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IFRS 15 sets out a five-step model for revenue recognition. What is the correct order of the first three steps?
A
B
C
D
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2026 Statistics
Key Facts: ACCA FR Exam
3 hrs
Computer-Based Exam
ACCA FR Exam Page
50%
Pass Mark
ACCA FR Examiner Approach
15 OTs
Section A Questions
ACCA FR Exam Structure
2 x 20
Section C Mark Questions
ACCA FR Exam Structure
IFRS 18
Replaced IAS 1 (Sep 2025)
ACCA Technical Article
4 areas
Syllabus Areas A-D
ACCA FR Syllabus S25-J26
ACCA FR is a 3-hour computer-based exam in three sections. Section A has 15 two-mark objective test questions; Section B has three case questions each with five two-mark OTs; Section C has two 20-mark constructed-response questions, one on preparing financial statements and one on interpretation. The pass mark is 50%. The syllabus covers area A (conceptual and regulatory framework, including IFRS 18 which replaced IAS 1 from September 2025), area B (accounting for transactions under IFRS), area C (analysing and interpreting financial statements) and area D (preparation of single-entity and group financial statements).
Sample ACCA FR Practice Questions
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1According to the IASB Conceptual Framework, which two qualitative characteristics are the fundamental qualitative characteristics of useful financial information?
A.Relevance and faithful representation
B.Comparability and verifiability
C.Timeliness and understandability
D.Materiality and prudence
Explanation: The Conceptual Framework identifies relevance and faithful representation as the two fundamental qualitative characteristics. Comparability, verifiability, timeliness and understandability are enhancing characteristics that increase usefulness once the fundamental ones are met.
2Under the IASB Conceptual Framework, an asset is defined as:
A.A resource owned by the entity expected to generate future profit
B.A present economic resource controlled by the entity as a result of past events
C.Any item of value recorded in the entity's ledgers
D.A future inflow of cash that the entity expects to receive
Explanation: The 2018 Conceptual Framework defines an asset as a present economic resource controlled by the entity as a result of past events, where an economic resource is a right with the potential to produce economic benefits. Control, not legal ownership, is the key criterion.
3IFRS 18 Presentation and Disclosure in Financial Statements requires income and expenses in the statement of profit or loss to be classified into categories. Which of the following is NOT one of the categories introduced by IFRS 18?
A.Operating
B.Investing
C.Discontinued
D.Financing
Explanation: IFRS 18 requires items of income and expense to be classified into operating, investing, financing, income taxes and discontinued operations categories, with operating as the default. The first three (operating, investing, financing) are the classification categories that drive the new required subtotals; discontinued operations is presented separately but is not one of those three core classification categories tested here.
4Under IFRS 18, which new required subtotal separates the results of the main business activities from the cost of funding and tax?
A.Gross profit
B.Profit before financing and income taxes
C.Comprehensive income
D.Operating profit
Explanation: IFRS 18 requires entities to present an operating profit subtotal, comprising all income and expenses classified in the operating category. This standardises the previously inconsistent presentation of operating results and is the default bucket for the core business.
5Which body is responsible for issuing International Financial Reporting Standards (IFRS Accounting Standards)?
A.The International Accounting Standards Board (IASB)
B.The IFRS Interpretations Committee
C.The IFRS Advisory Council
D.The IFRS Foundation Trustees
Explanation: The International Accounting Standards Board (IASB) is the independent standard-setting body that develops and issues IFRS Accounting Standards. The IFRS Foundation oversees governance, the Advisory Council gives strategic advice, and the Interpretations Committee issues IFRIC Interpretations.
6An entity recognises revenue when it satisfies a performance obligation. Under IFRS 15, control of a good or service is transferred over time if which of the following criteria is met?
A.The contract has a fixed transaction price
B.The customer simultaneously receives and consumes the benefits as the entity performs
C.The entity retains legal title until final payment
D.The good has an alternative use to the entity
Explanation: Under IFRS 15, a performance obligation is satisfied over time if the customer simultaneously receives and consumes benefits as the entity performs, or the entity creates/enhances an asset the customer controls, or the asset has no alternative use and the entity has an enforceable right to payment for performance to date.
7IFRS 15 sets out a five-step model for revenue recognition. What is the correct order of the first three steps?
A.Determine the transaction price; identify the contract; allocate the price
B.Identify the performance obligations; recognise revenue; identify the contract
C.Identify the contract; identify the performance obligations; determine the transaction price
D.Allocate the transaction price; identify the contract; recognise revenue
Explanation: The IFRS 15 five-step model is: (1) identify the contract, (2) identify the separate performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the obligations, and (5) recognise revenue as each obligation is satisfied.
8A company sells a machine for $50,000 that includes two years of servicing. The standalone selling price of the machine is $44,000 and the servicing is $11,000. How much revenue is recognised for the machine on delivery under IFRS 15?
A.$50,000
B.$44,000
C.$46,000
D.$40,000
Explanation: The $50,000 transaction price is allocated by relative standalone selling prices. Total standalone price is $55,000, so the machine receives 44,000/55,000 x 50,000 = $40,000, recognised on delivery; the remaining $10,000 for servicing is recognised over two years.
9Under IAS 16 Property, Plant and Equipment, which of the following costs should be capitalised as part of the cost of an item of PPE?
A.Costs of site preparation and initial delivery
B.General administrative overheads
C.Costs of opening a new facility (advertising)
D.Operating losses incurred before the asset reaches planned performance
Explanation: IAS 16 includes directly attributable costs such as site preparation, delivery and handling, installation, and professional fees in the cost of PPE. Administrative overheads, advertising/promotion, and initial operating losses are specifically excluded and expensed.
10An asset costing $200,000 with a useful life of 10 years and no residual value is revalued to $270,000 at the start of year 3 (after two years of straight-line depreciation). What is the annual depreciation charge after revaluation?
A.$20,000
B.$33,750
C.$27,000
D.$30,000
Explanation: After two years' depreciation of $20,000 each, carrying amount is $160,000. On revaluation to $270,000 over the remaining 8 years, depreciation = 270,000 / 8 = $33,750 per year. Under IAS 16 depreciation is based on the revalued amount over remaining useful life.
About the ACCA FR Practice Questions
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