Judgment demands challenge

Multiple-choice questions. In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please reread the article before attempting the questions again.

Why do judgmental estimates remain common despite advances in data collection?

Financial statements no longer use data

Accounting standards require guesses only

Many accounting decisions still require professional judgment

Companies avoid using technology

Which accounting area commonly involves significant judgment?

Impairment decisions

Cash counting

Recording salaries

Bank reconciliation

When should a contingent liability to be recognised?

When there is a probable future asset from past events

When there is a probable future obligation arising from past events

When there is a post year-end, non-adjusting event

When there is a possible obligation arising from past events

How should a contingent liability be recognised?

As a current liability

As a non-current liability

As a disclosure note in the accounts

No item should be recorded until the event occurs

How many criteria need to be met for a provision to be recognised?

Which of the following is an item specifically covered by the exposure draft?

All the other answers are correct

Discount rates

Redundancy provisions

Environmental concerns

Which of the following statements is correct? Statement 1, The exposure draft proposes that a risk-free discount rate should be used. Statement 2, The exposure draft proposes that non-performance is considered under IAS 37

Only statement 1 is correct

Only statement 2 is correct

Neither statement is correct

Both statements are correct

Which of the following statements is correct? Statement 1, An exemption to recognise provisions on consolidation under IAS 37 not IFRS 3 is proposed. Statement 2, Provisions on consolidation should subsequently be valued at fair value under IFRS 3 rules

Only statement 1 is correct

Neither statement is correct

Only statement 2 is correct

Both statements are correct

Which of the following statements is correct regarding the proposals? Statement 1, The exposure draft is changing the terminology used in the criteria for a provision to be in line with the revised conceptual framework. Statement 2, The exposure draft is seeking to make changes to IAS 37

Neither statement is correct

Only statement 1 is correct

Only statement 2 is correct

Both statements are correct

Which of the following is the correct definition of a provision?

A liability of uncertain timing or amount

A probable obligation of uncertain timing

None of the other answers is correct

A possible future obligation arising from past events

1 unit

Judgment demands challenge

Why do judgmental estimates remain common despite advances in data collection?

Which accounting area commonly involves significant judgment?

When should a contingent liability to be recognised?

How should a contingent liability be recognised?

How many criteria need to be met for a provision to be recognised?

Which of the following is an item specifically covered by the exposure draft?

Which of the following statements is correct? Statement 1, The exposure draft proposes that a risk-free discount rate should be used. Statement 2, The exposure draft proposes that non-performance is considered under IAS 37

Which of the following statements is correct? Statement 1, An exemption to recognise provisions on consolidation under IAS 37 not IFRS 3 is proposed. Statement 2, Provisions on consolidation should subsequently be valued at fair value under IFRS 3 rules

Which of the following statements is correct regarding the proposals? Statement 1, The exposure draft is changing the terminology used in the criteria for a provision to be in line with the revised conceptual framework. Statement 2, The exposure draft is seeking to make changes to IAS 37

Which of the following is the correct definition of a provision?

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