T7 Online Practice Questions and Answers

Identify the characteristic being employed when companies in the same industry are using the same accounting principles.

A. Comparability

B. Relevance

C. Faithful representation

D. Verifiability

IAS 19 classifies employee benefits into four main categories. Which of the following best represent those categories?

A. Wages, short-term benefits, long-term benefits, termination benefits

B. Wages, profit-sharing, bonuses, non-monetary bonuses

C. Short-term benefits, post-employment benefits, long-term benefits, termination benefits

D. Wages, short-term benefits, bonuses, termination benefits

Level 2 of the conceptual framework of International Accounting Standards Board (IASB) identifies qualitative characteristics of accounting information. These characteristics distinguish more useful information from less useful information.

To what end is this distinction useful?

A. For reporting purposes

B. For business strategy

C. For decision-making purposes

D. For organizational vision

Level 3 of the conceptual framework for financial reporting includes five basic assumptions. Which of the following describes the basic assumption of economic entity?

A. The company lasts long enough to fulfill objectives and commitments

B. The company keeps its activity separate from its owners and other business units

C. The company can divide its economic activities into time periods

D. Transactions are recorded in the periods in which the events occur

When does a present obligation exist?

A. When the employee renders service

B. When the company has no realistic alternative but to make the payments

C. When a change in the company's informal practices would cause unacceptable damage to its relationship with employees

D. When the company recognizes the expected cost of profit-sharing and bonus payments

What is one of the purposes of International Accounting Standards Board (IASB)'s conceptual framework, which establishes the concepts that underlie financial reporting?

A. Provides information about economic entities that is useful in making economic decisions

B. Provides guidance where conflicting interpretations have developed

C. Provides benchmark for judgments

D. Informs International Accounting Standards Board (IASB) of implications of proposed standards

Neutral and complete are ingredients of which of the following fundamental characteristics of accounting information?

A. Faithful representation

B. Relevance

C. Predictive value

D. Comparability

In a defined contribution benefit plan, who assumes risk?

A. Employees

B. Employers

C. Both employees and employers