FR B Inventories, agriculture, provisions and events after the reporting period

Written by Fahad Mirza (ACCA)

ACCA · Financial Reporting · 8 questions

Name: ____________________   Date: ____________

1. Inventories are measured at:

   • A Fair value
   • B Cost
   • C Selling price
   • D The lower of cost and net realisable value

2. Which cost-flow method is not allowed under IAS 2?

   • A Weighted average cost
   • B LIFO
   • C Specific identification
   • D FIFO

3. How are biological assets measured under IAS 41?

   • A At fair value less costs to sell, with changes in profit or loss
   • B At historical cost less depreciation
   • C At cost
   • D At net realisable value

4. When is a provision recognised under IAS 37?

   • A When the entity intends to spend money
   • B When a possible obligation exists
   • C When the board approves a budget
   • D When there is a present obligation, a probable outflow and a reliable estimate

5. What is a constructive obligation?

   • A A possible obligation
   • B An obligation that arises from an entity's actions creating a valid expectation
   • C An obligation created by law
   • D An obligation created by a contract

6. Under IAS 37, when can a restructuring provision be recognised?

   • A When there is a detailed formal plan and a valid expectation has been raised in those affected
   • B Never
   • C At the start of the financial year
   • D When the board first discusses the plan

7. A court case is possible but not probable and the amount cannot be estimated. How is it treated?

   • A It is ignored completely
   • B It is disclosed as a contingent liability
   • C It is recognised as a provision
   • D It is recognised as an asset

8. A major customer goes into liquidation after the year end, and the debt related to sales made before the year end. This is:

   • A A non-adjusting event
   • B A contingent asset
   • C A change in accounting policy
   • D An adjusting event after the reporting period