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ACCA P2 mcq2
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ACCA P2 mcq2 ACCA P2 mcq2 Document Transcript

  • F7 (INT) Competency AssessmentPurpose Candidates are able to assess as to whether he/she has the required competency of Paper F7 (International). Note: The role of Paper F7 is to form a solid footing going forward to study for Paper P2 (International). When studying Paper P2, Paper F7 syllabus will be assumed knowledge.Who should attempt? Candidates awarded an exemption of Paper F7 Candidates successfully completed Paper 2.5 (old syllabus)What is the Competency Assessment about? Consist of 20 multiple choice questions (MCQ) MCQs are designed to test the candidates’ knowledge of the breadth of syllabus of Paper F7 (International)Instruction for candidates Time allowed: 45 minutes All 20 questions are compulsory and MUST be attempted This question paper MUST be returned at the end of assessment Do not open this paper until instructed by the supervisor -1-
  • ALL 20 questions are compulsory and MUST be attempted.Question 1Which of the following is not a qualitative characteristic of financial statements according to theFramework?A.Materiality. B.Understandability. C.Comparability. D.Relevance.Question 2Which one of the following is not required to be presented as minimum information on the faceof the Statement of Financial Position?A.Investment property. B.Investments accounted under the equity method. C.Biological assets. D.Contingent liability.Question 3Which of the following costs of conversion cannot be included in cost of inventory?A.Cost of direct labour. B.Factory rent and utilities. C.Salaries of sales staff (sales department shares the building with factory supervisor). D.Factory overheads based on normal capacity.Question 4An entity (other than a financial institution) receives dividends from its investment in shares.How should it disclose the dividends received in the cash flow statement prepared under IAS 7?A.Operating cash inflow. B.Investing cash inflow. C.Financing cash inflow. D.Cash and cash equivalent. 2
  • Question5Change in accounting policy does not includeA.Change in useful life from 10 years to 7 years. B. Change of method of valuation of inventory from FIFO to weighted-average. C.Change of method of valuation of inventory form weighted-average to FIFO. D.Change the practice of paying bonus one month’s salary to staff before the end of the year to a new practice of paying one-half month’s salary only.Question 6The preparation of financial statements of Janu, a public limited company, for the reportingperiod ended December 31, 2011, was completed by the management on March 15, 2012. Thedraft financial statements were considered at the meeting of board of directors held on March 20,2012, on which date the board approved them and authorised them for issuance. The annualgeneral meeting (AGM) was held on April 10, 2012, after allowing for printing and the requisitenotice period mandated by the corporate statute. At the AGM the shareholders approved thefinancial statements. The approved financial statements were filed by Janu with the statutorybody that regulates public limited companies on April 20, 2012.Given these facts, what is the authorisation date in terms of IAS 10?A. March 15, 2012. B. March 20, 2012. C. April10, 2012. D. April 20, 2012.Question 7A construction company signed a contract to build a cinema over a period of two years, and withthis contract also signed a maintenance contract for five years. Both the contracts are negotiatedas a single package and are closely interrelated to each other. The two contracts should beA.Recognised under the completed contracted method. B. Segmented and considered two separate contracts. C.Combined and treated as a single contract. D.Treated differently – the building contract under the completed contract method and maintenance contract under the percentage of completion method. 3
  • Question 8Which of the following statement is not correct regarding deferred tax?A.Reason for providing deferred tax is that IFRS recognition criteria are different from those that are normally set out in tax law. B.IAS 12 uses a liability method and adopts a statement of financial position approach. C.Tax base is the value that IAS 12 assumes that each asset and liability has for tax purposes. D.Temporary differences are the value that IAS 12 assumes that each asset and liability has for accounting purposes.Question 9An entity installed a new production facility and incurred a number of expenses at the point ofinstallation. The entity’s accountant is arguing that most expenses do not qualify forcapitalisation. Included in those expenses are initial operating losses. These should beA.Deferred and amortised over a reasonable period of time. B.Expensed and charged to the income statement. C.Capitalised as part of the cost of the plant as a directly attributable cost. D.Taken to retained earnings since it is unreasonable to present it as part of the current year’s income statement.Question 10Where there is a lease of land and buildings and the title to the land is not transferred, generallythe lease is treated as ifA.Both the land and building is a finance lease. B. Both the land and building is an operating lease. C.The land is an operating lease; the building is a finance lease. D.The land is a finance lease; the building is an operating lease. 4
  • Question 11Which of the following is not an appropriate way of recognising revenue?A. A transaction is not deemed a sale until it is probable that the future economic benefits will flow to the entity. B. Interest is recognised using the “actual interest method”. C.Royalties are recognised on an accrual basis in accordance with the royalty agreement. D.Dividends are recognised when the shareholders has a right to receive payment.Question 12In the case of grants related to income, which of these accounting treatments is prescribed byIAS 20? A. Credit the grant to retained earnings. B.Credit the grant to other component of reserves. C.Credit the grant to income statement as other income or deduct it from the related expense. D. Credit the grant to sales or other revenue from operations in the income statement.Question 13On July 1, 2011, Douglas, a public limited company, began construction of an apartment. Theconstruction is expected to be completed on December 31, 2014. It is being financed by issuanceof bonds for $7 million at 12% per annum. The bonds were issued at the beginning of theconstruction. The bonds carry a 1.5% issuance cost. Compute the borrowing costs that need to becapitalised under IAS 23.A. $30,000. B. $105,000. C.$840,000. D.$870,000.Question 14Earnings per share (EPS) calculated before accounting for which of the following items?A.Current tax for the period.B. Deferred tax for the period.C.Ordinary dividend for the period.D.Preference dividend for the period. 5
  • Question 15A cash-generating unit isA.The smallest business segment. B.Any grouping of assets that generates cash flows. C.Any group of assets that are reported separately to management. D.The smallest group of assets that generates independent cash flows from continuing use.Question 16A competitor has sued an entity for unauthorised use of its patented technology. The amount thatthe entity may be required to pay to the competitor if the competitor succeeds in the lawsuit isdeterminable with reliability, and according to the legal counsel it is less than probable (but morethan remote) that an outflow of the resources would be needed to meet the obligation. The entitythat was sued should at year-end:A.Recognise a provision for this possible obligation. B.Make a disclosure of the possible obligation in notes to the financial statements. C.Make no provision or disclosure and wait until the lawsuit is finally decided and then expense the amount paid on settlement, if any. D.Set aside, as an appropriation, a contingency reserve, an amount based on the best estimate of the possible liability.Question 17Which item listed below does not qualify as an intangible asset?A.Computer software. B.Registered patent. C.Copyrights that are protected. D.Notebook computer.Question 18Transfer from investment property to property, plant and equipment are appropriateA.When there is change of use. B.Based on the entity’s discretion. C.Only when the entity adopts the fair value model under IAS 40. D.The entity can never transfer property into another classification on the statement of financial position once it is classified as investment property. 6
  • Question 19An intangible asset with an indefinite life is accounted for as follows:A.No amortisation but annual impairment test. B. Amortised and impairment tests annually. C.Amortised and impairment tested if there is a “trigger event”. D.Amortised and no impairment test.Question 20An entity is planning to dispose of a collection of assets. The entity designates these assets as adisposal group. The carrying amount of these assets immediately before classification as held forsale was $20 million. Upon being classified as held for sale, the assets were revalued to $18million. The entity feels that it would cost $1 million to sell the disposal group. What would bethe carrying amount of the disposal group in the entity’s accounts after its classification as heldfor sale?A.$17 million. B. $18 million. C.$19 million. D.$20 million. 7