3/13/2021 ACC406 INCLASS TEST

ACC406 INCLASS TEST Total points 30/30

The respondent's email address (r181521b@students.msu.ac.zw) was recorded on

submission of this form.

1. Which of the following is NOT a borrowing costs in line with IPSAS 5 2/2
Borrowing costs *

Interest on bank overdrafts and short-term and long-term borrowings

(b) Amortization of discounts or premiums on borrowings

(c) Amortization of ancillary costs incurred in the arrangement of borrowings

(d) Finance charges in respect of finance leases

(e) None of the above

2. The following are revenues from Exchange transactions according to 2/2

IPSAS 9: Revenue from Exchange Transactions except *

(a) The rendering of services

(b) Gains from the sale of property

(c) The sale of goods

(d) The use by others of entity assets yielding interest

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3. Which of the following is NOT an example of a Service Concession 2/2

Arrangement (SCA) in accordance with IPSAS 32: Service Concessions
Arrangements: Grantor *

(a) An agreement to construct a tollgate between the government and a private

entity

(b) An arrangement to build a bridge between a local government and a domestic

company

(c) An arrangement to construct a Railway line between National Railways of

Zimbabwe and a private entity

(d) An arrangement to construct a private road between a Member of Parliament

and a private entity

4. To develop its IPSASs, the IPSASB actively draws on extant IFRSs and 2/2
IASs as a basis. Which one of the below statements is incorrect in
regards to this process? *

a) The IPSASB considers if there are any public sector issues within any given IFRS
that warrants departure for the public sector

b) The IPSASB can use an existing IFRS or IAS as the basis for developing an IPSAS

c) The IPSASB considers financial reporting subject matters that are public sector
specific and for which there is no underlying IFRS/IAS.

d) The majority of IPSASs are an exact copy of the underlying IFRSs or IASs

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5. Which of the following can be recognised as provisions according to 2/2

IPSAS19: Provisions, Contingent Liabilities and Contingent Assets. i.
Anticipated future losses of $16m relating to a separately identifiable
contract ii. Anticipated costs of $2m relating to a personal injury claim
which is likely to be paid iii. A guarantee relating to a charity which has
filed for protection from its creditors iv. Future of repairing major
tangible assets. Costs are estimated to be $4m. *

(i) and (ii) only

(ii) and (iii) only

(ii) only

All of the above

6. In 2019 Gweru City Council set up a provision for $200 000 for a legal 3/3
claim which it expected to settle in 2020. When the claim was settled in
2020 the actual costs incurred were only $175 000. How should this be
treated in the accounts according to IPSAS 19: Provisions, Contingent
Liabilities and Contingent Assets *

a) The accounts for 2019 should be restated so that the provision costs are correctly
recorded as $175 000

b) The difference of $25 000 should be credited to the statement of financial

performance in 2020 as operating income

c) The balance of $25 000 on the provision should be retained to pay for future
possible legal claims

d) The difference of $25 000 should be credited to the cash flow statement

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7. According to IPSAS 3, how should a change in accounting policy be 2/2

treated? *

(a) Prospectively

(b) Retrospective restatement

(c) Restrospective application

(d) Prospective restatement

8. Which of the following should be treated as prior period errors 2/2

according to IPSAS 3 :Accounting policies, Changes in Accounting
Estimates and Errors. i. Creditor balances which were omitted from the
financial statements ii. Adjustment to the value of an asset as a result of
an impairment review iii. Change in the discount factor used for
provisions as a result of changes in market interest rates iv. Changes in
the net realizable value of inventory due to certain items becoming
obsolete *

(i) only

(ii) and (iii) only

(i) and (iv) only

None of the above

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9. In line with IPSAS12: Inventories, which of the following can be included 2/2
in the cost of inventories: i. Abnormal wastage ii. Cost of storage of
finished goods iii. Selling costs iv. Administrative overheads *

All of the above

(ii) and (iv) only

(ii) only

None of the above

10. Which of the following statements is TRUE in relation to IPSAS 12 2/2

Inventories? *

(a)FIFO is not allowed by IPSAS 12

(b)All individual items of inventory must be separately priced and valued

(c) Inventory should be valued at the higher of cost or net realizable value

(d)The entity shall use the same cost formula for all inventories of a similar
nature

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11. Which of the following does the Cash Basis IPSAS require to be 2/2
included in the statement of cash receipts and payments: (i) Cash
balances (ii) Cash payments and receipts (iii) Payments made by third
parties on behalf of the entity (iv) Receivables and payables *

(a) All of the above

(b) (i), (ii) and (iii)

(c) (ii) and (iii)

(d) (i), (ii) and (iv)

12. Midlands medical clinic purchased a property on 1 January 2015 for 3/3
$1.5m, when its estimated useful life was 20 years. On 31 December 2017
the property was revalued to $1.7m and on 31 December 2020 the
property was sold for $1.5m. What should be recorded in the statement
of surplus or deficit for 2020 in relation to the property? *

A. Depreciation of $100,000 and profit on disposal of $450,000.

B. Depreciation of $85,000 and profit on disposal of $55,000

C. Depreciation of $75,000 and profit on disposal of $450,000

D. Depreciation of $100,000 and profit on disposal of $100,000

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13. ZIMRA owns a building which cost $1 200 000 when it was purchased 4/4
in 2008. At the time of purchase it was estimated to have a useful
economic life of 60 years and zero residual value. It is the policy of
ZIMRA to charge a full year depreciation in the year of acquisition. The
building is revalued every five years. At the last valuation in 2012 the
value was deemed to be $1 400 000. In accordance with IPSAS17
Property, Plant & Equipment, calculate the carrying amount (CA) of the
property at 31 December 2014 and the balance on the revaluation
reserve. *

(a) CA $1 325 000DR Revaluation Reserve $200 000CR

(b) CA $1 325 000DR Revaluation Reserve $280 000CR

(c) CA $1 330 000DR Revaluation Reserve $220 000CR

(d) CA $1 330 000DR Revaluation Reserve $280 000CR

This form was created inside of Midlands State University.

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