1. Under a consignment arrangement, the consignor recognizes net revenue equal to the gross sales price less the consignee's commission.  True False

1. Under a consignment arrangement, the consignor recognizes net revenue equal to the gross sales price less the consignee's commission. 

True

False

2. A consignor recognizes revenue when the consigned goods are transferred to the consignee. 

True

False

3. If another party is primarily responsible for fulfilling a contract with a customer, this may indicate that the entity is an agent. 

True

False

4. Pinewood Co. agrees to create artifcat for Saga Co. Pinewood is primarily liable for the artifact's conformance with the customer's specifications. Pinewood does not have the required expertise so its subcontracts Saleng Co. to do the manufacturing. If the entire manufacturing process is outsourced from Saleng Co., Pinewood would be acting as an agent of Saleng. 

True

False

5. Fight Club Co. enters into a contract with Tough Co., a promoter of mixed martial arts (MMA) fights. Under the contract, Fight Club Co. purchases MMA event tickets from Tough at a negotiated price and resells them to end customers at a marked-up price. Fight Club bears the loss for unsold tickets. The arrangement between Fight and Tough implies a principal-agent relationship whereby Fight is an agent of Tough. 

True

False

6. Under IAS 18, what is the measurement of sales revenue from instalment sales? 

a. Carrying amount of the consideration received or receivable.

b. Cost of the consideration received or receivable.

c. Book value of the consideration received or receivable.

d. Fair value of the consideration received or receivable.

7. Under IAS 18, if the company receives long-term non-interest bearing note receivable as consideration for the sale of its inventories on an installment basis, what it the

measurement of sales revenue from installment sales? 

a. Face value of the note receivable

b. Maturity value of note receivable.

c. Present value of note receivable.

d. Undiscounted value of note receivable.

8. How shall the difference between the fair value and nominal amount of the long-term note received as consideration in an installment sales be accounted for? 

a. It shall recognized as expense on the date of sale.

b. It shall be recognized as interest revenue over the term of the note using straight line method.

c. It shall be recognized as interest revenue over the term of the note using effective interest method.

d. It shall be recognized as expense on the date of sale.

9. In an instalment sales, if the collection of note receivable is not remote and not reasonably, how shall the gross profit be recognized? 

a. It shall not be recognized.

b. It shall be fully recognized on the date of sale using accrual basis.

c. It shall be recognized in proportion to the amount of collection under installment method.

d. It shall be recognized fully only on the year the receivable is completely collected.

10. Under generally accepted accounting principles, what is the proper presentation of deferred gross profit from installment sales? 

a. It shall be presented as contra-instalment receivable account.

b. It shall be presented as current liability.

c. It shall be presented as equity.

d. It shall be presented as deferred revenue.

11. If the fair value of the repossessed inventory cannot be estimated reliably at the date of repossession, what shall be the basis of initial measurement of repossessed inventory? 

a. Estimated selling price less reconditioning cost less cost to sell less normal profit.

b. Estimated selling price less reconditioning cost.

c. Estimated selling price less reconditioning cost less cost to sell.

d. Estimated selling price less cost to sell.

12. If the initial measurement of repossessed inventory is lower than the net of defaulted installment receivable and its corresponding deferred gross profit, the difference shall be recognized as 

a. Deferred loss on repossession to be presented as current asset.

b. Loss on repossession to be presented as part of income from continuing operation before tax.

c. Deferred gain on repossession to be presented as current liability.

d. Gain on repossession to be presented as part of other comprehensive income.

13. IFRS 17 was introduced principally for what reason? 

a. To make improvement to insurance accounting.

b. As response to recent scandals within the insurance industry.

c. To completely overhaul insurance accounting.

d. Because of pressure from financial services authorities in several countries.

14. Which statement is TRUE about an insurance contract? 

a. The insurer is the party that has an obligation under an insurance contract to compensate a policyholder if an insured event occurs.

b. The policyholder is the party that has a right to compensation under an insurance contract if an insured event occurs.

c. The insured event is an uncertain future event that is covered by an insurance contract and creates insurance risk.

d. All of these statements are true about an insurance contract.