MID-TERM TEST Time: 30 minutes
1. Which one of the following terms best describes assets recorded at the amount
that represents the immediate purchase cost of an equivalent asset? A. Realisable value B. Present value C. Current cost D. Historical cost
2. According to the IASB Conceptual Framework, which two of the following
characteristics are described as fundamental qualitative characteristics that make
the information provided in financial statements useful to users? A. Comparability B. Understandability C. Relevance D. Faithful
3. Financial statements include a statement of financial position, a statement of
profit or loss and other comprehensive income and a statement of changes in equity.
According to the Preface to International Financial Reporting Standards,
which two of the following are also included within the financial statements? A. A directors' report B. An auditor's report C. A statement of cash flows D. Accounting policies
4. The Scandium Company is commencing a new construction project, which is to
be financed by borrowing. The key dates are as follows:
15 May 20X9 Loan interest relating to the project starts to be incurred 1
3 June 20X9 Technical site planning commences
12 June 20X9 Expenditures on the project start to be incurred
18 July 20X9 Construction work commences
According to IAS 23 Borrowing costs, from what date can Scandium commence
the capitalisation of borrowing costs? A. 12 June 20X9 B. 18 July 20X9 C. 3 June 20X9 D. 15 May 20X9
5. Are the following statements true or false, according to IAS 38 Intangible assets?
1. Expenditure during the research phase of a project may sometimes be capitalised as an intangible asset.
2. Expenditure during the development phase of a project may sometimes be
capitalised as an intangible asset. A. 1.False 2. False B. 1.False 2. True C. 1.True 2. False D. 1.True 2. True
6. Under IAS 36 Impairment of assets are the following statements relating to an active market true or false?
1. Willing buyers and sellers are usually found.
2. Prices are available to the public. 2 A. 1.False 2. False B. 1.False 2. True C. 1.True 2. False D. 1.True 2. True
7. Under IFRS 16 Leases, which two of the following dates are used to identify the inception of a lease?
A. The date of the commitment by the parties to all of the provisions of the lease
B. The date of the commitment by the parties to the principal provisions of the lease
C. The date when title to the asset is transferred
D. The date of the lease agreement
8. How should import duties be dealt with according to IAS 2 Inventories? A. Ignored B. Deducted from cost C. Deducted in arriving at NRV D. Added to cost
9. Are the following statements true or false, according to IAS 2 Inventories?
1. Cost of factory management should be included in the cost of inventories.
2. Maintenance expenses for an item of equipment used in the manufacturing
process should be included in the cost of inventories. A. 1.False 2. False B. 1.False 2. True 3 C. 1.True 2. False D. 1.True 2. True
10. According to IFRS 15 Revenue from contracts with customers, which of the
following factors is not taken into account when establishing the transaction price of a contract? A. Financing components
B. Variable consideration in contract price C. Non-cash consideration D. Customer credit quality
11. According to IAS 12 Income taxes, are the following statements in relation to
deferred tax liabilities true or false?
1. Deferred tax liabilities are the amounts of income taxes payable in future periods
in respect of taxable temporary differences.
2. Deferred tax assets are the amounts of income taxes recoverable in future
periods in respect of deductible temporary differences. A. 1.False 2. False B. 1.False 2. True C. 1.True 2. False D. 1.True 2. True
12. Which two of the following are examples of deferred tax assets? 4
Deferred tax assets are the amount of income taxes recoverable in future periods in respect of: A. permanent differences
B. taxable temporary differences
C. the carryforward of unused tax losses
D. deductible temporary differences
13. Is the following statements about the valuation of inventory is TRUE OR FALSE?
Inventory should be valued at the lowest of cost, net realisable value and replacement cost. A. TRUE B. FALSE
14. Which of the following is NOT classified as inventory? A. Raw materials B. An office building C. Work in progress D. Finished goods
15. M Co sets up his demolition business from scratch on 1 January 20X0. Which
items should be represented as capital expenditure? A. Rents office premises
B. Buys three wrecking machines C. Repairs the warehouse roof
D. Writes off a damaged machine.
16. Under this accounting principle, a business is not expected to end its operations in the near term. A. Accounting entity B. Going concern 5 C. Accrual basis D. Materiality
17. The personal transactions of the business owner that do not involve the
business are not recorded in the books of accounts of the business. This relates to the concept of A. Business entity concept B. Accounting currency C. Accounting period D. Accrual basis
18. The information includes everything necessary to reflect what happened for all
of the business activities for which the firm is reporting. A. completeness B. neutrality C. freedom from error D. verifiability 19. Fill in the blank:
“Aaccording to IAS 37 Provisions, an onerous contract is a contract in which
__________ of meeting the obligations under the contract __________ the
economic benefits expected to be received under it.” A. Sunk costs; exceed B. Unavoidable costs; exceed
C. Opportunity costs; are less than
D. Avoidable costs; are less than
20. A non-current asset was bought at 1 Jan 20X1 for $9,600 and depreciated by
20% per annum using the reducing balance method. On 1 Jan 20X4, it was sold for $4,800.
What was the result of this disposal? 6 A. A loss on disposal of $960
B. A profit on disposal of $115.20
C. A loss on disposal of $115.20
D. A profit on disposal of $960 7