Section 1: General Overview of IAS 8
Question 1: The objective of IAS 8 is to prescribe the accounting treatment for
which of the following?
A) Accounting policies, changes in accounting estimates, and errors
B) The impairment of financial assets
C) Accounting for revenue recognition
D) The classification of liabilities
Answer: A) Accounting policies, changes in accounting estimates, and errors
Difficulty Level: Basic
Question 2: Which of the following is an example of a change in accounting
estimate according to IAS 8?
A) A change in the estimated useful life of an asset
B) A change in the method of depreciation
C) A change in the classification of an asset from non-current to current
D) A change in the cost of inventories
Answer: A) A change in the estimated useful life of an asset
Difficulty Level: Basic
Question 3: Under IAS 8, how should a change in accounting policy be accounted
for?
A) By adjusting prior periods’ financial statements
B) By adjusting the current period’s financial statements only
C) By applying the change prospectively, unless impracticable
D) By reporting the change in the statement of financial position
Answer: A) By adjusting prior periods’ financial statements
Difficulty Level: Basic
Question 4: Which of the following is not a valid reason for changing an accounting
policy under IAS 8?
A) To reflect new information or events
B) To achieve comparability with peers
C) To comply with a new IFRS or local law
D) To improve the financial position of the entity
Answer: D) To improve the financial position of the entity
Difficulty Level: Basic
Question 5: When an entity changes an accounting policy, how should the effects
of the change be disclosed according to IAS 8?
A) As an error
B) In the notes to the financial statements, including the reason for the
change
C) As a part of the statement of comprehensive income
D) In the statement of financial position
Answer: B) In the notes to the financial statements, including the reason for
the change
Difficulty Level: Basic
Section 2: Changes in Accounting Estimates
Question 6: Which of the following is a characteristic of a change in accounting
estimate under IAS 8?
A) It is retrospective in nature
B) It results in a correction of an error in previous financial statements
C) It is applied prospectively in the period of change and future periods
D) It requires a reclassification of amounts in the financial statements
Answer: C) It is applied prospectively in the period of change and future
periods
Difficulty Level: Basic
Question 7: How should the effect of a change in accounting estimate be treated if
it affects both the current period and future periods?
A) Adjust the financial statements for all prior periods
B) Adjust only the financial statements for the current period
C) Adjust only the financial statements for the future periods
D) Recognize the change prospectively in both the current and future periods
Answer: D) Recognize the change prospectively in both the current and
future periods
Difficulty Level: Basic
Question 8: Which of the following is a change in accounting estimate that is
required by IAS 8 to be applied prospectively?
A) Change in the depreciation method
B) Change in the recognition of revenue
C) Change in the estimated useful life of an asset
D) Change in the inventory costing method
Answer: C) Change in the estimated useful life of an asset
Difficulty Level: Basic
Question 9 (Case Study): Company A estimates that the useful life of a piece of
equipment will change from 10 years to 15 years due to improved technology. The
company should apply the change in estimate:
A) Retrospectively, adjusting prior periods’ depreciation
B) Prospectively, only adjusting depreciation from the current period onward
C) In the statement of financial position, without adjusting depreciation
D) In the notes to the financial statements only
Answer: B) Prospectively, only adjusting depreciation from the current period
onward
Difficulty Level: Advanced
Question 10: When a change in accounting estimate occurs, which of the following
should be disclosed under IAS 8?
A) The reasons for the change and the amount of the effect on income
B) The reasons for the change and its effect on future cash flows
C) Only the effect on future financial position
D) No disclosure is required
Answer: A) The reasons for the change and the amount of the effect on
income
Difficulty Level: Basic
Section 3: Errors
Question 11: According to IAS 8, how should a material prior period error be
corrected?
A) By adjusting the current period’s financial statements
B) By adjusting the prior period’s financial statements retrospectively
C) By disclosing the error in the notes without adjusting the financial
statements
D) By applying the correction prospectively
Answer: B) By adjusting the prior period’s financial statements
retrospectively
Difficulty Level: Basic
Question 12: Which of the following is an example of an error according to IAS 8?
A) Incorrect application of an accounting policy
B) A change in accounting estimates
C) A mistake in mathematical calculations
D) A change in the estimated useful life of an asset
Answer: C) A mistake in mathematical calculations
Difficulty Level: Basic
Question 13: When an entity discovers that a prior period error has occurred,
which of the following must be disclosed in the financial statements?
A) The nature of the error and the effect on income and earnings per share
B) Only the nature of the error
C) Only the effect of the error on the balance sheet
D) The amount of the error adjusted for in the financial statements
Answer: A) The nature of the error and the effect on income and earnings
per share
Difficulty Level: Basic
Question 14 (Case Study): Company B finds that it incorrectly recognized
revenue from a sale in the prior year, which overstated its profit. The amount of the
error is material. How should Company B correct the error under IAS 8?
A) By restating prior period financial statements as if the error never occurred
B) By adjusting the current period’s profit and disclosing the error in the notes
C) By applying the correction prospectively
D) By disclosing the error without making any adjustments to the financial
statements
Answer: A) By restating prior period financial statements as if the error
never occurred
Difficulty Level: Advanced
Question 15: When an error is corrected retrospectively under IAS 8, how is it
presented in the financial statements?
A) As a correction of the current period’s profit
B) As a restatement of the comparative figures
C) In the statement of financial position only
D) In the notes without restating the financial statements
Answer: B) As a restatement of the comparative figures
Difficulty Level: Basic
Section 4: Transition and Retrospective Application
Question 16: When adopting a new accounting policy, which of the following is
required by IAS 8?
A) The policy must be applied prospectively
B) The policy must be applied retroactively to all prior periods
C) The change must be disclosed in the financial statements
D) The policy change must be applied in future periods only
Answer: C) The change must be disclosed in the financial statements
Difficulty Level: Basic
Question 17: What should an entity do if it is impracticable to apply a new
accounting policy retrospectively?
A) Apply the new policy prospectively from the earliest date practicable
B) Apply the new policy to only the current period
C) Apply the new policy to prior periods and adjust the current period
accordingly
D) Discontinue the new policy
Answer: A) Apply the new policy prospectively from the earliest date
practicable
Difficulty Level: Basic
Question 18: When adopting a new accounting policy for the first time, how should
the cumulative effect of the change be accounted for under IAS 8?
A) As a prior period adjustment
B) As a correction of error
C) As a change in accounting estimate
D) In the statement of financial position as an adjustment to retained
earnings
Answer: D) In the statement of financial position as an adjustment to
retained earnings
Difficulty Level: Basic
Question 19 (Case Study): Company C changes its accounting policy for revenue
recognition. It is not possible to apply the new policy retroactively. According to IAS
8, the company should:
A) Apply the policy retrospectively as much as possible
B) Adjust retained earnings at the beginning of the period of adoption
C) Apply the policy only prospectively
D) Apply the policy retroactively to prior periods and adjust for income tax
Answer: B) Adjust retained earnings at the beginning of the period of
adoption
Difficulty Level: Advanced
Question 20: According to IAS 8, when a change in accounting policy is applied
prospectively, how should the effects of the change be presented in the financial
statements?
A) In the statement of profit or loss and other comprehensive income for the
current period only
B) In the statement of changes in equity only
C) In the notes to the financial statements only
D) In both the statement of profit or loss and other comprehensive income
and the statement of financial position
Answer: A) In the statement of profit or loss and other comprehensive
income for the current period only
Difficulty Level: Basic
Alternative/replacement set of questions
Questions:
Question 1: Which of the following is the primary purpose of IAS 8?
A) To prescribe the criteria for selecting and changing accounting policies
B) To prescribe the format of financial statements
C) To prescribe the disclosure requirements for financial instruments
D) To prescribe the recognition and measurement of revenue
Answer: A) To prescribe the criteria for selecting and changing accounting
policies
Difficulty Level: Basic
Question 2: Which of the following is NOT a type of accounting change addressed
by IAS 8?
A) Change in accounting policy
B) Change in accounting estimate
C) Correction of prior period errors
D) Change in financial statement format
Answer: D) Change in financial statement format
Difficulty Level: Basic
Question 3: Which of the following is true about the retrospective application of
changes in accounting policies under IAS 8?
A) Changes in accounting policies must always be applied retrospectively
B) Changes in accounting policies must always be applied prospectively
C) Changes in accounting policies can be applied either retrospectively or
prospectively
D) Changes in accounting policies must be applied retrospectively unless it is
impracticable to do so
Answer: D) Changes in accounting policies must be applied retrospectively
unless it is impracticable to do so
Difficulty Level: Basic
Question 4: Which of the following is true about the prospective application of
changes in accounting estimates under IAS 8?
A) Changes in accounting estimates must always be applied retrospectively
B) Changes in accounting estimates must always be applied prospectively
C) Changes in accounting estimates can be applied either retrospectively or
prospectively
D) Changes in accounting estimates must be applied retrospectively unless it
is impracticable to do so
Answer: B) Changes in accounting estimates must always be applied
prospectively
Difficulty Level: Basic
Question 5: Under IAS 8, which of the following is NOT a required disclosure for
changes in accounting policies?
A) The nature of the change in accounting policy
B) The reasons why applying the new accounting policy provides reliable and
more relevant information
C) The amount of the adjustment for each financial statement line item
affected
D) The fair value of the assets and liabilities affected by the change
Answer: D) The fair value of the assets and liabilities affected by the change
Difficulty Level: Basic
Question 6: Which of the following is true about the correction of prior period
errors under IAS 8?
A) Prior period errors must always be corrected prospectively
B) Prior period errors must always be corrected retrospectively
C) Prior period errors can be corrected either retrospectively or prospectively
D) Prior period errors must be corrected retrospectively unless it is
impracticable to do so
Answer: B) Prior period errors must always be corrected retrospectively
Difficulty Level: Basic
Question 7: Under IAS 8, which of the following is NOT a required disclosure for the
correction of prior period errors?
A) The nature of the prior period error
B) The amount of the correction for each financial statement line item
affected
C) The impact of the correction on earnings per share
D) The fair value of the assets and liabilities affected by the correction
Answer: D) The fair value of the assets and liabilities affected by the
correction
Difficulty Level: Basic
Question 8: Which of the following is true about the selection of accounting
policies under IAS 8?
A) Accounting policies must be selected based on the requirements of IFRS
B) Accounting policies must be selected based on the requirements of local
GAAP
C) Accounting policies can be selected based on either IFRS or local GAAP
D) Accounting policies must be selected based on the requirements of the
entity's management
Answer: A) Accounting policies must be selected based on the requirements
of IFRS
Difficulty Level: Basic
Question 9: Under IAS 8, which of the following is true about the disclosure of
changes in accounting estimates?
A) The nature and amount of the change must be disclosed
B) Only the nature of the change must be disclosed
C) Only the amount of the change must be disclosed
D) No disclosure is required for changes in accounting estimates
Answer: A) The nature and amount of the change must be disclosed
Difficulty Level: Basic
Question 10: Which of the following is true about the application of new IFRSs
under IAS 8?
A) New IFRSs must always be applied retrospectively
B) New IFRSs must always be applied prospectively
C) New IFRSs can be applied either retrospectively or prospectively
D) New IFRSs must be applied retrospectively unless it is impracticable to do
so
Answer: D) New IFRSs must be applied retrospectively unless it is
impracticable to do so
Difficulty Level: Basic
Question 11: Under IAS 8, which of the following is NOT a required disclosure for
changes in accounting policies resulting from the initial application of a new IFRS?
A) The title of the new IFRS
B) The transitional provisions of the new IFRS
C) The amount of the adjustment for each financial statement line item
affected
D) The fair value of the assets and liabilities affected by the change
Answer: D) The fair value of the assets and liabilities affected by the change
Difficulty Level: Basic
Question 12: Which of the following is true about the treatment of changes in
accounting estimates under IAS 8?
A) Changes in accounting estimates must always be treated as changes in
accounting policies
B) Changes in accounting estimates must always be treated as prior period
errors
C) Changes in accounting estimates must be treated prospectively
D) Changes in accounting estimates must be treated retrospectively
Answer: C) Changes in accounting estimates must be treated prospectively
Difficulty Level: Basic
Question 13: Under IAS 8, which of the following is true about the disclosure of
changes in accounting policies?
A) The nature and amount of the change must be disclosed
B) Only the nature of the change must be disclosed
C) Only the amount of the change must be disclosed
D) No disclosure is required for changes in accounting policies
Answer: A) The nature and amount of the change must be disclosed
Difficulty Level: Basic
Question 14: Which of the following is true about the correction of prior period
errors under IAS 8?
A) Prior period errors must always be corrected prospectively
B) Prior period errors must always be corrected retrospectively
C) Prior period errors can be corrected either retrospectively or prospectively
D) Prior period errors must be corrected retrospectively unless it is
impracticable to do so
Answer: B) Prior period errors must always be corrected retrospectively
Difficulty Level: Basic
Question 15: Under IAS 8, which of the following is NOT a required disclosure for
changes in accounting estimates?
A) The nature of the change in accounting estimate
B) The reasons for the change in accounting estimate
C) The amount of the change in accounting estimate
D) The impact of the change on earnings per share
Answer: D) The impact of the change on earnings per share
Difficulty Level: Basic
Question 16: Which of the following is true about the selection of accounting
policies under IAS 8?
A) Accounting policies must be selected based on the requirements of IFRS
B) Accounting policies must be selected based on the requirements of local
GAAP
C) Accounting policies can be selected based on either IFRS or local GAAP
D) Accounting policies must be selected based on the requirements of the
entity's management
Answer: A) Accounting policies must be selected based on the requirements
of IFRS
Difficulty Level: Basic
Question 17: Under IAS 8, which of the following is true about the disclosure of
changes in accounting estimates?
A) The nature and amount of the change must be disclosed
B) Only the nature of the change must be disclosed
C) Only the amount of the change must be disclosed
D) No disclosure is required for changes in accounting estimates
Answer: A) The nature and amount of the change must be disclosed
Difficulty Level: Basic
Question 18: Which of the following is true about the application of new IFRSs
under IAS 8?
A) New IFRSs must always be applied retrospectively
B) New IFRSs must always be applied prospectively
C) New IFRSs can be applied either retrospectively or prospectively
D) New IFRSs must be applied retrospectively unless it is impracticable to do
so
Answer: D) New IFRSs must be applied retrospectively unless it is
impracticable to do so
Difficulty Level: Basic
Question 19: Under IAS 8, which of the following is NOT a required disclosure for
changes in accounting policies resulting from the initial application of a new IFRS?
A) The title of the new IFRS
B) The transitional provisions of the new IFRS
C) The amount of the adjustment for each financial statement line item
affected
D) The fair value of the assets and liabilities affected by the change
Answer: D) The fair value of the assets and liabilities affected by the change
Difficulty Level: Basic
Question 20: Which of the following is true about the treatment of changes in
accounting estimates under IAS 8?
A) Changes in accounting estimates must always be treated as changes in
accounting policies
B) Changes in accounting estimates must always be treated as prior period
errors
C) Changes in accounting estimates must be treated prospectively
D) Changes in accounting estimates must be treated retrospectively
Answer: C) Changes in accounting estimates must be treated prospectively
Difficulty Level: Basic
Question 21: Under IAS 8, which of the following is true about the disclosure of
changes in accounting policies?
A) The nature and amount of the change must be disclosed
B) Only the nature of the change must be disclosed
C) Only the amount of the change must be disclosed
D) No disclosure is required for changes in accounting policies
Answer: A) The nature and amount of the change must be disclosed
Difficulty Level: Basic
Question 22: Which of the following is true about the correction of prior period
errors under IAS 8?
A) Prior period errors must always be corrected prospectively
B) Prior period errors must always be corrected retrospectively
C) Prior period errors can be corrected either retrospectively or prospectively
D) Prior period errors must be corrected retrospectively unless it is
impracticable to do so
Answer: B) Prior period errors must always be corrected retrospectively
Difficulty Level: Basic
Question 23: Under IAS 8, which of the following is NOT a required disclosure for
changes in accounting estimates?
A) The nature of the change in accounting estimate
B) The reasons for the change in accounting estimate
C) The amount of the change in accounting estimate
D) The impact of the change on earnings per share
Answer: D) The impact of the change on earnings per share
Difficulty Level: Basic
Question 24: Which of the following is true about the selection of accounting
policies under IAS 8?
A) Accounting policies must be selected based on the requirements of IFRS
B) Accounting policies must be selected based on the requirements of local
GAAP
C) Accounting policies can be selected based on either IFRS or local GAAP
D) Accounting policies must be selected based on the requirements of the
entity's management
Answer: A) Accounting policies must be selected based on the requirements
of IFRS
Difficulty Level: Basic
Question 25: Under IAS 8, which of the following is true about the disclosure of
changes in accounting estimates?
A) The nature and amount of the change must be disclosed
B) Only the nature of the change must be disclosed
C) Only the amount of the change must be disclosed
D) No disclosure is required for changes in accounting estimates
Answer: A) The nature and amount of the change must be disclosed
Difficulty Level: Basic
Question 26: Which of the following is true about the application of new IFRSs
under IAS 8?
A) New IFRSs must always be applied retrospectively
B) New IFRSs must always be applied prospectively
C) New IFRSs can be applied either retrospectively or prospectively
D) New IFRSs must be applied retrospectively unless it is impracticable to do
so
Answer: D) New IFRSs must be applied retrospectively unless it is
impracticable to do so
Difficulty Level: Basic
Question 27: Under IAS 8, which of the following is NOT a required disclosure for
changes in accounting policies resulting from the initial application of a new IFRS?
A) The title of the new IFRS
B) The transitional provisions of the new IFRS
C) The amount of the adjustment for each financial statement line item
affected
D) The fair value of the assets and liabilities affected by the change
Answer: D) The fair value of the assets and liabilities affected by the change
Difficulty Level: Basic
Question 28: Which of the following is true about the treatment of changes in
accounting estimates under IAS 8?
A) Changes in accounting estimates must always be treated as changes in
accounting policies
B) Changes in accounting estimates must always be treated as prior period
errors
C) Changes in accounting estimates must be treated prospectively
D) Changes in accounting estimates must be treated retrospectively
Answer: C) Changes in accounting estimates must be treated prospectively
Difficulty Level: Basic
Question 29: Under IAS 8, which of the following is true about the disclosure of
changes in accounting policies?
A) The nature and amount of the change must be disclosed
B) Only the nature of the change must be disclosed
C) Only the amount of the change must be disclosed
D) No disclosure is required for changes in accounting policies
Answer: A) The nature and amount of the change must be disclosed
Difficulty Level: Basic
Question 30: Which of the following is true about the correction of prior period
errors under IAS 8?
A) Prior period errors must always be corrected prospectively
B) Prior period errors must always be corrected retrospectively
C) Prior period errors can be corrected either retrospectively or prospectively
D) Prior period errors must be corrected retrospectively unless it is
impracticable to do so
Answer: B) Prior period errors must always be corrected retrospectively
Difficulty Level: Basic
