Worldatwork T7 Exam Questions Instant Access

Question 1

Which of the following is a disadvantage of reporting assets at historical cost?

AHistorical cost is not objective

BHistorical cost is not particularly relevant to most readers

CHistorical cost is subject interpretation, and therefore to bias

DHistorical cost is not verifiable

Answer : B

Question 2

Level 2 of the conceptual framework of International Accounting Standards Board (IASB) identifies qualitative characteristics of accounting information. These characteristics distinguish more useful information from less useful information.

To what end is this distinction useful?

AFor reporting purposes

BFor business strategy

CFor decision-making purposes

DFor organizational vision

Answer : C

Question 3

Which of the following is true of accrual accounting?

ANeither the recognition of revenue nor the recording of expense necessarily involves the receipt or payment of cash

BIt rests on a primary guiding principle, which is recognition

CThe recognition of revenue involves the receipt or payment of cash, while the recording of expense does not

DIt entails recording income or expenditure only when money comes into or leaves the company

Answer : A

Question 4

The concept that numbers and descriptions must match what really existed or happened is represented by which fundamental qualitative characteristic?

APredictive value

BComplete

CFaithful representation

DRelevance

Answer : C

Question 5

Which of the following should be used when discounting a benefit in order to determine the present value of the defined benefit obligation and the current service cost?

AFair value

BTime value of money

CNet present value

DThe corporate vision

Answer : C

Question 6

Current assets comprise assets that can be converted to cash. They must be converted within what time period?

ABefore the end of the fiscal year

BWithin a year

CWithin a fiscal year

DWithin two years

Answer : B

Question 7

Companies desire more current assets than current liabilities. What is the difference between current assets and current liabilities called?

ANet income

BTotal liabilities

CNet working capital

DNoncurrent liabilities

Answer : C

Worldatwork International Financial Reporting Standards for Compensation Professionals T7 Exam Questions