Question 1

The separation of ownership and control is normally a characteristic of:

Accepted Answer

A)  companies. 
B)  partnerships. 
C)  sole traders. 
D)  partnerships and companies. 
A)  companies. 
B)  partnerships. 
C)  sole traders. 
D)  partnerships and companies.

Question 2

There are several advantages to forming a partnership, including the ease with which it can be formed and the limited rules and regulations that apply to it. However, as for a company, one of the regulations is that a partnership must prepare financial statements in accordance with Accounting Standards if it is deemed to be a reporting entity.

Accepted Answer

A) True 
 B)False

Question 3

Liabilities are:

Accepted Answer

A)  resources under an organisation's legal control. 
B)  obligations owed by an organisation to its suppliers of goods and services on credit creditors. 
C)  the amount of investment made by owners in a business. 
D)  the profits earned by a corporation. 
A)  resources under an organisation's legal control. 
B)  obligations owed by an organisation to its suppliers of goods and services on credit creditors. 
C)  the amount of investment made by owners in a business. 
D)  the profits earned by a corporation.

Question 4

Which of the following is not an attribute of a liability?

Accepted Answer

A)  Present obligation to transfer resources to another entity. 
B)  The transfer is unavoidable by the entity. 
C)  The transfer results in reduced economic benefits to the entity making the transfer. 
D)  The event creating the responsibility has not yet occurred. 
A)  Present obligation to transfer resources to another entity. 
B)  The transfer is unavoidable by the entity. 
C)  The transfer results in reduced economic benefits to the entity making the transfer. 
D)  The event creating the responsibility has not yet occurred.

Question 5

A large proprietary company must have its financial statements audited and lodged with the:

Accepted Answer

A)  Australian Securities Exchange. 
B)  Australian Securities and Investments Commission. 
C)  Financial Reporting Council. 
D)  Australian Accounting Standards Board. 
A)  Australian Securities Exchange. 
B)  Australian Securities and Investments Commission. 
C)  Financial Reporting Council. 
D)  Australian Accounting Standards Board.

Question 6

In which section of a balance sheet would a general reserve be found?

Accepted Answer

A)  Current Assets 
B)  Current Liabilities 
C)  Non-current Assets 
D)  Shareholders' Equity 
A)  Current Assets 
B)  Current Liabilities 
C)  Non-current Assets 
D)  Shareholders' Equity

Question 7

Which of the following is not true of sole traders?

Accepted Answer

A)  They are one-owner businesses. 
B)  They are not normally reporting entities. 
C)  They are separate legal entities. 
D)  They usually have limited funds at their disposal. 
A)  They are one-owner businesses. 
B)  They are not normally reporting entities. 
C)  They are separate legal entities. 
D)  They usually have limited funds at their disposal.

Question 8

A conceptual framework can be defined as a set of interrelated objectives and fundamentals that is expected to lead to consistent standards, and that prescribes the nature, function and limits of financial accounting and reporting.

Accepted Answer

A) True 
 B)False

Question 9

R2 and E2 have been working as employees in the fashion industry. They are considering forming a partnership designing fashion clothing, trading under the RE2 label. Advise the individuals on the advantages and the disadvantages of forming a partnership.

Accepted Answer

Advantages

Question 10

Which of the following statements is incorrect?

Accepted Answer

A)  Compliance with the conceptual framework is non-mandatory in general purpose financial statements. 
B)  Compliance with Accounting Standards is mandatory in general purpose financial statements. 
C)  Compliance with the conceptual framework is mandatory in general purpose financial statements. 
D)  Accounting Standards are more specific than the conceptual framework. 
A)  Compliance with the conceptual framework is non-mandatory in general purpose financial statements. 
B)  Compliance with Accounting Standards is mandatory in general purpose financial statements. 
C)  Compliance with the conceptual framework is mandatory in general purpose financial statements. 
D)  Accounting Standards are more specific than the conceptual framework.

Question 11

Under what circumstances does an entity represent a 'reporting entity' for the purposes of the Australian conceptual framework?

Accepted Answer

A reporting entity is one for

Question 12

Which of the following sets of entities are not likely to meet the definition of a reporting entity?

Accepted Answer

A)  Small proprietary companies, large proprietary companies and partnerships 
B)  Small proprietary companies and sole traders 
C)  Large proprietary companies, sole traders and partnerships 
D)  Small proprietary companies and large professional accounting practices 
A)  Small proprietary companies, large proprietary companies and partnerships 
B)  Small proprietary companies and sole traders 
C)  Large proprietary companies, sole traders and partnerships 
D)  Small proprietary companies and large professional accounting practices

Question 13

Which of the following statements regarding partnerships is incorrect?

Accepted Answer

A)  There are no legal formalities required to form a partnership and it can be an oral agreement. 
B)  Partnerships have unlimited liability not subject to the amount contributed by each partner. 
C)  The partnership is subject to income tax, not the individual partners. 
D)  Each partner has the authority to enter contracts on behalf of the partnership, provided the contracts relate to normal operations. 
A)  There are no legal formalities required to form a partnership and it can be an oral agreement. 
B)  Partnerships have unlimited liability not subject to the amount contributed by each partner. 
C)  The partnership is subject to income tax, not the individual partners. 
D)  Each partner has the authority to enter contracts on behalf of the partnership, provided the contracts relate to normal operations.

Question 14

In accordance with the IASB Conceptual Framework, income includes both revenue and gains.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following items does not appear on the balance sheet of a partnership?

Accepted Answer

A)  Accounts Receivable 
B)  Equipment 
C)  Accounts Payable 
D)  Income tax payable 
A)  Accounts Receivable 
B)  Equipment 
C)  Accounts Payable 
D)  Income tax payable

Question 16

Describe the purpose of the external auditor in financial reporting.

Accepted Answer

The purpose of the external auditor is t

Question 17

Which of the following would not be considered a disadvantage of forming a partnership?

Accepted Answer

A)  Limited life 
B)  Unlimited liability 
C)  Ease of formation 
D)  Mutual agency 
A)  Limited life 
B)  Unlimited liability 
C)  Ease of formation 
D)  Mutual agency

Question 18

According to the Corporations Act, an external auditor must:

Accepted Answer

A)  have appropriate tertiary qualifications. 
B)  satisfy ASIC that he/she is capable of performing the duties of an auditor. 
C)  satisfy ASIC that he/she is a fit and proper person to be registered as an auditor. 
D)  all of the above. 
A)  have appropriate tertiary qualifications. 
B)  satisfy ASIC that he/she is capable of performing the duties of an auditor. 
C)  satisfy ASIC that he/she is a fit and proper person to be registered as an auditor. 
D)  all of the above.

Question 19

Which of the following is not true for a partnership?

Accepted Answer

A)  Suppliers can supply goods on credit to a partnership. 
B)  Customers can purchase goods on credit from a partnership. 
C)  Partners have to pay their tax yearly. 
D)  Partners can enter contracts on behalf of the partnership. 
A)  Suppliers can supply goods on credit to a partnership. 
B)  Customers can purchase goods on credit from a partnership. 
C)  Partners have to pay their tax yearly. 
D)  Partners can enter contracts on behalf of the partnership.

Question 20

The Corporations Act 2001 requires that financial statements include a directors' report, a directors' statement and an auditor's report.

Accepted Answer

A) True 
 B)False

The separation of ownership and control is normally a characteristic of:

Liabilities are:

Which of the following is not an attribute of a liability?

A large proprietary company must have its financial statements audited and lodged with the:

In which section of a balance sheet would a general reserve be found?

Which of the following is not true of sole traders?

A conceptual framework can be defined as a set of interrelated objectives and fundamentals that is expected to lead to consistent standards, and that prescribes the nature, function and limits of financial accounting and reporting.

R2 and E2 have been working as employees in the fashion industry. They are considering forming a partnership designing fashion clothing, trading under the RE2 label. Advise the individuals on the advantages and the disadvantages of forming a partnership.

Which of the following statements is incorrect?

Under what circumstances does an entity represent a 'reporting entity' for the purposes of the Australian conceptual framework?

Which of the following sets of entities are not likely to meet the definition of a reporting entity?

Which of the following statements regarding partnerships is incorrect?

In accordance with the IASB Conceptual Framework, income includes both revenue and gains.

Which of the following items does not appear on the balance sheet of a partnership?

Describe the purpose of the external auditor in financial reporting.

Which of the following would not be considered a disadvantage of forming a partnership?

According to the Corporations Act, an external auditor must:

Which of the following is not true for a partnership?

The Corporations Act 2001 requires that financial statements include a directors' report, a directors' statement and an auditor's report.

Introduction to Accounting

Ethics and Corporate Governance

Wealth and the Measurement of Profit

Presentation of Financial Position and the Worksheet

Presentation of Financial Performance and the Worksheet

Presentation of Cash Flows

Accounting for Selected Assets

Liabilities and Sources of Financing

Financial Statement Analysis

Worksheet to Debits and Credits

An Introduction to Management Accounting: a Strategic Perspective

Performance Measurement and the Balanced Scorecard

Costs and Cost Behaviour

Budgets

Cost-Volume-Profit Analysis

Accounting for Decision Making: With and Without Resource Constraints

Capital Investment Decisions

Filters

Exam 2: Types of Organisations and the Financial Reporting Framework

The separation of ownership and control is normally a characteristic of:

Liabilities are:

Which of the following is not an attribute of a liability?

A large proprietary company must have its financial statements audited and lodged with the:

In which section of a balance sheet would a general reserve be found?

Which of the following is not true of sole traders?

A conceptual framework can be defined as a set of interrelated objectives and fundamentals that is expected to lead to consistent standards, and that prescribes the nature, function and limits of financial accounting and reporting.

R2 and E2 have been working as employees in the fashion industry. They are considering forming a partnership designing fashion clothing, trading under the RE2 label. Advise the individuals on the advantages and the disadvantages of forming a partnership.

Which of the following statements is incorrect?

Under what circumstances does an entity represent a 'reporting entity' for the purposes of the Australian conceptual framework?

Which of the following sets of entities are not likely to meet the definition of a reporting entity?

Which of the following statements regarding partnerships is incorrect?

In accordance with the IASB Conceptual Framework, income includes both revenue and gains.

Which of the following items does not appear on the balance sheet of a partnership?

Describe the purpose of the external auditor in financial reporting.

Which of the following would not be considered a disadvantage of forming a partnership?

According to the Corporations Act, an external auditor must:

Which of the following is not true for a partnership?

The Corporations Act 2001 requires that financial statements include a directors' report, a directors' statement and an auditor's report.

Introduction to Accounting

Ethics and Corporate Governance

Wealth and the Measurement of Profit

Presentation of Financial Position and the Worksheet

Presentation of Financial Performance and the Worksheet

Presentation of Cash Flows

Accounting for Selected Assets

Liabilities and Sources of Financing

Financial Statement Analysis

Worksheet to Debits and Credits

An Introduction to Management Accounting: a Strategic Perspective

Performance Measurement and the Balanced Scorecard

Costs and Cost Behaviour

Budgets

Cost-Volume-Profit Analysis

Accounting for Decision Making: With and Without Resource Constraints

Capital Investment Decisions

Filters