36 Questions
According to IFRS 15, which of the following contracts are exempted from the standard?
Non-monetary exchanges between entities in the same line of business
What is the meaning of 'performance obligation' in the context of IFRS 15?
The object of the contract: what is being sold and how
What does IFRS 15 provide a five-step model for?
Identifying elements to recognize a revenue
What is the transaction price?
Euro 200,000
Based on the text, how is the transaction price allocated?
Based on relative stand-alone selling prices
What is the purpose of including variable consideration in the transaction price?
To accurately reflect the amount of consideration expected
Based on the text, how does Contractor M determine whether the bonus should be included in the transaction price?
Based on the certification specified in the contract
Which of the following criteria must be met for an entity to account for a contract with a customer?
a) The parties have approved the contract and are committed to perform their obligations
What does collectability refer to in the context of a contract with a customer?
a) The customer's intent and ability to pay the promised consideration
Which of the following is NOT a performance obligation in the contract to manufacture and install customized equipment?
d) Sale of installation services separately
How does Contractor M determine the expected value for the contract to construct a corporate headquarters?
a) By considering the possible outcomes and their respective probabilities
Which type of cost is immediately linked to the object?
Direct cost
What is the classification of deferred revenue in the balance sheet?
Liabilities
What is the classification of accrued revenue in the balance sheet?
Assets
What is the classification of deferred expenses in the balance sheet?
Assets
What is the classification of accrued expenses in the balance sheet?
Liabilities
Which of the following is an example of a fixed cost?
Rent cost
What is the relationship between costs and revenues in IFRS?
Costs are regulated by IFRS 15
What is the impact of greater volumes on the average cost of an item?
The average cost decreases
What type of cost depends directly on production volumes?
Variable costs
What is the stand-alone selling price estimated by Entity A for the hardware?
Euro 185.000
What is the reason for the customer's professional services being more valuable if rendered as soon as possible?
The customer's business is highly seasonal
What is control in the context of revenue recognition?
The ability to direct the use of and obtain the benefits from an asset
Why does the customer not simultaneously receive and consume the benefits of Audit Corp.'s performance in the consulting contract example?
The nature of the professional opinion
According to IFRS, when should costs be recognized in the accounting process?
When the control is transferred
When does a company record deferred taxes according to IAS 12?
When it is probable that the recover of the asset or reduction of the liability will influence future payment of taxes
When does a company account for deferred expenses?
At the beginning of the next period
When does a company account for accrued revenues?
At the end of the year
Which of the following best describes taxable income?
The profit or loss related to a period, determined according to fiscal laws
What is the difference between current taxes and deferred taxes?
Current taxes represent the amount of tax owed on the current income, while deferred taxes represent taxes that will be paid in the future
Which of the following is an example of a temporary difference?
Depreciation is different between fiscal and accounting law
How are deferred taxes recorded?
Debit→Deferred tax liability (IS), Credit→Deferred tax liability (BS)
A customer is defined as a party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration. Which of the following statements is true about customers and contracts?
A customer can also be a counterparty to the contract if they share in the risks and benefits of an activity or process.
What is the definition of a contract according to the text?
An agreement between two or more parties that creates enforceable rights and obligations.
When is a revenue recorded according to the text?
When a company has both a customer and a written contract agreed upon.
What should be recorded as a liability according to the text?
Considerations (i.e. cash) received when the criteria for contracts are not met or the entity has no remaining obligation to transfer goods or services.
Accounting for Deferred Expenses Quiz: Test your knowledge on how companies account for deferred expenses at the beginning, end, and beginning of the next period. Explore the process of recording payments received, managing contracts, and understanding the impact on company accounts. Perfect for accounting professionals and students looking to enhance their understanding of deferred expenses.
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