EMT Practice Test

1. Question Content...

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Question1: When business managers seek detailed information about the profitability or efficiency of different parts of their operations, they would find the most useful information in

Question2: A company sold some old operating equipment from its factory. After depreciation was accounted for, a small gain on sale was recorded. According to the revised IAS 1 Presentation of Financial Statements, this transaction will be shown as a separate item 'gain on sale of equipment'. This item will be shown in the statement of

Question3: Financial information is reliable if it
I)prefers substance over legal form.
II)is neutral and without any material error.
III)is complete and has been made with prudence.
IV)is understandable to those with no knowledge of accounting.

Question4: An agent is answerable under the contract to the agent's principal and must account for the resources of the agent's principal and the money the agent has gained working on the principal's behalf. In the context of agency, this definition describes an agent's

Question5: The use of the principle of substance over form is found in which one of the following accounting treatments?

Question6: X was influenced by G Co's audit report and dividend declaration, and decided to invest in the securities of the company. What should X be cautious about before investing in the shares of the company?
X should be aware that

Question7: A multinational company is converting the methodology of reporting by its subsidiaries in various countries to make it uniform with the requirements of the International Financial Reporting Standards (IFRS). While changing the reporting methodologies, accountants have to apply certain judgments.
Which one of the following is not a valid motivation for decision making on reporting methodologies?

Question8: Which of the following are the stated objectives of the International Accounting Standards Board (IASB)?
I)Enforce accounting standards.
II)Develop accounting standards.
III)Work for convergence of accounting standards.

Question9: Which one of the following examples would not represent an agency cost?

Question10: Generally accepted accounting practice recognises revenue when

Question11: In individual countries, Generally Accepted Accounting Principles (GAAP) is primarily a combination of

Question12: Which one of the following is not a function of the trustees of the International Financial Reporting Standards Foundation (IFRS Foundation)?

Question13: What is the difference between positive and normative accounting theories?

Question14: Venturer Ltd has received fees from venture capital activities and has engaged you as the accountant to prepare the financial report for 31 December 20X0. Unable to find a specific reference to venture capital fees in either the conceptual framework or the accounting standards, you establish the appropriate accounting treatment by

Question15: The accounting policies used by companies must result in financial reports that are

Question16: Which one of the following parties provides information to ensure that the financial statements show a true and fair view?

Question17: Investors use the audited financial statements of a company to
I)evaluate the company's current return on assets
II)predict the company's market conditions for future years.
III)predict the company's market conditions for future years.
IV)make a judgement on the liquidity and solvency of the company.

Question18: Which one of the following is an advantage of current purchasing power accounting?

Question19: You assumed the role as the Chairperson of the Board of Directors of Daylight Ltd. As you start to write your first directors' report, which one of the following areas are you not required to include in your report?

Question20: A decision has been made to change the value of a major non-current asset, upon which depreciation is based, from original cost to a revalued amount. This results in a change in

Question21: The chairperson of XYZ Company is concerned about the readability of the annual financial report that is about to be published on its website. XYZ Company is obliged to comply with International Financial Reporting Standards, and the report contains all of the required financial statements, the auditor's report, corporate governance statements, declarations of accounting policy, explanatory notes and a section that addresses the company's corporate social responsibility program.
The chairperson is wondering whether the report can be condensed. The issue that is concerning the chairperson is known as

Question22: Which one of the following financial statements helps provide information about factors that might affect an entity's liquidity or solvency?

Question23: Which accounting theory is best described by the statement 'An approach to accounting is one where a theory is thought of as a body of knowledge that explains and attempts to predict actual accounting practice'?

Question24: Which one of the following is an objective of the International Federation of Accountants (IFAC)?

Question25: A statement of generally accepted theoretical principles which form the frame of reference for financial reporting refers to the

Question26: The IASB evaluates the merits of adding a potential item to its agenda mainly by reference to the needs of

Question27: Which one of the following would be included in a statement of financial position?

Question28: Published financial statements are regulated by

Question29: Which one of the following statements is not correct in respect of manual accounting systems?

Question30: Which one of the following countries has the view that Generally Accepted Accounting Principles (GAAP) refers to accounting practices which are regarded as permissible by the accounting profession?

Question31: Which one of the following would be recognised in the statement of profit or loss and other comprehensive income?

Question32: The two fundamental qualitative characteristics of the financial information are

Question33: The International Federation of Accountants (IFAC) was established by

Question34: Which one of the following bases of measurement is used to implement an approach to capital maintenance based on maintaining the operating capability of a business?