These are ACCA F7 (FR) Financial Reporting MCQs for Part-A of the Syllabus “The conceptual and regulatory framework for financial reporting”.

These multiple-choice questions (MCQs) are designed to help ACCA F7 students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

Please note:

Students should not attempt these MCQs until they have finished the entire chapter.
All questions are compulsory, so please do not skip any.

We hope that these MCQs will be a valuable resource for students preparing for the ACCA F7 (FR) exam.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course:	ACCA – Association of Chartered Certified Accountants
Fundamental Level:	Applied Skills
Subject:	Financial Reporting
Paper:	F7 – FR
Chapters and Topics Covered:	The need for a conceptual framework and the characteristics of useful information, Recognition and measurement, Regulatory framework, The concepts and principles of groups and consolidated financial statements
Questions:	01 – Lisbon Co
Syllabus Area:	A – “The conceptual and regulatory framework for financial reporting”
Questions Type:	CBE MCQs
Exam Section:	Section B

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part A of the Syllabus; “The conceptual and regulatory framework for financial reporting” of ACCA F7 (FR) Financial Reporting Module.

Time

These MCQs are not time-bound. Take your time and solve them without stress. Pay proper attention and focus. Do not rush or hesitate

Result

Students will get their F7 CBE MCQs Test results after they finish the entire test. They will also be able to see the correct and incorrect answers, as well as explanations for the incorrect questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “(select all those which are correct/ or incorrect)“.
Drop-down: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

Keywords

Question – Lisbon Co – 01/01)

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F7 (FR) - Part A - MCQs - Lisbon

Course: ACCA - Association of Chartered Certified Accountants
Subject: F7 (FR) - Financial Reporting
Syllabus Area: A - The conceptual and regulatory framework for financial reporting
Question Name: Lisbon Co
Exam Section: Section B
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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1 / 5

Information relevant to questions 1–5.

Scenario

The accountant of Lisbon is considering a number of transactions and events and how they should be treated in accordance with the concepts and qualitative characteristics of financial information as set out in the Conceptual Framework.

During the year ended 31 March 20X6, Lisbon experienced the following transactions or events:

Lisbon sold an asset to a finance company and immediately leased it back for the remainder of its useful life.
The transaction met the criteria to be recognised as a sale under IFRS 15 Revenue from Contracts with Customers. The accountant has decided that this should be treated as a sale and leaseback and has accounted for it accordingly.
The company's statement of profit or loss, prepared using historical costs, showed a loss from operating its shops, but Lisbon is aware that the increase in the value of its properties during the period far outweigh the operating loss.
Inventory has up to this year been valued using FIFO but the accountant is considering changing to the weighted average method for the year to 31 March 20X6.

REQUIREMENT

Because of the loss arising from operating the shops, the accountant is considering whether Lisbon is a going concern. If it was decided that Lisbon was no longer a going concern at 31 March 20X6, which of the following is correct in accordance with the Conceptual Framework?

All the assets should be liquidated.

Financial statements do not need to be prepared.

The financial statements should be prepared as normal and the going concern status disclosed in the notes.

The financial statements should be prepared on a different basis.

2 / 5

Information relevant to questions 1–5.

Scenario

During the year ended 31 March 20X6, Lisbon experienced the following transactions or events:

Lisbon sold an asset to a finance company and immediately leased it back for the remainder of its useful life.
The transaction met the criteria to be recognised as a sale under IFRS 15 Revenue from Contracts with Customers. The accountant has decided that this should be treated as a sale and leaseback and has accounted for it accordingly.
The company's statement of profit or loss, prepared using historical costs, showed a loss from operating its shops, but Lisbon is aware that the increase in the value of its properties during the period far outweigh the operating loss.
Inventory has up to this year been valued using FIFO but the accountant is considering changing to the weighted average method for the year to 31 March 20X6.

REQUIREMENT

In looking at issue (ii) above, the accountant decides that the properties should be revalued.

Which concept or qualitative characteristic has been applied in making this decision?

Relevance

Timeliness

Going concern

Materiality

3 / 5

Information relevant to questions 1–5.

Scenario

During the year ended 31 March 20X6, Lisbon experienced the following transactions or events:

Lisbon sold an asset to a finance company and immediately leased it back for the remainder of its useful life.
The transaction met the criteria to be recognised as a sale under IFRS 15 Revenue from Contracts with Customers. The accountant has decided that this should be treated as a sale and leaseback and has accounted for it accordingly.
The company's statement of profit or loss, prepared using historical costs, showed a loss from operating its shops, but Lisbon is aware that the increase in the value of its properties during the period far outweigh the operating loss.
Inventory has up to this year been valued using FIFO but the accountant is considering changing to the weighted average method for the year to 31 March 20X6.

REQUIREMENT

In applying the enhancing qualitative characteristic of comparability, how should the change of inventory valuation basis be accounted for?

The notes should show what the profit would have been if the change had not taken place.

The financial statements for the prior period as shown at 31 March 20X6 should be restated using the weighted average basis.

The financial statements for 31 March 20X6 should show both methods.

The change should be disclosed only.

4 / 5

Information relevant to questions 1–5.

Scenario

During the year ended 31 March 20X6, Lisbon experienced the following transactions or events:

Lisbon sold an asset to a finance company and immediately leased it back for the remainder of its useful life.
The transaction met the criteria to be recognised as a sale under IFRS 15 Revenue from Contracts with Customers. The accountant has decided that this should be treated as a sale and leaseback and has accounted for it accordingly.
The company's statement of profit or loss, prepared using historical costs, showed a loss from operating its shops, but Lisbon is aware that the increase in the value of its properties during the period far outweigh the operating loss.
Inventory has up to this year been valued using FIFO but the accountant is considering changing to the weighted average method for the year to 31 March 20X6.

REQUIREMENT

The accountant is aware that some members of the board of Lisbon have little understanding of accounting and he is worried about his presentation of the financial statements at the board meeting.

In accordance with the Conceptual Framework, how should the accountant deal with this situation?

In doing his presentation he should omit any complex issues, so that everybody can understand what he is saying.

He should classify, characterise and present the information clearly and precisely.

He should open his presentation with the advice that some of them may not understand all of it.

He should deliver his presentation just to those who are financially qualified.

5 / 5

Information relevant to questions 1–5.

Scenario

During the year ended 31 March 20X6, Lisbon experienced the following transactions or events:

Lisbon sold an asset to a finance company and immediately leased it back for the remainder of its useful life.
The transaction met the criteria to be recognised as a sale under IFRS 15 Revenue from Contracts with Customers. The accountant has decided that this should be treated as a sale and leaseback and has accounted for it accordingly.
The company's statement of profit or loss, prepared using historical costs, showed a loss from operating its shops, but Lisbon is aware that the increase in the value of its properties during the period far outweigh the operating loss.
Inventory has up to this year been valued using FIFO but the accountant is considering changing to the weighted average method for the year to 31 March 20X6.

REQUIREMENT

Which concept or qualitative characteristic has influenced the decision in (i) above?

Faithful representation

Comparability

Accruals

Verifiability

Your score is