Free Questions › ACCA › Strategic Business Reporting
Free ACCA Strategic Business Reporting Practice Questions & Answers
400 exam-style Strategic Business Reporting questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 1
What is the primary objective of general purpose financial reporting per the IASB Conceptual Framework?
Select an option first.
Correct answer: B — To provide useful financial information to existing and potential investors, lenders and other creditors for resource allocation decisions
Explanation: B is correct: the Conceptual Framework states the objective is to provide decision-useful financial information to capital providers — investors, lenders and creditors. A is wrong — tax is not the primary objective. C is wrong — compliance is secondary. D is wrong — historical cost is a measurement basis, not the objective.
Question 2
Which of the following is a FUNDAMENTAL qualitative characteristic of useful financial information?
Select an option first.
Correct answer: C — Faithful representation
Explanation: C is correct: the two fundamental characteristics are relevance and faithful representation. Comparability, timeliness and understandability are enhancing characteristics.
Question 3
Under the Conceptual Framework, an asset is defined as:
Select an option first.
Correct answer: B — A present economic resource controlled by the entity as a result of past events
Explanation: B is correct: control, not ownership, is required. An economic resource is a right that has the potential to produce economic benefits. A is wrong — ownership is not required. C is wrong — not all debit balances are assets. D is wrong — intangibles have no physical form.
Question 4
A liability under the Conceptual Framework is:
Select an option first.
Correct answer: B — A present obligation to transfer an economic resource as a result of past events
Explanation: B is correct: a liability requires a present obligation, arising from a past event, to transfer an economic resource. A is wrong — liabilities extend beyond bank debt. C is wrong — not every credit balance is a liability. D is wrong — settlement need not be cash.
Question 5
Under IFRS 15, revenue is recognised when:
Select an option first.
Correct answer: C — A performance obligation is satisfied by transferring control of a good or service to the customer
Explanation: C is correct: IFRS 15 requires recognition when control transfers to the customer — the entity has satisfied its performance obligation. A is wrong — cash receipt is irrelevant under accrual accounting. B is wrong — invoicing is administrative. D is wrong — signing creates obligations but doesn't satisfy them.
Get the full ACCA question bank — free
Drop your email and we'll send you fresh ACCA practice questions, fully worked solutions and exam-deadline reminders. No spam — unsubscribe in one click.
Want to save your score and take a full mock exam? Create a free account →
Question 6
The first step in the IFRS 15 five-step model is:
Select an option first.
Correct answer: C — Identify the contract with the customer
Explanation: C is correct: Step 1 is identifying the contract. The five steps are: (1) identify contract, (2) identify performance obligations, (3) determine transaction price, (4) allocate transaction price, (5) recognise revenue. A is step 3. B is step 4. D is step 5.
Question 7
Under IAS 16, PPE is initially measured at:
Select an option first.
Correct answer: C — Cost — purchase price plus directly attributable costs plus dismantling costs
Explanation: C is correct: IAS 16 requires initial recognition at cost: purchase price net of discounts, directly attributable costs to bring to location/condition, and initial estimate of dismantling/restoration costs. A is wrong — NRV is for inventories. B is wrong — fair value may be used on first-time adoption only. D is wrong — replacement cost is current cost measurement.
Question 8
Under IAS 38, internally generated brands must be:
Select an option first.
Correct answer: C — Not recognised on the balance sheet
Explanation: C is correct: IAS 38 explicitly prohibits recognition of internally generated brands, mastheads and customer lists because their cost cannot be reliably distinguished from developing the business overall. A is wrong — fair value does not override the prohibition. B is wrong — development costs of brands cannot be separately identified. D is wrong — since they cannot be recognised, amortisation is irrelevant.
Question 9
Research expenditure under IAS 38 must be:
Select an option first.
Correct answer: B — Expensed as incurred
Explanation: B is correct: all research expenditure is expensed because at the research stage an entity cannot demonstrate it is probable future economic benefits will flow. A is wrong — only development costs meeting all six criteria may be capitalised. C is wrong — research is not a physical asset cost. D is wrong — deferral is not permitted.
Question 10
Which of the following is NOT an IAS 38 capitalisation criterion for development costs?
Select an option first.
Correct answer: C — Registration of the asset as intellectual property
Explanation: C is correct — IP registration is not one of the six criteria. The six are: technical feasibility, intention to complete, ability to use/sell, probable future economic benefits, adequate resources available, and reliable measurement of expenditure.
Question 11
Under IAS 36, an impairment loss is recognised when:
Select an option first.
Correct answer: B — Carrying amount exceeds recoverable amount
Explanation: B is correct: impairment = excess of carrying amount over recoverable amount (higher of FVLCOD and value in use). A is wrong — a market value decline is an indicator requiring a test, not an automatic impairment. C is wrong — revising useful life changes depreciation, not impairment. D is wrong — holding period is irrelevant.
Question 12
Recoverable amount under IAS 36 is:
Select an option first.
Correct answer: C — The higher of fair value less costs of disposal and value in use
Explanation: C is correct: recoverable amount = higher of (a) fair value less costs of disposal and (b) value in use. Using the higher reflects the maximum benefit available. B is wrong — using the lower overstates impairment. A and D are wrong measurement bases.
Question 13
Under IAS 40, investment property is held:
Select an option first.
Correct answer: C — To earn rental income or for capital appreciation, or both
Explanation: C is correct: IAS 40 defines investment property as property held to earn rentals or for capital appreciation. A is wrong — that is PPE. B is wrong — that is inventory. D is wrong — owner-occupied is PPE.
Question 14
Under IFRS 16, a lessee must recognise:
Select an option first.
Correct answer: B — A right-of-use asset and lease liability for substantially all leases, subject to exemptions
Explanation: B is correct: IFRS 16 requires ROU asset and lease liability recognition for all leases except optional short-term (≤12 months) and low-value exemptions. A is wrong — that was the old IAS 17 treatment. C is wrong — the exemption is optional and only for short-term leases. D is wrong — depreciation of the ROU asset is also an expense.
Question 15
The lease liability under IFRS 16 is initially measured at:
Select an option first.
Correct answer: B — Present value of future lease payments discounted at the implicit rate (or IBR)
Explanation: B is correct: IFRS 16 requires PV of future lease payments using the rate implicit in the lease or the lessee's incremental borrowing rate. A is wrong — undiscounted ignores time value. C is wrong — FV of underlying asset is a lessor classification test. D is wrong — that was old IAS 17.
Question 16
Under IAS 19, a defined contribution plan is one where:
Select an option first.
Correct answer: B — The employer's obligation is fixed contributions; employees bear investment risk
Explanation: B is correct: DC plans have fixed employer contributions — the employee bears all investment risk. A is wrong — guaranteed benefit is a DB plan. C is wrong — DC assets are typically independently managed. D is wrong — actuarial assumptions are for DB plans.
Question 17
The net defined benefit liability under IAS 19 is:
Select an option first.
Correct answer: B — PV of defined benefit obligation minus fair value of plan assets
Explanation: B is correct: net DBI = PV(DBO) − FV(plan assets). If DBO > assets, net liability; if assets > DBO, net asset (subject to asset ceiling). A is wrong — plan assets alone are not the liability. C and D are cash flows, not the balance sheet measurement.
Question 18
Under IAS 12, a deferred tax liability arises when:
Select an option first.
Correct answer: B — Carrying amount > tax base, creating a taxable temporary difference
Explanation: B is correct: a taxable temporary difference (CA > tax base for assets) results in future taxable amounts — hence a deferred tax liability. A is wrong — CA < tax base creates a deferred tax asset. C is wrong — unused losses create deferred tax assets. D is wrong — overpaid current tax is a tax receivable.
Question 19
A deferred tax asset arises from:
Select an option first.
Correct answer: C — Deductible temporary differences or unused tax losses where recovery is probable
Explanation: C is correct: DTAs arise from deductible temporary differences and unused losses/credits, recognised to the extent future taxable profit is probable. A is wrong — accelerated allowances create DTLs (CA > tax base). B is wrong — revaluation creates DTLs. D is wrong — only reversing differences generate deferred tax.
Question 20
Under IAS 37, a provision is recognised when:
Select an option first.
Correct answer: B — There is a present obligation, probable outflow, and a reliable estimate
Explanation: B is correct: all three IAS 37 criteria must be met: present obligation from a past event, probable outflow (>50%), and reliable estimate. A is wrong — possible obligation is a contingent liability (disclosed only). C is wrong — announcement may create a constructive obligation but alone is insufficient. D is wrong — budget approval does not create a legal or constructive obligation.
Question 21
A contingent liability under IAS 37 should be:
Select an option first.
Correct answer: B — Disclosed in notes unless possibility of outflow is remote
Explanation: B is correct: contingent liabilities are disclosed (not recognised) unless the possibility of outflow is remote. A is wrong — recognition requires probability and reliability. C is wrong — remote ones can be ignored but probable ones must be disclosed. D is wrong — expected value applies to provisions, not contingent liabilities.
Question 22
Under IFRS 2, equity-settled share-based payments to employees are measured at:
Select an option first.
Correct answer: B — Fair value of equity instruments at the grant date
Explanation: B is correct: equity-settled awards are measured at grant-date fair value — not subsequently remeasured. A is wrong — treasury shares do not determine the expense. C is wrong — intrinsic value is a simplified method for limited cases. D is wrong — vesting date value applies to cash-settled awards.
Question 23
The IFRS 2 expense for equity-settled awards vesting over three years is:
Select an option first.
Correct answer: B — Spread over the vesting period based on expected shares vesting
Explanation: B is correct: the expense is allocated over the vesting period at grant-date fair value, updated each period for non-market vesting condition estimates. A is wrong — front-loading ignores the service-period concept. C is wrong — spreading is required during vesting. D is wrong — fair value is fixed at grant date.
Question 24
Under IFRS 13, fair value is defined as:
Select an option first.
Correct answer: B — The price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
Explanation: B is correct: IFRS 13 uses an exit-price concept — the price received/paid in an orderly transaction between market participants. A is wrong — that was the old IAS 39 definition. C is wrong — NPV of cash flows is value in use (IAS 36). D is wrong — replacement cost is an entry price.
Question 25
The IFRS 13 fair value hierarchy prioritises inputs as:
Select an option first.
Correct answer: B — Level 1 (quoted prices in active markets) → Level 2 (observable inputs) → Level 3 (unobservable inputs)
Explanation: B is correct: Level 1 = unadjusted quoted prices in active markets (highest quality); Level 2 = observable inputs other than Level 1; Level 3 = unobservable/entity inputs (lowest quality). A is wrong — order is reversed. C and D are wrong — the hierarchy is about market observability of inputs.
Question 26
Under IAS 21, a foreign currency transaction is initially recorded at:
Select an option first.
Correct answer: B — The spot rate at the transaction date
Explanation: B is correct: IAS 21 requires translation at the spot rate on the transaction date (or average rate if not significantly different). A is wrong — closing rate is used to retranslate year-end monetary items. C is wrong — average rate approximates spot but is not the primary rule. D is wrong — forward rates apply only in hedge accounting.
Question 27
Monetary items in foreign currency are retranslated at year end using:
Select an option first.
Correct answer: C — Closing spot rate at the reporting date
Explanation: C is correct: IAS 21 requires monetary items (receivables, payables, loans) to be retranslated at the closing rate; exchange differences go to profit or loss. A is wrong — historical rate applies to non-monetary items at cost. B is wrong — average rate is for P&L items. D is wrong — forward rates are for hedge accounting.
Question 28
Under IAS 10, adjusting events after the reporting period:
Select an option first.
Correct answer: B — Provide evidence of conditions existing at the reporting date — require financial statements to be adjusted
Explanation: B is correct: adjusting events confirm conditions that existed at year end — statements must be adjusted (e.g. post-year-end court ruling confirming a year-end liability). A is wrong — that describes non-adjusting events. C is wrong — adjusting events require adjustment, not just disclosure. D is wrong — materiality is separate.
Question 29
Under IAS 8, a change in accounting policy is applied:
Select an option first.
Correct answer: B — Retrospectively, restating prior period comparatives unless impracticable
Explanation: B is correct: accounting policy changes are applied retrospectively — comparatives are restated and the opening balance of the earliest period presented is adjusted. A is wrong — prospective application is for changes in estimates. C is wrong — retrospective application goes further back. D is wrong — the financial statements are adjusted.
Question 30
Under IAS 8, a change in accounting estimate is applied:
Select an option first.
Correct answer: B — Prospectively — in current and future periods affected
Explanation: B is correct: changes in estimates (useful life, residual value, bad debt provision) are applied prospectively — no retrospective restatement. A is wrong — retrospective restatement is for prior period errors and policy changes. C is wrong — prior period error corrections are a separate category. D is wrong — estimates do affect the income statement.
More free ACCA topics
Management Accounting401
Advanced Taxation400
Corporate and Business Law398
Advanced Financial Management396
Financial Reporting395
Financial Management394
Performance Management391
Financial Accounting388
Advanced Performance Management388
Business and Technology300
Taxation299
Strategic Business Leader297
Advanced Audit and Assurance296
Audit and Assurance294
Ten questions in
- The ones you miss are saved as a drill you can repeat
- Your place is kept, on this device and any other
- A streak, if that is the thing that gets you back tomorrow
Every question on this page stays free and open either way.