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13 Questions

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Accounting Policies and Estimates Quiz

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Questions and Answers

What triggers a change of accounting policies according to the given text?

A change in the entity's financial year

A new accounting standard (correct)

A change in the entity's logo design

A change in management personnel

When might an error arise in the measurement of financial statements according to the given text?

When preparing the external audit report

When reviewing the financial statements

When selecting accounting policies

When estimating the amounts for line items (correct)

Who is responsible for applying judgements in the selection of accounting policies and estimation of amounts according to the given text?

External auditors

Regulatory authorities

Investors

Management of the entity (correct)

What is the role of an entity in selecting accounting policies and estimating amounts for financial statements?

To apply judgements and make estimates based on changing circumstances Signup and view all the answers

When is a change of accounting policies required according to the text?

When a policy becomes outdated due to changing circumstances Signup and view all the answers

What does MFRS108 require an entity to do regarding the application of accounting policies?

Select and apply accounting policies consistently for similar transactions, events, and conditions Signup and view all the answers

What is one of the desirable attributes in the context of financial statements to meet the comparability objective?

Consistency in accounting policies Signup and view all the answers

When might a change in measurement give rise to an error in financial statements?

When the actual result is not the same as the estimated amount Signup and view all the answers

What is the primary reason for a mandatory change in accounting policy?

It is caused by a new law or accounting standard Signup and view all the answers

Which of the following is NOT considered a change in accounting policies?

Change from retrospective to current period application Signup and view all the answers

In which way can the effect of a change in accounting policy be incorporated into the financial statements by treating as if the new policy had always been in use?

Retrospective application Signup and view all the answers

What is the basis for a discretionary change in accounting policy?

Dependent on judgement of management Signup and view all the answers

How does a voluntary change in accounting policy differ from a mandatory change?

It does not require prior year adjustment Signup and view all the answers