FCCA FCCA Financial Reporting and Standards 2

Question 1

Which IFRS standard addresses financial instruments, covering classification, measurement, and impairment?

Accepted Answer

IFRS 9

Answer

IFRS 7

Answer

IFRS 13

Answer

IFRS 16

Question 2

Under the IFRS conceptual framework, which qualitative characteristic ensures that financial information represents what it purports to represent?

Accepted Answer

Faithful representation

Answer

Relevance

Answer

Comparability

Answer

Timeliness

Question 3

A US company reports a deferred tax liability. This arises most commonly due to which situation?

Accepted Answer

When tax depreciation exceeds accounting depreciation in the current year

Answer

When accounting revenue exceeds taxable revenue permanently

Answer

When there are tax losses carried forward

Answer

When interest expense is not deductible for tax purposes

Question 4

Under IFRS, inventory is measured at which amount on the balance sheet?

Accepted Answer

The lower of cost or net realizable value

Answer

The higher of cost or net realizable value

Answer

Always at cost, regardless of market conditions

Answer

Always at net realizable value

Question 5

Which method of inventory cost flow is NOT permitted under IFRS but IS permitted under US GAAP?

Accepted Answer

LIFO (Last-In, First-Out)

Answer

FIFO (First-In, First-Out)

Answer

Weighted average cost

Answer

Specific identification

Question 6

Under IFRS, how is a contingent liability treated in the financial statements if it is possible but not probable?

Accepted Answer

Disclosed in the notes but not recognized

Answer

Recognized as a provision on the balance sheet

Answer

Recognized as an expense in the income statement

Answer

Ignored completely in financial statements