1.When there is much variability, the operating cycle is measured at

a. Six months b. The median value

c. Twelve months d. Less than twelve months

2.Which of the following best describe the term liability?

a. An excess of equity over current assets

b. Resources to meet financial commitments when due

c. The residual interest in the assets of the entity after deducting all of the liabilities

d. A present obligation arising from past events.

3.Which of the following is usually classified as a noncurrent asset?

a. Plant expansion fund

b. Prepaid rent

c. Supplies

d. Goods that are in the process of being completed for another entity.

4.Accrued expense would normally appear in the statement of financial position under

a. Noncurrent assets b. Noncurrent liabilities

c. Current liabilities d. Current assets

5.Noncurrent liabilities include

a. Obligations expected to be liquidated within the operating cycle.

b. Obligations payable at some date beyond the operating cycle

c. Accrued interest expense on the note payable

d. All of these are noncurrent liabilities.

6.The components of financial statements include all of the following except

a. Statement of financial position

b. Income statement

c. Statement of retained earnings

d. Statement of cash flows

7.Which of the following is not a long-term investment?

a. Cash surrender value of life insurance b. Franchise

c. Land held for speculation d. A sinking fund

8.Accrued revenue would normally appear in the statement of financial position under

a. Noncurrent assets b. Current liabilities

c. Noncurrent liabilities d. Current assets

9.Which of the following is not an acceptable major asset classification?

a. Current assets b. Investments

c. Property, plant and equipment d. Deferred charges

10.The essential characteristics of an asset include all of the following except

a. The asset is the result of past events

b. The assets provide future economic events

c. The cost of asset can be measured reliably

d. The asset is tangible.

11.The statement of financial position is useful for analyzing all the following, except

a. Liquidity

b. Solvency

c. Profitability

d. Financial flexibility or need for additional financing

12.The major financial statement includes all the following except

a. Statement of financial position

b. Statement of changes in financial position

c. Statement of comprehensive income

d. Statement of changes in equity.

13.Assets to be sold, consumed or realized as part of the normal operating cycle are

a. Current assets

b. Noncurrent assets

c. Classified as current or noncurrent is accordance with other criteria

d. Noncurrent investments.

14.In which section of the statement of financial position should cash that is restricted for the settlement of a liability due 18 months after the reporting period be presented?

a. Current assets b. Equity

c. Noncurrent liabilities d. Noncurrent assets

15.Which item is not a current liability?

a. Unearned revenue

b. Stock dividend payable

c. The currently maturing portion of long-term debt

d. Trade account payable.

16.It is the total of income less expensive, excluding the components of other comprehensive income.

a. Comprehensive income b. Profit or loss

c. Accounting income d. Economic income

17.The income statement reveals

a. Assets and equity at the point in time

b. Assets and equity for a period of time

c. Net income at the point in time

d. Net income for a period of time.

18.A party is related to an entity if the party, directly or indirectly, through one or more intermediaries

a. Control, is controlled by or is under common control with the entity

b. Has an interest in the entity that gives it significant influence over the entity.

c. Has joint control over the entity

d. All of these define a related party.

19.If there have been transactions between related parties an entity shall disclose

a. Nature of the relationship

b. Information about the transactions

c. Nature of the relationship and information about the transaction

d. Neither the nature of the relationship nor information about the transactions.

20.Which of the following is not a related party?

a.A director of the entity

b.The parent of the entity

c. A shareholder that holds 1 % stake in the entity

d. The son of the chief executive officer of the entity.

21.All of the following fall within the definition of an entity's related party except

a. Joint venture in which an entity is a venturer

b. A postemployment benefit plan for the benefit of the employees

c. An executive director of the entity

d. The partner of a key manager is a major supplier of the entity.

22.All of the following are related party transactions except

a. Transferred goods from inventory to a shareholder owning 40% of the entity's ordinary shares

b. Sold an entity car to the wife of the managing director

c. Sold an asset to an associate

d. Took out at huge bank loan

23.The financial statements are authorized for issue

a. When the board of directors reviews the financial statements and authorizes them for issue

b. When the financial statements are made available to shareholders.

c. When the shareholders approve the financial statements at their annual meeting

d. When the approved financial statements are filed with a regulatory body.

24.Inventories shall be measured at

a. Cost

b. Net realizable value

c. Lower of cost and net realizable value

d. Lower of cost and market

25.The cost of inventories shall be measured using

a. FIFO b. Average method

c. LIFO d. Either FIFO or average method.

26.Net realizable value

a. Current replacement cost

b. Estimated selling price

c. Estimated selling price less estimated cost to complete

d. Estimated selling price less estimated cost to complete & estimated cost of disposal.

27.The costing of inventory must be deferred until the end of reporting period under which method?

a. FIFO b. LIFO

c. Weighted average d. Specific identification

28.Inventories are usually written down to net realizable value

a. Item by item b. By classification c. By total d. By segment

29.Which is not a disclosure in relation to inventory?

a. The amount of any writedown of inventory recognized as expense.

b. The amount of any reversal of writedown

c. The circumstances or events that led to the reversal of a writedown of inventory.

d. The fair value less cost of disposal of inventory pledged as security for liabilities.

30.In the period of rising prices, the inventory cost allocation method that tends to result in the lowest reported net income is

a. FIFO b. LIFO c. Weighted average d. Moving average

31.The amount of any writedown of inventory to net realizable value and all losses of inventory should be

a. Recognized as operating expense in the period the writedown or loss occurs.

b. Recognized as other expense in the period writedown or loss occurs.

c. Recognized as component of cost of sales in the period the writedown or loss occurs.

d. Deferred until the related inventory is sold.

32.The cost of inventories that are not ordinarily interchangeable and goods or services

produced and segregated for specific projects shall be measured using

a. FIFO b. Average Method

c. LIFO d. Specific Identification

33.Which is not a disclosure in relation to inventory

a. Accounting policy adopted in measuring inventory

b. The carrying amount of each item of inventory

c. The carrying amount of inventory carried at fair value less cost of disposal

d. The amount of inventory recognized as expense during the period.

34.Which of the following inventory method measures most closely the current cost of inventory?

a. FIFO b. Specific identification c. Weighted average d. LIFO

35.Which inventory cost flow assumption would consistently result in the highest income in a period of sustained inflation?

a. LIFO b. FIFO

c. Weighted average d. Specific identification

36.Property, plant and equipment are defined as

a. Assets held for sale in the ordinary course of business.

b. Assets held to earn rentals or for capital appreciation.

c. Tangible assets held for use in the production or supply of goods or services or for administrative purposes.

d. Tangible assets held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and expected to be used during more than one reporting period.

37.Which is not an essential characteristic of property, plant and equipment?

a. The property, plant and equipment are tangible assets.

b. The property, plant and equipment are used in production or supply of goods and services, for rental purposes and for administrative purposes.

c. The property, plant and equipment are expected to be used over a period of more than one year.

d. The property, plant and equipment are subject to depreciation.

38.An item of property, plant and equipment shall be recognized as an asset when

a. It is probable that future economic benefits will flow to the entity.

b. The cost of the asset can be measured reliably.

c. The cost is material.

d. It is probable that future economic benefits will flow to the entity and the cost of the asset can be measured reliably.

39.Major spare parts and standby equipment which are expected to be used over a period of more than one year shall be classified as

a. Property, plant and equipment b. Inventory

c. Noncurrent investment d. Expense

40.Under the cost model, an item of property, plant and equipment shall be carried subsequently at

a. Cost

b. Revalued amount

c. Cost less accumulated depreciation and any accumulated impairment loss

d. Revalued amount less accumulated depreciation and any accumulated impairment loss