IFRS Knowledge Test | MGS Fintech PROF

IFRS knowledge test

This set of questions is designed to assess the ability to correctly apply International Financial Reporting Standards (IFRS) in practical situations.
The exercises aim to understand accounting principles and the correct reflection of economic transactions and events in financial statements.
The multiple-choice answers are formulated to allow the correct option to be chosen.

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1. Situation 1 — Presentation of Financial Statements (IAS 1)

The entity “North” prepares financial statements for the year ended December 31, 2025.

During the preparation process, a significant error was identified regarding the classification of a short-term loan as long-term in the 2024 financial statements.

Question: How should the error be corrected under IAS 1 “Presentation of Financial Statements” and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”?

a) Correction of the error in the 2025 report without recalculating comparative data;

b) Retrospective correction, presenting recalculated data for 2024 and a third balance sheet as of January 1, 2024;

c) Correction only in the explanatory notes;

d) Disclosure of information without adjusting numerical values.

According to paragraphs 31–34 of IAS 7, interest paid may be treated as a financial or operating flow, and dividends received as an investing or operating flow, depending on the accounting policy applied consistently.

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2. Situation 2 — Cash Flow Statement (IAS 7)
The entity “Terra” received dividends of €50,000 from a subsidiary in 2025 and paid bank interest of €15,000.
Entity policy: interest is classified as a financing activity, dividends are classified as an investing activity.

Question: How should these cash flows be presented under IAS 7?

a) Both as operating activities;

b) Interest — financial activity, dividends — investment activity;

c) Both as financial activities;

d) Dividends — financial activity, interest — operating activity.

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3. Situation 3 — Change in accounting policies (IAS 8)
The company "Delta" valued inventories according to the FIFO method, but starting with 2025 it adopts the weighted average cost method, considering it more relevant.

Question: How should this change be reflected according to IAS 8?

a) Prospective application;

b) Retrospective application with recalculation of comparative data;

c) Adjustment only in the current period;

d) Disclosure without recalculation.

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4. Situation 4 — Events after the reporting period (IAS 10)
The reporting date of the entity “Nova” is 31 December 2025.
On 20 January 2026, the entity received a court decision requiring it to pay €200,000 in damages, a lawsuit filed since November 2025.

Question: How should this event be reflected in the financial statements for 2025?

a) Recognition of an estimated liability on 31.12.2025;

b) Disclosure only in the notes;

c) No action, as the event belongs to the year 2026;

d) Decrease in retained earnings.

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