Question: 1

Management discussion and analysis is least likely to include information on:

A future outlook.

B planned expenditures.

C related-party transactions.

Related-party transaction information is found in the notes to the financial

statements

Question: 2
The information on a company’s risks and resources is most likely found in which of the following
sources?

A Auditor’s report.

B Financial notes and supplementary schedules.

C Management’s discussion and analysis. The management commentary or MD&A

includes information on the company’s significant resources, risks and
relationships.

Question: 3
Which of the following will most likely have information about a company’s planned capital
expenditures?

A Management discussion and analysis.

 A company’s forward-looking information such as those about planned capital
expenditures is typically provided in the management discussion and analysis
(MD&A).

B Notes to the financial statements.

C Proxy statement.

Question: 4
Which of the following is most likely to appear in a company’s management discussion and analysis
(MD&A)?

A Compensation arrangements for management and directors.

B Potential conflicts of interest between management, directors, and shareholders.

C Significant events and contingencies that may affect future operations.

Significant events, conditions, trends, and contingencies that may affect future
operations are contained in the management discussion and analysis. Compensation
agreements for directors and management, and their potential conflicts of interest
are required in the proxy statement.

Question: 5
Which of the following is least likely to be included in the financial notes and suupplementary
schedules?

A Depreciation method for new assets.

 B Future economic outlook.

C Revenue recognition policy.

A company’s significant accounting choices, such as how it recognizes its

revenues, must be discussed in the notes to the financial statements

Question: 6

According to the IFRS Conceptual Framework, the least likely feature underlying the

preparation of financial statements is:

A accrual basis.

B matching.

C materiality.
Question: 7
According to the IFRS framework, the qualitative characteristic that makes financial information
useful is least likely to be:

A comparability.

B materiality.

C understandability.

Question: 8
According to the IASB’s Conceptual Framework for Financial reporting, the two fundamental
qualitative characteristics that make financial information useful are best described as:
 A relevance and faithful representation.

B timeliness and accrual accounting.

C verifiability and understandability.

Question: 9

Under the IFRS Framework for the Preparation and Presentation of Financial Statements, to be
recognized as a financial statement element, an element most likely needs to:

A have a cost or value that can be measured with reliability.

B normally be carried at historical cost, current cost or fair market value.

C provide certainty that any future economic benefit associated with the item will
flow to or from the enterprise.

Question: 10
According to the IASB Conceptual Framework, the two fundamental qualitative characteristics that
make financial information useful are best described as:

A timeliness and accrual accounting.

B relevance and faithful representation.

 C understandability and verifiability.

Question: 11
ABC Manufacturing Company prepares its financial statements in accordance with U.S. GAAP. Data
for ABC is presented below:

   $000s
 Revenue  10,000
 Cost of goods sold   6,000
 Other operating expenses   1,500
 Restructuring costs (infrequent but not unusual)      300
 Interest expense      400
ABC'S operating profit (in $000s) is closest to:

A 2200

B 1900

C 2100

Question: 12
An analyst is estimating the net profit margin of a manufacturing company for next year. The method
he adopts is to average the net profit margin for the past five years. Which of the following
statements is most likely accurate with respect to the items used for his projections?

A He must not include the gain on sale of investments, as it is a manufacturing firm.

B He uses the most recent year’s tax rate, which was only 60% of the previous two
 years’ rate.

C He must include the losses incurred due to discontinued operations in each of the
five years.

Question: 13
The following information is available on a company for the current year:
Net Income: USD 2,500,000
Average number of shares outstanding: 150,000
Convertible preferred shares outstanding: 5,000
Preferred dividend per share: USD 5
Each preferred is convertible into 5 shares of common stock
Convertible bonds, USD 100 face value per bond at 6% coupon: USD 60,000
Each bond is convertible into 20 shares of common stock
Corporate tax rate: 35%

The diluted EPS is closest to:

A $13.38.

B $14.29.

C $15.29.
Question: 14
Selected information of a company’s common equity over the course of the year is presented below:
Outstanding shares, at the start of the year: 3,000,000 
Stock options outstanding, at start and end of the year: 100,000; Exercise price: $10.00
Shares issued on April 1: 500,000
Shares repurchased (treasury shares) on July 1: 100,000
Average market price of common shares for the year:  $20/share 

If the company’s net income for the year is $5,000,000, its diluted EPS is closest to

A $1.50.

B $1.48.

C $1.46.

Question: 15
A company has earnings of 10 million for 2013. The preferred dividend for the year is 2
million and the common stock dividend is 1 million. The number of shares outstanding for
the year is 20 million. What is the basic EPS?

A 0.40

B 0.35

C 0.50

Question: 16
The core principle of the converged revenue recognition standard (issued by IASB and FASB) is that
revenue should be recognized to “depict the transfer of promised goods or services to customers in
an amount that reflects:

A the consideration that the entity has actually received in an exchange for those
goods or services.”

B the consideration to which the entity expects to be entitled in an exchange for those
goods or services.”

C the costs that the entity has incurred to produce those goods or services.”

Question: 17
Under the matching principle, a company recognizes some expenses such as cost of goods sold
when:

A associated revenues are recognized.

B a cash payment is made related to the expense.

C a company incurs the liability to pay.

Question: 18
An expense recognition policy can be considered conservative if: 

A expenses are recognized sooner rather than later.

B expenses are recognized later rather than sooner.

 C expenses are underestimated.

Question: 19
Period costs are reflected in the period:

A when the associated revenue is recognized.

B immediately following the period when the company makes the expenditure.

C when the company makes the expenditure, or incurs the liability.

Question: 20
Which of the following principles is followed for expense recognition?

A Going concern

B Matching

C Prudence

Question: 21
Alpha-Sine Corporation has the following portfolio of marketable securities which was acquired at
the end of 2012:

Original Cost in € as at the Fair Market Value in €as at

Category
Year End, 2012 Year End, 2013
Measured at Fair Value through Profit and Loss 10,000,000 10,500,000
(FVTPL)
Measured at Fair Value through Other
5,000,000 5,500,000
Comprehensive Income (FVTOCI)
 

If the company reports under IFRS instead of U.S. GAAP, its net income will most likely be:

A the same.

B €500,000 lower.

C €500,000 higher.

Question: 22
Which of the following assets are most likely tested for impairment annually?

A A patent with a legal life of 15 years.

B A copyright with an expected indefinite life.

C Land.

Question: 23

Which of the following statements is least accurate?

A Treasury shares are non-voting but receive dividends.

 B Treasury shares are shares that a company has repurchased.

C A treasury stock operation reduces equity.

Question: 24
Which of the following components does not comprise of equity attributable to owners of the parent
company?

A Non-controlling interest.

B Retained earnings.

C Other comprehensive income.

Question: 25
In order to analyze what portion of company’s assets are liquid, an analyst is most likely to use:

A cash ratio.

B common-size balance sheet.

C current ratio.

Question: 26
The following information is available for Nissan Newspapers Ltd. 

 Cash balance as of June 30,  $58,000

2012 
 Cash balance as of July 1, 2011  $65,000
 Cash flows:  
 ($45,000
 Operating activities
)
 Financing activities  $90,000
The cash flow from investing activities is closest to:

A ($52,000).

B $13,000.

C $52,000.

Question: 27
In 2016 MG Laptops Ltd reported a cost of goods sold worth USD120,000. During 2016 the
inventory balance increased by USD50,000 and accounts payable increased by USD40,000. The
cash paid to suppliers is closest to:

A 110,000.

B 120,000.

C 130,000.

Question: 28
The retained earnings over the year increased by $4 million. The net income was $5 million. The
dividend paid was most likely:
 A $-1 million.

B $0.

C $1 million.

Question: 29
The following information is available for Frampton Corporation Ltd.

 $12,00
 Cash received from customers
0
 Cash paid to employees  $2,000
 Cash paid for income tax  $1,500
 Cash paid for purchase of  $20,00
equipment  0
 Cash paid for dividends  $1,800
 $15,00
 Cash paid to retire long term debt
0
The net cash from financing activities is closest to:

A $16,500

B $16,800

C $20,000

Question: 30
The following information is available for HTC Corporation.

 Income Statement Extract  2012  2011

 Operating income  $14 million  $12 million
 Depreciation  $5 million  $3 million
 Net income  $9 million  $7 million
 

 Balance Sheet Extract  2012  2011

 Current Assets  $8 million  $6 million
 Current Liabilities  $10 million  $12 million
The total adjustment in order to compute operating cash flow is closest to:

A ($2 million)

B $1 million

C $5 million

1 C 11 A 21 A
2 C 12 A 22 B
3 A 13 A 23 A
4 C 14 B 24 A
5 B 15 A 25 B
6 B 16 B 26 A
7 B 17 A 27 C
8 A 18 A 28 C
9 C 19 C 29 B
10 B 20 B 30 B