Question 1

Which of the following items does not give rise to a reclassification adjustment from components of other comprehensive income to profit and loss?

Accepted Answer

A)  disposal of a foreign operation
B)  de-recognition of revalued assets
C)  sale of a foreign subsidiary
D)  de-recognition of available-for-sale financial assets B

Question 2

Where a change in accounting estimates occurs,the following should be disclosed:

Accepted Answer

A)  the fact that the amount of the effect on future periods will not be disclosed because estimating that amount is impracticable.
B)  the reason for the change and comparative data to show the effect with and without the change.
C)  the nature of the change and the impact on previous statements of profit and loss.
D)  the fact that the amount of the effect on future periods will not be disclosed because estimating that amount is impracticable and the reason for the change and comparative data to show the impact with and without the change. A

Question 3

Comprehensive income includes dividend payments to shareholders.

Accepted Answer

A) True 
 B)False  False

Question 4

An implication of the fact that traditional financial accounting is based on a model that emphasises property rights is that:

Accepted Answer

A)  fair values become of critical importance.
B)  such rights are recognised as intangible assets.
C)  many social costs are ignored.
D)  these financial reports are always prepared on a 'true and fair' basis.

Question 5

Discuss the accounting treatment prescribed by IAS 1 Presentation of Financial Statements for reclassification adjustments from components of other comprehensive income to profit and loss.

Accepted Answer

The answer of Discuss the accounting treatment prescribed by IAS...

Question 6

When there is a change made to the useful life of an asset:

Accepted Answer

A)  It must be recognised as a change in an accounting estimate and the impact of the reported change must be disclosed in the notes to the accounts.
B)  It must be recognised as an error and all previous financial statements must be restated.
C)  It must be recognised as an error and opening retained earnings and opening balances of the asset must be restated.
D)  It is recognised as a change in an accounting estimate and the opening retained earnings and opening balances of the asset must be restated.

Question 7

Components of 'other comprehensive income' would include:

Accepted Answer

A)  net profit reported in the statement of comprehensive income.
B)  net operating cash flows reported on the statement of cash flows.
C)  changes in revaluation surplus.
D)  net operating cash flows reported on the statement of cash flows, plus total of all income and expenses recognised directly in equity.

Question 8

IAS 1 permits entities to present the components of other comprehensive income either before tax effects (gross presentation)or after their related tax effects (net presentation).

Accepted Answer

A) True 
 B)False

Question 9

Amounts reclassified to profit or loss in the current period that were recognised in 'other comprehensive income' in the current or previous periods are known as a:

Accepted Answer

A)  disposal of revenue or expenses
B)  de-recognition of transactions
C)  reclassification adjustment
D)  reprocessed transaction

Question 10

IAS 1 requires profit or loss and the total comprehensive income for the period reported on the face of the statement of comprehensive income to be disaggregated between the non-controlling interest and the owners of the parent.

Accepted Answer

A) True 
 B)False

Question 11

Examples of classification of expenses by their nature are:

Accepted Answer

A)  employee expenses and distribution expenses.
B)  depreciation and marketing expenses.
C)  borrowing costs and distribution expenses.
D)  employee expenses and depreciation expenses.

Question 12

IFRS 2 requires that the fair value of the option issued as a share-based payment to an employee,be determined and this value be deemed to be the cost of the options.

Accepted Answer

A) True 
 B)False

Question 13

Extraordinary items will be included in the statement of comprehensive income:

Accepted Answer

A)  when they are material and need to be disclosed separately.
B)  when an item of revenue or expense is attributable to an event outside the ordinary course of business.
C)  when an expense or revenue is of a non-recurring nature.
D)  None of the given answers are correct.

Question 14

Which of the following items is not an example of items reportable under other comprehensive income?

Accepted Answer

A)  changes in revaluation surplus
B)  actuarial gains and losses on defined contribution plans
C)  gains and losses arising from translating the financial statements of a foreign operation
D)  the effective portion of gains and losses on hedging instruments in a cash flow hedge

Question 15

IAS 1 permits an entity to present all items of income and expense recognised in a period to be presented in either the statement of comprehensive income or the statement of profit and loss.

Accepted Answer

A) True 
 B)False

Question 16

Profit is:

Accepted Answer

A)  an ideal measure of the 'well-offness' of a firm because income and expenses are clearly defined.
B)  only a measure of financial performance and therefore not useful in decision-making.
C)  directly affected by the accounting policy choices implemented by management.
D)  comparable across all firms as it is simply calculated by subtracting expense from revenues.

Question 17

A statement of comprehensive income that includes revenue,other income,employee benefits and costs,motor vehicle expenses would have been prepared using the:

Accepted Answer

A)  nature of expense method.
B)  narrative method.
C)  revenues and gains approach.
D)  function of expense approach.

Question 18

All disclosure requirements that relate to an entity's profit or loss are included in IAS 1.
FALSE

Accepted Answer

The answer of All disclosure requirements that relate to an...

Question 19

Changes in accounting estimates include:

Accepted Answer

A)  changes in expected warranty costs on goods sold under guarantee.
B)  changes in the expected pattern of consumption of economic benefits of depreciable assets.
C)  changes in the provision for inventory obsolescence.
D)  all of the given answers.

Question 20

When selecting a presentation format for the statement of comprehensive income management must select the one that is:

Accepted Answer

A)  most relevant.
B)  most reliable.
C)  most consistent.
D)  most relevant and the most reliable.

Exam 14: The Statement of Comprehensive Income and Statement of Changes in Equity

Which of the following items does not give rise to a reclassification adjustment from components of other comprehensive income to profit and loss?

Where a change in accounting estimates occurs,the following should be disclosed:

Comprehensive income includes dividend payments to shareholders.

An implication of the fact that traditional financial accounting is based on a model that emphasises property rights is that:

Discuss the accounting treatment prescribed by IAS 1 Presentation of Financial Statements for reclassification adjustments from components of other comprehensive income to profit and loss.

When there is a change made to the useful life of an asset:

Components of 'other comprehensive income' would include:

IAS 1 permits entities to present the components of other comprehensive income either before tax effects (gross presentation)or after their related tax effects (net presentation).

Amounts reclassified to profit or loss in the current period that were recognised in 'other comprehensive income' in the current or previous periods are known as a:

IAS 1 requires profit or loss and the total comprehensive income for the period reported on the face of the statement of comprehensive income to be disaggregated between the non-controlling interest and the owners of the parent.

Examples of classification of expenses by their nature are:

IFRS 2 requires that the fair value of the option issued as a share-based payment to an employee,be determined and this value be deemed to be the cost of the options.

Extraordinary items will be included in the statement of comprehensive income:

Which of the following items is not an example of items reportable under other comprehensive income?

IAS 1 permits an entity to present all items of income and expense recognised in a period to be presented in either the statement of comprehensive income or the statement of profit and loss.

Profit is:

A statement of comprehensive income that includes revenue,other income,employee benefits and costs,motor vehicle expenses would have been prepared using the:

All disclosure requirements that relate to an entity's profit or loss are included in IAS 1. FALSE

Changes in accounting estimates include:

When selecting a presentation format for the statement of comprehensive income management must select the one that is: