WorldatWork Certified Compensation Professional (CCP) T7 Questions & Answers

• Question 51:

  IAS 19 requires that all numbers involved in accounting for defined benefit plans be presented as a single amount in the statement of financial position. What is this amount called?

  A. Net defined benefit liability (asset)

  B. Asset ceiling

  C. Fair value

  D. Net present value

  Correct Answer: A

• Question 52:

  The following requirements are characteristic of which term below? Must be reported on the balance sheet; must be owned or controlled by the company; and must possess expected future benefits.

  A. Assets

  B. Owners' equity

  C. Contributed capital

  D. Liabilities

  Correct Answer: A

• Question 53:

  Which of the following is true of accrual accounting?

  A. Neither the recognition of revenue nor the recording of expense necessarily involves the receipt or payment of cash

  B. It rests on a primary guiding principle, which is recognition

  C. The recognition of revenue involves the receipt or payment of cash, while the recording of expense does not

  D. It entails recording income or expenditure only when money comes into or leaves the company

  Correct Answer: A

• Question 54:

  Current assets comprise assets that can be converted to cash. They must be converted within what time period?

  A. Before the end of the fiscal year

  B. Within a year

  C. Within a fiscal year

  D. Within two years

  Correct Answer: B

• Question 55:

  Identify the characteristic being employed when companies in the same industry are using the same accounting principles.

  A. Comparability

  B. Relevance

  C. Faithful representation

  D. Verifiability

  Correct Answer: A

• Question 56:

  What are the two guiding principles of accrual accounting?

  A. Expense recognition and matching

  B. Revenue recognition and matching

  C. Revenue recognition and measurement

  D. Cost and materiality

  Correct Answer: B

• Question 57:

  A statement of cash flows provides information on which of the following primary business activities of a company?

  A. Cash inflows, cash outflows, payment of dividends

  B. Operating activities, cash inflows, cash outflows

  C. Cash sales, investing activities, payment of dividends

  D. Operating, investing, and financing activities

  Correct Answer: D

• Question 58:

  When an employee has provided service in exchange for benefits to be paid in the future, what is it considered in accounting terms?

  A. The employee value proposition

  B. A long term benefit

  C. A noncurrent expense

  D. A liability

  Correct Answer: D

• Question 59:

  Which of the following describes the change in the net defined benefit liability (asset) during the period due to passage of time?

  A. Past service cost

  B. Current service cost

  C. Net interest on the net defined benefit liability (asset)

  D. Time value of money

  Correct Answer: C

• Question 60:

  What is the purpose of a statement of cash flow?

  A. To show liability and equity and the manner in which those funds are employed in a manner which is useful for users of the statement

  B. To account for changes in cash during the accounting period in a manner which is useful for users of the statement

  C. To show details of the nature of a company's operating activities in a manner which is useful for users of the statement

  D. To reconcile the beginning and ending balances of stockholders' equity in a manner which is useful for users of the statement

  Correct Answer: B