According to ifrs what condition must be met for revenue recognition to occur?
Answer
Costs can be reliably measured
According to the ifrs what are the 5 qualities of financial information that improve reliability
Answer
Faithful representation, substance over form, prudence, neutrality, completeness
A company accrued wages of $2,000 and collected accounts receivable of $10,000. What
best describes the effect of these two transactions on the company?
Answer
Current ratio will decrease.
Accruing wages increases both current liabilities and expenses, but collecting receivables has
no effect on current assets or sales therefore the current ratio and net income both de-
crease.
A company had 100,000 shares outstanding on 1 jan 2009. The company has no plans to is-
sue additional shares or purchase treasury shares during the year, but is planning either a
two-for-one stock split or a 100 percent stock dividend on 1 july. The number of shares used
to determine eps at 31 dec 2009 is
Answer
200,000 for both the stock split and the stock dividend.
Stock dividends and splits are treated in the same way for purposes of determining weighted
average number of shares outstanding the adj in the # of shares is made as if the stock split
or dividend occurred at the beginning of the year.
Under ifrs the preparation of a complete set of financial statements is best described as a:
1
, Answer
General requirement for financial statements.
A company issued bonds in 2009 that mature in 2019. The measurement basis that will most
likely be used on the 2009 balance sheet for the bonds is:
Answer
Amortized cost
Bonds payable issued by a company are financial liabilities that are measured at amortized
cost.
What features are unique to financial statements in u.s. gaap
Answer
Current assets and current liabilities are listed before noncurrent assets and noncurrent lia-
bilities. Minority interest is listed separately from equity or liabilities.
What features are unique to financial statements in ifrs
Answer
Noncurrent assets and noncurrent liabilities are listed before current assets and current lia-
bilities. Also, minority interest must be shown as a component of equity.
An analyst makes the appropriate adjustments to the financial statements of retail compa-
nies that are lessees using a substantial number of operating leases. Compared to ratios
computed from the unadjusted statements, the ones computed from the adjusted state-
ments would most likely be higher for: debt to equity or interest coverage?
Answer
The debt to equity ratio but not the interest coverage ratio.
The adjustments to convert operating leases would increase the amount of total debt in the
debt-equity ratio thus increasing the ratio; the portion of the lease payments estimated to
be lease interest expense would lower the interest coverage ratio.
2
Answer
Costs can be reliably measured
According to the ifrs what are the 5 qualities of financial information that improve reliability
Answer
Faithful representation, substance over form, prudence, neutrality, completeness
A company accrued wages of $2,000 and collected accounts receivable of $10,000. What
best describes the effect of these two transactions on the company?
Answer
Current ratio will decrease.
Accruing wages increases both current liabilities and expenses, but collecting receivables has
no effect on current assets or sales therefore the current ratio and net income both de-
crease.
A company had 100,000 shares outstanding on 1 jan 2009. The company has no plans to is-
sue additional shares or purchase treasury shares during the year, but is planning either a
two-for-one stock split or a 100 percent stock dividend on 1 july. The number of shares used
to determine eps at 31 dec 2009 is
Answer
200,000 for both the stock split and the stock dividend.
Stock dividends and splits are treated in the same way for purposes of determining weighted
average number of shares outstanding the adj in the # of shares is made as if the stock split
or dividend occurred at the beginning of the year.
Under ifrs the preparation of a complete set of financial statements is best described as a:
1
, Answer
General requirement for financial statements.
A company issued bonds in 2009 that mature in 2019. The measurement basis that will most
likely be used on the 2009 balance sheet for the bonds is:
Answer
Amortized cost
Bonds payable issued by a company are financial liabilities that are measured at amortized
cost.
What features are unique to financial statements in u.s. gaap
Answer
Current assets and current liabilities are listed before noncurrent assets and noncurrent lia-
bilities. Minority interest is listed separately from equity or liabilities.
What features are unique to financial statements in ifrs
Answer
Noncurrent assets and noncurrent liabilities are listed before current assets and current lia-
bilities. Also, minority interest must be shown as a component of equity.
An analyst makes the appropriate adjustments to the financial statements of retail compa-
nies that are lessees using a substantial number of operating leases. Compared to ratios
computed from the unadjusted statements, the ones computed from the adjusted state-
ments would most likely be higher for: debt to equity or interest coverage?
Answer
The debt to equity ratio but not the interest coverage ratio.
The adjustments to convert operating leases would increase the amount of total debt in the
debt-equity ratio thus increasing the ratio; the portion of the lease payments estimated to
be lease interest expense would lower the interest coverage ratio.
2
