INTERMEDIATE ACCOUNTING II – PRACTICE EXAM (ORIGINAL) – SET 1 150 VERIFIED QUESTIONS & DETAILED RATIONALES FOR TOP PERFORMANCE

INTERMEDIATE ACCOUNTING II – PRACTICE EXAM
(ORIGINAL) – SET 1 150 VERIFIED QUESTIONS & DETAILED
RATIONALES FOR TOP PERFORMANCE
1. Under IFRS 15, revenue is recognized when:
A. Cash is received
B. Performance obligations are satisfied
C. Invoice is issued
D. Contract is signed
Answer: B
Revenue is recognized when control of goods/services transfers to the customer.
2. FIFO inventory method assumes:
A. Latest purchases sold first
B. Oldest costs assigned to ending inventory
C. Average cost used
D. Random selection of units
Answer: B
FIFO assigns earliest costs to COGS.
3. Which financial statement shows financial position?
A. Income statement
B. Statement of cash flows
C. Statement of financial position
D. Statement of changes in equity
Answer: C
It presents assets, liabilities, and equity.
4. Depreciation is:
A. Cash outflow
B. Allocation of asset cost
C. Market value increase
D. Revaluation surplus
Answer: B
Depreciation spreads cost over useful life.
5. IAS 36 deals with:
A. Revenue
B. Impairment of assets
C. Inventory
D. Leases
Answer: B
It ensures assets are not overstated.
6. Weighted average cost method:
A. Uses oldest cost
B. Uses newest cost
C. Averages all costs
D. Ignores purchases

, Answer: C
Costs are averaged over units.
7. Lease under IFRS 16 is recognized by lessee as:
A. Expense only
B. Asset and liability
C. Revenue
D. Equity item
Answer: B
Right-of-use asset and lease liability are recorded.
8. Provision is recognized when:
A. Payment is made
B. Obligation is certain and measurable
C. Board approves
D. Cash is received
Answer: B
Must be present obligation with probable outflow.
9. Accrued revenue is:
A. Received in cash
B. Earned but not received
C. Deferred income
D. Prepaid expense
Answer: B
Revenue earned before cash receipt.
10. IFRS cash flow classification excludes:
A. Operating
B. Investing
C. Financing
D. Marketing
Answer: D
Only operating, investing, financing exist.
11. Goodwill arises when:
A. Assets decrease
B. Purchase price > fair value of net assets
C. Liabilities exceed assets
D. Inventory increases
Answer: B
Represents intangible value in acquisition.
12. Impairment loss is recognized when:
A. Carrying amount > recoverable amount
B. Cash increases
C. Revenue increases
D. Depreciation ends
Answer: A
Asset value exceeds recoverable amount.
13. Double declining balance is:
A. Accelerated depreciation

, B. Straight line
C. Units of production
D. Revaluation method
Answer: A
Higher depreciation in early years.
14. Deferred tax arises due to:
A. Cash differences
B. Timing differences
C. Permanent differences only
D. Equity changes
Answer: B
Temporary differences between accounting and tax.
15. Cost of goods sold includes:
A. Selling expenses
B. Direct manufacturing costs
C. Administrative costs
D. Interest expense
Answer: B
Direct costs of production.
16. Revaluation model applies to:
A. Inventory only
B. PPE under IAS 16
C. Cash only
D. Receivables
Answer: B
PPE can be revalued to fair value.
17. Trade receivables are measured at:
A. Fair value through profit
B. Amortized cost
C. Historical cost only
D. Replacement cost
Answer: B
Typically amortized cost using effective interest.
18. Matching principle requires:
A. Expenses recorded when paid
B. Expenses matched with revenues
C. Cash basis accounting
D. Assets ignored
Answer: B
Expenses align with related revenues.
19. Bank reconciliation adjusts:
A. Sales
B. Cash balance
C. Inventory
D. Equity