Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Which of the following conditions is not
required to be satisfied to recognize revenue from the sale of goods?
a. | The enterprise has transferred to the buyer the
significant risks and rewards of ownership of the goods. | b. | The enterprise retains neither continuing managerial involvement to the degree
usually associated with ownership, nor effective control over the goods
sold. | c. | The cash corresponding to the sale of goods has been
collected. | d. | The amount of
revenue can be measured reliably.
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2.
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A sale on credit of 100 CU takes place that carries
a 100% chance that the seller will need to provide additional costs of 10 CU two years from the date
of the sale. What is recorded in the balance sheet at the time of the sale?
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3.
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Which of the following conditions does not
need to be satisfied in order to reliably estimate the outcome of a transaction?
a. | The amount of revenue that will be obtained upon
completion can be measured reliably. | b. | The cash
corresponding to the transaction has been collected. | c. | The stage or percentage of completion of the transaction on the balance sheet
date can be measured reliably. | d. | The costs incurred
for the transaction and the costs to complete the transaction can be measured
reliably. |
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4.
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When the outcome of a transaction cannot be
estimated reliably, and it is not probable that the costs incurred will be recovered, revenue should
not be recognized, and the costs incurred should be recognized immediately as an expense. Which
accounting principle is put into practice in this case?
a. | Matching principle | b. | Going concern principle | c. | Principle of
prudence | d. | Accrual principle
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5.
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Dividends should be recognized when the
shareholders’ right to receive payment is established. This takes place:
a. | When the books are closed. | b. | When the business is liquidated. | c. | When the board of directors decide to distribute
dividends. | d. | When the decision
to distribute dividends is made in the shareholders’ general
meeting. |
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6.
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Which of the following statements is
false?
a. | Permanent differences do not reverse themselves over
time. | b. | In case of permanent differences, the accounting and tax
approaches give the same after-tax income. | c. | Permanent
differences have no future tax consequences. | d. | Permanent
differences are linked to the differences in the timing of revenue and expense recognition between
accounting and tax rules. |
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7.
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In some countries, a latent gain on marketable
securities is taxable in the period incurred, but is reported under financial accounting only at the
time of the sale. What will be generated by this temporary difference?
a. | Deferred tax liability | b. | Deferred tax revenue | c. | Deferred tax
asset | d. | Deferred tax expense
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8.
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Taxes payable accounting consists in ignoring a
temporary difference; it recognizes income tax expense in the financial statements for shareholders
as identical to the income tax payable. There is no link between the tax recognized and the
triggering event and thus this principle is in opposition to the ______
a. | Principle of prudence. | b. | Accrual principle. | c. | Going concern
principle. | d. | Matching
principle. |
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9.
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The “completed contract method” and the
“percentage of completion method” are both used for the recognition of income pertaining
to a long-term contract. When do these methods imply that potential losses on a contract are
recognized?
a. | When they incurred | b. | At the end of the contract | c. | As soon as they can be legitimately established | d. | None of the above
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10.
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Which of the following categories of government
assistance is not specified by IAS 20?
a. | Contingent loans | b. | Forgivable loans | c. | Grants related to
income | d. | Grants related to assets
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