Financial Reporting And Analysis - Financial Reporting And Analysis Section 1
46. Which of the following categories is not permitted under IFRS?
- Option : B
- Explanation : IFRS prohibits items to be categorized as extraordinary, while U.S. GAAP permits this categorization.
47. Retrospective application refers to:
- Option : C
- Explanation : Retrospective application means that the financial statements for previous fiscal years are presented as if the newly adopted accounting principle had been used throughout the period. A change in accounting policy is applied retrospectively.
48. Which of the following statements is most accurate?
- Option : B
- Explanation : A classified balance sheet separately classifies current and non-current assets and liabilities. Excess of current assets over current liabilities is known as working capital.
| Revenue recognized.Cash not received. | Cash received. Revenue not recognized. |
| Asset | Asset |
| Asset. | Liability |
| Liability. | Asset |
- Option : B
- Explanation : Recognizing revenue before receiving cash creates a ‘receivable’ which is an asset. Receiving cash before recognizing revenue creates ‘unearned revenue’ which is a liability.
50. Balance sheet provides financial information of a company:
- Option : B
- Explanation : Balance sheet provides information about a company at a specific point in time. C is incorrect because there are three elements: assets, liabilities, and equity.
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