Chapter 1 Team Quiz

9/8/22, 4:51 PM Chapter 1 Team Quiz
Chapter 1 Team Quiz

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MULTIPLE CHOICE
When the classification of items in the financial statements is changed, the entity
Must not reclassify the comparative amounts
Can choose whether or not to reclassify
Must reclassify the comparative amounts unless it is impracticable to do so
Must reclassify the current year amounts only
The primary responsibility for the preparation of the financial statements is

reposed in
Management of the entity
Internal auditor
External auditor
Controller
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Which of the following is included in a set of the financial statements?
Statement by the board of directors of compliance with local legislation
Statement of changes in equity
Value added statement
Statement of financial position for the last five years
Which is not an objective of financial reporting?
To provide information about assets and claims against those assets
To provide information useful in assessing cash flows
To provide information useful in lending and investing decisions
To provide information about the liquidation value of an entity
Materiality depends on
The nature of the omission, misstatement or obscured information
The absolute size of the omission or misstatement
The relative size and nature of the omission, misstatement or obscured information
The judgment of management
The effects of transactions and other events on economic resources and claims
are depicted in the periods in which those effects occur even if the resulting cash
receipts and payments occur in a different period
Accrual accounting
Cash accounting
Modified accrual accounting
Modified cash accounting
The primary focus of financial reporting has been on meeting the needs of which of
the following groups?
Management
Existing and potential investors, lenders and other creditors
National taxing authorities
Independent CPAs
Which is an objective of financial reporting?
To provide information useful to management
To identify nonfinancial transactions
To provide information useful to assess the amount, timing and uncertainty of

prospective cash receipts
To provide information that excludes claims
Which is not an objective of financial reporting?
Financial reporting shall provide information about resources, claims against

resources and changes in them
Financial reporting shall provide information useful in evaluating stewardship of

management
Financial reporting shall provide information useful in investment, credit and similar
decision
Financial reporting shall provide information useful in assessing cash flow prospects
A third statement of financial position as at beginning of the earliest comparative

period presented is required
When an entity applies an accounting policy retrospectively
when an entity makes retrospective restatement of items in the financial statements
When an entity reclassifies items in the financial statements
Under all of these circumstances
During a period when an entity under the direction of a particular management,

financial reporting will directly provide information about
Entity performance and management performance
Management performance but not entity performance
Entity performance but not management performance
Neither entity nor management performance
Which of the following is included within the financial statements?
Accounting policies
Statement of retained earnings
An auditor's report
Report of the board of directors
Financial Statements must be prepared at least
Annually
Quarterly
Semiannually
Every two years
The accrual basis of accounting is most useful for
Determining the amount of income tax liability
Predicting short-term financial performance
Predicting long-term financial performance
Determining the amount of dividends to shareholders
Items of dissimilar nature or function
Must always be presented separately
Must not be presented separately
Must be presented separately if material
Must be presented separately even if material
Which is an objective of financial reporting?
To provide information that is useful in making investing and credit decisions
To provide information that is useful to management
To provide information to investors
To provide information about internal and external conflicts
Which statement in relation to financial statements is incorrect?
General purpose financial statements do not and cannot provide all of the
information that primary users need
General purpose financial statements are designed to show the value of the
reporting entity
General purpose financial statements are intended to provide common information

to users.
Financial statements are largely based on estimate and judgment rather than exact
depiction
What is the most useful information in predicting future cash flows?
Information about current cash flows
Current earnings based on accrual accounting
Information regarding the accounting policies used
Information regarding the results obtained by using a wide variety of accounting

policies
What is the objective of financial statements?
To provide information about the financial position, financial performance and

changes in financial position useful to a wide range of users.
To prepare a statement of financial position and statement of comprehensive

income.
To present relevant, reliable, comparable and understandable information
To prepare financial statements in accordance with all applicable standards
Technically, offsetting in financial statements is accomplished when
The allowance for doubtful accounts is deducted from accounts receivable
The accumulated depreciation is deducted from property, plant and equipment
Total liabilities are deducted from total assets
Gain or loss from disposal of noncurrrent asset is reported by deducting from the
proceeds the carrying amount of the asset and the related disposal cost
A complete set of financial statements include all of the following components,

except
Statement of financial position
Notes to financial statements
Environmental reports and value added statements
The major financial statements include all, except
Statement of changes in financial position
Statement of comprehensive income
The presentation and classification of items in the financial statements shall be

retained from one accounting period to the next.
Consistency of presentation
Materiality
Aggregation
Comparability
The overall objective of financial reporting is to provide information
That is useful for decision making
About assets, liabilities and equity
About financial performance during a period
That assess performance of management
Which statement is incorrect concerning fair presentation of financial statements?
Fair presentation requires the faithful representation of the effects of transactions

and other events.
Financial statements shall present fairly the financial position, financial performance
and cash flows of an entity
An entity whose financial statement comply with PFRS shall not make an explicit and
unreserved statement of such compliance in notes
In virtually all circumstances, a fair presentation is achieved by compliance with

applicable PFRS.
Clear selection
Which of the following cannot be considered fair presentation of financial

statements?
To present information in a manner that provides relevant and faithfully represented

financial information.
To provide additional disclosures when compliance with specific PFRS is insufficient

to understand the financial position and financial performance
To rectify inappropriate accounting policies either by disclosure of accounting

policies used or by notes or explanatory information
To select and apply accounting policies in accordance with applicable PFRS
The objective of financial reporting is based on
The need for conservatism
Reporting on management stewardship
Generally accepted accounting principles
The needs of the users of the information
Assessing cash flow prospects is interpreted to mean
Cash basis accounting is preferred over accrual basis
Information about the financial effects of cash receipts and cash payments is
generally considered the best indicator of ability to generate favorable cash flows
Over the long run, trends in revenue and expenses are generally more meaningful
than trends in cash receipts and disbursements
All of the choices are correct regarding assessing cash flow prospects
Financial reporting pertains to
Individual business entities, rather than to industries or an economy or to members

of society as consumers
Individual business entities and an economy or to members of society as consumers
Individual business entities and an economy rather than to industries or to

consumers
Individual business entities, industries and an economy rather than to members of

society as consumers
Which statement indicates a going concern?
Management intends to liquidate the entity
Management intends to cease the operations of the entity
Management has no realistic alternative but to cease the operations of the entity
None of these
The major financial statements include all, except
Statement of retained earnings
Income statement
Statement of cash flows
An entity is permitted to depart from a particular standard if all of the following

conditions are satisfied, except
In extremely rare circumstances
When management concludes that compliance with the standard would be

misleading
When departure from the standard is necessary to achieve fair presentation
When the Conceptual Framework for Financial Reporting prohibits such a departure.
When an entity changed the reporting period longer or shorter than one year, an
entity shall disclose all of the following except
Period covered by the financial statements
The reason for using a longer or shorter period.
The fact that amounts presented in the financial statements are not entirely
comparable
The fact that similar entities in the geographical area in which the entity operates
have done so.
Which of the following is not a component of the financial statements
Report of the board of directors
Notes to financial statements
An entity must disclose comparative information for
The previous comparable period for all amounts
The previous comparable period for all amounts and for all narrative and descriptive
information
The previous comparable period for all amounts and for all narrative and descriptive
information when it is relevant to an understanding of the current period's financial
statements
The previous two comparable periods for all amount
An objective of financial reporting is to provide
Information about the investors in the entity.
Information about the liquidation value of the entity
Information useful in assessing cash flow prospects
Information that will attract new investors
The primary objective of financial reporting is to provide useful information to
Management
Capital providers
Regulatory body
Government
In measuring financial performance, accrual accounting is used because
Cash flows are considered less important
It provides a better indication of ability to generate cash flows than cash basis
It recognizes revenue when cash is received and expenses when cash is paid
It is one of the implicit assumptions
Which would likely prepare the most accurate financial forecast for an entity based
on empirical evidence?
Investors using statistical models
Corporate management
Financial analysts
Independent certified public accountants
An entity shall present
The statement of cash flows more prominently
The statement of financial position more prominently
The income statement more prominently
Each financial statement with equal prominence
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9/8/22, 4:51 PM Chapter 1 Team Quiz

Chapter 1 Team Quiz

Your email will be recorded when you submit this form

Must not reclassify the comparative amounts

Can choose whether or not to reclassify

Must reclassify the comparative amounts unless it is impracticable to do so

Must reclassify the current year amounts only

The primary responsibility for the preparation of the financial statements is

Management of the entity

Which of the following is included in a set of the financial statements?

Statement by the board of directors of compliance with local legislation

Statement of changes in equity

Value added statement

Statement of financial position for the last five years

Which is not an objective of financial reporting?

To provide information about assets and claims against those assets

To provide information useful in assessing cash flows

To provide information useful in lending and investing decisions

To provide information about the liquidation value of an entity

The nature of the omission, misstatement or obscured information

The absolute size of the omission or misstatement

The judgment of management

Modified accrual accounting

Modified cash accounting

Existing and potential investors, lenders and other creditors

National taxing authorities

Which is an objective of financial reporting?

To provide information useful to management

To identify nonfinancial transactions

To provide information useful to assess the amount, timing and uncertainty of

To provide information that excludes claims

Which is not an objective of financial reporting?

Financial reporting shall provide information about resources, claims against

Financial reporting shall provide information useful in evaluating stewardship of

A third statement of financial position as at beginning of the earliest comparative

When an entity applies an accounting policy retrospectively

when an entity makes retrospective restatement of items in the financial statements

When an entity reclassifies items in the financial statements

Under all of these circumstances

During a period when an entity under the direction of a particular management,

Entity performance and management performance

Management performance but not entity performance

Entity performance but not management performance

Neither entity nor management performance

Which of the following is included within the financial statements?

Statement of retained earnings

Report of the board of directors

Financial Statements must be prepared at least

Every two years

The accrual basis of accounting is most useful for

Determining the amount of income tax liability

Predicting short-term financial performance

Predicting long-term financial performance

Determining the amount of dividends to shareholders

Items of dissimilar nature or function

Must always be presented separately

Must not be presented separately

Must be presented separately if material

Must be presented separately even if material

Which is an objective of financial reporting?

To provide information that is useful in making investing and credit decisions

To provide information that is useful to management

To provide information to investors

To provide information about internal and external conflicts