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IFA 1 Mid

The document is an Intermediate Financial Accounting 1 midterm exam that includes matching qualitative characteristics with statements, multiple-choice questions regarding revenue recognition, income statements, and accounting principles, as well as true or false statements. Additionally, it contains a practical workout problem involving a construction contract, requiring calculations of revenue and gross profit for each year and journal entries. The exam assesses knowledge of IFRS standards and fundamental accounting concepts.

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Mekonnen Aboneh
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9 views3 pages

IFA 1 Mid

The document is an Intermediate Financial Accounting 1 midterm exam that includes matching qualitative characteristics with statements, multiple-choice questions regarding revenue recognition, income statements, and accounting principles, as well as true or false statements. Additionally, it contains a practical workout problem involving a construction contract, requiring calculations of revenue and gross profit for each year and journal entries. The exam assesses knowledge of IFRS standards and fundamental accounting concepts.

Uploaded by

Mekonnen Aboneh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Intermediate Financial Accounting 1 mid -30% Date: Aug sept /2023

Name__________________________________________ID No._______________Section_____

Instruction: Match the qualitative characteristics below with the following statements

1. Relevance 3. Completeness 5. Timeliness


2. Comparability 4. Neutrality 6. Consistency

a. An ingredient of enhancing quality


b. Quarterly and annual financial reporting are required
c. TATA Corporation has used FIFO method over many years since it began operations.
d. Information that is capable of making a difference in the decisions of users in their capacity as
capital providers.
e. Financial reporting should not be prepared to favor a party at the expense of the others.

Instruction: Choose the best answer for the following statements


1. Which of the following is the first step in the revenue recognition from contract with customers in
accordance with IFRS 15?
A. Allocation of contract price to each obligation
B. Identification of the existence of contract with customers
C. Determine the contract price and amount of revenue
D. Recognize revenue
2. Revenue recognition from contract with customer (IFRS 15) doesn’t apply if
A. The contract has commercial substance
B. The parties to the contract have approved the contract and are committed to perform their
respective obligations
C. The company can identify each party’s rights regarding the goods or services to be transferred
D. The contract is wholly unperformed
3. Which of the following is a drawback of income statement?
A. Predict future performance
B. Evaluate past performance
C. Help assess the risk or uncertainty of achieving future cash flows
D. Omits items that cannot be measured by money
4. Income is best defined as an (a)

A. Increase in resources and equity C. Increase in liability and assets


B. Decrease in liability and resources D. Decease in liability and equity

5. Income on income statement includes except


A. Revenue from ordinary business
B. Gain from disposal of fixed assets
C. Unrealized gain from holding assets
D. None
6. Natural classification expense

A. Salary expense C. Marketing expense


B. Administrative expense D. Production cost

7. The difference between net sales revenue and cost of goods sold is

A. Gross profit C. Net profit


B. Operating profit D. Profit before interest and tax

8. One of the following is a change in accounting principle

A. Change from FIFO to weighted average C. Change from 3,000 to 2500 doubtful
B. Change from 10 years to 8 years of asset’s account
useful life D. All of the above

9. Retained earnings increases by all except,

A. Net income C. Change in accounting estimate


B. Change in accounting principles D. Net loss

10. One of the following item is reported in the ‘other comprehensive income’

A. Translation gains and losses on foreign C. Loss from operating business


currency. D. Gain/loss from discontinued operation
B. Service revenue

Instruction: WRITE which basic principle of accounting is best described in each item below.
1. Financial reporting and accounting of a business should be separate from its owners and other
entities
2. Forewarning Corporation reports information about awaiting lawsuits penalties in the notes to its
financial statements.
3. RED PLC prepares and issue financial reports every 12-months
Instruction: Write true or false
1. Currently, the IFRS are developed and issued by IASC
2. One of the items presented on the statement of change in equity is retained earnings
3. Retained earnings statement is presented as a main financial statement
4. Other comprehensive income is reported on income statement as part of net income
5. The conceptual frame work are not accounting standards

Workout
CHACHA Construction Company has a contract to construct a bridge for Br 4,000,000 price that took
3years. Its estimated Br 3,000,000 cost. The following pertains to the contract

year 1 year2 year3


cost incurred-current 1,200,000 850,000 950,000
estimated cost to complete 1,800,000 950,000 -
progress billing 1,500,000 1,000,000 1,500,000

Instruction:
1. Compute the revenue and gross profit for each year
2. Show the necessary journal entry for year 1

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