AAT Level 4 - Professional Diploma in Accounting Financial Reporting Frameworks Questions and Answers

Question 1

According to Section 2 of FRS 102 'Concepts and Pervasive Principles', which of the following are the principal qualitative characteristics that make the information in financial statements useful?

Accepted Answer

Relevance, Reliability, Comparability, and Understandability

Answer

Prudence, Consistency, Materiality, and Timeliness

Answer

Accruals, Going Concern, Objectivity, and Neutrality

Answer

Faithful Representation, Verifiability, Neutrality, and Completeness

Question 2

A private limited company in the UK has an accounting reference date of 30 June. For its financial year ended 30 June 2025, what is the statutory deadline for filing its annual accounts with Companies House?

Accepted Answer

31 March 2026

Answer

31 December 2025

Answer

31 January 2026

Answer

30 June 2026

Question 3

A UK company wishes to apply FRS 105, 'The Financial Reporting Standard applicable to the Micro-entities Regime'. Which of the following would disqualify the company from being treated as a micro-entity, regardless of its size?

Accepted Answer

It is a parent company that is required to prepare consolidated financial statements.

Answer

Its annual turnover is £630,000.

Answer

Its balance sheet total (gross assets) is £315,000.

Answer

It has an average of 10 employees.

Question 4

A UK company, which reports under FRS 102, owns a building carried under the revaluation model. At the start of the year, the building's carrying amount was £800,000. At the year-end, a professional valuer assesses its fair value to be £870,000. This is the first revaluation of this asset. How should the £70,000 revaluation gain be recognised in the financial statements?

Accepted Answer

As a credit to the Revaluation Surplus, reported under Other Comprehensive Income.

Answer

As 'Other Income' in the Statement of Profit or Loss.

Answer

As a direct credit to the Retained Earnings reserve.

Answer

As an increase in the cash flow from investing activities.

Question 5

On 1 October 2024, a company with a 31 December year-end receives an order and a full payment of £24,000 for a 12-month maintenance contract, which commences on 1 November 2024. Under FRS 102, how much revenue should be recognised from this contract in the Statement of Profit or Loss for the year ended 31 December 2024?

Accepted Answer

£4,000

Answer

£24,000

Answer

£2,000

Answer

£0

Question 6

Which of the following statements provides the best definition of a 'provision' in accordance with FRS 102 Section 21?

Accepted Answer

A liability of uncertain timing or amount.

Answer

A liability of certain timing and amount.

Answer

An amount appropriated from retained earnings for a future project.

Answer

A reduction in the carrying value of an asset to its recoverable amount.