IFRS and GAAP Accounting Principles: Questions and Answers

Posted on Apr 6, 2025 in Accounting and Finance

IFRS and GAAP Accounting Principles

T8

Which false? a) Receiv. include equity sec…

In record a factori trans.: d) IFRS all. partial

Under IFRS: a) the entry to record uncoll. GAAP.

Under IFRS, loans and receiv b) Amortiz c. adjust

T9

Which correct? b) IFRS per revalu (ex goodwill).

Res. and develop costs are: a) exp under GAAP.

IFRS allows. Which correct regarding? c) The journal entry to record a revaluation when the…

T10

The acc. bonds pay.: essent. same IFRS/GAAP

Which false? a) Under IFRS, c. liab. must always

The joint projects FASB/IASB: d) All of the above.

Under IFRS, a purchase d) All of above

Which false: d) Under IFRS, a comp. rec. rev sur

The term “reserves” IFRS b) capital received

Under IFRS: c) dividends received can op / inv

Which correct: c) The majority of comp GAAP

T11

Under IFRS, a state comprehensive. inc.

b) income tax expense. chat

c) retained earnings. power

Which true? c) The IASB and FASB

Under IFRS, the amount of cap. c) Share Premium.

T12

Under IFRS, int. paid c) a fin. elem. or op. elem.

IFRS requires noncash: a) be disclosed notes

In the future, it appears a) the income statement and balance sheet will have headings

T13

The basic tools GAAP/IFRS: d) None of above.

Presentation of comp IFRS: d) a st. comp. incom.

2019, Parmalance, Sal rev. 500,000 d) 160,000

Which false: a) Und IFRS, long-liv ass. writ down

Each of items IFRS except: b) dividends received

a. amounts due from individuals or companies

1. Under the direct write-off method of accounting for uncollectible accounts, Bad Debts Expense is debitedd. when an account is determined to be uncollectible.
2. Non-trade receivables should be reported separately from trade receivables. Why is this statement either true or false?b. It is true because non-trade receivables do not result from business operations and should not be included with accounts receivable.
3. Accounts receivable are valued and reported on the balance sheetc. at cash realizable value.
4. Three accounting issues:c. recognizing, valuing, and accelerating collections.
5. Which of the following is least likely to help a company minimize losses as credit standards are relaxed?b. Increase the estimate…

Under the allowance method, writing off an uncollectible account a. affects only balance

1. The face value of a note refers to the amountc. at which the note…
2. Under the allowance method, when a specific account is written offa. total assets unchanged
3. Receiv. might be sold toa. gen cash quick

1. The balance in the Accumulated Depreciation account represents thea. amount charged to expense

since the acquisition Management should select the depreciation method that c. best the plant asset’s contribution The Land account would include all of the following costs except c. the cost of build a fence One factor that is not considered in determining the useful life of an intangible asset is a. salvage Intangible assets a. should be reported as a separate… Which of the following is considered research and development costs? b. Plann search or critic..

1. Under current accounting practice, intangible assets are classified asd. limited-life or indefinite-life
2. In a business combination, companies record identifiable intangible assets that they can reliably measure. All other intangible assets, too difficult to identify or measure, are recorded asc. goodwill
3. Which of the following is not reported under the “Other Expenses and Losses” section of the income statement?b. Trade name amort expense
4. Which of the following is not reported as part of continuing operations?a. goodwill
5. Which of the following research and development expenditures should be capitalized and depreciated?a. Acquisition of machinery that can also be used for future R&D projects
6. Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n)c. systematic and rational manner.
7. Goodwill may be recorded whend. one comp
8. Which one of the following items is not considered a part of the cost of a truck purchased for business use?b. Truck license

1. Cost allocation of an intangible asset is referred to asb. amortization
2. When a patent is amortized, the credit is usually made tob. the Patents account
3. Which of the following is a type of technology-related intangible asset?b. Patent
4. Research and development costsc. may resul
5. The book value of an asset will equal its fair market value at the date of sale ifd. no gain or loss on disposal is recorded
6. The cost of an intangible asset includes all of the following except:d. all of these choices
7. Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generallya. expensed when incurred
8. The cost of successfully defending a patent in an infringement suit should beb. added to the val

TEMA 10

1. The present value of a bond isb. market price
2. Sales taxes collected by a retailer from a customer are expenses.a. of the customers

1. The effective-interest method of amortization of bond premiums and discounts is considered superior to the straight-line method because it results in a(n)b. uniform rate of interest
2. If bonds are originally sold at a discount using the straight-line amortization method:c. Unamortized discount is subtracted
3. Bonds that are issued against the general credit of the borrower are calledc. debenture bon
4. When bonds are issued at a premium, the total interest cost of the bonds over the life of the bonds is equal to the amount ofb. interest paid over the life of the bond minus
5. If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at:d. A discount
6. In the balance sheet, the account Premium on Bonds Payable isd. added to bonds payable
7. A bond with a face value of $ 200,000 and a quoted price of 97¼ has a sellingc. 194,500
8. The contractual interest rate on a bond is often referred to as the:c. stated rate

1. The statement “Bond prices vary inversely with changes in the market rate of interest” means that if theb. market rate of interest decreases, then bond prices will go up
2. Over the term of the bonds, the balance in the Discount on Bonds Payable account willa. decre
3. The interest expense recorded on an interest payment date is increaseda. by amort of

discount Which of the following is not an advantage of issuing bonds instead of common stock? d. Earnin per share on common stock may be lower. The times interest earned ratio is computed by dividing a. income before interest expense and

TEMA 11

1. The ability of a corporation to obtain capital isa. enhanced because…
2. A net lossa. is closed to Retained
3. The per share amount normally assigned by the board of directors to a small stock dividend isa. the market value…
4. Regular dividends are declared out ofa. retained earnings
5. A corporation records a dividend-related liabilityc. on the declaration date
6. A stock split willb. have no effect on retained
7. A corporate board of directors does not generallyc. execute policy
8. The cumulative effect of the declaration and payment of a cash dividend on a financial statements is toa. decrease assets and stock
9. Which of the following phrases is not descriptive of the corporate form of business?c. Unlim liab
10. Which of the following statements is true regarding corporate performance ratios?d. Return on common stockholder’s equity…

1. The term residual claim refers to a stockholders’ right toc. share in asset
2. If an investment firm underwrites a stock issue, thec. corporation obtains…
3. When retained earnings are restricted, total retained earningsb. are unaffected
4. Which of the following statements is not true about a 2-for-1 stock split?d. Total paid-in ca incr.
5. The term legal capital is a descriptive term forc. par value
6. Information that is not generally reported of stock on the balance sheet isc. the market value

TEMA 12

1. In developing the cash flows from operating activities, most companies in the United Statesa. use indirect method
2. Which of the following would not be an adjustment to net income using the indirect method?d. An increase in Land
3. The acquisition of land by issuing common stock isd. a noncash transaction

that is not In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of c. a comparative balance sh The statement of cash flows will not provide insight into d. the exact proceeds Using the indirect method, if equipment is sold at a gain, the b. amount of the gain is deducted Which of the following statements concerning the statement of cash flows is true? c. If the direct method is used…

1. The statement of cash flowsb. is used to assess…
2. To determine the net cash provided (used) by operating activities, it is necessary to analyzea. all of the above
3. All of the following statements about free cash flow are false exceptb. free flow is

not reported Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the c. indirect method Which of the following is not typically a characteristic experienced by a company during the growth phase of the corporate life cycle? c. Cash from investing is positive Cash receipts from customers are greater than sales revenues when there is a(n) d. decrease in accounts receivable

TEMA 13

1. All of the following are reported on the income statement net of tax exceptb. income from operations
2. The receivables turnover and inventory turnover ratios are used to analyzed. liquidity
3. In a common size balance sheet, the 100 percent figure isd. total assets
4. When preparing an income statement, which of the following is the proper order for income statement components?d. Irregular items, Net income, Other comprehensive income items, Comprehensive
5. A successful grocery store would probably havea. a high inventory turnover
6. Which of the following is not considered a permanent difference?d. Stock-based comp
7. Taxable inc. of a corporation c. because comp