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T7 WorldatWork International Financial Reporting Standards for Compensation Professionals Exam Free Practice Exam Questions (2025 Updated)

Prepare effectively for your WorldatWork T7 International Financial Reporting Standards for Compensation Professionals Exam certification with our extensive collection of free, high-quality practice questions. Each question is designed to mirror the actual exam format and objectives, complete with comprehensive answers and detailed explanations. Our materials are regularly updated for 2025, ensuring you have the most current resources to build confidence and succeed on your first attempt.

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Total 89 questions

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

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

A.

Operating expenses

B.

Net income

C.

Total income

D.

Current assets

A US-based company reports information about pending lawsuits in the notes to its financial statements. This is an example of which basic principle of accounting?

A.

Full disclosure

B.

Expense recognition

C.

Going concern

D.

Constraints

Defined contribution plans are an example of which kind of employee benefits?

A.

Short-term benefits

B.

Post-employment benefits

C.

Termination benefits

D.

Long-term benefits

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

Why is faithful representation important in accounting documentation?

A.

It ensures neutrality on the part of the company’s accounting department

B.

It guarantees that all information is free from error

C.

It is useful if information represents what it purports to represent

D.

It indicates that accountants have confirmed all of the data

What is the main objective of IAS 19?

A.

To prescribe the accounting and disclosure for employee benefits

B.

To prescribe the timing of payments

C.

To draw a distinction between long and short term benefits

D.

To draw a distinction between a defined contribution and defined benefit plan

Which characteristic requires a high degree of consensus among individuals on a given measurement?

A.

Faithful representation

B.

Verifiability

C.

Comparability

D.

Neutral

What is one of the primary purposes of the International Accounting Standards Board (IASB)?

A.

To develop a single set of high quality and enforceable global accounting standards

B.

To align US standards and International Accounting Standards Board (IASB) standards

C.

To appoint Standards Advisory Council (SAC) members

D.

To monitor International Accounting Standards Board (IASB) effectiveness

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

What is the purpose of an income statement?

A.

To show liability and equity and the manner in which those funds are employed

B.

To account for changes in cash during the accounting period

C.

To show details of the nature of a company’s operating activities

D.

To reconcile the beginning and ending balances of stockholders’ equity

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

A.

Directors and management personnel

B.

All employees except casual employees

C.

All employees

D.

All full-time employees

What are the changes in the present value of the defined benefits obligation that result from experience adjustments or the effects of changes in actuarial assumptions called?

A.

Net interest on the net defined benefit liability (asset)

B.

Time value of money

C.

Current service cost

D.

Actuarial gains and losses

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

Why is accounting for defined benefits plans one of the most complex issues in International Financial Reporting Standards?

A.

Because it involves incorporating actuarial assumptions into measurement of the obligation and the expenses

B.

Because defined benefits plan obligations are not measured on a discounted basis

C.

Because defined benefits plans must be settled within ten years after the employee renders the related service

D.

Because the employer is not allowed to incorporate actuarial assumptions into measurement of the obligation and the expenses

Company XYZ outsourced its printing services to a specialist printing firm. The specialist firm took responsibility for the staff, though the team remains on Company XYZ’s premises. Which of the following is true?

A.

Because they remain on your premises, they are considered staff costs

B.

Due to the outsourcing of the staff, they are now considered service-supplier costs rather than staff costs

Companies desire more current assets than current liabilities. What is the difference between current assets and current liabilities called?

A.

Net income

B.

Total liabilities

C.

Net working capital

D.

Noncurrent liabilities

What is the sum of current and noncurrent liabilities called?

A.

Total cost

B.

Current debt

C.

Total expenses

D.

Total liabilities

The economic activities of US-based Company XYZ is divided into 12-month periods for the purpose of issuing annual reports. Which basic assumption of accounting does this practice represent?

A.

Going concern

B.

Monetary unit

C.

Periodicity

D.

Economic entity

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

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Total 89 questions
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