According to IAS 37, a liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. (Difficulty: Moderate)
True
false
The financing need is equal to: (Difficulty: Moderate)
Fixed assets – Current assets + Current liabilities
Fixed assets – Current assets – Current liabilities
Fixed assets + Current assets + Current liabilities
Fixed assets + Current assets – Current liabilities
Given the following data: o A manufacturer X acquires raw materials, on credit, for 100 CU. o The raw materials will be kept in inventory for a few days before being consumed. o The purchase of the raw materials will be settled in two installments: a first payment of 90 after 30 days and the balance after 45 days. What is recorded in the balance sheet at the time of the acquisition? (Difficulty: Easy)
Which item corresponds to the following criteria: (Difficulty: Moderate) o Causality principle: real and present; o Timing: almost certain; o Amount: uncertain?
Accrued liabilities
Provisions
Contingent liabilities
None of the previous answers
Accruals are often reported as part of: (Difficulty: Moderate)
Provisions
Long-term debts
Contingent liabilities
Trade and other payables
With which accounting principle is the capitalization of finance leases in conformity? (Difficulty: Moderate)
Matching principle
Principle of ‘substance over form’
Accrual principle
Principle of prudence
According to IAS 17, if there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term, the asset should be fully depreciated over: (Difficulty: Moderate)
5 years.
The lease term.
Its useful life.
The shorter of the lease term or its useful life.
Accounting for post-employment benefits will depend on which of the following important distinctions being made regarding the nature of the benefit plan: (Difficulty: Moderate)
Defined contribution plans or defined benefit plans.
Pension plans or medical care plans.
Mutual plans or individual plans.
Defined input plans or defined output plans.
Given the following data: o The total monthly payroll amounts to 300 CU. o This amount corresponds to a net payment to the workers of 235 CU, a total of employee withholdings of 20 CU for contribution to the social security program and a total withholding of 45 CU, which will be paid to the fiscal authorities in the name of the employees in settlement of personal income taxes. What is recorded in the financial statements before the payment of each liability? (Difficulty: Moderate)
Which ratio is used to evaluate the likely capability of the firm to face its interest obligation? (Difficulty: Moderate)
Interest coverage ratio = Operating income (before interest expense and income taxes)/Interest expense
Debt ratio = Total debt/Total assets
Debt to equity ratio = Debt/Shareholders’ equity
Long-term debt to equity ratio = Long-term debt/Shareholders’ equity