Jose Rizal Memorial State University - Dipolog City Campus CBA AECC3 Module 10 INTERIM FINANCIAL REPORTING Exercises/Assignments 1)Which of the following statements is true regarding interim reporting for companies that prepare their financial statements in accordance with IFRS?   a

Jose Rizal Memorial State University - Dipolog City Campus

CBA AECC3

Module 10

INTERIM FINANCIAL REPORTING

Exercises/Assignments

1)Which of the following statements is true regarding interim reporting for companies that prepare their financial statements in accordance with IFRS?

 

a.            The discrete view is required for interim financial statements.

 

b.            Interim reports are required on a quarterly basis.

 

c.             Interim reports are not required for IFRS reporting.

 

d.            Interim reports require the preparation of only a statement of earnings and a statement of financial position.

 

 

2.            Noble corporation prepares its financial statement in accordance with IFRS. If noble prepares Interim financial statements, which statements are required?

 

I.             Statement of Financial Position

 

II.            Statement of Income

 

III.           Statement of Comprehensive Income

 

IV.          Statement of Cash Flows

 

V.            Statement of changes in equity

 

a. I, II, and III.     b. I, II, IV, and V.               c. II, III, and IV.  d. I, III, IV, and V.

 

 

 

3.            Which of the following describes IFRS’s requirements regarding interim financial statements?

 

a.            Interim financial statements are required.

 

b.            If interim financial statements are presented, four basic financial statements are required.

 

c.             If interim financial statements are presented, at least a balance sheet and profit and loss are required.

 

d.            Interim financial statements must be presented with the most recent annual financial statements.

 

 

 

4.            For interim financial reporting, a company’s income tax provision for the second quarter of year 1 should be determined using the

 

a.            Effective tax rate expected to be applicable for the full year of year 1 as estimated at the end of the first quarter of year 1.

 

b.            Effective tax rate expected to be applicable for the full year of year 1 as estimated at the end of the second quarter of year 1.

 

c.             Effective tax rate expected to be applicable for the second quarter of year 1.

 

d.            Statutory tax rate for year 1.

 

 

 

5.            ASC Topic 270, Interim Reporting, states that interim financial reporting should be viewed primarily in which of the following ways?

 

a.            As useful only if activity is spread evenly throughout the year.

 

b.            As if the interim period were an annual accounting period.

 

c.             As reporting for an integral part of an annual period.

 

d.            As reporting under a comprehensive basis of accounting other than GAAP.

 

 

 

6.            Conceptually, interim financial statements can be described as emphasizing

 

a.            Timeliness over reliability.

 

b.            Reliability over relevance.

 

c.             Relevance over comparability.

 

d.            Comparability over neutrality.

 

 

 

7.            Advertising costs may be accrued or deferred to provide an appropriate expense in each period for Interim financial reporting           Year-end financial reporting

 

a. Yes    No

 

 

c. No      No

 

d. No     Yes

 

 

 

8.            A planned volume variance in the first quarter, which is expected to be absorbed by the end of the fiscal period, ordinarily should be deferred at the end of the first quarter if it is

 

Favorable            Unfavorable

 

a.            Yes         No

 

b.            No          Yes

 

c.             No          No

 

d.            Yes         Yes

 

 

 

9.            It means the preparation and presentation of financial information for a period of less than one year.

a.            Segment Financial Reporting

 

b.            Interim Financial Reporting

 

c.             Annual Financial Reporting

 

d.            Departmental Financial Reporting

 

 

 

10.          PAS 34 provides for the preparation of interim financial reports. Which of the following statements concerning interim financial reporting is incorrect?

 

a.            Interim financial reports may be presented monthly, quarterly or semiannually.

 

b.            Publicly traded entities are encouraged to provide interim financial reports semi-annually and such reports are to be made available not later than 60 days after the end of the interim period.

 

c.             PAS 34 mandates which entities are required to publish interim financial reports, how frequently, or how soon after the end of an interim period.

 

d.            The most common interim financial report is the quarterly financial report.

 

 

 

11.          Which of the following statements concerning the two views of interim financial reporting is/are correct?

 

a.            “Independent view” provides that each interim period is an integral part of the annual accounting period.

 

b.            “Integral view” also known as “discrete view” provides that each interim period is a basic accounting period and the results of operations should be determined in essentially the same way as if the interim period was an accounting period.

 

c.             Both A and B

 

d.            Neither A nor B

 

 

 

12.          Annual operating expenses are estimated and then allocated to the interim periods based on forecasted revenue or sales volume. In other words, costs incurred which clearly benefit the entire year are allocated to the interim period benefited. These statements pertain to what view of interim financial reporting?

 

a. Integral view b. Independent view     c. Discrete view d. Side view

 

 

 

13.          Annual operating expenses are recognized in the interim period in which they are incurred, irrespective of the number of interim periods benefited. This statement pertains to what view of interim financial reporting?

 

a. Integral view b. Independent view

 

c. Side view        d. Front view

 

 

 

14.          What view of interim financial reporting is essentially adopted by the PAS 34?

 

a. Integral view b. Independent view

 

c. Mix of integral and independent view               d. No view at all

 

 

 

15.          For interim financial reporting, a company's income tax provision for the second quarter of 20x1 should be determined using the

 

a.            Effective tax rate expected to be applicable for the full year of 20x1 as estimated at the end of the first quarter of 20x1.

 

b.            Best estimate of the weighted average annual income tax rate expected for the full financial year of 20x1.

 

c.             Effective tax rate expected to be applicable for the second quarter of 20x1.

 

d.            Statutory tax rate for 20x1.

 

 

 

16.          An inventory loss from a market price decline occurred in the first quarter, and the decline was not expected to reverse during the fiscal year. However, in the third quarter the inventory’s market price recovery exceeded the market decline that occurred in the first quarter. For interim financial reporting, the peso amount of net inventory should

 

a.            Decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the decrease in the first quarter.

 

b.            Decrease in the first quarter by the amount of the market price decline and increase in the third quarter by the amount of the market price recovery.

 

c.             Decrease in the first quarter by the amount of the market price decline and not be affected in the third quarter.

 

d.            Not be affected in either the first quarter or the third quarter.

 

 

 

17.          The cost of inventories of INTERDICT FORBID Co. exceeds their net realizable value as of the end of the second quarter. INTERDICT believes that market prices will return to their previous levels by the end of the year. At the end of the year, the decline in the value of the inventories had not reversed, but

 

market prices did not decline further. When should the loss be reported in INTERDICT’s interim income statements?

 

a.            Equally over the 2nd, 3rd, and 4th quarters

 

b.            In the 2nd and 4th quarters only

 

c.             In the annual financial statements only

 

d.            In the 2nd quarter only

 

 

 

18.          Conceptually, interim financial statements can be described as emphasizing

 

a.            Timeliness over reliability.

 

b.            Reliability over relevance.

 

c.             Relevance over comparability.

 

d.            Comparability over neutrality.

 

 

 

19.          In addition to the other information required for non-highly seasonal businesses, an entity whose business is highly seasonal is encouraged under PAS 34 to present

 

a.            financial information for the twelve months ending on the interim reporting date and comparative information for the prior twelve-month period

 

b.            financial information for the twelve months ending on the interim reporting date and comparable information for the latest annual financial reporting period.

 

c.             financial information for the twelve months ending on the interim reporting date and no comparative information.

 

d.            financial information for the thirteen months ending on the interim reporting date and comparable information for the thirteen-month period of the immediately preceding financial year

 

 

20.          Which of the following statements is incorrect?

 

a.            An entity may present complete set of financial statements in its interim financial reporting.

 

b.            The results for each interim period should be based on the accounting principles and practices used by an entity in the preparation of its latest annual financial statements unless a change in an accounting practice or policy has been adopted in the current year.

 

c.             PAS 34 requires that an entity apply the same criteria for recognizing and measuring a provision at an interim date as it would at the end of its financial year. The existence or non-existence of an obligation to transfer benefits is not a function of the length of the reporting period. It is a question of fact.

 

 

 

first, second, third and fourth quarters.