52 Questions
What is a deferred tax asset (DTA)?
A company's ability to deduct the fiscal value of a loss in future periods
What is the purpose of adjusting for non-deductible expenses in a company's financial statements?
To move from the profit and loss result to the taxable result
What is the difference between temporary and permanent differences in a company's financial statements?
Temporary differences are expected to reverse over time, while permanent differences are not
What is the limitation on a company's right to obtain reimbursement for tax losses?
It is limited by law to a certain period
What is the transaction price in the context of revenue recognition?
The amount of money an entity expects to receive from a customer
What is variable consideration in the context of revenue recognition?
Consideration that may vary due to discounts, rebates, refunds, or performance bonuses
How should an entity estimate the transaction price?
Consistent with the contract and similar transactions
What is the basis for allocating the transaction price to each separate performance obligation?
An amount that depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services to the customer
What is the revenue recognition model based on?
Transfer of control
What is the difference between variable and fixed costs in a company's cost structure?
Variable costs increase with production volumes, while fixed costs remain constant
What is the relationship between fixed costs and profitability in a company?
The greater the incidence of fixed costs, the greater the influence of volumes on profitability
What is the difference between direct and indirect costs in a company's cost structure?
Direct costs are immediately linked to the object, while indirect costs are not linked to any single object
What is the preferred method for reporting cash flows from operating activities according to IFRS?
The direct method
What is the most common method for reporting cash flows from operating activities?
The indirect method
What are non-cash expenses/revenues?
Expenses/revenues that didn't have any impact on cash available
What is working capital?
The composition of short-term assets and short-term liabilities
What must be considered in operating activities when reporting cash flows?
Non-cash expenses and revenue, all changes in working capital, and cost included in investing activities
What is the purpose of recognizing DTA in a company's financial statements?
To accurately represent tax incidence in the profit and loss statement
What does the cash flow statement represent?
The sources of cash inflow and outflow
What is the purpose of preparing a statement of cash flows in accordance with IAS 7?
To provide information about the company's financial performance and cash generating activities
When is a company required to test for the recoverability of DTA?
Whenever DTA are recorded
What information is not described by looking at the financial position and income of a company?
The health of the company
What is the purpose of recording deferred taxes in a company's financial statements?
To adjust for temporary differences between financial statement and taxable income
Which of the following is an example of a non-taxable revenue according to the text?
Tax reimbursements
When are costs deductible for tax purposes?
Only costs that are not specifically excluded by local tax legislation are deductible for tax purposes
How are deferred tax assets recorded in a company's financial statements?
As a debit to deferred tax asset (IS) and a credit to deferred tax asset (BS)
What is the definition of control according to the text?
The ability to direct the use of an asset and obtain all of the benefits from it.
What are the potential benefits of an asset according to the text?
The potential cash flows that can be obtained directly or indirectly in many ways.
How are costs classified in IFRS according to the text?
Cost of goods, cost of services, cost of personnel, administrative costs, finance costs, etc.
What is the difference between variable and fixed costs according to the text?
Variable costs are directly dependent on volumes, while fixed costs are sustained by the company independently of volumes.
What is the definition of cash equivalents according to the Standard?
Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to a significant risk of changes in value
What is the purpose of a statement of cash flows according to the Standard?
To evaluate the changes in net assets of an entity
What are cash flows according to the Standard?
Inflows and outflows of cash and cash equivalents
What are operating activities according to the Standard?
The principal revenue-producing activities of the entity and other activities that are not investing or financing activities
What is the purpose of separately disclosing cash flows arising from financing activities?
To predict future claims on cash flows by providers of capital
Which of the following is an example of cash flow arising from financing activities?
Cash proceeds from issuing debentures
What is the difference between the direct and indirect method of reporting cash flows from operating activities?
The direct method reports all cash inflows and outflows, while the indirect method only reports gross cash receipts
Which of the following is an example of cash flow arising from investing activities?
Cash payments for the reduction of the outstanding liability relating to a lease
What is an example of a cash flow from operating activities that is NOT listed in the text?
Cash payments for advertising expenses
What is the criteria for classifying an expenditure as an investing activity?
The expenditure must result in a recognized asset in the statement of financial position
Which of the following is NOT an example of a cash flow arising from investing activities?
Cash receipts from sales of property, plant and equipment
Which of the following is an example of a cash flow from operating activities for an insurance entity?
Cash receipts for premiums and claims
What is the purpose of separately disclosing cash flows arising from investing activities?
To show the extent to which expenditures have been made for resources intended to generate future income and cash flows
What is the difference between deferred revenue and accrued revenue?
Deferred revenue is an obligation on a company's balance sheet that receives the advance payment because it owes the customer products or services, while accrued revenue is revenue that has been earned but not yet received.
What is the difference between deferred expenses and accrued expenses?
Deferred expenses are costs that have already been paid but not yet incurred, while accrued expenses are costs that have been incurred but not yet paid.
What is the difference between deferred revenue and deferred expense?
Deferred revenue is an obligation to provide services or products for which payment has not yet been received, while deferred expenses are costs that have been incurred but not yet paid.
What is accrued revenue?
Revenue that has been earned but not yet received.
What is the difference between Italian GAAP and IFRS regarding recognition of costs?
Italian GAAP recognizes costs when the service is rendered or the goods are received, while IFRS recognizes costs when control is transferred
What is the basis for the calculation of taxes due for a period?
The taxable income
What is the difference between current taxes and taxable income?
Current taxes represent the amount of tax owed on the current income, while taxable income is the profit related to a period
What is the difference between accounting laws and fiscal laws?
Accounting laws and fiscal laws can lead to different results
What is the trigger for recognizing costs in the Italian context?
The transfer of property
Test your knowledge of cash flows from operating activities with this quiz! Identify which activities constitute as cash receipts or cash payments in accordance with accounting standards. This quiz covers topics such as sales, services, royalties, fees, commissions, and more. Perfect for accounting students or professionals.
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