Question 1

Due process in standard setting involves public consultation with all interested parties.

Accepted Answer

A) True 
 B)False  True

Question 2

Accountants generally make no adjustments for changes in the value of the dollar.

Accepted Answer

A) True 
 B)False  True

Question 3

The comparability principle applies both to comparing businesses to one another and to comparing different periods for the same business.

Accepted Answer

A) True 
 B)False  True

Question 4

According to the IASB and adopted by the AASB, the primary objective of financial reporting is to provide information:

Accepted Answer

A) to the Federal government. 
B) about the profitability of the business. 
C) that is useful for decision making, particularly for investors and lenders. 
D) regarding the cash flows of the business. 
A) to the Federal government. 
B) about the profitability of the business. 
C) that is useful for decision making, particularly for investors and lenders. 
D) regarding the cash flows of the business.

Question 5

Three of the qualitative characteristics listed in the AASB Framework are:

Accepted Answer

A) optimism, availability, relevance. 
B) readability, timeliness, reasonability. 
C) reliability, comparability, relevance. 
D) conservatism, availability, relevance. 
A) optimism, availability, relevance. 
B) readability, timeliness, reasonability. 
C) reliability, comparability, relevance. 
D) conservatism, availability, relevance.

Question 6

SAC 2 is titled:

Accepted Answer

A) Objective of General Purpose Financial Reporting. 
B) Qualitative Characteristics of Financial Information. 
C) Definition and Recognition of the Elements of Financial Statements. 
D) Definition of the Reporting Entity. 
A) Objective of General Purpose Financial Reporting. 
B) Qualitative Characteristics of Financial Information. 
C) Definition and Recognition of the Elements of Financial Statements. 
D) Definition of the Reporting Entity.

Question 7

Since 2005, the main influence on Australian accounting standards is:

Accepted Answer

A) International accounting standards. 
B) British accounting standards. 
C) U.S. accounting standards. 
D) All of the above. 
A) International accounting standards. 
B) British accounting standards. 
C) U.S. accounting standards. 
D) All of the above.

Question 8

AASB stands for Australian Accounting Standards Board.

Accepted Answer

A) True 
 B)False

Question 9

AASB 101 requires that accounting policy changes be disclosed in a note to the financial statements. A business bought new equipment and thought it would have a six- year useful life. After two years, the business decided that the equipment would be useful for only three more years. This would be considered a:

Accepted Answer

A) contingency. 
B) change in accounting policy. 
C) change in accounting estimate. 
D) recording error. 
A) contingency. 
B) change in accounting policy. 
C) change in accounting estimate. 
D) recording error.

Question 10

The materiality principle requires that financial statements should tend to understate rather than overstate net assets in the face of uncertainty.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a characteristic used to judge whether an entity is a reporting entity that should prepare general purpose financial reports?

Accepted Answer

A) Whether the entity has economic or political importance. 
B) The size or indebtedness of the entity. 
C) The structure of the entity, e.g. whether it is a sole trader or a company. 
D) Whether ownership and management are separate. 
A) Whether the entity has economic or political importance. 
B) The size or indebtedness of the entity. 
C) The structure of the entity, e.g. whether it is a sole trader or a company. 
D) Whether ownership and management are separate.

Question 12

List the four methods commonly used to recognise profit and briefly describe their main features.

Accepted Answer

1. Sales method-profit is recorded at th

Question 13

Currently the Australian Accounting Research Foundation (AARF)is primarily responsible for issuing accounting standards in Australia.

Accepted Answer

A) True 
 B)False

Question 14

State the basic objective of financial reporting and explain which groups might benefit if this objective is met.

Accepted Answer

SAC 2 states that the basic objective of

Question 15

Accounting standards in the USA are issued by:

Accepted Answer

A) the Financial Accounting Standards Board. 
B) Congress. 
C) the Accounting Principles Board. 
D) the Securities and Exchange Commission. 
A) the Financial Accounting Standards Board. 
B) Congress. 
C) the Accounting Principles Board. 
D) the Securities and Exchange Commission.

Question 16

Which of the following is not a type of 'value'?

Accepted Answer

A) current cost 
B) historical cost 
C) selling price 
D) None of the above, i.e. all are types of 'value.' 
A) current cost 
B) historical cost 
C) selling price 
D) None of the above, i.e. all are types of 'value.'

Question 17

In 2013, Amana sold 10 washing machines, which cost $700 each, for a price of $1 300 each. All sales are made on credit and $7 000 was collected in 2013. Using the sales method, how much gross profit will Amana recognise in 2013?

Accepted Answer

A) $6 000 
B) $7 000 
C) $6 800 
D) $13 000 
A) $6 000 
B) $7 000 
C) $6 800 
D) $13 000

Question 18

AASB 110 refers to subsequent events that relate to new matters that have arisen after balance date. Which of the following occurrences after balance date is not an example of a new event?

Accepted Answer

A) becoming a party to a legal action 
B) a major fire or flood loss 
C) substantial borrowings or share issues 
D) specific information on the size of a bad debt that had previously been considered doubtful 
A) becoming a party to a legal action 
B) a major fire or flood loss 
C) substantial borrowings or share issues 
D) specific information on the size of a bad debt that had previously been considered doubtful

Question 19

Which of the following is not a condition that must be met under AASB 118 'Revenue,' before revenue from the sale of goods is recorded?

Accepted Answer

A) The cash for the sale has been received. 
B) The amount of revenue and related costs can be measured reliably. 
C) The seller has effectively transferred ownership to the buyer 
D) All of the above are conditions that must be met. 
A) The cash for the sale has been received. 
B) The amount of revenue and related costs can be measured reliably. 
C) The seller has effectively transferred ownership to the buyer 
D) All of the above are conditions that must be met.

Question 20

Describe the essential characteristic(s)of a reporting entity and detail what specific obligation(s)it must meet.

Accepted Answer

A reporting entity, according to SAC 1,

Exam 17: The Framework of Accounting

Due process in standard setting involves public consultation with all interested parties.

Accountants generally make no adjustments for changes in the value of the dollar.

The comparability principle applies both to comparing businesses to one another and to comparing different periods for the same business.

According to the IASB and adopted by the AASB, the primary objective of financial reporting is to provide information:

Three of the qualitative characteristics listed in the AASB Framework are:

SAC 2 is titled:

Since 2005, the main influence on Australian accounting standards is:

AASB stands for Australian Accounting Standards Board.

The materiality principle requires that financial statements should tend to understate rather than overstate net assets in the face of uncertainty.

Which of the following is not a characteristic used to judge whether an entity is a reporting entity that should prepare general purpose financial reports?

List the four methods commonly used to recognise profit and briefly describe their main features.

Currently the Australian Accounting Research Foundation (AARF)is primarily responsible for issuing accounting standards in Australia.

State the basic objective of financial reporting and explain which groups might benefit if this objective is met.

Accounting standards in the USA are issued by:

Which of the following is not a type of 'value'?

In 2013, Amana sold 10 washing machines, which cost $700 each, for a price of $1 300 each. All sales are made on credit and $7 000 was collected in 2013. Using the sales method, how much gross profit will Amana recognise in 2013?

AASB 110 refers to subsequent events that relate to new matters that have arisen after balance date. Which of the following occurrences after balance date is not an example of a new event?

Which of the following is not a condition that must be met under AASB 118 'Revenue,' before revenue from the sale of goods is recorded?

Describe the essential characteristic(s)of a reporting entity and detail what specific obligation(s)it must meet.

The Role of Accounting in Business

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Share Capital and the Balance Sheet

Companies: Effects on Retained Earnings, Share Splits and Buy-Backs, and the Income Statement

The Cash Flow Statement

Financial Statement Analysis

Introduction to Managerial Accounting and the Master Budget

Job Costing

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

Appendix

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