Worldatwork T7 Exam Practice Test Instant Access

Question 1

The profit-sharing plan of Company ABC requires the company pay a specified proportion of its profit for the year to employees who serve throughout the year. If no employees leave during the year, the total profit-sharing payments for the year will be 3% of profit. The company estimates that staff turnover will reduce the payments to 2.5% of profit. What does Company ABC recognize as a liability and an expense?

A0.5% of profit

B2.5% of profit

C3% of profit

D5.5% of profit

Answer : B

Question 2

When does a present obligation exist?

AWhen the employee renders service

BWhen the company has no realistic alternative but to make the payments

CWhen a change in the company's informal practices would cause unacceptable damage to its relationship with employees

DWhen the company recognizes the expected cost of profit-sharing and bonus payments

Answer : B

Question 3

An offer of redundancy is an example of which kind of employee benefits?

AShort-term benefits

BPost-employment benefits

CTermination benefits

DLong-term benefits

Answer : C

Question 4

Employee benefits provided in exchange for the end of an employee's employment are considered what kind of benefits?

AShort-term benefits

BPost-employment benefits

CTermination benefits

DLong-term benefits

Answer : C

Question 5

Employee benefits that are not short-term, post-employment or termination benefits are considered what kind of benefits?

AShort-term benefits

BPost-employment benefits

CTermination benefits

DLong-term benefits

Answer : D

Question 6

A statement of cash flows provides information on which of the following primary business activities of a company?

ACash inflows, cash outflows, payment of dividends

BOperating activities, cash inflows, cash outflows

CCash sales, investing activities, payment of dividends

DOperating, investing, and financing activities

Answer : D

Question 7

What is the purpose of an income statement?

ATo show liability and equity and the manner in which those funds are employed

BTo account for changes in cash during the accounting period

CTo show details of the nature of a company's operating activities

DTo reconcile the beginning and ending balances of stockholders' equity

Answer : C

Worldatwork T7 International Financial Reporting Standards for Compensation Professionals Exam Practice Test