Question 1

Which of the following statements about accounting regulation is NOT true?

Accepted Answer

A)  The Financial Reporting Council is responsible for providing broad oversight of the accounting standard-setting process in the private and public sectors. 
B)  One of the key functions of the Australian Accounting Standards Board is to oversee the operation of the Financial Reporting Council. 
C)  The Australian Securities and Investments Commission monitors compliance with accounting standards. 
D)  ASIC promotes honesty and fairness in financial markets. 
A)  The Financial Reporting Council is responsible for providing broad oversight of the accounting standard-setting process in the private and public sectors. 
B)  One of the key functions of the Australian Accounting Standards Board is to oversee the operation of the Financial Reporting Council. 
C)  The Australian Securities and Investments Commission monitors compliance with accounting standards. 
D)  ASIC promotes honesty and fairness in financial markets. B

Question 2

Which of the following is not a key point of the Framework?

Accepted Answer

A)  Relevance and faithful representation are the primary qualitative characteristics that financial information should possess. 
B)  Consistency should not be an end in itself. 
C)  The concept of prudence should always take precedence over reliability. 
D)  Financial information may lose its relevance if there is undue delay in reporting it. 
A)  Relevance and faithful representation are the primary qualitative characteristics that financial information should possess. 
B)  Consistency should not be an end in itself. 
C)  The concept of prudence should always take precedence over reliability. 
D)  Financial information may lose its relevance if there is undue delay in reporting it. C

Question 3

Which of the following is NOT included in the corporate governance statement required under stock exchange regulations?

Accepted Answer

A)  Composition of the audit committee 
B)  Audit report 
C)  Remuneration policy for directors 
D)  Statement of ethical standards 
A)  Composition of the audit committee 
B)  Audit report 
C)  Remuneration policy for directors 
D)  Statement of ethical standards B

Question 4

Assets are usually reported in the balance sheet at:

Accepted Answer

A)  liquidation value. 
B)  value in use. 
C)  current or market value. 
D)  historical cost. 
A)  liquidation value. 
B)  value in use. 
C)  current or market value. 
D)  historical cost.

Question 5

The standard version of the audit report does NOT state that:

Accepted Answer

A)  the financial statements are the responsibility of management. 
B)  the auditor's responsibility is to express an opinion on the financial statements. 
C)  the company will remain a going concern. 
D)  the financial statements give a true and fair view. 
A)  the financial statements are the responsibility of management. 
B)  the auditor's responsibility is to express an opinion on the financial statements. 
C)  the company will remain a going concern. 
D)  the financial statements give a true and fair view.

Question 6

Which of the following is/are included in the corporate governance statement required under stock exchange regulations?

Accepted Answer

A)  (i) and (ii) only 
B)  (i) and (iii) only 
C)  (ii) and (iii) only 
D)  (i), (ii) and (iii) 
A)  (i) and (ii) only 
B)  (i) and (iii) only 
C)  (ii) and (iii) only 
D)  (i), (ii) and (iii)

Question 7

Which of the following is/are essential requirements for an asset to exist for accounting purposes?

Accepted Answer

A)  (i) only 
B)  (i) and (ii) only 
C)  (i) and (iii) only 
D)  (ii) and (iii) only 
A)  (i) only 
B)  (i) and (ii) only 
C)  (i) and (iii) only 
D)  (ii) and (iii) only

Question 8

Which of the following is NOT a policy of stock exchanges?

Accepted Answer

A)  To ensure that all persons investing in securities listed on the exchange have equal access to information that may affect investment decisions 
B)  To regulate the conduct of securities markets 
C)  To enable companies to maximise profits 
D)  To protect investors and retain their confidence 
A)  To ensure that all persons investing in securities listed on the exchange have equal access to information that may affect investment decisions 
B)  To regulate the conduct of securities markets 
C)  To enable companies to maximise profits 
D)  To protect investors and retain their confidence

Question 9

Which of the following is NOT true? The external auditor's report provides the auditor's opinion that:

Accepted Answer

A)  the financial statements give a true and fair view. 
B)  the financial statements are in accordance with the provisions of the Corporations Act 2001. 
C)  the financial statements are in accordance with applicable accounting standards. 
D)  the financial statements are accurate. 
A)  the financial statements give a true and fair view. 
B)  the financial statements are in accordance with the provisions of the Corporations Act 2001. 
C)  the financial statements are in accordance with applicable accounting standards. 
D)  the financial statements are accurate.

Question 10

The preparation of financial statements in a similar form to those of other companies facilitates:

Accepted Answer

A)  comparability. 
B)  materiality. 
C)  faithful representation. 
D)  understandability. 
A)  comparability. 
B)  materiality. 
C)  faithful representation. 
D)  understandability.

Question 11

Which of the following statements about liabilities is NOT true?

Accepted Answer

A)  An intention to repair a machine in six months' time does not give rise to a liability. 
B)  If a liability is to be reliably measured, estimation procedures cannot be used. 
C)  For a liability to exist, the entity must not be able to avoid the sacrifice of economic resources. 
D)  A liability is a present obligation arising from past events. 
A)  An intention to repair a machine in six months' time does not give rise to a liability. 
B)  If a liability is to be reliably measured, estimation procedures cannot be used. 
C)  For a liability to exist, the entity must not be able to avoid the sacrifice of economic resources. 
D)  A liability is a present obligation arising from past events.

Question 12

The decision by a motor repair company to expense small tools immediately on acquisition rather than depreciate them over their useful lives is an application of the concept of:

Accepted Answer

A)  timeliness. 
B)  materiality. 
C)  disclosure. 
D)  understandability. 
A)  timeliness. 
B)  materiality. 
C)  disclosure. 
D)  understandability.

Question 13

Which of the following statements about comparability is true?

Accepted Answer

A)  A company has to use the same accounting methods in all parts of a company. 
B)  The same depreciation method should be employed for all assets of a company. 
C)  The same accounting methods must be used as those used by other companies in the industry. 
D)  None of the answers provided. 
A)  A company has to use the same accounting methods in all parts of a company. 
B)  The same depreciation method should be employed for all assets of a company. 
C)  The same accounting methods must be used as those used by other companies in the industry. 
D)  None of the answers provided.

Question 14

Which of the following statements about capital markets is true?

Accepted Answer

A)  Systematic risk refers to the risk arising from a firm's financing decision. 
B)  Returns of high-beta stocks tend to vary less than overall market prices. 
C)  The efficient market hypothesis states that it is not possible to consistently 'beat the market' by using publicly available information. 
D)  If the efficient market hypothesis were true, it would be impossible to make money in the stock market. 
A)  Systematic risk refers to the risk arising from a firm's financing decision. 
B)  Returns of high-beta stocks tend to vary less than overall market prices. 
C)  The efficient market hypothesis states that it is not possible to consistently 'beat the market' by using publicly available information. 
D)  If the efficient market hypothesis were true, it would be impossible to make money in the stock market.

Question 15

Which of the following items is/are generally NOT included in a directors' report to shareholders?

Accepted Answer

A)  Names of directors 
B)  Principal activities of the company 
C)  Budgeted net profit for following year 
D)  Significant changes in the company's state of affairs 
A)  Names of directors 
B)  Principal activities of the company 
C)  Budgeted net profit for following year 
D)  Significant changes in the company's state of affairs

Question 16

The external auditor renders an adverse opinion when he/she:

Accepted Answer

A)  is unable to express an opinion either way because of a limitation in the work he or she was able to carry out. 
B)  considers that the financial statements are not presented fairly in accordance with GAAP. 
C)  is generally satisfied except for a specified departure from GAAP in the statements. 
D)  is unable to obtain sufficient reliable audit evidence. 
A)  is unable to express an opinion either way because of a limitation in the work he or she was able to carry out. 
B)  considers that the financial statements are not presented fairly in accordance with GAAP. 
C)  is generally satisfied except for a specified departure from GAAP in the statements. 
D)  is unable to obtain sufficient reliable audit evidence.

Question 17

The external auditor renders an 'except for' opinion when he/she:

Accepted Answer

A)  is unable to express an opinion either way because of a limitation in the work he or she was able to do. 
B)  considers that the financial statements are not presented fairly in accordance with GAAP. 
C)  is generally satisfied except for a specified departure from GAAP in the statements. 
D)  is unable to obtain sufficient reliable audit evidence. 
A)  is unable to express an opinion either way because of a limitation in the work he or she was able to do. 
B)  considers that the financial statements are not presented fairly in accordance with GAAP. 
C)  is generally satisfied except for a specified departure from GAAP in the statements. 
D)  is unable to obtain sufficient reliable audit evidence.

Question 18

Use of the same accounting methods over time facilitates:

Accepted Answer

A)  disclosure. 
B)  relevance. 
C)  comparability. 
D)  faithful representation. 
A)  disclosure. 
B)  relevance. 
C)  comparability. 
D)  faithful representation.

Question 19

Which of the following is NOT an example of an event that may give rise to general information-based trading?

Accepted Answer

A)  The outbreak of war 
B)  A change in the political party in power as a result of an election 
C)  The announcement of a rise in inflation 
D)  A consistent dividend policy 
A)  The outbreak of war 
B)  A change in the political party in power as a result of an election 
C)  The announcement of a rise in inflation 
D)  A consistent dividend policy

Question 20

Agency theory tends to focus on:

Accepted Answer

A)  the decision-making role of accounting information. 
B)  the stewardship role of accounting information. 
C)  future orientated decision making. 
D)  the internal control system. 
A)  the decision-making role of accounting information. 
B)  the stewardship role of accounting information. 
C)  future orientated decision making. 
D)  the internal control system.

Which of the following statements about accounting regulation is NOT true?

Which of the following is not a key point of the Framework?

Which of the following is NOT included in the corporate governance statement required under stock exchange regulations?

Assets are usually reported in the balance sheet at:

The standard version of the audit report does NOT state that:

Which of the following is/are included in the corporate governance statement required under stock exchange regulations?

Which of the following is/are essential requirements for an asset to exist for accounting purposes?

Which of the following is NOT a policy of stock exchanges?

Which of the following is NOT true? The external auditor's report provides the auditor's opinion that:

The preparation of financial statements in a similar form to those of other companies facilitates:

Which of the following statements about liabilities is NOT true?

The decision by a motor repair company to expense small tools immediately on acquisition rather than depreciate them over their useful lives is an application of the concept of:

Which of the following statements about comparability is true?

Which of the following statements about capital markets is true?

Which of the following items is/are generally NOT included in a directors' report to shareholders?

The external auditor renders an adverse opinion when he/she:

The external auditor renders an 'except for' opinion when he/she:

Use of the same accounting methods over time facilitates:

Which of the following is NOT an example of an event that may give rise to general information-based trading?

Agency theory tends to focus on:

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters

Exam 6: Financial Reporting Principles, Accounting Standards and Auditing

Which of the following statements about accounting regulation is NOT true?

Which of the following is not a key point of the Framework?

Which of the following is NOT included in the corporate governance statement required under stock exchange regulations?

Assets are usually reported in the balance sheet at:

The standard version of the audit report does NOT state that:

Which of the following is/are included in the corporate governance statement required under stock exchange regulations?

Which of the following is/are essential requirements for an asset to exist for accounting purposes?

Which of the following is NOT a policy of stock exchanges?

Which of the following is NOT true? The external auditor's report provides the auditor's opinion that:

The preparation of financial statements in a similar form to those of other companies facilitates:

Which of the following statements about liabilities is NOT true?

The decision by a motor repair company to expense small tools immediately on acquisition rather than depreciate them over their useful lives is an application of the concept of:

Which of the following statements about comparability is true?

Which of the following statements about capital markets is true?

Which of the following items is/are generally NOT included in a directors' report to shareholders?

The external auditor renders an adverse opinion when he/she:

The external auditor renders an 'except for' opinion when he/she:

Use of the same accounting methods over time facilitates:

Which of the following is NOT an example of an event that may give rise to general information-based trading?

Agency theory tends to focus on:

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters