469479287-Chapter-3 - FAR PDF

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CHAPTER 3What is the purpose of notes to financial statements? D. All of these can be considered a purpose of the notes.What is the first item in presenting the notes?  A. Statement of compliance with PFRS An entity whose financial statements comply with PFRS shall  C. Make an explicit and unrese...

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CHAPTER 3 What is the purpose of notes to financial statements?  D. All of these can be considered a purpose of the notes. What is the first item in presenting the notes?  A. Statement of compliance with PFRS An entity whose financial statements comply with PFRS shall  C. Make an explicit and unreserved statement of compliance in the notes. An entity is required to disclose all of the following nonfinancial information, except  D. Names and addresses of directors and officers. Notes to financial statements  C. Are an integral part of financial statements The presentation of the notes to financial statements in a systematic manner  C. Is mandatory, as far as practicable The cross-reference between each line item in the financial statements and any related information disclosed in the notes to financial statements  B. Is mandatory Disclosure of information about key sources of estimation uncertainty  B. Is mandatory Disclosure of information about judgements  B. Is mandatory Which best demonstrates the standard of adequate disclosure?  D. The notes to financial statements Which statement is incorrect regarding notes to financial statements?  C. IFRS requires that all notes should be clear, simple to understand and nontechnical in nature. Notes to financial statements  C. Amplify items presented in the financial statements Which is not a method of disclosing pertinent information?

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D. All of these are methods of disclosing pertinent information

The disclosure of accounting policies is important to financial statement users in determining  B. Whether accounting policies are consistently applied from year to year. The standard of full disclosure is best described by which of the following?  D. Disclosure of any financial facts significant enough to influence the judgement of a primary user. Application of the full disclosure principle  C. Is demonstrated by the use of supplementary information presenting the effects of changing prices. Accounting policies disclosed in the notes to financial statements typically include all of the following, except  D. Significant inventory purchasing policies Significant accounting policies may not be  D. Omitted from financial statement disclosure An inventory accounting policy that should be disclosed in a summary of significant accounting policies is  C. Method used for pricing inventory Which of the following should be disclosed in a summary of significant accounting policies?  D. Depreciation method What is the purpose of information presented in the notes to financial statements?  A. To provide disclosures required by generally accepted accounting principles Which of the following information should be disclosed in the summary of significant accounting policies?  C. Criteria for determining which investments are treated as cash equivalents Which of the following is not a required disclosure of accounting policies?  B. Key management personnel involved in drafting the summary of significant accounting policies The notes to financial statements should not be used to  D. Correct an improper presentation in the financial statements. An entity shall disclose in the summary of significant accounting policies

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C. The measurement basis used in preparing the financial statements and the accounting policies used.

The summary of significant accounting policies should disclose  B. Basis of profit recognition on long term construction contracts The summary of significant accounting policies should disclose  C. The depreciation method used only Which of the following should be included in the summary of significant accounting policies?  A. Property, plant and equipment recorded at cost with the depreciation computed principally by straight line method Related parties include all of the following, except  D. Two venturers simply because they share joint control over a joint venture A related party transaction is a transfer  B. Between related parties, regardless of whether a price is charged. Unrelated parties include which of the following?  D. All of these are unrelated parties Close family members of an individual include all, except  D. Brothers and sisters of the individual The minimum disclosures about related party transactions include all of the following, except  D. Nature of the relationship Which is not included in key management personnel compensation?  D. Reimbursement of out-of-pocket expenses Which of the following is not a mandated disclosure about related party transactions?  B. Names of all the associates that an entity has dealt with during the year. Which of the following is not a required minimum disclosure about related party transaction?  C. The amount of similar transaction with unrelated parties to establish that comparable related party transaction has been entered at arm’s length Related party transactions include all, except  B. Sold a car to the uncle of the entity’s finance director.

All of the following are related party transactions, except  D. Took out a huge bank loan An entity that entered into a related party transaction would be required to disclose all of the following information, except  B. Nature of any future transactions planned between the parties and the terms involved. Which is not a required related party disclosure?  C. An entity that has a common director with the entity All of the following are related parties, except  D. The partner of a key manager is a major supplier of the entity Which of the following is not a related party of an entity?  B. An entity providing banking facilities to the entity Which of the following should be included in key management personnel compensation?  C. Social security contributions and postemployment benefits At the end of the current reporting period, an entity carried a receivable from a major customer who declared bankruptcy after the end of reporting period and before the issuance of financial statements. What should be reported at the current year-end?  B. Make a provision for the event after reporting period in the financial statements. An entity decided to build an operate an amusement park next year. The entity applied for a letter of guarantee which was issued before the issuance of the financial statements of the current year. What is the adjustment required at the current year-end?  D. Do nothing An entity built a new factory building during the current year. Subsequent to the current year-end and before issuance of financial statements, the building was destroyed by fire and the claim against the insurance entity proved futile because the cause of the fire was negligence on the part of the caretaker of the building. What should be reported at the current year-end?  D. Disclose the nonadjusting event in the notes to financial statements. An entity deals extensively with foreign currency transactions. Subsequent to the end of reporting period and before the date of authorization of the issuance of the financial statements, there were abnormal fluctuations in foreign currency rate. What should be reported at the current year-end?  C. Disclose the post-reporting period event. Which statement is true in relation to events after reporting period?

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B. Note to financial statements should give details of material nonadjusting events which could influence the economic decisions of users.

Which event after the reporting period would require adjustment?  D. Loss on a lawsuit the outcome of which was deemed uncertain at year-end Events that occur after the current year-end but before the financial statements are issued and affect the realizability of accounts receivable should be  C. Used to record an adjustment to bad debt expense. Nonadjusting events include all, except  D. Destruction of a major production plant by a fire before the end of the reporting period Nonadjusting event include all, except  D. A mistake in the calculation of allowance for uncollectible accounts receivable. Which event after the end of reporting period would generally require disclosure?  D. Issue of a large amount of ordinary shares...