Accounting Standards (IFRS, GAAP) Quiz | Accounting Standards (IFRS, GAAP) Online Test for Practice

31. What is the concept of prudence?

1. Revenues and profits should not be overstated, and expenses and losses should not be understated
2. Assets should always be recorded at their fair value
3. Liabilities should always be recorded at their historical cost
4. Revenues should be recognized when cash is received

32. What is the concept of going concern?

1. The assumption that a company will continue to operate in the foreseeable future
2. The assumption that a company will cease operations in the foreseeable future
3. The assumption that a company will be sold in the near future
4. The assumption that a company will be liquidated in the near future

33. What is the concept of consistency?

1. Accounting policies should remain consistent from period to period unless there is a valid reason for change
2. Accounting policies should be changed frequently to reflect changes in business conditions
3. Accounting policies should be selected to present the most favorable financial results
4. Accounting policies should be selected to minimize tax liabilities

34. Which accounting standards are primarily used in most of the world (excluding the US)?

1. IFRS
2. GAAP
3. Both IFRS and GAAP
4. Neither IFRS and GAAP

35. What is the difference between revenue and income?

1. Revenue is the gross inflow of economic benefits arising from ordinary activities of an entity, while income is revenue minus expenses
2. Revenue is the net inflow of economic benefits arising from ordinary activities of an entity, while income is revenue plus expenses
3. Revenue is the total assets of an entity, while income is the total liabilities of an entity
4. Revenue is the total equity of an entity, while income is the net income of an entity

36. What is the difference between expenses and costs?

1. Expenses are costs that are directly related to the generation of revenue, while costs are all the expenses incurred by an entity
2. Expenses are all the costs incurred by an entity, while costs are only the costs that are directly related to the generation of revenue
3. Expenses are the costs of goods sold, while costs are all other expenses
4. Expenses are the costs of selling goods, while costs are the costs of producing goods

37. What is the difference between assets and liabilities?

1. Assets are resources controlled by the entity as a result of past events, while liabilities are present obligations of the entity arising from past events
2. Assets are the ownership interest in a company, while liabilities are the debts of a company
3. Assets are the cash and cash equivalents of a company, while liabilities are the debts of a company that are due within one year
4. Assets are the investments of a company, while liabilities are the borrowings of a company

38. What is the difference between equity and liabilities?

1. Equity represents the ownership interest in a company, while liabilities represent the debts of a company
2. Equity is the total assets of a company, while liabilities are the total debts of a company
3. Equity is the net income of a company, while liabilities are the total expenses of a company
4. Equity is the market value of a company's shares, while liabilities are the book value of a company's shares

39. What is the difference between inventory and fixed assets?

1. Inventory is held for sale, while fixed assets are used in the production process
2. Inventory is a current asset, while fixed assets are long-term assets
3. Inventory is valued at cost, while fixed assets are valued at fair value
4. Inventory is tangible, while fixed assets are intangible

40. What is the difference between tangible and intangible assets?

1. Tangible assets have physical substance, while intangible assets do not
2. Tangible assets are valued at cost, while intangible assets are valued at fair value
3. Tangible assets are used in the production process, while intangible assets are not
4. Tangible assets are current assets, while intangible assets are long-term assets

41. What is the difference between current assets and non-current assets?

1. Current assets are expected to be converted into cash within one year, while non-current assets are not
2. Current assets are more liquid than non-current assets
3. Current assets are used in the production process, while non-current assets are not
4. Current assets are valued at cost, while non-current assets are valued at fair value

42. What is the difference between current liabilities and non-current liabilities?

1. Current liabilities are expected to be settled within one year, while non-current liabilities are not
2. Current liabilities are more urgent than non-current liabilities
3. Current liabilities are secured by assets, while non-current liabilities are unsecured
4. Current liabilities are interest-bearing, while non-current liabilities are not

43. What is the difference between revenue and gain?

1. Revenue arises from the ordinary activities of an entity, while gains arise from incidental or peripheral activities
2. Revenue is the gross inflow of economic benefits, while gains are the net inflow of economic benefits
3. Revenue is recognized when cash is received, while gains are recognized when earned
4. Revenue is recognized when goods are shipped, while gains are recognized when goods are delivered

44. What is the difference between expenses and losses?

1. Expenses arise from the ordinary activities of an entity, while losses arise from incidental or peripheral activities
2. Expenses are the costs of goods sold, while losses are the costs of selling goods
3. Expenses are recognized when cash is paid, while losses are recognized when incurred
4. Expenses are deducted from revenue to determine net income, while losses are not

45. What is the primary objective of both IFRS and GAAP?

1. To ensure comparability and reliability of financial statements
2. To maximize profits for companies
3. To minimize tax liabilities for companies
4. To comply with all applicable laws and regulations