Business Management : Practice Questions and Answers

The assumption that a company will be liquidated in the near future

The assumption that a company will continue to operate in the foreseeable future

The assumption that a company will cease operations in the foreseeable future

The assumption that a company will be sold in the near future

Revenues should be recognized when cash is received

Revenues and profits should not be overstated, and expenses and losses should not be understated

Assets should always be recorded at their fair value

Liabilities should always be recorded at their historical cost

Only information that is significant to the financial statements needs to be disclosed

All information, regardless of significance, must be disclosed in the financial statements

Information that is not significant to the financial statements need not be disclosed

Information that is disclosed in the financial statements must be accurate and reliable

When cash is paid

When goods or services are received

When the obligation to pay is incurred

When the invoice is received

When cash is received

When goods are shipped

When the risks and rewards of ownership have transferred to the customer

When the goods are produced

A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow 1 of economic benefits from the entity

A future obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of economic benefits 2 from the entity

A present obligation of the entity arising from future events, the settlement of which is expected to result in an outflow 3 of economic benefits from the entity

A future obligation of the entity arising from future events, the settlement of which is expected to result in an inflow of economic benefits to the entity

A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow 4 of economic benefits from the entity

A future obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of economic benefits 5 from the entity

A present obligation of the entity arising from future events, the settlement of which is expected to result in an outflow 6 of economic benefits from the entity

A future obligation of the entity arising from future events, the settlement of which is expected to result in an inflow of economic benefits to the entity

An entity must control the economic benefits of the asset and it is probable that future economic benefits will flow to the entity

An entity must own the asset and it is probable that future economic benefits will flow to the entity

An entity must have possession of the asset and it is probable that future economic benefits will flow to the entity

An entity must have paid for the asset and it is probable that future economic benefits will flow to the entity

Historical cost is the original cost of an asset, while fair value is the current market value of an asset

Historical cost is the current market value of an asset, while fair value is the original cost of an asset

Historical cost is the estimated future value of an asset, while fair value is the current market value of an asset

Historical cost is the estimated future value of an asset, while fair value is the original cost of an asset

IFRS

GAAP

Both IFRS and GAAP

Neither IFRS nor GAAP

Assets and liabilities should be recorded at their current market value

Assets should be recorded at their historical cost

Liabilities should be recorded at their historical cost

Revenues should be recognized when cash is received

Assets should be recorded at their original cost

Assets should be recorded at their fair value

Assets should be recorded at their market value

Assets should be recorded at their estimated future value

Revenues and profits should not be overstated, and expenses and losses should not be understated

Assets should be recorded at their fair value

Liabilities should be recorded at their historical cost

Revenues should be recognized when cash is received

Only material items should be disclosed in the financial statements

All items, regardless of their size, should be disclosed in the financial statements

Material items should be disclosed in the notes to the financial statements

Material items should be valued at fair value

Accounting policies should be applied consistently from period to period

Accounting policies should be changed frequently to reflect changes in business conditions

Accounting policies should be selected to present the most favorable financial results

Accounting policies should be selected to minimize tax liabilities

The assumption that a company will continue to operate in the foreseeable future

The assumption that assets should be recorded at their historical cost

The assumption that liabilities should be recorded at their fair value

The assumption that revenues and expenses should be matched

Revenues and expenses are recognized when earned or incurred, regardless of when cash is received or paid 3

Revenues are recognized when cash is received, and expenses are recognized when cash is paid

Revenues are recognized when goods or services are delivered, and expenses are recognized when paid

Revenues are recognized when ordered, and expenses are recognized when incurred

Accrual basis accounting, going concern, consistency, materiality

Historical cost, fair value, prudence, going concern

Accrual basis accounting, going concern, materiality, reliability

Historical cost, fair value, prudence, consistency