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Question 1

Which one of the following actions would result in a decrease in income?

Answer 1

Accelerating purchases at the end of the year when using last-in, first-out inventory method in times of rising prices.
Under the LIFO method, the most recent costs of acquiring or producing inventory are expensed as part of cost of goods sold. In a time of rising prices, charging newer, higher-priced goods against current revenues decreases income.

Question 2

When the allowance method of recognizing uncollectible accounts is used, the entry to record the write-off of a specific account:

Answer 2

decreases both accounts receivable and the allowance for uncollectible accounts.

to record uncollectible amount
Dr bad dept expenses
Cr Allowance for uncollectible

to write off the amount
Dr allowance for uncollectible
Cr account receivable

Question 3

According to the IASB Framework, the two criteria required for incorporating items into the income statement or statement of financial position are that

Answer 3

In order for an item to be recognized in the financial statements, IFRS requires that it meet the definition of an element and can be measured reliably.