Accounting Standards (IFRS, GAAP) Multiple Choice Questions and Answers for Practice

Correct Answer is: Revenues and expenses are recognized when earned or incurred, regardless of when cash is received or paid 3

Correct Answer is: The assumption that a company will continue to operate in the foreseeable future

Correct Answer is: Accounting policies should be applied consistently from period to period

Correct Answer is: Only material items should be disclosed in the financial statements

Correct Answer is: Revenues and profits should not be overstated, and expenses and losses should not be understated

Correct Answer is: Assets should be recorded at their original cost

Correct Answer is: Assets and liabilities should be recorded at their current market value

Correct Answer is: GAAP

Correct Answer is: Historical cost is the original cost of an asset, while fair value is the current market value of an asset

Correct Answer is: An entity must control the economic benefits of the asset and it is probable that future economic benefits will flow to the entity

Correct Answer is: A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow 4 of economic benefits from the entity

Correct Answer is: A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow 1 of economic benefits from the entity

Correct Answer is: When the risks and rewards of ownership have transferred to the customer

Correct Answer is: When the obligation to pay is incurred

Correct Answer is: Only information that is significant to the financial statements needs to be disclosed