CFAS - Chapter 7: Multiple Choice

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1. All of the following can considered appropriate ... 7. Under the financial capital concept, net income occurs ...
classification, except when

a. Current and noncurrent assets a. The nominal amount of net assets at year-end
b. Current and noncurrent liabilities increased.
c. Ordinary share capital and preference share capital b. The physical productive capital at year-end
d. Offsetting asset and liability increased after excluding any distributions to and
contributions from owners.
2. Financial capital is defined as a
c. The nominal amount of net assets at year-end
increased after excluding distributions to and
a. Net assets in monetary terms.
contributions from owners.
b. Net assets in terms of physical productive capacity.
d. The physical productive capital at year-end
c. Legal capital.
increased.
d. Share capital issued and outstanding.
8. What is the new term to describe the statement of d
3. Income and expenses are classified as a
profit or loss together with the statement showing
other comprehensive income.
a. Profit or loss and other comprehensive income
b. Profit loss and retained earnings
a. Income statement
c. Retained earnings and other comprehensive income
b. Statement of profit or loss
d. Ordinary and extraordinary
C. Statement of other comprehensive income
4. It is the sorting of assets, liabilities, equity, income and a d: Statement of financial performance
expenses with similar characteristics
9. Which concept is applied to net income and other ...
comprehensive income?
a. Classification
b. Summarization
a. Financial capital
c. Interpretation
b. Physical capital
d. Recognition
c. Legal capital
5. The physical capital maintenance concept requires the a d. Borrowed capital
adoption of which measurement basis?
10. Which statement regarding the term profit is true? ...
a. Historical cost
a. Profit is any amount over and above that required to
b. Current cost
maintain the capital at the beginning of the period.
c. Fair value
b. Profit is equal to income minus expenses.
d. Present value
c. Profit is the equivalent of net income under IFRS.
6. The presentation and disclosure requirement achieves d d. All of these statements are true about the term
all of the following, except profit.

a. An effective communication tool

b. More relevant and faithfully represented financial
information
c. Understandability and comparability of information
d. Financial position, financial performance and cash
flows