DAIF Chapter 4

Question 1

What is the definition of an asset?

Answer 1

An asset is a present economic resource controlled by the entity as a result of a past event

Question 2

What is the definition of a liability?

Answer 2

A liability is a present obligation of an entity to transfer an economic resource as a result of a past event

Question 2

What is the definition of equity ?

Answer 2

Equity is the residual interest in the assets of an entity after deducting all of its liabilities

Question 3

What are the two recognition criteria / fundamental characteristics of useful financial information?

Answer 3

Relevance and faithful representation

Question 4

What does faithful Representation mean?

Answer 4

Complete neutral and free from error

Question 5

What is the definition of an intangible asset?

Answer 5

An identifiable non-monetary asset without physical substance

Question 6

T OR F
Development expenditure must be written off as an expense to profit or loss as it is incurred?

Answer 6

False

Question 7

T OR F
Research expenditure must be written off as an expense to profit or loss as it is incurred.

Answer 7

True

Question 8

Which Inventory valuing method is not permitted by IAS 2?

Answer 8

LIFO

Question 9

IN IAS 10 what is an adjusting event after the year end but before the accounts are signed ?

Answer 9

The liquidation of a credit customer /
Declaration of a final dividend after the year end date
Fraud which has been discovered after the year end date

Question 10

In IAS 10 what is three examples of non adjusting events ?

Answer 10

A Fire / Issue of new share capital / Acquisition of a subsidiary

Question 11

Can Testing costs be capitalised?

Answer 11

Yes

Question 12

Where is a revaluation recognised in the statement of profit or loss?

Answer 12

A Revaluation is recognised in the statement of other comprehensive income