1. XYZ Inc. changes its method of valuation of inventories fromweighted-average method to first-in,first-out (FIFO) method. XYZ Inc. should account for this changeas(a) A change in estimate and account for it prospectively.(b) A change in accounting policy and account for it prospectively.(c) A change in accounting policy and account for itretrospectively.(d) Account for it as a correction of an error and account for itretrospectively.2. Change in accounting policy does not include(a) Change in useful life from 10 years to 7 years.(b) Change of method of valuation of inventory from FIF0 toweighted-average.(c) Change of method of valuation of inventory from weighted-average to FIFO.(d) Change from the practice (convention) of paying as Christmasbonus one month's salary to staff before the end of the year to thenew practice of paying one-half month's salary only.3. When a public shareholding company changes an accountingpolicy voluntarily, it has to(a) Inform shareholders prior to taking the decision.(b) Account for it retrospectively.(c) Treat the effect of the change as an extraordinary item.(d) Treat it prospectively and adjust the effect of the change in thecurrent period and future periods.4. When it is difficult to distinguish between a change of estimateand a change in accounting policy,then an entity should(a) Treat the entire change as a change in estimate withappropriate disclosure.(b) Apportion, on a reasonable basis, the relative amounts ofchange in estimate and the change in accounting policy and treateach one accordingly.(c) Treat the entire change as a change in accounting policy.(d) Since this change is a mixture of two types of changes, it isbest if it is ignored in the year of the change; the entity should thenwait for the following year to see how the change develops andthen treat it accordingly.5. When an independent valuation expert advises an entity that thesalvage value of its plant and machineryhad drastically changed and thus the change is material, the entityshould(a) Retrospectively change the depreciation charge based on therevised salvage value.(b) Change the depreciation charge and treat it as a correction ofan error.(c) Change the annual depreciation for the current year and futureyears.(d) Ignore the effect of the change on annual depreciation, becausechanges in salvage values would normally affect the future onlysince these are expeetad to be raeovarad in future 1. Which of the following reports is not a component of thefinancial statements according to IAS 1?(a) Balance sheet.(b) Statement of changes in equity.(c) Director’s report.(d) Notes to the financial statements.2. XYZ Inc. decided to extend its reporting period from a year(12-month period) to a 15-month period. Which of the followingis not required under IAS 1 in case of change in reporting period?(a) XYZ Inc. should disclose the reason for using a longer periodthan a period of 12 months.(b) XYZ Inc. should change the reporting period only if othersimilar entities in the geographical area in which it generallyoperates have done so in the current year; otherwise its financialstatements would not be comparable to others.(c) XYZ Inc. should disclose that comparative amounts used in thefinancial statements are not entirely comparable.3. Which of the following information is not specifically arequired disclosure of IAS 1?(a) Name of the reporting entity or other means of identification,and any change in thatinformation from the previous year.(b) Names of major/significant shareholders of the entity.(c) Level of rounding used in presenting the financial statements.(d) Whether the financial statements cover the individual entity ora group of entities.4. Which one of the following is not required to be presented asminimum information on the face of the balance sheet, accordingto IAS 1?(a) Investment property.(b) Investments accounted under the equity method.(c) Biological assets.(d) Contingent liability.5. When an entity opts to present the income statement classifyingexpenses by function, which of the following is not required to bedisclosed as "additional information"?(a) Depreciation expense.(b) Employee benefits expense.(c) Director's remuneration.(d) Amortization expense.

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1. XYZ Inc. changes its method of valuation of inventories from weighted-average method to first-in, first-out (FIFO) method. XYZ Inc. should account for this change as (a) A change in estimate and account for it prospectively. (b) A change in accounting policy and account for it prospectively. (c) A change in accounting policy and account for it retrospectively. (d) Account for it as a correction of an error and account for it retrospectively. 2. Change in accounting policy does not include (a) Change in useful life from 10 years to 7 years. (b) Change of method of valuation of inventory from FIFO to weighted-average. (c) Change of method of valuation of inventory from weighted- average to FIFO. (d) Change from the practice (convention) of paying as Christmas bonus one month's salary to staff before the end of the year to the new practice of paying one-half month's salary only.

1. XYZ Inc. changes its method of valuation of inventories from weighted-average method to first-in, first-out (FIFO) method. XYZ Inc. should account for this change as (a) A change in estimate and account for it prospectively. (b) A change in accounting policy and account for it prospectively. (c) A change in accounting policy and account for it retrospectively. (d) Account for it as a correction of an error and account for it retrospectively. 2. Change in accounting policy does not include (a) Change in useful life from 10 years to 7 years. (b) Change of method of valuation of inventory from FIFO to weighted-average. (c) Change of method of valuation of inventory from weighted- average to FIFO. (d) Change from the practice (convention) of paying as Christmas bonus one month's salary to staff before the end of the year to the new practice of paying one-half month's salary only.

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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