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T7 Questions and Answers

Question # 6

The following requirements are characteristic of which term below? Must be reported on the balance sheet; must be owned or controlled by the company; and must possess expected future benefits.

A.

Assets

B.

Owners’ equity

C.

Contributed capital

D.

Liabilities

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Question # 7

When an employee has provided service in exchange for benefits to be paid in the future, what is it considered in accounting terms?

A.

The employee value proposition

B.

A long term benefit

C.

A noncurrent expense

D.

A liability

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Question # 8

IAS 19 requires that all numbers involved in accounting for defined benefit plans be presented as a single amount in the statement of financial position. What is this amount called?

A.

Net defined benefit liability (asset)

B.

Asset ceiling

C.

Fair value

D.

Net present value

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Question # 9

Which fundamental qualitative characteristics make accounting information useful for decision-making?

A.

Relevance and faithful representation

B.

Cost and materiality

C.

Assets and liability

D.

Income and expenses

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Question # 10

Which of the following is true of liabilities?

A.

Current liabilities come due in less than a year

B.

Current liabilities come due in less than 18 months

C.

Noncurrent liabilities come due in less than a year

D.

Both current and noncurrent liabilities come due in less than a year

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Question # 11

One of the reasons preparers use the conceptual framework is to:

A.

Develop accounting policies in the absence of specific standards

B.

Document a historical record of all judgments

C.

Develop alternate interpretations of specific standards

D.

Encourage change to standards as Board members change

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Question # 12

What is the reconciliation of the beginning and ending balances of stockholders’ equity accounts called?

A.

Statement of Financial Position

B.

Statement of Income

C.

Statement of Cash Flows

D.

Statement of Stockholders’ Equity

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Question # 13

Defined benefit pension commitments often represent a company’s largest single financial liability. IAS 19 was amended as of January, 2014. What does this amendment require?

A.

That surplus or deficit of a pension fund be detailed in the financial statement

B.

That any existing deficit of a pension fund be detailed in the financial statement

C.

That any projected deficit of a pension fund be detailed in the financial statement

D.

That companies state whether they have a defined benefit or defined contribution plan in the financial statement

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