IFRS Test Questions with 100% Correct
Answers 2024/2025
what are the IFRS? - ANSWERSa set of rules and principles that explain how particular transactions
should be dealt with (which are applied consistently and internationally) to ensure certain characteristics
which characteristics do the IFRS ensure that financial statements are? - ANSWERS- comparable and
consistent from business to business, year to year and country to country
- understandable
- verifiable
- relevant
- timely
- faithfully represented (as accurate as possible)
accrual basis - ANSWERSexpenses and revenues are recorded in the period that they occur, whether or
not cash is involved (we record credit transactions not just cash)
fair representation - ANSWERS- information in financial statements is not biased towards any
stakeholder or group of stakeholders.
- information must be faithfully represented ensuring that it is realistic, reliable and free from errors
going concern - ANSWERSthe business will continue operating in the foreseeable future
materiality (what's important) - ANSWERS- financial information relevant to a reader of a financial
statement must be disclosed separately
- items that are important or material to the reader are shown in the financial statements
example of materiality - ANSWERSinterest on overdraft is recorded in a separate account (not interest
expense) as it is material, important, to know how much interest we are paying as this determines if its
cheaper to take out a short term loan
Answers 2024/2025
what are the IFRS? - ANSWERSa set of rules and principles that explain how particular transactions
should be dealt with (which are applied consistently and internationally) to ensure certain characteristics
which characteristics do the IFRS ensure that financial statements are? - ANSWERS- comparable and
consistent from business to business, year to year and country to country
- understandable
- verifiable
- relevant
- timely
- faithfully represented (as accurate as possible)
accrual basis - ANSWERSexpenses and revenues are recorded in the period that they occur, whether or
not cash is involved (we record credit transactions not just cash)
fair representation - ANSWERS- information in financial statements is not biased towards any
stakeholder or group of stakeholders.
- information must be faithfully represented ensuring that it is realistic, reliable and free from errors
going concern - ANSWERSthe business will continue operating in the foreseeable future
materiality (what's important) - ANSWERS- financial information relevant to a reader of a financial
statement must be disclosed separately
- items that are important or material to the reader are shown in the financial statements
example of materiality - ANSWERSinterest on overdraft is recorded in a separate account (not interest
expense) as it is material, important, to know how much interest we are paying as this determines if its
cheaper to take out a short term loan
