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WorldatWork T7 - International Financial Reporting Standards for Compensation Professionals Exam

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Total 89 questions

Level 2 of the conceptual framework of International Accounting Standards Board (IASB) identifies qualitative characteristics of accounting information. These characteristics distinguish more useful information from less useful information.

To what end is this distinction useful?

A.

For reporting purposes

B.

For business strategy

C.

For decision-making purposes

D.

For organizational vision

What is a constructive obligation?

A.

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

B.

When a company has no realistic alternative but to make payments

C.

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

D.

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

What are the two guiding principles of accrual accounting?

A.

Expense recognition and matching

B.

Revenue recognition and matching

C.

Revenue recognition and measurement

D.

Cost and materiality

Which of the following best defines the term “liability”?

A.

A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity

B.

A 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

C.

Decreases 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

D.

Increases 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

Which of the following are ingredients of the fundamental characteristic of relevance?

A.

Cost and materiality

B.

Predictive value and confirmatory value

C.

Relevance and faithful representation

D.

Timeliness and understandability

Employee benefits that are expected to be settled wholly before twelve months after the end of the annual reporting people in which the employee rendered the related service are considered what kind of benefits?

A.

Short-term benefits

B.

Post-employment benefits

C.

Termination benefits

D.

Long-term benefits

An offer of redundancy is an example of which kind of employee benefits?

A.

Short-term benefits

B.

Post-employment benefits

C.

Termination benefits

D.

Long-term benefits

Which statement below most accurately describes a primary purpose of the International Accounting Standards Committee (IASC) Foundation?

A.

Approves principles-based standards and informs International Accounting Standards Board (IASB) of implications of proposed standards

B.

Oversees standards set for the public sector

C.

Monitors International Accounting Standards Board (IASB)’s effectiveness, raise funds, approve budget, responsible for constitution

D.

Provides advice to International Accounting Standards Board (IASB) on priorities

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

A.

Short-term benefits

B.

Post-employment benefits

C.

Termination benefits

D.

Long-term benefits

What is the purpose of a statement of cash flow?

A.

To show liability and equity and the manner in which those funds are employed in a manner which is useful for users of the statement

B.

To account for changes in cash during the accounting period in a manner which is useful for users of the statement

C.

To show details of the nature of a company’s operating activities in a manner which is useful for users of the statement

D.

To reconcile the beginning and ending balances of stockholders’ equity in a manner which is useful for users of the statement