Practice Test Geeks(CA) Chartered Certified Accountant Practice Test
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Financial Reporting & Analysis Flashcards

7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Reporting & Analysis flashcards as text

  1. Under IFRS 16, how should a lessee classify a lease on the balance sheet at commencement date?

    Answer: Recognize a right-of-use asset and a corresponding lease liability

    IFRS 16 requires lessees to recognize a right-of-use asset and a lease liability at commencement, reflecting the present value of future lease payments.

  2. A company reports net income of $500,000, depreciation of $80,000, and an increase in accounts receivable of $30,000. What is operating cash flow using the indirect method?

    Answer: $550,000

    Operating cash flow = $500,000 + $80,000 – $30,000 = $550,000 under the indirect method.

  3. Which financial ratio best measures a company's ability to meet short-term obligations using only its most liquid assets?

    Answer: Cash ratio

    The cash ratio (cash + cash equivalents ÷ current liabilities) is the most conservative liquidity measure, excluding receivables and inventory.

  4. Under IAS 36, when must an entity test goodwill for impairment?

    Answer: Annually, regardless of impairment indicators

    IAS 36 requires goodwill to be tested for impairment annually and whenever there is an indication that it may be impaired.

  5. A company uses the percentage-of-completion method for a long-term contract. In Year 1, costs incurred are $200,000 out of estimated total costs of $500,000 on a $750,000 contract. What revenue is recognized in Year 1?

    Answer: $300,000

    Percentage complete = 200,000/500,000 = 40%; Revenue recognized = 40% × $750,000 = $300,000.

  6. Which of the following is NOT a component of other comprehensive income (OCI) under IFRS?

    Answer: Gains from sale of inventory

    Gains from inventory sales are recognized in profit or loss, not OCI; OCI includes items bypassing the income statement.

  7. Under US GAAP, how are research costs and development costs treated?

    Answer: Both are expensed as incurred

    Under US GAAP (ASC 730), both research and development costs are generally expensed as incurred, unlike IFRS which allows development cost capitalization.