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1. Which of the following meas to in the Board's Conce referred

1. Which of the following meas to in the Board's Conce referred

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Which of the following measurement bases are referred to in the Board's Conceptual Framework? A. Current cost, Historical cost, Fair value, Present value B. Current cost, Future value, Fair value, Present value C. Current cost, Residual value, Fair value, Present value D. Residual value, Fair value, Present value, Future value 2. The "carrying amount" of an item of property, plant and equipment generally refers to: A. The historical cost of the item B. The replacement cost of the item c. The depreciable amount of the item D. The amount at which the item is recognised in the financial statements 4. The elements of financial statements which relate to statement of profit or loss are: A. Income, assets and expenses B. Income and expenses C. Income, expenses and equity D. Assets, liabilities and equity 6. Which of the following is or are not part of the advantages of applying a principles-based framework of accounting rather than a rules-based framework? (i) It avoids fire-fighting', where standards are developed in response to specific problems as they arise (ii) It allows preparers and auditors to deal with complex transactions which may not be specifically covered by an accounting standard (iii) Principles-based standards are thought to be harder to circumvent (iv) A set of rules is given which attempts to cover every eventuality (v) Accounting standards can be developed in relation to agreed principles A. (i) only B. (i), (iii) and (v) only C. (iv) only D. (i), (ii), (iii) and (v) only
Transcribed Image Text:1. Which of the following measurement bases are referred to in the Board's Conceptual Framework? A. Current cost, Historical cost, Fair value, Present value B. Current cost, Future value, Fair value, Present value C. Current cost, Residual value, Fair value, Present value D. Residual value, Fair value, Present value, Future value 2. The "carrying amount" of an item of property, plant and equipment generally refers to: A. The historical cost of the item B. The replacement cost of the item c. The depreciable amount of the item D. The amount at which the item is recognised in the financial statements 4. The elements of financial statements which relate to statement of profit or loss are: A. Income, assets and expenses B. Income and expenses C. Income, expenses and equity D. Assets, liabilities and equity 6. Which of the following is or are not part of the advantages of applying a principles-based framework of accounting rather than a rules-based framework? (i) It avoids fire-fighting', where standards are developed in response to specific problems as they arise (ii) It allows preparers and auditors to deal with complex transactions which may not be specifically covered by an accounting standard (iii) Principles-based standards are thought to be harder to circumvent (iv) A set of rules is given which attempts to cover every eventuality (v) Accounting standards can be developed in relation to agreed principles A. (i) only B. (i), (iii) and (v) only C. (iv) only D. (i), (ii), (iii) and (v) only
10. Kingsford Ltd operates in an emerging market with a fast-growing economy where prices increase frequently. Which of the following statements are false when using historical cost accounting compared to current value accounting in this type of market? (i) Capital employed which is calculated using historical costs is understated compared to current value capital employed (ii) Historical cost profits are overstated in comparison to current value profits (iii) Capital employed which is calculated using historical costs is overstated compared to current value capital employed (iv) Historical cost profits are understated in comparison to current value profits A. (i) and (ii) B. (i) and (iv) C. (ii) and (iii) D. (iii) and (iv) 11. How often should goodwill acquired in a business combination be tested for impairment? A. Every year B. Whenever there are external indications of impairment c. Whenever there are internal indications of impairment D. Never 13. Which of the following would not be included in the cost of an item of property, plant and equipment under IAS 16? A. Delivery and installation charges B. Testing costs c. Refundable value added tax D. Site preparation costs 16. An impairment loss is: A. The amount by which the recoverable amount of an asset exceeds its carrying amount B. The amount by which the recoverable amount of an asset exceeds its written down value c. The amount by which the carrying amount of an asset exceeds its recoverable amount D. The amount by which the carrying amount of an asset exceeds its market value 17. Which of the following is the main purpose of the statement of changes in equity? A. To show an entity's income, expenses and profit for an accounting period B. To show how each component of an entity's equity has altered during an accounting period c. To show an entity's total equity at the end of an accounting period D. To show an entity's assets, liabilities and equity at the end of an accounting period. 18. Which of the following is true about the notes to the financial statements? The notes to the financial statements should provide information: As required by international standards, if not presented elsewhere in the financial statements i. Which is relevant to an understanding of the financial statements About the entity's accounting policies A. (i) and (ii) only B. (i) and (iii) only C. All of the above D. None of the above
Transcribed Image Text:10. Kingsford Ltd operates in an emerging market with a fast-growing economy where prices increase frequently. Which of the following statements are false when using historical cost accounting compared to current value accounting in this type of market? (i) Capital employed which is calculated using historical costs is understated compared to current value capital employed (ii) Historical cost profits are overstated in comparison to current value profits (iii) Capital employed which is calculated using historical costs is overstated compared to current value capital employed (iv) Historical cost profits are understated in comparison to current value profits A. (i) and (ii) B. (i) and (iv) C. (ii) and (iii) D. (iii) and (iv) 11. How often should goodwill acquired in a business combination be tested for impairment? A. Every year B. Whenever there are external indications of impairment c. Whenever there are internal indications of impairment D. Never 13. Which of the following would not be included in the cost of an item of property, plant and equipment under IAS 16? A. Delivery and installation charges B. Testing costs c. Refundable value added tax D. Site preparation costs 16. An impairment loss is: A. The amount by which the recoverable amount of an asset exceeds its carrying amount B. The amount by which the recoverable amount of an asset exceeds its written down value c. The amount by which the carrying amount of an asset exceeds its recoverable amount D. The amount by which the carrying amount of an asset exceeds its market value 17. Which of the following is the main purpose of the statement of changes in equity? A. To show an entity's income, expenses and profit for an accounting period B. To show how each component of an entity's equity has altered during an accounting period c. To show an entity's total equity at the end of an accounting period D. To show an entity's assets, liabilities and equity at the end of an accounting period. 18. Which of the following is true about the notes to the financial statements? The notes to the financial statements should provide information: As required by international standards, if not presented elsewhere in the financial statements i. Which is relevant to an understanding of the financial statements About the entity's accounting policies A. (i) and (ii) only B. (i) and (iii) only C. All of the above D. None of the above
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