T7 Exam Training Practice Tests (WorldatWork International Financial Reporting Standards for Compensation Professionals)]

Question 1

Which statement below most accurately describes a primary purpose of the International Accounting Standards Committee (IASC) Foundation?

A. Oversees standards set for the public sector B. Approves principles-based standards and informs International Accounting Standards Board (IASB) of implications of proposed standards C. Provides advice to International Accounting Standards Board (IASB) on priorities D. Monitors International Accounting Standards Board (IASB)'s effectiveness, raise funds, approve budget, responsible for constitution

Correct Answer: D

Question 2

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

A. Cost and materiality B. Assets and liability C. Relevance and faithful representation D. Income and expenses

Correct Answer: C

Question 3

What is the purpose of an income statement?

A. To account for changes in cash during the accounting period B. To reconcile the beginning and ending balances of stockholders' equity C. To show liability and equity and the manner in which those funds are employed D. To show details of the nature of a company's operating activities

Correct Answer: D

Question 4

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?

A. Faithful representation of the amount paid for a given item B. Amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm's length transaction C. Quality of information that confirms users' earlier expectations D. A residual interest in the assets of the entity after deducting all its liabilities

Correct Answer: B

Question 5

When a company provides information that is of sufficient importance to influence the judgment and decisions of an informed user, which principle of Level 3 of the conceptual framework is being represented?

A. Faithful representation B. Going concern C. Full disclosure D. Measurement

Correct Answer: C

Question 6

Which of the following are ingredients of the fundamental qualitative characteristics of faithful representation?

A. Predictive value, confirmatory value, relevance B. Assets, liabilities, equity C. Comparability, verifiability, timeliness D. Complete, neutral, freedom from error

Correct Answer: D

Question 7

Level 2 of the conceptual framework of International Accounting Standards Board (IASB) identifies qualitative characteristics of accounting information. These characteristics distinguish more useful information from less useful information.
To what end is this distinction useful?

A. For organizational vision B. For reporting purposes C. For decision-making purposes D. For business strategy

Correct Answer: C

Question 8

In defined contribution plans when the contributions are not expected to be settled wholly before twelve months after the end of the reporting period, what must occur?

A. Contributions must not be discounted B. Contributions must be discounted C. The employer must assume risk for the plan D. The employer must pay a specified amount to the employee

Correct Answer: B

Question 9

Which of the following is a disadvantage of reporting assets at historical cost?

A. Historical cost is not particularly relevant to most readers B. Historical cost is not objective C. Historical cost is subject interpretation, and therefore to bias D. Historical cost is not verifiable

Correct Answer: A

WorldatWork International Financial Reporting Standards for Compensation Professionals - T7 Exam Practice Test