339 Questions
What is the purpose of financial statements?
To provide information on a company's business for stakeholders.
What is the purpose of the trial balance?
To test the adequacy of double entry posting before preparing the final accounts
What is the difference between trade receivables and notes receivables?
Trade receivables represent the right to receive cash or cash equivalent while notes receivables are formal, written instruments of credit.
What is the primary purpose of accounting?
To classify and record monetary transactions
What is VAT?
An indirect tax on goods
What is VAT?
An indirect tax on goods
What is the most commonly used method of accounting?
Double entry bookkeeping
Which financial reporting standards govern the rules for receivables?
IFRS 15 and IFRS 9
What determines the classification of assets and liabilities as current or non-current?
The nature of operations and operating cycle
What is the most commonly used method of accounting?
double entry bookkeeping
Which of the following is NOT a document included in the International Accounting Framework?
GAAP
Which financial standard(s) govern(s) the treatment of receivables?
Both IFRS 15 and IFRS 9
What is the International Accounting Framework composed of?
International accounting standards issued by IASB
Which of the following is a requirement of IAS 2 for inventories that are damaged or obsolete?
Impairment must be written off
Which of the following is an example of an intangible asset?
Trademark
What is the purpose of a balance sheet?
To show the assets, liabilities, and equity of a company
Which inventories require impairment under IAS 2?
Inventories that are damaged or obsolete
What is the definition of accounting?
The classification and recording of monetary transactions
What determines the classification of assets and liabilities as current or non-current?
The nature of operations and operating cycle
What is the definition of intangible assets?
Assets without physical substance that are not monetary
What is the purpose of financial statements?
To provide information on a company's business for stakeholders
What determines the classification of current vs. non-current assets and liabilities?
Nature of operations and operating cycle
What is the definition of intangible assets?
Identifiable non-monetary assets without physical substance
What are investments?
Titles of ownership over cash flows of a company
What is the purpose of a balance sheet?
To show a company's assets, liabilities, and equity
Which of the following inventory evaluation methods is not allowed by IAS 2?
LIFO
What is the purpose of the trial balance?
To test the adequacy of double entry posting
What are investments?
Titles of rights over cash flows of an owned company.
Which of the following is NOT a part of the International Accounting Framework?
GAAP
What is the most commonly used method of accounting?
double entry bookkeeping
Who charges VAT?
State governments
What are the primary qualitative characteristics of financial statements according to the Conceptual Framework?
Relevance, faithful representation, and substance over form
Do post balance sheet events affect the classification of assets and liabilities as current or non-current?
No
Which of the following are the primary qualitative characteristics of financial statements according to the Conceptual Framework?
Relevance, faithful representation, and substance over form
What is the basis for estimating net realizable value?
Reliable available information
How is net realizable value estimated under IAS 2?
Based on reliable available information
What are transactions?
Events that cause a change in a company's financial position
What are fixed assets?
Long-term tangible property used to generate income
What is the basis for estimating net realizable value of inventories?
Reliable available information
What is the difference between cash basis and accrual basis accounting?
Cash basis recognizes revenues when cash is received and expenses when they are paid, while accrual basis records income and expenses when the firm has given or received benefit from a transaction.
What do trade receivables represent?
The right to receive cash or cash equivalent
What does the accrual basis of accounting record?
Income and expenses when the firm has given or received benefit from a transaction
Who charges VAT?
The state government
Where are trade receivables classified in the balance sheet?
Within current assets
What are the two methods of accounting?
Cash and accrual basis
Which model of credit loss was introduced under IFRS 9?
Expected credit loss model
What are the components of the statement of financial position?
Assets, liabilities, and equity
What are transactions in accounting?
Events that cause a change in a company's financial position
How can investments be classified?
As subsidiaries, joint control/joint operations, associates, or others.
Which of the following is not a classification of investments?
Bonds
What are the components of the statement of financial position?
Assets, liabilities, and equity
Which of the following is an example of an intangible asset?
Trademarks
When did the move towards a global accounting system begin?
In the early 2000s
Which of the following is an example of an intangible asset?
Trademarks
Which accounting standard is applied to every intangible asset except for goodwill, financial assets, deferred tax assets, assets held for sale, and assets arising from specific industries?
IAS 38
Who regulates the preparation of financial statements?
Accounting principles
What are fixed assets?
Long-term tangible property used to generate income
Which of the following documents are included in the set of international accounting standards?
IAS, IFRS, IFRIC interpretations, and Practice Statements
Do post balance sheet events affect the classification of assets and liabilities as current or non-current?
No
What is the difference between assets and liabilities?
Assets are the company's possessions, while liabilities are debts owed by the company.
What are subsidiaries?
Investees on which the investor has control.
When is VAT generated?
When invoices are issued
What is the net worth of a firm?
The difference between assets and liabilities
Is impairment a one-time event or must it be repeated in subsequent periods?
Must be repeated in subsequent periods
Which of the following is NOT an enhancing qualitative characteristic of financial statements according to the Conceptual Framework?
Materiality
When is VAT generated?
When invoices are issued
What are subsidiaries?
Investees on which the investor has control
What are the two parts of each IAS/IFRS?
Mandatory and optional
What are the different types of transactions in accounting?
Cash, credit, barter, or paper transactions
How often must impairment be reassessed for inventories?
Only when significant changes occur
Which standard is applied to every intangible asset except for goodwill, financial assets, deferred tax assets, assets held for sale, and assets arising from specific industries?
IAS 38
What does the statement of comprehensive income include?
Mandatory line items and non-owner changes in equity
What are the two approaches to even out financial information globally?
Standardization and harmonization
Which standard is applied to every intangible asset except for goodwill, financial assets, deferred tax assets, assets held for sale, and assets arising from specific industries?
IAS 38
What types of transactions can occur?
Cash, credit, barter, or paper transactions
What is the main requirement for an intangible asset to be recognized?
It should provide future economic benefits
Which of the following is NOT one of the enhancing qualitative characteristics of financial statements according to the Conceptual Framework?
Materiality
When did the move towards a global accounting system begin?
Early 2000s
Which of the following is not a type of fixed asset?
Financial liabilities
What are the three rules of accounting?
Debit the receiver and credit the giver, debit what comes in and credit what goes out, and debit all expenses and credit all gains and profits.
What are notes receivables?
Amount customers owe for which a formal, written instrument of credit has been issued
What are the types of fixed assets?
Property, plant and equipment, intangibles, and financial assets
How are notes receivables reported in financial statements?
At the net realizable value
What does the Statement of Comprehensive Income include?
Mandatory line items and separates owner and non-owner changes in equity
When does cash basis recognize revenues and expenses?
When cash is received and expenses are paid
What is the purpose of an allowance for bad debts?
To estimate the losses a company expects to have each year
What does the statement of comprehensive income include?
Both owner and non-owner changes in equity
What is double entry bookkeeping?
Recording transactions twice to ensure accuracy
Can income and expenses be presented in one statement or two statements?
Either in one or two statements
How are notes receivables reported?
At the net realizable value
What criteria must intangible assets arising from the development phase of an internal project meet to be recognized?
They must meet certain criteria
What are the three rules of accounting?
Debit what comes in and credit what goes out, debit the receiver and credit the giver, and debit all expenses and credit all gains and profits.
How many statements can income and expenses be presented in?
One or two statements
What is the cost constraint in the Conceptual Framework?
A limitation on the information that can be included in financial statements
What is the purpose of financial statements?
To evaluate the financial health of a company
Which inventory evaluation methods are allowed under IAS 2?
Specific cost, weighted average cost, and FIFO
How is VAT calculated?
On the net difference of VAT on purchases and sales
How can income and expenses be presented in financial statements?
In one or two statements
What are associates?
Entities over which a company has significant influence
What does accrual basis record?
Income and expenses when the firm has given or received benefit from a transaction
What are the two approaches to even out financial information globally?
Standardization and harmonization
What is the net difference of VAT on purchases and sales?
VAT paid to the government
What are the primary qualitative characteristics included in the Conceptual Framework?
Relevance, faithful representation, and substance over form
What are associates?
Entities over which a company has significant influence
Which financial statement shows the company's revenue, expenses, and net income over a period of time?
Income statement
Which of the following is NOT a distinctive element of financial statements?
Gross profit
How are PP&E initially measured?
At cost
What is the main requirement for an intangible asset?
It should provide future economic benefits
What is factoring?
A financial transaction through which a company obtains cash by transferring its account receivables
Which inventory evaluation methods are allowed by IAS 2?
Specific cost, weighted average cost, and FIFO
What does equity represent?
Assets minus liabilities
What is the requirement for an intangible asset to be recognized?
It should provide future economic benefits
What are monetary events?
Events that involve a transfer of money and result in a change in the company's financial position
What is the purpose of ledger accounts?
To summarize all transactions related to a person, asset, income, or expense that have taken place during a specific period
How are PP&E initially measured?
Cost, including installation and assembly costs
What is the aim of the journey towards a universal accounting language?
To unify social values of economic operators
What are monetary events in accounting?
Events that involve a transfer of money and result in a change in the company's financial position
What is the expected credit loss (ECL) model?
A model that anticipates the expected credit loss in the financial statements
What information does the cash flow statement provide?
Information on the company's ability to generate cash and cash equivalents
What are non-monetary events in accounting?
Events that do not affect a company's financial position
What are non-monetary events?
Events that are not related to any exchange of money
What is the purpose of ledger accounts?
To summarize all transactions related to a person, asset, income or expense that have taken place during a specific period
What is the difference between debits and credits?
Debits refer to money received, while credits refer to money paid or owed
What is double entry?
Recording two separate and distinct aspects of a transaction
What are the four main types of financial statements?
Balance sheet, income statement, cash flow statement, and statement of change in equity
What do explanatory notes provide in financial statements?
Additional information about accounting principles, estimates, policies, and events that impacted the business
Who systematized the accounting system in the 15th century?
Luca Pancioli
What is the aim of the journey towards a universal accounting language?
To unify social values of economic operators.
Which of the following is an enhancing qualitative characteristic included in the Conceptual Framework?
Comparability
Which of the following is a distinctive element of financial statements?
Share capital
Which of the following is NOT included in the financial statements prescribed by IAS 1?
Gross profit
What information does the cash flow statement provide?
Information on the enterprise's ability to generate cash and cash equivalents
What information does the Cash Flow Statement provide?
Information on the enterprise's ability to generate cash and cash equivalents
What regulates PP&E accounting?
IAS 16
What regulates PP&E accounting?
IAS 16
When should the cost of an intangible asset be recognized as an asset?
If it is probable that future economic benefits associated with the item will flow to the entity
What criteria must intangible assets arising from the development phase of an internal project meet to be recognized?
They must have a defined useful life
What criteria must intangible assets arising from the development phase of an internal project meet to be recognized?
All of the above
What are joint ventures?
Joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture
What are joint ventures?
Joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture
What is the difference between factoring with recourse and factoring without recourse?
Factoring with recourse transfers the risks of bad debts to the bank while factoring without recourse does not.
What do credit notes do?
Cancel a whole or part of a previously issued invoice
What is factoring?
A financial transaction through which a company obtains cash by transferring its account receivables
What are inventories?
Assets held for sale, in production, or raw materials/supplies
What are inventories?
Assets held for sale or production
What information must be disclosed about equity according to IAS 1?
Both share capital and nature and purpose of each reserve within equity
What does equity represent?
Assets minus liabilities
What does equity represent?
The difference between assets and liabilities
What information is included in the notes to the financial statements?
Accounting policies, disclosures, and significant judgements
Which of the following is NOT included in the notes to financial statements prescribed by IAS 1?
All of the above are included
What is the purpose of the statement of financial position?
To show the value of the company's assets and liabilities at a particular point in time
What is the purpose of IFRS 15?
To regulate the accounting of revenue from contracts with customers
What does the business cycle involve?
Financing, purchasing fixed and current assets, processing and producing, and selling finished goods
How can investments be evaluated?
At cost, equity method, or fair value
What are the three rules of accounting?
Debit the receiver and credit the giver, debit what comes in and credit what goes out, and debit all expenses and credit all gains and profits
Is the cost constraint considered a qualitative characteristic in the Conceptual Framework?
No
What does IAS 1 require disclosure of within equity?
Share capital and nature and purpose of each reserve
What does the statement of changes in equity show?
Total comprehensive income, changes in equity components, and dividends
What does the business cycle involve?
Financing, purchasing fixed and current assets, processing and producing, and selling finished goods
What is the balance sheet equation?
A = L + E
What is depreciation?
The systematic allocation of the depreciable amount of an asset over its useful life
Who systematized the accounting system in the 15th century?
Luca Pancioli
What is depreciation?
The systematic allocation of the depreciable amount of an asset over its useful life
What is net realizable value?
Estimated selling price less completion and selling costs
What do debits and credits refer to in accounting?
Debits refer to money received, while credits refer to money paid or owed
What is net realizable value?
The estimated selling price less completion and selling costs
How should an entity assess the probability of expected future economic benefits of an intangible asset?
Using supportable assumptions
What information is included in the Notes to the Financial Statements?
Accounting policies, disclosures, and significant judgements
In which country was the financial statement first viewed as a source of protection for social creditor rights in the 17th century?
France
What is the difference between factoring with and without recourse?
Factoring with recourse transfers the risks of bad debts to the bank, while factoring without recourse does not.
What does IAS 1 require disclosure of within equity?
Share capital and nature and purpose of each reserve within equity
Under what condition shall the cost of intangible assets be recognized as an asset?
If it is probable that future economic benefits associated with the item will flow to the entity
What is the balance in accounting?
The difference between debit and credit
What information is included in the notes to the financial statements?
All of the above
When should the cost of intangible assets be recognized as an asset?
When it is probable that future economic benefits associated with the item will flow to the entity
How are account receivables recorded at initial recognition?
At their nominal amount
What is the purpose of financial statements?
To provide a comprehensive view of a company's financial performance
How can investments be evaluated?
At cost, equity method, or fair value
What is the difference between external and internal financing?
External financing involves receiving money from an external institution, while internal financing involves receiving money from shareholders
What is carrying amount?
The amount at which an asset is recognized after deducting any accumulated depreciation and accumulated impairment losses
Which statement is NOT included in the set of general purpose financial statements under IFRS?
Statement of taxation
What is fair value?
The value at which an asset can be exchanged or a liability paid
In which century was the financial statement first viewed as a source of protection for social creditor rights in France?
17th century
What is carrying amount?
The amount at which an asset is recognized after deducting any accumulated depreciation and accumulated impairment losses
Which type of financial statement shows the company's cash receipts and payments over a period of time?
Cash flow statement
What is fair value?
The value at which an asset can be exchanged or a liability paid
What is the structure of a ledger?
Columns for date, journal number, description, debit, credit, and balance
What does the statement of changes in equity show?
Total comprehensive income, changes in equity components, and dividends
What does the statement of changes in equity show?
Total comprehensive income, changes in equity components, and dividends
Which of the following is NOT required for fair presentation of financial statements according to IAS 1?
Use of historical cost for all assets and liabilities
What are the two accounting models to evaluate intangible assets?
Cost model and revaluation model
How should an entity assess the probability of expected future economic benefits of an intangible asset?
Using reasonable and supportable assumptions
What is secured borrowing?
A financial transaction through which a company obtains cash by pledging its account receivables
What is the net realizable value of notes receivables?
The amount of notes receivables after deducting an allowance for bad debts
What are financial statements?
Formal records of the financial activities and position of a business
When was the Securities and Exchange Commission (SEC) established in the US?
1934
What is external financing in accounting?
Receiving money from an external institution
What is the allowance for bad debts?
An estimation of losses one expects to have each year
What are impairment tests?
Tests required annually to measure the recoverable amount of investments.
What is required for every business transaction?
A debit entry and a corresponding credit entry
What do financial statements give a true representation of?
The financial effects of transactions and events
How should an entity assess the probability of expected future economic benefits of an intangible asset?
Using reasonable and supportable assumptions
What does IAS 8 cover?
All of the above
What are impairment tests used for?
To measure the recoverable amount of investments
What does IAS 8 cover?
Accounting policies, changes in accounting estimates, and errors
What is the impact of IAS 8 adjustments on retained earnings?
They require adjustments to the opening balance of retained earnings
What does IAS 8 cover?
Accounting policies, changes in accounting estimates, and errors
What is the balance in accounting?
The difference between debit and credit.
What are the distinctive elements of financial statements?
Assets, liabilities, equity, revenues, and expenses
Which items are excluded from IAS 2?
All of the above
What is included in a ledger?
Accounts for assets, liabilities, owners' equity, revenues, and expenses.
When was the Securities and Exchange Commission (SEC) established in the US?
1934
What do adjustments required by IAS 8 require adjustments to?
The opening balance of retained earnings
How are fixed assets recorded in accounting?
As assets
What does IFRS 9 distinguish between?
Financial instruments whose changes in value are classified within OCI and those classified within P&L
What is recoverable amount?
The higher of an asset’s fair value less costs of disposal and its value in use
When was the Financial Accounting Standard Board (FASB) established in the US?
1973
How are transactions recorded in the ledger?
As they occur
What is the consequence of accounts receivable being unrecoverable?
It results in the derecognition of account receivables
What is the result of accounts receivable not being recoverable?
It could result in bankruptcy
What is the purpose of notes in financial statements?
To present material information not included in the financial statements
What does IFRS 8 require disclosure of?
Segment reporting only
What are explanatory notes?
Additional information about accounting principles, estimates, policies, and events that impacted the business
What is recoverable amount?
The fair value of an asset less costs of disposal
What does IFRS 8 require disclosure of?
Segment reporting
What is the net worth of a company?
The difference between assets and liabilities
What is the impact of adjustments required by IAS 8 on retained earnings?
Adjustments reduce retained earnings
Who decides on dividends and how do they impact equity?
Shareholders, and they decrease equity against payables to shareholders
Which of the following is covered under IAS 2?
Finished goods inventory
How many accounting models are there to evaluate intangible assets?
Two
How many accounting models are there to evaluate intangible assets, and what are they?
Two models: cost model and revaluation model
Which of the following is NOT required for presentation and classification of financial statements according to IAS 1?
Use of fair value for all assets and liabilities
What do ledger accounts summarize?
All transactions related to a person, asset, liability, owners' equity, revenue, or expense that have taken place during a specific period
How are fixed assets recorded?
As assets
What does IFRS 8 require?
Disclosure of segment reporting
When does the depreciation of an intangible asset begin and end?
It begins when it is available for use and ends when it is classified as held for sale or derecognized
What does IFRS 9 distinguish between?
Financial instruments whose changes in value are classified within OCI and those classified within P&L.
What happens to the risks of bad debts in secured borrowing?
The risks of bad debts are not transferred to the bank
What types of items are represented in OCI and specific reserves in equity?
Changes in exchange rate and post-employment benefits
What does IFRS 1 regulate?
The first-year adoption of IFRS
What is the balance sheet equation?
A = L + E
What does IFRS 1 regulate?
The first-year adoption of IFRS only
What does IFRS 1 regulate?
First-year adoption of IFRS
When was the Financial Accounting Standard Board (FASB) established in the US?
1973
What is entity-specific value?
The present value of the cash flows an entity expects to arise from the continuing use of an asset
Who decides dividends?
The shareholders
What is entity-specific value?
The present value of the cash flows an entity expects to arise from the continuing use of an asset
When was the International Accounting Standards Board (IASB) established?
2000
What is the basis for determining the useful life of an asset?
Its expected utility to the entity
What does the depreciation of intangible assets depend on?
Whether they have a defined or undefined useful life
Which financial statement shows the value of the company's assets, liabilities, and equity at a particular point in time?
Balance sheet
What is inventory in accounting?
The recording of all finished products and raw materials at the end of the year
What does the depreciation of intangible assets depend on?
Whether they have a defined or undefined useful life
What is the purpose of the cash flow statement?
To show the company's cash receipts and payments over a period of time
What is terminal value?
The value of the company beyond the explicit period of the plan
What does terminal value express?
The value of the company beyond the explicit period of the plan.
How do journal entries and ledger accounts affect financial statements?
They affect both the income statement and balance sheet
What is the purpose of IFRS 9?
To regulate the accounting of financial instruments
What is the purpose of the bank account ledger?
To record all financial transactions related to a bank account
What did IFRS 9 replace for banks after the financial crisis of 2008?
IAS 39
How is a bank account ledger balanced?
By taking the total of both sides and calculating the sum of each side
What is allowance for bad debts?
An estimation of losses one expects to have each year
How are inventories evaluated?
At the lowest between cost and net realizable value
How are inventories evaluated?
At the lowest between cost and net realizable value
What is inventory?
The recording of all finished products and raw materials at the end of the year
Who decides on dividends and how do they impact equity?
Shareholders; reduce equity against payables to shareholders
Which assumption is necessary for financial statements according to IFRS?
Going concern
Which of the following is NOT a primary component of the balance sheet equation?
Revenue
What is the purpose of impairment tests?
To recognize a durable loss in value of assets.
What types of items are represented in OCI and specific reserves in equity?
Both changes in exchange rate and post-employment benefits
What happens to an intangible asset with an undefined useful life?
It does not have to be depreciated
What is bookkeeping?
The routine recording of business transactions
What are the four main types of financial statements?
Balance sheet, income statement, cash flow statement, and statement of change in equity
When should the residual value and useful life of an asset be reviewed?
At least every financial year-end
When should the residual value and useful life of an asset be reviewed?
At least every financial year-end
When was the International Accounting Standards Board (IASB) established?
2000
What happens to an intangible asset with an undefined useful life?
It is subject to annual impairment test
What are FIFO and weighted average cost?
Methods used to determine inventory cost
Which of the following is NOT a mandatory part of an IAS/IFRS?
An optional part
Which basis is used for transactions and events in financial statements according to IFRS?
Accrual basis
What is bookkeeping in accounting?
The routine recording of business transactions
What is the expected credit loss (ECL) model?
A new model of credit loss introduced under IFRS 9
What are impairment tests required for?
To recognize a durable loss in value of assets
How should differences between IFRS and local GAAP be recorded?
As equity
What is the main difference between the depreciation of an intangible asset with a defined useful life and one with an undefined useful life?
The former is subject to annual impairment test
How should differences between IFRS and local GAAP be recorded?
As equity
What is the consequence of unrecoverable accounts receivable?
It results in bankruptcy
What is represented in OCI and specific reserves in equity?
Changes in exchange rate and post-employment benefits
When did Italy adopt all IASB documents?
2003
How should differences between IFRS and local GAAP be recorded?
As equity
What is the balance?
The difference between debit and credit
Which IAS prescribes the basis for presentation of financial statements for comparability?
IAS 1
What are FIFO and weighted average cost?
Methods used to determine inventory cost
How is the bank account ledger balanced?
By taking the total of both sides and calculating the sum of each side
What is the purpose of recording transactions in the moment in which they occur?
To ensure that the trial balance is accurate
What is the purpose of journal entries and ledger accounts?
To affect both the income statement and balance sheet
What is the difference between Italian GAAP and IAS 38 regarding intangible assets?
Italian GAAP has a wider class of intangible assets than IAS 38
What is factoring?
A financial transaction through which a company obtains cash by transferring its account receivables
Which of the following is NOT an element of the International Accounting Framework?
GAAP
What is the basis for determining the useful life of an asset?
Its expected utility to the entity
How many items must be included in the summarization services disclosure requirements?
9
When should transactions be recorded?
In the moment in which they occur
What is the main difference between Italian GAAP and IAS 38 regarding the revaluation model for intangible assets?
Italian GAAP does not allow the revaluation model for intangible assets
When did Italy make IFRS mandatory for public companies and those within the scope of consolidation?
2006
Why are inventory journal entries important?
To track material and product purchases
What is double entry bookkeeping?
The routine recording of business transactions in a replicable manner
How are land and buildings accounted for?
Separately as two assets
Which of the following statements are included in general purpose financial statements under IFRS?
Financial position, comprehensive income, changes in equity, and cash flows
Why are inventory journal entries important?
To track material and product purchases
When did Italy adopt all IASB documents?
2003
What is the purpose of impairment tests?
To determine if the benefit from an asset is greater than its cost
What is the purpose of OIC 11?
To give the golden rules for preparing Italian financial statements
How many items must be included in the disclosure requirements for equity according to the text?
9
What is the purpose of double entry bookkeeping in accounting?
To record transactions in a replicable manner
Which of the following is NOT required for presentation of financial statements under IFRS?
Materiality and aggregation
Is it required for financial statements to always be comparable under IFRS?
Yes
What must be prepared at the date of transition to IFRS?
An opening balance sheet
What is the difference between subsidiaries and associates?
Subsidiaries are investees on which the investor has control, while associates are entities over which a company has significant influence
What is included in the ledger structure?
Columns for date, journal number, description, debit, credit, and balance
Which of the following is not a classification of investments according to the text?
Bonds
What must be prepared at the date of transition to IFRS?
An opening balance sheet
What is required for fair presentation of financial statements according to IFRS?
Compliance with IFRS and all required standards
Which of the following is not a method for evaluating investments according to the text?
Market value
How are costs for unsold or unproduced items adjusted?
Through an increase in inventory on the balance sheet and a credit in the income statement
What are the nine items that must be included in the disclosure requirements for summarization services?
Share capital, share premium reserve, revaluation reserve, legal reserve, own shares reserve, statutory reserves, other reserves, profit (loss) carryforward, and result of the year
What is the balance sheet?
A financial statement that shows the financial position of a company at a specific point in time
Where are the golden rules for preparing Italian financial statements found?
OIC 11
Which of the following is NOT one of the primary qualitative characteristics of financial statements according to the Conceptual Framework?
Comparability
What is the difference between Italian GAAP and IAS 38 regarding intangible assets?
Italian GAAP does not allow the revaluation model for intangible assets
What does OIC 16 not allow?
Capitalization of dismantling and restoring costs
What information is included in financial statement notes?
Accounting policies and explanatory notes
How are costs for unsold or unproduced items accounted for?
They are suspended in inventory at the end of the year
What are the fundamental elements of Italian financial statements?
Clarity, fair representation, and correctness
What is the derecognition of PPE?
The disposal of PPE or when no future economic benefits are expected
When did Italy make IFRS mandatory for public companies and those within the scope of consolidation?
2006
Which companies cannot use IFRS?
Companies with simplified requirements for financial statements
How do the disclosure requirements for equity in the text compare to those in IAS/IFRS?
They are the same
What is the balance sheet in accounting?
A statement that shows financial position at a specific point in time
What is the difference between factoring with and without recourse?
With recourse, the risks of bad debts are transferred to the bank, while without recourse, they are not
Study Notes
- Accounting involves the classification and recording of monetary transactions.
- Transactions are events that cause a change in a company's financial position.
- Transactions can be cash, credit, barter, or paper transactions.
- Monetary events involve a transfer of money and result in a change in the company's financial position.
- Non-monetary events are not related to any exchange of money.
- The business cycle involves financing, purchasing fixed and current assets, processing and producing, and selling finished goods.
- External financing involves receiving money from an external institution, while internal financing involves receiving money from shareholders.
- Fixed assets are recorded as assets, while current expenses are recorded as costs.
- Inventory is the recording of all finished products and raw materials at the end of the year.
- Bookkeeping is the routine recording of business transactions.
- Double entry bookkeeping records transactions in a replicable manner
- Business transactions bring a double change in financial position
- Assets represent valuable things a company owns
- Liabilities represent obligations claimed by creditors
- Equity represents dotation of capital received by owners
- Changes in assets must be reflected in equal measure in liabilities and equity
- Balance sheet shows financial position at a specific point in time
- Income statement summarizes results of operating for a period of time
- Income statement records all costs and revenues during a period
- Revenue and expenses are recorded in the income statement.
Test your knowledge of basic accounting concepts with this informative quiz. From understanding the different types of transactions to the principles of double-entry bookkeeping, this quiz covers it all. Get ready to dive into the business cycle, learn about assets, liabilities, and equity, and discover how to read a balance sheet and income statement. Whether you're a business student or simply interested in learning more about accounting, this quiz is the perfect way to test and expand your knowledge.
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