1. The company changed its depreciation method from straight-line method to the double declining balance method. Which of the following should be reported?

A. Proforma effect of retroactive application

B. Prior period error

C. An accounting change that should reported currently and prospectively

D. Cumulative effect of change in accounting policy

2.Why is retrospective treatment of a change in accounting estimate is prohibited?

A. Retrospective treatment of a change in accounting estimate is prohibited under existing standard.

B. The existing standard does not prohibit retrospective treatment of change in accounting estimate but is silent on the issue.

C. Change in accounting estimate is a normal recurring correction or adjustment which is natural result of the accounting process.

D. The retrospective treatment for any type of presentation is not allowed.

3. The accounting staff of a merchandise company erroneously overstated the beginning balance of the inventory account. Under IAS 8, the effect of the error is to

A. Overstate net purchase

B. Overstate gross margin

C. Overstate Cost of Goods Available for Sale.

D. Understate Cost of Goods Sold

4. Which of the following information should Starting Right Corporation present on its financial statements?

A. Name of the reporting entity including any changes from what has been presented from the previous year.

B. Years covered and include at least a one-year comparative

C. Whether the financial statements cover the individual entity or a group of entities.

D. All of the given Choices.

5. As stated in IAS 10, if a dividend is declared after the reporting period but the financial statements are authorized for issue, the dividend is:

A. Recognized as a liability at the reporting period

B. Reported as a reduction against the cash account at reporting period.

C. Recorded as a direct reduction of equity at the reporting period.

D. Not recognized as a liability at the reporting period.

6. When after the end of reporting period an event occurs that is indicative of conditions that arose after the end of reporting period

A. The entity shall adjust the related amount in the financial statements

B. The entity shall disclose the nature and effect of the event in the financial statements

C. The entity shall disclose the nature but the effect of the event

D. The entity shall disclose the nature and effect of the event and adjust the related amount

7. The accountant wrongfully includes the $50,000 in the ending balance of inventory. What is the effect of the overstatement of current year's ending inventory?

A. The current year's cost of goods sold is overstated

B. the current year's operating expense is understated

C. The current year's net income is overstated

D. The next year's income is overstated