Worldatwork T7 Exam Practice Test Instant Access

Question 1

Which of the following are ingredients of the fundamental characteristic of relevance?

ACost and materiality

BPredictive value and confirmatory value

CRelevance and faithful representation

DTimeliness and understandability

Answer : B

Question 2

What is the timing of revenue recognition?

AWhen it is probable that future economic benefits will flow to the company and reliable measurement of the amount of revenue is possible

BWhen the company reports current and non-current classifications in its statement of financial position

CWhen economic benefits are received by the company and reliable measurement of the amount of revenue is possible

DWhen users have sufficient reasonable knowledge of business and financial accounting matters to understand the information

Answer : A

Question 3

The International Accounting Standards Board (IASB) has given companies the option to use fair value as the basis for measurement of financial assets and liabilities. Which of the following best defines fair value?

AA residual interest in the assets of the entity after deducting all its liabilities

BFaithful representation of the amount paid for a given item

CAmount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm's length transaction

DQuality of information that confirms users' earlier expectations

Answer : C

Question 4

Which of the following best defines the term ''asset''?

AThe residual interest in the assets of the entity after deducting all its liabilities.

BA resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity

CA 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

DIncreases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants

Answer : B

Question 5

Predictive value is an ingredient of which of the following fundamental characteristics of information?

AComplete

BComparability

CRelevance

DNeutral

Answer : C

Question 6

Which fundamental qualitative characteristics make accounting information useful for decision-making?

ARelevance and faithful representation

BCost and materiality

CAssets and liability

DIncome and expenses

Answer : A

Question 7

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

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