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FR IAS-8

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FR IAS-8

Tishadz December 22, 2020

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Question 1 of 15

1. Question
1. The following is an extract from the 20X6 annual report of Status Ltd (Status). Statement of accounting policies Basis of accounting
The financial statements are drawn up on a historical cost basis and, except where stated, do not take into account changing money values and/or current valuations of non-current assets.

Changes in accounting policies
During the 20X6 financial year, Status voluntarily changed its policy on accounting for inventory. This did not materially affect the 20X6 financial statements, but will have a material impact on the financial statements in subsequent reporting periods.
In addition to the above accounting policy details, what must the accountant for Status include as disclosures? Select which two options are correct.
- a. the nature and reason for the accounting policy change
- b. the fact that the financial report has been prepared on a going concern basis
- c. the financial effects of the accounting policy change on subsequent reporting periods
- d. the fact that the financial report has been prepared in accordance with International Financial Reporting Standard
Correct

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Question 2 of 15

2. Question
2. In preparing the 20X4 financial statements of Medal Ltd (Medal), there was a voluntary change of accounting policy in relation to inventories. The accountant for Medal noted that this change would not require any adjustment in the financial report for the reporting period ending on30 June 20X4. However, the accountant considered that the change in accounting policy would have a material effect on the subsequent reporting period.

In accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, which one of the following actions should be taken when preparing the financial report for the year ended 30 June 20X4?
- a. No information about the accounting policy change needs to be disclosed
- b. Disclosure of the nature and reason for the change and its estimated financial effect in the subsequent reporting period.
- c. Disclosure of the nature and reason for the change and that no adjustments were recognized in the 20X4 financial statements.
- d. Inclusion of a note stating that an accounting policy had been changed but no adjustments were required in the 20X4 financial statements
Correct

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Question 3 of 15

3. Question
3. In preparing the accounts of Oscar Ltd (Oscar) for the financial year ended 30 June 20X7, the following items were considered. In accordance with IAS 1 Presentation of Financial Statements, IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and IAS 10 Events after the Reporting Period, which of the following items would be included in the determination of profit after incometax?

Select which three options are correct
- a. the loss from a major fire that closed the plant during April20X7
- b. a reassessment of the useful life of plant and equipment in December20X6
- c. a major currency realignment on 11 July 20X7 that affected the amount of Oscar’s foreign currencyreceivables
- d. a change in accounting estimate related to the determination of the bad debts write-off for the 20X6 financialstatements
Correct

Incorrect
Question 4 of 15

4. Question
4. Change in accounting policy does not include:
- a. 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 from weighted-average to FIFO
Correct

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Question 5 of 15

5. Question
5. Prior-period errors, including fraud, should be corrected:
- a. Only in the period when the error has been discovered.
- b. In the earliest period that is practical.
- c. In future periods only
Correct

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Question 6 of 15

6. Question
6. Specific principles bases conventions rules and practices applied in presenting financial statements. This defines:
- a. Prospective application
- b. Accounting policies
- c. Accounting estimates
Correct

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Question 7 of 15

7. Question
7. Adjustment of the carrying amount of an asset or a liability or the consumption of an asset. This defines
- a. Accounting policies
- b. Misstatements
- c. A change in accounting estimate
Correct

Incorrect
Question 8 of 15

8. Question
8. Changes in accounting policies:
- a. Should only make the change in the following period
- b. Should make the change to all periods reported
- c. Should be applied only in the year of the change
Correct

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Question 9 of 15

9. Question
9. If it is impractical to make a retrospective application to a period:
- a. Do not make the change at all
- b. Make the change only to the current period
- c. Apply the change to the earliest period that is practical
Correct

Incorrect
Question 10 of 15

10. Question
10. The term “accounting policies” refers to:
- a. The measurement bases used by an entity
- b. The accounting concepts and conventions adopted by an entity
- c. The accounting principles applied by an entity
- d. All of the above
Correct

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Question 11 of 15

11. Question
11. If an accounting standard applies specifically to a certain item, an entity’s accounting policy in relation to that item must normally be determined by applying the relevant standard. True or False?
- a. True
- b. False
Correct

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Question 12 of 15

12. Question
12. An entity may change one of its accounting policies:
- a. If this would reduce the cost of preparing the financial statements
- b. If this would result in the provision of reliable and more relevant information
- c. Never
- d. Whenever it wishes to do so
Correct

Incorrect
Question 13 of 15

13. Question
13. A change in accounting policy which does not result from the initial application of an international standard must normally be accounted for:
- a. Either retrospectively or prospectively
- b. Retrospectively
- c. Prospectively unless it is impracticable to do so
- d. Prospectively
Correct

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Question 14 of 15

14. Question
14. For all changes in accounting policy, the entity concerned must disclose:
- a. The title of the international standard that has caused the change to occur
- b. The fact that the change has been accounted for in accordance with transitional provisions specified in the applicable standard
- c. The reasons which suggest that the change will provide reliable and more relevant information
- d. The nature of the change
Correct

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Question 15 of 15

15. Question
15. A change in an accounting estimate should be accounted for:
- a. Retrospectively unless it is impracticable to do so
- b. Retrospectively
- c. Prospectively
- d. Either retrospectively or prospectively
Correct

Incorrect

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