Worldatwork T7 Exam Practice Test Instant Access

Question 1

The profit-sharing plan of Company ABC requires the company pay a specified proportion of its profit for the year to employees who serve throughout the year. If no employees leave during the year, the total profit-sharing payments for the year will be 3% of profit. The company estimates that staff turnover will reduce the payments to 2.5% of profit. What does Company ABC recognize as a liability and an expense?

A0.5% of profit

B2.5% of profit

C3% of profit

D5.5% of profit

Answer : B

Question 2

What is a constructive obligation?

AWhen a company recognizes the expected cost of profit-sharing and bonus payments

BWhen a company has no realistic alternative but to make payments

CWhen a change in the company's informal practices would cause unacceptable damage to its relationship with employees

DThe required accounting entry for liabilities or accrued expenses or cash paid

Answer : C

Question 3

Employee benefits that are payable after the completion of employment are considered what kind of benefits?

AShort-term benefits

BPost-employment benefits

CTermination benefits

DLong-term benefits

Answer : B

Question 4

The IAS 19 standard applies to which of the following groups of employees?

ADirectors and management personnel

BAll employees except casual employees

CAll employees

DAll full-time employees

Answer : C

Question 5

When an employee has provided service in exchange for benefits to be paid in the future, what is it considered in accounting terms?

AThe employee value proposition

BA long term benefit

CA noncurrent expense

DA liability

Answer : D

Question 6

Companies desire more current assets than current liabilities. What is the difference between current assets and current liabilities called?

ANet income

BTotal liabilities

CNet working capital

DNoncurrent liabilities

Answer : C

Question 7

Which of the following is true of liabilities?

ACurrent liabilities come due in less than a year

BCurrent liabilities come due in less than 18 months

CNoncurrent liabilities come due in less than a year

DBoth current and noncurrent liabilities come due in less than a year

Answer : A

Worldatwork T7 International Financial Reporting Standards for Compensation Professionals Exam Practice Test