International Financial Reporting Standards for Compensation Professionals Exam (T7) Practice Test

Questions # 21:

The IAS 19 standard applies to which of the following groups of employees?

Options:

Directors and management personnel

All employees except casual employees

All employees

All full-time employees

Questions # 22:

The profit-sharing plan of Company ABC requires the company pay a specified proportion of its profit for the year to employees who serve throughout the year. If no employees leave during the year, the total profit-sharing payments for the year will be 3% of profit. The company estimates that staff turnover will reduce the payments to 2.5% of profit. What does Company ABC recognize as a liability and an expense?

Options:

0.5% of profit

2.5% of profit

3% of profit

5.5% of profit

Questions # 23:

The International Accounting Standards Board (IASB) has given companies the option to use fair value as the basis for measurement of financial assets and liabilities. Which of the following best defines fair value?

Options:

A residual interest in the assets of the entity after deducting all its liabilities

Faithful representation of the amount paid for a given item

Amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction

Quality of information that confirms users’ earlier expectations

Questions # 24:

Issuance of interim reports is an example of what enhancing characteristic?

Options:

Comparability

Verifiability

Relevance

Timeliness

Questions # 25:

Which of the following is the term that describes total net sales minus total expenses?

Options:

Operating expenses

Net income

Total income

Current assets

Questions # 26:

When a company consumes the economic benefit arising from service provided by an employee in exchange for employee benefits, what is it considered in accounting terms?

Options:

The employee value proposition

An expense

A benefit

A cost

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