Question Tag: Accounting Standards

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FR – Nov 2024 – L2 – Q5c – Revenue Recognition under IFRS 15

Assessing whether goods and services in a contract are distinct under IFRS 15.

Question

Togbah LTD (Togbah), a software developer, enters into a contract with a customer to transfer the following:

Software licence,
Installation service (includes changing the web screen for each user),
Software updates, and
Technical support for two years.

Togbah sells the above separately. The installation service is routinely performed by other entities and does not significantly modify the software. The software remains functional without the updates and the technical support.

Required:
Explain whether the goods or services promised to the customer are distinct in terms of IFRS 15: Revenue from Contracts with Customers.

Answer

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Tags: Accounting Standards, Contracts with Customers, IFRS 15, Performance Obligations, Revenue Recognition
Level: Level 2

Topic: Financial Reporting Standards and Their Applications
Series: Nov 2024

FR – Nov 2024 – L2 – Q5a – Barriers to Harmonisation of Accounting Standards

Identifying five barriers to the harmonisation of accounting standards across different countries.

Question

Harmonisation of accounting standards is a topical issue and is needed due to the increasing globalisation and competitiveness of governments and services. Harmonisation ensures reliable and high-quality financial reporting. However, not all countries have been able to harmonise their accounting standards in line with the International Financial Reporting Standards.

Required:
State FIVE barriers to the harmonisation of accounting standards faced by these countries.

Answer

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Tags: Accounting Standards, Barriers, Compliance, Harmonisation, IFRS, International Accounting
Level: Level 2

Topic: Corporate Reporting and Compliance
Series: Nov 2024

CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)

Advise on the correct accounting treatment for transactions involving contracts, licences, and purchase of components.

Question

Dango Plc is a conglomerate company operating in Nigeria with diverse interests across Africa. It prepares its financial statements in accordance with International Financial Reporting Standards with a year-end of September 30. The following transactions relate to Dango Plc.

(a) In February 2016, Dango Plc won a significant new contract to supply large quantities of rice to the government of Guyama, a small West African country, for the next two years. Under the terms of the arrangement, payment is made in cash on delivery once goods have been cleared by customs. The rice will be delivered in batches four (4) times every year, on April 1, July 1, October 1, and January 1. The batches for April 1, 2016, and July 1, 2016, amounting to N250 million and N380 million respectively, were delivered and paid. Dango incurred significant costs on customs duties for the first batch of delivery. The October 1 batch, valued at N520 million, was shipped prior to the year-end but delivered and paid for on October 1, 2016.

(b) On October 1, 2010, a 12-year licence was awarded to Dango Plc by the Federal Government to be the sole manufacturer of a chemical used in the Nigerian pharmaceutical industry. The licence was recognised on that date at its fair value of N196 million. The award of the licence motivated Dango Plc in 2011 to purchase a division of another Nigerian competitor company making similar products. Goodwill of N240 million was recognised on the purchase of the division. Dango Plc merged the activities of the newly acquired division with its own to create a specialist chemical sub-division, which it now classifies as a separate cash-generating unit. By 2016, the revenue of this cash-generating unit now amounts to 5% of the Group’s revenue.

(c) Dango Plc buys raw materials from overseas suppliers. It has recently taken delivery of 1,000 units of component X, used in the production of chemicals. The quoted price of component X was N1,200 per unit, but Dango Plc has negotiated a trade discount of 5% due to the size of the order. The supplier offers an early settlement discount of 2% for payment within 30 days, and Dango Plc intends to achieve this. Import duties of N60 per unit must be paid before the goods are released through customs. Once the goods are released, Dango Plc must pay a delivery cost of N5,000 to have the components taken to its warehouse.

Required:
Write a report to the directors advising them on the correct accounting treatment of the above transactions in the financial statements for the year ended September 30, 2016, in accordance with the provisions of the relevant standards.

Note: You may consider the relevance of the following standards to the transactions: IAS 20, IAS 2, IAS 38, IFRS 3, and IFRS 15.

Answer

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Tags: Accounting Standards, Customs Duties, Discounts, Goodwill, Licenses, Revenue
Level: Level 3

Topic: Revenue Recognition (IFRS 15)

AAA – Nov 2013 – L3 – AII – Q9 – Quality Control in Audit Firms

Identifies the type of review conducted by a partner or manager for compliance with standards.

Question

A review by a partner or manager to ensure that the form and content of the financial statements are in accordance with accounting standards, CAMA CAPC20 LFN 2004 and Securities and Exchange Commission (SEC), where applicable is ………………….. Review.

Answer

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Tags: Accounting Standards, Audit Procedures, Financial Statements, Quality control, Review Process
Level: Level 3

Topic: Quality Control in Audit Firms
Series: NOV 2013

AAA – Nov 2012 – L3 – AII – Q15 – Regulatory Framework and Professional Standards

Identifies a major deficiency of local standards compared to IFRS in the presentation of non-current assets.

Question

One of the major deficiencies of our Local Standards over IFRS’s presentation of Non-current Assets is that our Local Standards do not recognise ……………. process.

Answer

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Tags: Accounting Standards, IFRS, Local Standards, Non-current Assets, Regulatory Differences
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q9 – Regulatory Framework and Professional Standards

Identifying an invalid statement about the benefits and use of IFRS.

Question

Which of the statements listed below about IFRS is invalid?

A. Multinational should benefit from a number of cost savings when using IFRS
B. Companies that wish to reach a wider group of investors will find financial statements based on IFRS acceptable in all major markets
C. Using IFRS will make it easier, though more expensive, to have secondary listing in other countries of the world
D. Using the same accounting basis provides greater comparability between companies which will lead to more efficient investment
E. The original standard setter between (1973-2000) was International Accounting Standard Committee (IASC)

Answer

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Tags: Accounting Standards, Financial Reporting, IFRS, International Standards
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

FR – Nov 2023 – L2 – Q7a – Regulatory Framework for Financial Reporting

Discusses main sources of financial reporting regulations and reasons for regulatory practices.

Question

Within the context of financial reporting and regulatory frameworks:

i. Discuss the main sources of regulations. (3 Marks)
ii. Discuss TWO reasons why financial reporting practice should be regulated. (2 Marks)

Answer

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Tags: Accounting Standards, Company Law, Financial Reporting, Regulations, Regulatory Rationale, Stock Exchange
Level: Level 2

Topic: Regulatory Framework for Financial Reporting

BL – Nov 2020 – L1 – SB – Q1d – Business Ethics and Corporate Governance.

Describe ethical codes and their purpose for professional accountants.

Question

Accountants, like most professionals, are guided by the code of ethics of their profession when dealing with clients.

Required:
Explain:
i. Ethical codes
ii. The purpose of ethical codes for a professional accountant.

Answer

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Tags: Accounting Standards, Ethical Guidelines, Ethics, Professional Conduct
Level: Level 1

Topic: Business Ethics and Corporate Governance
Series: NOV 2020

FA – May 2012 – L1 – SA – Q4 – Regulatory Environment of Accounting

Identifying the function of the Financial Reporting Council of Nigeria.

Question

Which of the following is NOT a function of the Financial Reporting Council of Nigeria?

A. Promoting and enforcing compliance with the accounting standards developed by the Board
B. Developing and publishing in the public interest accounting standards to be observed in the preparation of financial statements
C. Advising State Governments on matters relating to accounting standards
D. Receiving notices of non-compliance with its standards from the preparer
E. Advising the Minister on making of regulations under Section 356 of Companies and Allied Matters, Cap C20, LFN 2004

Answer

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Tags: Accounting Standards, Financial Reporting Council, Nigerian Accounting Laws
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: MAY 2012

FR – Nov 2020 – L2 – Q2c – Regulatory Framework for Financial Reporting

Highlights of the objectives of the International Accounting Standards Board (IASB).

Question

Non-accounting professionals usually wonder why an entity’s general-purpose financial reporting should be regulated without allowing users to be free to choose their presentations.

Required:

Highlight THREE objectives of the International Accounting Standards Board (IASB).

Answer

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Tags: Accounting Standards, IASB, Objectives
Level: Level 2

Topic: Regulatory Framework for Financial Reporting
Series: NOV 2020

FA – Nov 2013 – L1 – SA – Q6 – Regulatory Environment of Accounting

Understanding what GAAP refers to.

Question

The “generally accepted accounting practice” (GAAP) refers to:

A. Complete set of regulations from all sources together with any general accounting principles and conventions
B. Only the principles and conventions that are enshrined in companies’ legislations
C. The accounting regulations which apply to large companies
D. Financial accounting which is concerned with reporting financial results in aggregates to a variety of users
E. Legislation which generally sets out the broad rules with which companies must comply when preparing financial statements

Answer

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Tags: Accounting principles, Accounting Standards, GAAP
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: NOV 2013

FR – May 2018 – L2 – Q6a – Accounting for Income Taxes (IAS 12)

Explain the need for providing deferred tax and the principles for accounting for deferred tax under IAS 12.

Question

IAS 12 – Income Tax details the requirements relating to the accounting treatment of deferred tax and current income tax.

Required: Explain the need to provide for deferred tax and briefly outline the principles of accounting for deferred tax contained in IAS 12.

Answer

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Tags: Accounting Standards, Deferred Tax, IAS 12, Income Taxes, Temporary Differences
Level: Level 2

Topic: Accounting for Income Taxes (IAS 12)
Series: MAY 2018

FA – May 2018 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identifies the purpose of the Conceptual Framework for Financial Reporting.

Question

Which of the following is NOT a purpose of the Conceptual Framework for Financial Reporting?
A. To assist national standard-setting bodies in developing national standards.
B. To assist preparers of financial statements in applying IFRSs and in dealing with topics that have yet to form the subject of an IFRS.
C. To assist auditors in forming an opinion on whether financial statements comply with IFRS.
D. To assist users of financial statements in interpreting the information contained in financial statements prepared in compliance with IFRS.
E. To define standards for measurement or disclosure.

Answer

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Tags: Accounting Standards, Conceptual Framework, IFRS
Level: Level 1

Topic: Scope of Management Accounting
Series: MAY 2018

FA – Nov 2014 – L1 – SA – Q1 – Elements of Financial Statements

Identifying the item not part of a complete set of financial statements under IFRS.

Question

Which of the following is NOT part of a complete set of financial statements under International Financial Reporting Standard (IFRS)?

A. Statement of changes in equity
B. Statement of financial position
C. Statement of cash flows
D. Statement of corporate governance
E. Notes to the financial statements

Answer

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Tags: Accounting Standards, Elements of Statements, Financial Statements, IFRS, International Financial Reporting Standards
Level: Level 1

Topic: Elements of Financial Statements
Series: NOV 2014

FA – May 2021 – L1 – SB – Q1b – Regulatory Environment of Accounting

Definition and purpose of accounting standards in financial reporting.

Question

i. What is accounting standards? (2 Marks)
ii. Explain the purpose of accounting standards (4 Marks)

Answer

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Tags: Accounting Standards, Purpose of Standards
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: MAY 2021

FA – Nov 2019 – L1 – SA – Q8 – Accounting Treatment for Bad and Doubtful Debts

Calculate the net amount of trade receivables recognized in the statement of financial position.

Question

What is the net amount of trade receivables recognized in the statement of financial position?

The following is an information extract from the books of accounts of Walling Parking Enterprises, a sole trader:

Trade receivables balance for the period: N1,300,000
The chance of collecting 2% of the receivables figure is remote.
It is virtually certain that 95% of the balance of the receivables is collectable.

Answer

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Tags: Accounting Standards, Financial Position, Trade receivables
Level: Level 1

Topic: Bad and Doubtful Debts
Series: NOV 2019

FA – Nov 2019 – L1 – SA – Q5 – Financial Statements Preparation

Identify what a cash flow statement cannot reveal.

Question

Which of the following information CANNOT be revealed by a statement of cash flow?

Answer

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Tags: Accounting Standards, Cash Flow, Financial Position
Level: Level 1

Topic: Financial Statements Preparation
Series: NOV 2019

FA – May 2024 – L1 – SB – Q5a -Accounting for Inventories (IAS 2)

Explains the essential components involved in measuring inventories under IAS 2.

Question

a. Explain the essential components involved in measuring inventories in compliance with IAS 2 – Inventories. (6 Marks)

Answer

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Tags: Accounting Standards, IAS 2, Inventory Valuation
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: MAY 2024

FA – Mar/July 2020 – L1 – SA – Q14 – Regulatory Environment of Accounting

Identifying non-objective of IASB

Question

Which of the following is NOT an objective of the International Accounting Standards Board (IASB)?
A. Review of accounting standards
B. Promotion of the use of accounting standards
C. Promoting application of the accounting standards
D. Convergence of international accounting standards
E. Preparation of the financial statements in line with the requirement of IASB framework

Answer

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Tags: Accounting Standards, Financial Reporting, IASB
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: MAR/JULY 2020

FR – May 2017 – L2 – Q5c – Corporate Reporting and Compliance

Identify the advantages and disadvantages of international harmonisation of accounting standards for multinational companies.

Question

Generally, there are advantages of global harmonisation of financial reporting standards to countries around the world, including Ghana.

Required:
Identify THREE advantages and THREE disadvantages of international harmonisation of accounting standards to multinational companies operating in Ghana.

Answer

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Tags: Accounting Standards, Financial Reporting, IFRS, International Harmonisation, Multi-national Companies
Level: Level 2

Topic: Corporate Reporting and Compliance
Series: MAY 2017

Question Tag: Accounting Standards

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FR – Nov 2024 – L2 – Q5c – Revenue Recognition under IFRS 15

Assessing whether goods and services in a contract are distinct under IFRS 15.

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FR – Nov 2024 – L2 – Q5a – Barriers to Harmonisation of Accounting Standards

Identifying five barriers to the harmonisation of accounting standards across different countries.

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CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)

Advise on the correct accounting treatment for transactions involving contracts, licences, and purchase of components.

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AAA – Nov 2013 – L3 – AII – Q9 – Quality Control in Audit Firms

Identifies the type of review conducted by a partner or manager for compliance with standards.

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AAA – Nov 2012 – L3 – AII – Q15 – Regulatory Framework and Professional Standards

Identifies a major deficiency of local standards compared to IFRS in the presentation of non-current assets.

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AAA – Nov 2012 – L3 – SA – Q9 – Regulatory Framework and Professional Standards

Identifying an invalid statement about the benefits and use of IFRS.

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FR – Nov 2023 – L2 – Q7a – Regulatory Framework for Financial Reporting

Discusses main sources of financial reporting regulations and reasons for regulatory practices.

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BL – Nov 2020 – L1 – SB – Q1d – Business Ethics and Corporate Governance.

Describe ethical codes and their purpose for professional accountants.

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FA – May 2012 – L1 – SA – Q4 – Regulatory Environment of Accounting

Identifying the function of the Financial Reporting Council of Nigeria.

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FR – Nov 2020 – L2 – Q2c – Regulatory Framework for Financial Reporting

Highlights of the objectives of the International Accounting Standards Board (IASB).

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FA – Nov 2013 – L1 – SA – Q6 – Regulatory Environment of Accounting

Understanding what GAAP refers to.

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FR – May 2018 – L2 – Q6a – Accounting for Income Taxes (IAS 12)

Explain the need for providing deferred tax and the principles for accounting for deferred tax under IAS 12.

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FA – May 2018 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identifies the purpose of the Conceptual Framework for Financial Reporting.

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FA – Nov 2014 – L1 – SA – Q1 – Elements of Financial Statements

Identifying the item not part of a complete set of financial statements under IFRS.

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FA – May 2021 – L1 – SB – Q1b – Regulatory Environment of Accounting

Definition and purpose of accounting standards in financial reporting.

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FA – Nov 2019 – L1 – SA – Q8 – Accounting Treatment for Bad and Doubtful Debts

Calculate the net amount of trade receivables recognized in the statement of financial position.

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FA – Nov 2019 – L1 – SA – Q5 – Financial Statements Preparation

Identify what a cash flow statement cannot reveal.

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FA – May 2024 – L1 – SB – Q5a -Accounting for Inventories (IAS 2)

Explains the essential components involved in measuring inventories under IAS 2.

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FA – Mar/July 2020 – L1 – SA – Q14 – Regulatory Environment of Accounting

Identifying non-objective of IASB

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FR – May 2017 – L2 – Q5c – Corporate Reporting and Compliance

Identify the advantages and disadvantages of international harmonisation of accounting standards for multinational companies.

You're reporting an error for "FR – May 2017 – L2 – Q5c – Corporate Reporting and Compliance"

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