Financial Accounting Flashcards
7 cards from real ACCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Accounting flashcards as text
Under IAS 2 Inventories, which cost formula is NOT permitted for measuring inventory?
Answer: Last-In First-Out (LIFO)
IAS 2 prohibits the LIFO cost formula; only FIFO, weighted average, and specific identification are allowed.
A company receives a government grant of $50,000 related to the purchase of equipment costing $200,000. Under the deferred income approach in IAS 20, how should the grant be recognized?
Answer: Released to income over the useful life of the asset
Under the deferred income approach, the grant is initially recorded as deferred income and released to profit or loss over the asset's useful life.
Which of the following best describes 'accruals' in financial accounting?
Answer: Expenses incurred but not yet paid or recorded
Accruals are expenses that have been incurred in the current period but have not yet been paid or recorded by the period end.
Under IAS 10 Events After the Reporting Period, which event is classified as an ADJUSTING event?
Answer: Discovery of a fraud that existed at the reporting date
A fraud that existed at the reporting date provides evidence of conditions that existed then, making it an adjusting event under IAS 10.
When preparing a bank reconciliation, a lodgment recorded in the cash book but not yet shown on the bank statement is called:
Answer: An outstanding deposit (timing difference)
A deposit recorded by the company but not yet processed by the bank is an outstanding deposit, representing a timing difference in the reconciliation.
In a partnership, the appropriation account is used to:
Answer: Distribute profits and losses among partners according to the agreement
The appropriation account allocates net profit or loss to partners via salaries, interest on capital, and profit-sharing ratios per the partnership agreement.
Which accounting concept requires that financial statements should be free from material errors and bias, and faithfully represent what they purport to represent?
Answer: Faithful representation
Faithful representation is a fundamental qualitative characteristic under the IASB Conceptual Framework, requiring information to be complete, neutral, and free from error.