IFRS MCQs
Which organization is responsible for developing and issuing International Financial Reporting Standards?
a) International Accounting Standards Board (IASB)
b) International Financial Reporting Standards Foundation (IFRSF)
c) International Organization for Standardization (ISO)
d) Financial Accounting Standards Board (FASB)
Answer: a) International Accounting Standards Board (IASB)
What is the purpose of International Financial Reporting Standards?
a) To provide guidance on how to prepare financial statements
b) To establish a global accounting language
c) To improve transparency and comparability of financial information
d) All of the above
Answer: d) All of the above
Which of the following financial statements are required to be prepared in accordance with IFRS?
a) Balance sheet
b) Income statement
c) Statement of cash flows
d) All of the above
Answer: d) All of the above
Which of the following is not a principle-based approach to accounting?
a) Historical cost
b) Fair value
c) Substance over form
d) None of the above
Answer: a) Historical cost
Which of the following is a fundamental qualitative characteristic of financial reporting under IFRS?
a) Relevance
b) Materiality
c) Faithful representation
d) All of the above
Answer: d) All of the above
What is the objective of financial reporting under IFRS?
a) To provide information that is useful for making investment decisions
b) To provide information that is useful for assessing the company’s cash flows
c) To provide information that is useful for assessing the company’s profitability
d) All of the above
Answer: d) All of the above
Which of the following is not a required disclosure under IFRS?
a) Related party transactions
b) Contingent liabilities
c) Management’s discussion and analysis (MD&A)
d) Segment information
Answer: c) Management’s discussion and analysis (MD&A)
Which of the following is an example of an event after the reporting period that requires disclosure but does not require adjustment of the financial statements under IFRS?
a) Settlement of a lawsuit related to a prior period
b) Discovery of fraud or error related to a prior period
c) Sale of a subsidiary after the reporting period
d) None of the above
Answer: c) Sale of a subsidiary after the reporting period
Which of the following is not an example of an intangible asset under IFRS?
a) Patents
b) Trademarks
c) Goodwill
d) Land
Answer: d) Land
Which of the following is a requirement for recognizing revenue under IFRS?
a) The amount of revenue can be reliably measured
b) The economic benefits associated with the transaction will flow to the entity
c) The costs associated with the transaction can be reliably measured
d) All of the above
Answer: d) All of the above
Which of the following is a basic assumption underlying the preparation of financial statements under IFRS?
a) The going concern assumption
b) The conservatism assumption
c) The consistency assumption
d) The entity assumption
Answer: a) The going concern assumption
Which of the following is an example of a non-current liability under IFRS?
a) Accounts payable
b) Accrued expenses
c) Bank overdraft
d) Long-term debt
Answer: d) Long-term debt
Which of the following is not a type of financial instrument under IFRS?
a) Derivatives
b) Equity securities
c) Cash and cash equivalents
d) Debt securities
Answer: c) Cash and cash equivalents
Which of the following is an example of a fair value hierarchy level under IFRS?
a) Level 1
b) Level 2
c) Level 3
d) All of the above
Answer: d) All of the above
Which of the following is an example of a change in accounting estimate under IFRS?
a) Change in useful life of a fixed asset
b) Change in depreciation method for a fixed asset
c) Change in inventory valuation method
d) None of the above
Answer: a) Change in useful life of a fixed asset
Which of the following is an example of a contingent liability under IFRS?
a) Warranty obligations
b) Accounts payable
c) Long-term debt
d) Cash dividends payable
Answer: a) Warranty obligations
Which of the following is a required disclosure for related party transactions under IFRS?
a) The nature of the relationship between the parties
b) The amount of the transactions
c) Any outstanding balances
d) All of the above
Answer: d) All of the above
Which of the following is not an example of a comprehensive income item under IFRS?
a) Unrealized gains or losses on available-for-sale securities
b) Foreign currency translation adjustments
c) Dividends paid to shareholders
d) All of the above are examples of comprehensive income items
Answer: c) Dividends paid to shareholders
Which of the following is an example of a financial statement presentation requirement under IFRS?
a) The balance sheet must present assets in order of liquidity
b) The income statement must present expenses by function
c) The statement of cash flows must present cash flows from operating, investing, and financing activities
d) All of the above
Answer: d) All of the above
Which of the following is an example of a change in accounting policy under IFRS?
a) Change from straight-line to accelerated depreciation method
b) Change from FIFO to LIFO inventory valuation method
c) Change from cost model to revaluation model for property, plant, and equipment
d) All of the above
Answer: d) All of the above
Which of the following is an example of a current asset under IFRS?
a) Land held for investment
b) Goodwill
c) Accounts receivable
d) Patents
Answer: c) Accounts receivable
Which of the following is an example of a non-monetary asset under IFRS?
a) Cash
b) Accounts receivable
c) Property, plant, and equipment
d) Marketable securities
Answer: c) Property, plant, and equipment
Which of the following is an example of an intangible asset under IFRS?
a) Land
b) Accounts receivable
c) Patents
d) Inventory
Answer: c) Patents
Which of the following is an example of a measurement basis under IFRS?
a) Cost
b) Fair value
c) Historical cost
d) All of the above
Answer: d) All of the above
Which of the following is an example of an impairment indicator under IFRS?
a) Significant decrease in market value
b) Adverse changes in legal or economic environment
c) Obsolescence or physical damage
d) All of the above
Answer: d) All of the above
Which of the following is an example of a current liability under IFRS?
a) Long-term debt
b) Accounts payable
c) Deferred tax liability
d) Mortgage payable
Answer: b) Accounts payable
Which of the following is a required disclosure for segment reporting under IFRS?
a) Revenue and profit or loss for each reportable segment
b) Assets and liabilities for each reportable segment
c) Intersegment revenues and transfers
d) All of the above
Answer: d) All of the above
Which of the following is an example of a disclosure requirement for inventory under IFRS?
a) The cost formula used to determine the carrying amount of inventory
b) The carrying amount of inventory at the end of the reporting period
c) The amount of inventory written down to net realizable value
d) All of the above
Answer: d) All of the above
Which of the following is an example of a change in accounting policy that requires retrospective application under IFRS?
a) Change from FIFO to LIFO inventory valuation method
b) Change from cost model to revaluation model for property, plant, and equipment
c) Change in useful life of a fixed asset
d) None of the above
Answer: b) Change from cost model to revaluation model for property, plant, and equipment
Which of the following is an example of a disclosure requirement for employee benefits under IFRS?
a) The number of employees covered by defined benefit plans
b) The net defined benefit liability or asset recognized in the statement of financial position
c) The amount of actuarial gains and losses recognized in other comprehensive income
d) All of the above
Answer: d) All of the above
Which of the following is a criterion for recognizing revenue under IFRS 15?
a) The customer has the ability to return the product
b) The seller has transferred legal title to the product
c) The seller has received payment for the product
d) The seller has completed all its obligations to the customer
Answer: d) The seller has completed all its obligations to the customer
Which of the following is an example of a finance lease under IFRS 16?
a) A lease with a term of 6 months
b) A lease that transfers ownership of the asset to the lessee at the end of the lease term
c) A lease where the present value of the lease payments is less than 90% of the fair value of the leased asset
d) A lease that does not specify the leased asset
Answer: b) A lease that transfers ownership of the asset to the lessee at the end of the lease term
Which of the following is an example of a lessee accounting requirement under IFRS 16?
a) Recognizing a lease liability and right-of-use asset on the balance sheet
b) Recognizing interest expense on the income statement
c) Recognizing depreciation expense on the income statement
d) All of the above
Answer: d) All of the above
Which of the following is a requirement for a contract to be considered a lease under IFRS 16?
a) The contract must be enforceable
b) The contract must specify the leased asset
c) The contract must transfer the right to use the leased asset to the lessee
d) All of the above
Answer: d) All of the above
Which of the following is an example of a disclosure requirement for leases under IFRS 16?
a) The total amount of lease payments recognized as an expense during the reporting period
b) The weighted average discount rate used to calculate the lease liability
c) The maturity analysis of lease liabilities
d) All of the above
Answer: d) All of the above
Which of the following is an example of a recognition criterion for a financial instrument under IFRS 9?
a) The financial instrument is held for trading
b) The financial instrument is designated as a hedging instrument
c) The financial instrument is measured at fair value through profit or loss
d) All of the above
Answer: d) All of the above
Which of the following is an example of a classification category for a financial instrument under IFRS 9?
a) Held-to-maturity
b) Available-for-sale
c) Amortized cost
d) All of the above
Answer: d) All of the above
Which of the following is an example of a disclosure requirement for financial instruments under IFRS 7?
a) The fair value of financial assets and liabilities by category
b) The credit risk exposure of financial assets
c) The liquidity risk exposure of financial liabilities
d) All of the above
Answer: d) All of the above
Which of the following is an example of an adjustment that may be made to the carrying amount of a financial asset or liability under IFRS 9?
a) Impairment loss
b) Amortization expense
c) Accrued interest income
d) None of the above
Answer: a) Impairment loss