FSA TE10 Test

Q. Which of the following is not a required financial statement according to IAS No. 1?

• A. Statement of financial position.
• B. Statement of changes in income.
• C. Statement of comprehensive income.

The common shareholders’ equity reported on a company’s balance sheet is seldom an appropriate measure of the market or intrinsic value of the company’s common shares. The most likely reason for this fact is that the balance sheet:

• A. evaluates a company’s financial position spanning a period of time.
• B. recognizes items only when future economic benefits are reasonably certain.
• C. fails to include all aspects of a company’s ability to generate future cash flow.

Q. The financial statement that presents a shareholder’s residual claim on assets is the:

• A. balance sheet.
• B. income statement.
• C. cash flow statement.

None

• A. 3.91.
• B. 3.25.
• C. 2.59.

A company that prepares its financial statements using IFRS wrote down its inventory value by €20,000 at the end of year 1. In year 2, prices increased and the same inventory at the end of the year was worth €30,000 more than its value at the end of the prior year. Which of the following statements is most accurate? In year 2, the company’s cost of sales:

• A. was unaffected.
• B. decreased by €30,000.
• C. decreased by €20,000.

Debt with a maturity date beyond a company’s next operating cycle is most likely classified as a component of:

• A. trade payables.
• B. accrued liabilities.
• C. non-current liabilities.

An analysis used to forecast earnings that shows a range of possible outcomes as specific assumptions change best describes which of the following techniques?

• A. Scenario analysis
• B. Simulation
• C. Sensitivity analysis

Q. At the time of issue of 4.50% coupon bonds, the effective interest rate was 5.00%. The bonds were most likely issued at:

• A. par.
• B. a discount.
• C. a premium.

Q. Company A adheres to US GAAP and Company B adheres to IFRS. Which of the following is most likely to be disclosed on the financial statements of both companies?

• A. Any material income resulting from the liquidation of LIFO inventory
• B. The amount of inventories recognized as an expense during the period
• C. The circumstances that led to the reversal of a write down of inventories

At the time of issue, for a corporate bond that sells at par, the liability on the issuer's balance sheet would be:

• A. equal to face value.
• B. greater than face value.
• C. less than face value.