CFAS - CHAPTER 7

Question 1

The presentation and disclosure requirement achieves all of the following, except

a. An effective communication tool
b. More relevant and faithfully represented information
c. Understandability and comparability of information
d. Financial position, performance and cash flows

Answer 1

d. Financial position, performance and cash flows

Question 2

It is the sorting of assets, liabilities, equity, income and expenses with similar characteristics.

a. Classification
b. Summarization
c. Interpretation
d. Recognition

Answer 2

a. Classification

Question 3

All of the following can considered appropriate classification, except

a. Current and noncurrent assets
b. Current and noncurrent liabilities
c. Ordinary share capital and preference share capital
d. Offsetting asset and liability

Answer 3

d. Offsetting asset and liability

Question 4

Income and expenses are classified as

a. Profit or loss and other comprehensive income
b. Profit loss and retained earnings
c. Retained earnings and other comprehensive income
d. Ordinary and extraordinary

Answer 4

a. Profit or loss and other comprehensive income

Question 5

What is the new term to describe the statement showing profit or loss and other comprehensive income?

a. Income statement
b. Statement of profit or loss
c. Statement of other comprehensive income
d. Statement of financial performance

Answer 5

d. Statement of financial performance

Question 6

Financial capital is defined as

a. Net assets in monetary terms.
b. Net assets in terms of physical productive capacity.
c. Legal capital.
d. Share capital issued and outstanding.

Answer 6

a. Net assets in monetary terms.

Question 7

The physical capital concept requires which measurement?

a. Historical cost
b. Current cost
c. Fair value
d. Present value

Answer 7

b. Current cost

Question 8

Which concept is applied to net income and other comprehensive income?

a. Financial capital
b. Physical capital
c. Legal capital
d. Borrowed capital

Answer 8

a. Financial capital

Question 9

Which statement regarding the term profit is true?

a. Profit is any amount over and above that required to maintain the capital at the beginning of the period.
b. Profit is equal to income minus expenses.
c. Profit is the equivalent of net income under IFRS.
d. All of these statements are true about the term profit.

Answer 9

d. All of these statements are true about the term profit.

Question 10

Under the financial capital concept, net income occurs when

a. The nominal amount of net assets at year-end increased.
b. The physical productive capital at year-end increased excluding equity transactions with owners
c. The nominal amount of net assets at year-end increased excluding equity transactions with owners
d. The physical productive capital at year-end increased.

Answer 10

c. The nominal amount of net assets at year-end increased excluding equity transactions with owners