Worldatwork T7 Exam Practice Test Instant Access

Question 1

When the economic consequences of a standard or rule is ignored, which characteristic is being represented?

ANeutral

BVerifiability

CComplete

DRelevance

Answer : A

Question 2

Which of the following best defines the term ''equity''?

AThe residual interest in the assets of the entity after deducting all its liabilities

BA present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits

CDecreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants

DIncreases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants

Answer : A

Question 3

Company XYZ does not disclose any information in the notes to their financial statements unless the value of the information to users exceeds the expense of gathering it. Which constraint of Level 3 of the conceptual framework does this represent?

ACost

BMateriality

CExpense

DDisclosure

Answer : A

Question 4

Level 3 of the conceptual framework for financial reporting includes five basic assumptions. Which of the following describes the basic assumption of economic entity?

AThe company lasts long enough to fulfill objectives and commitments

BThe company keeps its activity separate from its owners and other business units

CThe company can divide its economic activities into time periods

DTransactions are recorded in the periods in which the events occur

Answer : B

Question 5

When a company consumes the economic benefit arising from service provided by an employee in exchange for employee benefits, what is it considered in accounting terms?

AThe employee value proposition

BAn expense

CA benefit

DA cost

Answer : B

Question 6

Which of the following is the best description of liquidity?

AThe historical cost of an asset

BThe fair value of an asset

CThe ease of converting a noncash asset to cash

DLiabilities, minus equity

Answer : C

Question 7

Identify the characteristic being employed when companies in the same industry are using the same accounting principles.

AComparability

BRelevance

CFaithful representation

DVerifiability

Answer : A

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