10 | Attempts: 1,057 | Updated: Mar 20, 2023

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International Financial Reporting Standards Quiz! Trivia - Quiz

Are you ready for the international financial reporting standards quiz? This quiz entails your understanding of Statement of Cash Flows, which inventory cost methods are allowed or not allowed, the two main criteria for an item to be seen as an asset, and how you determine whether an entity meets the criteria of an intangible asset. This great quiz will give you insight into International Financial Reporting Standards.

Questions and Answers

1.

The requirements of IAS 1 apply to all of the following types of financial statements except:
- A.
  
  General purpose financial statements
- B.
  
  Consolidated financial statements
- C.
  
  Separate general purpose financial statements of entities
- D.
  
  Condensed interim financial statements
Correct Answer
D. Condensed interim financial statements

Explanation
The requirements of IAS 1 apply to general purpose financial statements, consolidated financial statements, and separate general purpose financial statements of entities. However, they do not apply to condensed interim financial statements. Condensed interim financial statements are typically prepared and presented on a less detailed basis than annual financial statements, providing a summary of financial performance and position for a shorter period, such as a quarter or a half-year. These statements are subject to specific requirements and guidance outlined in other accounting standards.

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1
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2.

IAS 7: Statement of Cash Flows, states that bank overdrafts that form an integral part of an entity's cash management are included as:
- A.
  
  A liability
- B.
  
  A component of cash and cash equivalents
- C.
  
  An I-O-U
- D.
  
  A great way to boost the economy
Correct Answer
B. A component of cash and cash equivalents

Explanation
According to IAS 7: Statement of Cash Flows, bank overdrafts that are considered an integral part of an entity's cash management are included as a component of cash and cash equivalents. This means that bank overdrafts are treated as if they were cash on hand or readily convertible into cash, and are therefore included in the cash and cash equivalents balance on the statement of cash flows.

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3.

IAS 2: Inventories, does not allow which of the following inventory cost methods:
- A.
  
  FIFO (First-In, First-Out)
- B.
  
  LIFO (Last-In, First-Out)
- C.
  
  Weighted Average
Correct Answer
B. LIFO (Last-In, First-Out)

Explanation
IAS 2: Inventories does not allow the use of the LIFO (Last-In, First-Out) inventory cost method. This method assumes that the most recent inventory items purchased are the first ones to be sold. However, IAS 2 requires that inventories be valued at the lower of cost and net realizable value, and the LIFO method does not reflect this principle accurately. Instead, IAS 2 allows the use of the FIFO (First-In, First-Out) and Weighted Average cost methods, which are considered more appropriate for determining the cost of inventories.

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4.

Under IAS 16: Property, Plant, and Equipment, what are the two key criteria for an item of property, plant, and equipment to be recognized as an asset?
- A.
  
  When it can be reliably measured
- B.
  
  When it is controlled by the entity
- C.
  
  When it is probable that economic benefits will flow to the entity from the asset
- D.
  
  When it has a residual value
Correct Answer(s)
A. When it can be reliably measured
C. When it is probable that economic benefits will flow to the entity from the asset

Explanation
An item of property, plant, and equipment is recognized as an asset under IAS 16 when it can be reliably measured and when it is probable that economic benefits will flow to the entity from the asset. These criteria ensure that the item meets the definition of an asset, as it has a measurable value and is expected to generate future economic benefits for the entity.

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5.

What 3 key elements are used to decide whether an item meets the criteria of an intangible asset?
- A.
  
  Control, marketability, materiality
- B.
  
  Completion of development, control, tasty
- C.
  
  Control, identifiability, future economic benefits
- D.
  
  Profitable, satisfying, pretty
Correct Answer
C. Control, identifiability, future economic benefits

Explanation
The three key elements used to decide whether an item meets the criteria of an intangible asset are control, identifiability, and future economic benefits. Control refers to the entity's ability to obtain future economic benefits from the asset. Identifiability means that the asset is capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged. Future economic benefits refer to the asset's ability to generate cash flows or contribute to the entity's future cash flows.

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6.

Under IAS 36: Asset Impairment, the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount is called:
- A.
  
  Impairment loss
- B.
  
  Revaluation loss
- C.
  
  Tough loss
- D.
  
  Bad debt loss
Correct Answer
A. Impairment loss

Explanation
Under IAS 36: Asset Impairment, the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount is called an impairment loss. This loss occurs when the value of an asset or cash-generating unit is no longer fully recoverable, indicating a decrease in its value or potential future cash flows. It is important to recognize and account for impairment losses to accurately reflect the true value of assets in financial statements.

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7.

IFRS requires comprehensive income to be presented in one statement of comprehensive income or two separate statements.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
IFRS (International Financial Reporting Standards) indeed requires comprehensive income to be presented in one statement of comprehensive income or two separate statements. This means that entities following IFRS guidelines have the option to present comprehensive income in a single statement or separate it into two statements, namely an income statement and a statement of other comprehensive income. The choice depends on the reporting entity's preference and the level of detail they want to provide to stakeholders.

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8.

In relation to income statement presentation, IFRS does define certain key measures.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
IFRS (International Financial Reporting Standards) does indeed define certain key measures in relation to income statement presentation. These measures are important for ensuring consistency and comparability in financial reporting across different companies and industries. By providing clear guidelines on how to present income statement information, IFRS helps investors and stakeholders make informed decisions and evaluate the financial performance of a company. Therefore, the statement "True" is correct.

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9.

Under IFRS, extraordinary items are reported on the income statement.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Under IFRS, extraordinary items are not reported on the income statement. Extraordinary items are events or transactions that are both unusual in nature and infrequent in occurrence. IFRS does not require the reporting of extraordinary items separately on the income statement, rather it encourages the disclosure of such items in the notes to the financial statements. This is in contrast to US GAAP, where extraordinary items are reported separately on the income statement.

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10.

Under IFRS, disclosure of the components of cash and cash equivalents are required in the notes to the financial statements.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
Under IFRS (International Financial Reporting Standards), companies are required to disclose the components of cash and cash equivalents in the notes to the financial statements. This means that in addition to reporting the total amount of cash and cash equivalents, companies must provide a breakdown of the different types of cash and cash equivalents they hold. This disclosure ensures transparency and helps users of financial statements understand the composition of a company's cash position. Therefore, the statement "True" is correct.

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Current Version
Mar 20, 2023

Quiz Edited by
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Apr 26, 2010

Quiz Created by
Ebell1

International Financial Reporting Standards Quiz! Trivia

The requirements of IAS 1 apply to all of the following types of financial statements except:

IAS 7: Statement of Cash Flows, states that bank overdrafts that form an integral part of an entity's cash management are included as:

IAS 2: Inventories, does not allow which of the following inventory cost methods:

Under IAS 16: Property, Plant, and Equipment, what are the two key criteria for an item of property, plant, and equipment to be recognized as an asset?

What 3 key elements are used to decide whether an item meets the criteria of an intangible asset?

Under IAS 36: Asset Impairment, the amount by which the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount is called:

IFRS requires comprehensive income to be presented in one statement of comprehensive income or two separate statements.

In relation to income statement presentation, IFRS does define certain key measures.

Under IFRS, extraordinary items are reported on the income statement.

Under IFRS, disclosure of the components of cash and cash equivalents are required in the notes to the financial statements.