PFRS for Small and Medium-sized Entities Posted on July 26, 2020 by Disclaimer | 0 Comments Welcome to your PFRS for Small and Medium-sized Entities Quiz!Please answer the questions and submit it at the end of the quiz. This quiz has the following propertiesAdvertisements Mode: Multiple ChoicesNumber of questions to take (from many in the database): 25 itemsOrder: Ramdon questionsScoring: 1 point each, zero-based rating!Retake: YesFollow Philippine Accounting Updates on Facebook!Goodluck and have fun! Your Name E-mail Mobile No. Agree with Privacy Policy[ Small and Medium-sized Entities ]Which of the following entities must not describe its financial statements as being in compliance with the IFRS for SMEs even if it is required by law to prepare its financial statements in accordance with the IFRS for SMEs?an entity that holds assets in a fiduciary capacity for a broad group of outsiders as its primary business (eg a bank).an entity that operates two divisions in each of its retail outlets—a supermarket and a bank (which holds assets in a fiduciary capacity for a broad group of outsiders)). Both divisions are primary businesses of the entity.an entity that operates primarily as supermarket chain. However, it also enters into insurance contacts (as the insurer) with its customers. The entity’s short-term insurance and life insurance operations are small relative to the size of its supermarket operations and are operated from the entity’s supermarkets.an entity holds assets in a fiduciary capacity for a broad group of outsiders for reasons incidental to a primary business (eg a law firm that is legally required to hold in trust advances from its clients for legal services to be rendered).cases (a), (b) and (c) above.cases (a)–(d) above.[ Concepts and Pervasive Principles ]Materiality depends on:(a) the size of the item(b) the nature of the item(c) the size of the item or error judged in the particular circumstances(d) the requirements of the regulators(e) all of the above[ Concepts and Pervasive Principles ]Recognition criteria determine when to recognise an item. Measurement is determining the monetary amounts at which to measure an item. Uncertainties about the extent of future cash flows:(a) Only affect the decision about whether to recognise the item(b) Only affect the estimation of the amount at which to measure the item(c) Could affect decisions about both whether to recognise an item and the measurement of that item(d) Could not affect any decisions about both the recognition and the measurement of that item[ Financial Statement Presentation ]Items of dissimilar nature or function:(a) must always be presented separately in financial statements.(b) must not be presented separately in financial statements (ie must be aggregated in the financial statements).(c) must be presented separately in financial statements if those items are material.(d) either separately presented or aggregated depending on the accounting policy of the entity[ Statement of Financial Position ]When there is much variability in the duration of the entity’s normal operating cycle, the operating cycle is measured at:(a) its mean value(b) its median value(c) twelve months(d) three years[ Financial Statement Presentation ]Materiality depends on:(a) the nature of the omission or misstatement.(b) the size of the omission or misstatement.(c) the size and nature of the omission or misstatement judged in the surrounding circumstances.(d) None of the above[ Concepts and Pervasive Principles ]Which of the following satisfies the definition of a liability?(a) The income generating capacity of a snow ski resort is greatly influenced by the amount of snowfall. Snowfall is erratic. To reduce the volatility in its reported profit, a snow ski resort would like to recognise a liability (and corresponding expense) in years of high snowfall (a provision for warm weather) and release that provision to income in years of low snowfall.(b) An entity ‘self insures’ its assets against loss or damage, ie it opens a separate bank account (in the company’s name) into which it transfers each month an amount equal to the market rate for damage/loss insurance cover. When the entity suffers damage or loss its uses the money in the separate bank account to restore or replace the damaged or lost item. To reduce volatility in its reported profit, the entity would like to recognise a liability (and corresponding expense) in the period in which it transfers cash into the separate bank account (a provision for self insurance) and decrease that provision when cash is paid out of the separate bank account to replace or restore a damaged or lost item.(c) An entity is being sued for allegedly breaching the patent of one of its competitors. The entity’s legal counsel believes that it to be more likely than not that the entity will lose the case.(d) All of the above (ie (a) to (c))(e) None of the above[ Statement of Financial Position ]In accordance with the IFRS for SMEs, in presenting a statement of financial position, an entity:(a) must make the current/non-current presentation distinction.(b) must present assets and liabilities in order of liquidity.(c) must choose either the current/non-current or the liquidity presentation formats (ie a ‘free’ choice of presentation format).(d) must make the current/non-current presentation distinction except when a presentation based on liquidity provides information that is reliable and more relevant.[ Concepts and Pervasive Principles ]Which of the descriptions below best describes the qualitative characteristic ‘reliability’?(a) Information is reliable when it is measured precisely (ie little or no uncertainty in measurement)(b) Information is reliable when it is measured at historical costs(c) Information is reliable when it is measured at fair value(d) Information is reliable when it is free from material error and bias and represents faithfully that which it either purports to represent or could reasonably be expected to represent[ Concepts and Pervasive Principles ]The accrual basis of accounting that underlies financial information prepared in accordance with the IFRS for SMEs:(a) specifies that expenses are recognised as an expense in the period in which the income they generate is recognised (a matching concept)(b) specifies that an entity must be conservative in its accounting (ie understate assets and income and overstate liabilities and expenses)(c) specifies that an element (asset, liability, equity, income and expense) is recognised when it satisfies the definition and recognition criteria for an element(d) specifies that management discretion determines the timing of the recognition of income and expenses[ Statement of Financial Position ]In accordance with the IFRS for SMEs, an entity must present additional line items in a statement of financial position when:(a) such presentation is relevant to an understanding of the entity’s financial position.(b) such presentation is a generally accepted practice in the sector in which the entity operates.(c) such presentation is required by the tax authorities of the jurisdiction in which the entity operates.(d) such presentation is required by those charged with governance and the auditors of the entity[ Financial Statement Presentation ]If the changes to the equity of an entity during the periods for which financial statements are presented arise only from profit or loss, payment of dividends, corrections of prior period errors, and changes in accounting policy:(a) the entity presents the income statement but not the statement of changes in equity.(b) the entity presents the statement of comprehensive income but not the statement of changes in equity.(c) the entity presents the income statement and the statement of changes in equity.(d) the entity presents the statement of comprehensive income and the statement of changes in equity.(e) the entity presents a single statement of income and retained earnings.(f) the entity may present the statement/s listed in either (c), (d) or (e).[ Financial Statement Presentation ]An entity that is not publicly accountable must make an explicit and unreserved statement of compliance with the IFRS for SMEs:(a) if the entity complies with all the requirements of IFRS for SMEs.(b) if the entity complies with the vast majority of the requirements of IFRS for SMEs.(c) if the entity complies with the national GAAP based on IFRS for SMEs with some specific differences.(d) if the entity complies with full IFRSs.[ Concepts and Pervasive Principles ]Which qualitative characteristics are fundamental to general purpose financial information?(a) relevance and reliability(b) relevance and comparability(c) reliability and comparability(d) prudence and comparability[ Financial Statement Presentation ]When the classification of items in its financial statements is changed, the entity:(a) must not reclassify the comparative amounts.(b) can choose whether to reclassify the comparative amounts.(c) must reclassify the comparative amounts, unless it is impracticable to do so.(d) none of the above[ Small and Medium-sized Entities ]In which of the following situations can an entity that does not have public accountability claim compliance with the IFRS for SMEs in its financial statements?The entity prepares its financial statements in accordance with local GAAP that is substantially the same as the IFRS for SMEs.The entity prepares its financial statements in accordance with local GAAP that is, except in name, word-for-word the same as the IFRS for SMEs.The entity prepares its financial statements in accordance with the IFRS for SMEs.In both cases (b) and (c) above.[ Concepts and Pervasive Principles ]How many measurement bases does the IFRS for SMEs specify for the measurement of assets?(a) One—historical cost(b) One—fair value(c) Two—historical cost and fair value(d) Many—including historical cost, fair value, value in use, estimated selling price less costs to complete and sell, and the equity method[ Small and Medium-sized Entities ]Which of the following entities must not describe its financial statements as being in compliance with the IFRS for SMEs even if it is required by law to prepare its financial statements in accordance with the IFRS for SMEs?the entity is a subsidiary whose parent uses full IFRSs.the entity is an associate of an investor that uses full IFRSs.the entity is a jointly controlled entity whose venturers (investors) use full IFRSs.cases (a), (b) and (c) above.none of the cases (a)–(c) above.[ Financial Statement Presentation ]Fair presentation requires a faithful representation of the effect of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in Section 2. Fair presentation, in accordance with the IFRS for SMEs, is presumed to result from:(a) compliance with the IFRS for SMEs by an entity that has public accountability.(b) compliance with the IFRS for SMEs, with additional disclosures where necessary, by an entity that has public accountability.(c) compliance with the IFRS for SMEs by an entity that does not have public accountability.(d) compliance with the IFRS for SMEs, with additional disclosures where necessary, by an entity that does not have public accountability.[ Concepts and Pervasive Principles ]The objective of general purpose financial statements prepared in accordance with the IFRS for SMEs is:(a) to support the reporting entity’s annual tax return(b) to provide the government of the jurisdiction in which the reporting entity operates with financial information for use in government statistics or government planning or both(c) to provide management of the reporting entity with financial information about the reporting entity(d) to provide information about the financial position, performance and cash flows of the entity that is useful for economic decision-making by a broad range of users who are not in a position to demand reports tailored to meet their particular information needs (eg investors and creditors)[ Financial Statement Presentation ]In which of the following situations can an entity that does not have public accountability claim compliance with the IFRS for SMEs in its financial statements:(a) The entity prepares its financial statements in accordance with local GAAP that has substantially converged with the IFRS for SMEs.(b) The entity prepares its financial statements in accordance with local GAAP that is, except in name, word-for-word the same as the IFRS for SMEs.(c) The entity prepares its financial statements in accordance with the IFRS for SMEs.(d) In both cases (b) and (c) above.[ Concepts and Pervasive Principles ]Expenses are recognised in comprehensive income (ie profit or loss or other comprehensive income)(a) using the matching bases (ie on the basis of a direct association between the costs incurred and the earning of specific items of income)(b) using an accrual basis of accounting(c) at the discretion of management(d) at the discretion of the owners of the entity[ Concepts and Pervasive Principles ]Which of the following is not an element for which there is a concept in Section 2?(a) Asset(b) Liability(c) Income(d) Expense(e) Other comprehensive income[ Concepts and Pervasive Principles ]An entity made an unusually high profit for the year ended 31 December 20X7 because it negotiated a significantly lower cost price for its main raw material at a time when the selling price of its products was rising sharply. Management does not want to make public the unusually high profit because they believe that knowledge of the entity’s profitability would result in their customers seeking to negotiate lower selling prices when purchasing goods from the entity. Consequently, management would like to decrease profit for the year by recognising a provision for unforeseen possible expenses.(a) Because creation of the provision is prudent, it is acceptable accounting(b) Because creation of the provision is common practice in the jurisdiction in which the entity operates, it is acceptable accounting(c) Provided the reason for creating the provision is explained in the notes, it is acceptable accounting(d) Because they do not satisfy the definition of a liability, the entity cannot create a provision for unforeseen possible expenses[ Financial Statement Presentation ]Which of the following entities is not a going concern?(a) management intends to liquidate the entity.(b) management intends to cease the entity’s operations.(c) management has no realistic alternative but to cease the entity’s operations.(d) all of cases (a) to (c) above.Time is Up!Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)MoreClick to share on Reddit (Opens in new window)Click to share on Tumblr (Opens in new window)Click to email this to a friend (Opens in new window)Click to share on Pocket (Opens in new window)Click to print (Opens in new window) Related