Question 1

Total comprehensive income for the year is profit for the year plus other items of comprehensive income.

Accepted Answer

A) True 
 B)False

Question 2

All expenses from operating activities must be classified according to either their nature or function.

Accepted Answer

A) True 
 B)False

Question 3

Profit is not defined in the AASB Framework:

Accepted Answer

A)  because it is simply the difference between income and expenses, both of which are defined. 
B)  as it is an intangible item and therefore cannot be properly defined. 
C)  because different measurement methods will give different profits, therefore there cannot be one definition. 
D)  as it is clearly defined under AASB 101. 
A)  because it is simply the difference between income and expenses, both of which are defined. 
B)  as it is an intangible item and therefore cannot be properly defined. 
C)  because different measurement methods will give different profits, therefore there cannot be one definition. 
D)  as it is clearly defined under AASB 101.

Question 4

What is comprehensive income and how would users of financial statements get an indication of what the figure for comprehensive income might be?

Accepted Answer

Comprehensive income is a measure of a c

Question 5

When initial application of an Australian Accounting Standard has an effect on the current period or any prior period,would have such an effect except that it is impracticable to determine the amount of the adjustment,or might have an effect on future periods,an entity shall disclose:

Accepted Answer

A)  the title of the Australian Accounting Standard. 
B)  the nature of the change in accounting policy. 
C)  when applicable, a description of the transitional provisions. 
D)  all of the given answers. 
A)  the title of the Australian Accounting Standard. 
B)  the nature of the change in accounting policy. 
C)  when applicable, a description of the transitional provisions. 
D)  all of the given answers.

Question 6

Which of the following items is not an example of items reportable under other comprehensive income?

Accepted Answer

A)  changes in revaluation surplus 
B)  actuarial gains and losses on defined contribution plans 
C)  gains and losses arising from translating the financial statements of a foreign operation 
D)  the effective portion of gains and losses on hedging instruments in a cash flow hedge 
A)  changes in revaluation surplus 
B)  actuarial gains and losses on defined contribution plans 
C)  gains and losses arising from translating the financial statements of a foreign operation 
D)  the effective portion of gains and losses on hedging instruments in a cash flow hedge

Question 7

In establishing the classification of items in the income statement,the size of an item is an appropriate basis for establishing a separate classification (by nature or function)for it.

Accepted Answer

A) True 
 B)False

Question 8

By focusing only on the income statement,we do not obtain a full picture of all the gains and losses that may have occurred for an entity during the period.

Accepted Answer

A) True 
 B)False

Question 9

Traditional financial accounting calculations of profit ignore the cost of externalities.One reason for this is:

Accepted Answer

A)  Negative impacts on environmental resources not controlled by an entity (e.g. air and oceans) are not considered impacts on assets of the entity. 
B)  Negative impacts on environmental resources not controlled by an entity do not fall into the definition of extraordinary items. 
C)  Negative impacts on environmental resources not controlled by an entity may cover more than one future accounting period. 
D)  Negative impacts on environmental resources not controlled by an entity are by-products of ordinary activities and are not therefore disclosed in the statement of comprehensive income. 
A)  Negative impacts on environmental resources not controlled by an entity (e.g. air and oceans) are not considered impacts on assets of the entity. 
B)  Negative impacts on environmental resources not controlled by an entity do not fall into the definition of extraordinary items. 
C)  Negative impacts on environmental resources not controlled by an entity may cover more than one future accounting period. 
D)  Negative impacts on environmental resources not controlled by an entity are by-products of ordinary activities and are not therefore disclosed in the statement of comprehensive income.

Question 10

Which of the following would not be considered a 'prior period error' for the purposes of AASB 108?

Accepted Answer

A)  mathematical mistakes 
B)  fraud 
C)  misinterpretations of fact 
D)  none of the given answers 
A)  mathematical mistakes 
B)  fraud 
C)  misinterpretations of fact 
D)  none of the given answers

Question 11

AASB 101 requires profit or loss and the total comprehensive income for the period reported on the face of the statement of comprehensive income to be disaggregated between the non-controlling interest and the owners of the parent.

Accepted Answer

A) True 
 B)False

Question 12

The problem with a 'blanket rule' requiring all expenditure of a particular type to be written off as incurred (e.g.expenditure on research),is that:

Accepted Answer

A)  It is too much like US GAAP. 
B)  It does not enable readers of financial reports to differentiate between entities that have generated future economic benefits from particular activities and those who have not. 
C)  It does not enable readers of financial reports to differentiate between entities that have managed their earnings and those that have not. 
D)  It does not enable readers of financial reports to differentiate between entities that are going to continue to be successful and those that are not. 
A)  It is too much like US GAAP. 
B)  It does not enable readers of financial reports to differentiate between entities that have generated future economic benefits from particular activities and those who have not. 
C)  It does not enable readers of financial reports to differentiate between entities that have managed their earnings and those that have not. 
D)  It does not enable readers of financial reports to differentiate between entities that are going to continue to be successful and those that are not.

Question 13

Extraordinary items will be included in the statement of comprehensive income:

Accepted Answer

A)  when they are material and need to be disclosed separately. 
B)  when an item of revenue or expense is attributable to an event outside the ordinary course of business. 
C)  when an expense or revenue is of a non-recurring nature. 
D)  None of the given answers are correct. 
A)  when they are material and need to be disclosed separately. 
B)  when an item of revenue or expense is attributable to an event outside the ordinary course of business. 
C)  when an expense or revenue is of a non-recurring nature. 
D)  None of the given answers are correct.

Question 14

Comprehensive income includes dividend payments to shareholders.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not required to be shown on the face of the statement of comprehensive income?

Accepted Answer

A)  tax expense 
B)  revenue 
C)  share of profit or loss of associates and joint ventures using the equity method 
D)  share of profit or loss of associates and joint ventures using the proportional consolidation method 
A)  tax expense 
B)  revenue 
C)  share of profit or loss of associates and joint ventures using the equity method 
D)  share of profit or loss of associates and joint ventures using the proportional consolidation method

Question 16

Discuss three items that are permitted in AASB 101 Presentation of Financial Statements to be presented in other comprehensive income and explain how each item arises.

Accepted Answer

AASB 101 Presentation of Financial State

Question 17

The statement of changes in equity is required:

Accepted Answer

A)  because AASB 101 deals with income and does not define profit. 
B)  to show profit and loss for the period. 
C)  to summarise the large number of transactions that take place on the income statement. 
D)  to provide a reconciliation of opening and closing equity, and also to provide details of the various equity accounts that are impacted by the period's total comprehensive income. 
A)  because AASB 101 deals with income and does not define profit. 
B)  to show profit and loss for the period. 
C)  to summarise the large number of transactions that take place on the income statement. 
D)  to provide a reconciliation of opening and closing equity, and also to provide details of the various equity accounts that are impacted by the period's total comprehensive income.

Question 18

Following are the items of income and expense recognised during the period by Gordon Field Ltd:
$$\begin{array} { | l | l | } 
\hline \text { I }&\text { Gains and losses arising from translating the financial statements of a foreign } \
&\text { operation}\
\hline \text { II } & \text { Gains and losses on re-measuring available-for-sale financial assets } \
\hline \text { III } & \text { Gain on sale of property, plant and equipment } \
\hline IV & \text { Actuarial losses on defined benefit pension plans } \
\hline V & \text { Prior period errors discovered } \
\hline VI & \text { Prospective adjustment resulting from a change in accounting estimates } \
\hline
\end{array}$$
Which of the following combinations identify all items permitted in AASB 101 Presentation of Financial Statements to be presented under other comprehensive income?

Accepted Answer

A)  I, II, IV, V and VI 
B)  I, II, IV, and V 
C)  II, III, V and VI 
D)  II, V and VI 
A)  I, II, IV, V and VI 
B)  I, II, IV, and V 
C)  II, III, V and VI 
D)  II, V and VI

Question 19

The effect of a revision of an accounting estimate must be recognised in profit and loss in which reporting periods?

Accepted Answer

A)  in the present, prior (by adjusting retained earnings) and future periods affected 
B)  in the present and future periods affected 
C)  in the present and prior reporting periods (by adjusting retained earnings) 
D)  not recognised in any period 
A)  in the present, prior (by adjusting retained earnings) and future periods affected 
B)  in the present and future periods affected 
C)  in the present and prior reporting periods (by adjusting retained earnings) 
D)  not recognised in any period

Question 20

'Comprehensive income' refers to:

Accepted Answer

A)  the statement of total recognised income and expense. 
B)  the statement of changes in equity. 
C)  the net profit figure shown at the bottom of the statement of comprehensive income. 
D)  none of the given answers. 
A)  the statement of total recognised income and expense. 
B)  the statement of changes in equity. 
C)  the net profit figure shown at the bottom of the statement of comprehensive income. 
D)  none of the given answers.

Exam 16: The Statement of Comprehensive Income and Statement of Changes in Equity

Total comprehensive income for the year is profit for the year plus other items of comprehensive income.

All expenses from operating activities must be classified according to either their nature or function.

Profit is not defined in the AASB Framework:

What is comprehensive income and how would users of financial statements get an indication of what the figure for comprehensive income might be?

When initial application of an Australian Accounting Standard has an effect on the current period or any prior period,would have such an effect except that it is impracticable to determine the amount of the adjustment,or might have an effect on future periods,an entity shall disclose:

Which of the following items is not an example of items reportable under other comprehensive income?

In establishing the classification of items in the income statement,the size of an item is an appropriate basis for establishing a separate classification (by nature or function)for it.

By focusing only on the income statement,we do not obtain a full picture of all the gains and losses that may have occurred for an entity during the period.

Traditional financial accounting calculations of profit ignore the cost of externalities.One reason for this is:

Which of the following would not be considered a 'prior period error' for the purposes of AASB 108?

AASB 101 requires profit or loss and the total comprehensive income for the period reported on the face of the statement of comprehensive income to be disaggregated between the non-controlling interest and the owners of the parent.

The problem with a 'blanket rule' requiring all expenditure of a particular type to be written off as incurred (e.g.expenditure on research),is that:

Extraordinary items will be included in the statement of comprehensive income:

Comprehensive income includes dividend payments to shareholders.

Which of the following is not required to be shown on the face of the statement of comprehensive income?

Discuss three items that are permitted in AASB 101 Presentation of Financial Statements to be presented in other comprehensive income and explain how each item arises.

The statement of changes in equity is required:

The effect of a revision of an accounting estimate must be recognised in profit and loss in which reporting periods?

'Comprehensive income' refers to:

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Accounting

An Overview of Accounting for Assets

Depreciation of Property, plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

Accounting for Heritage Assets and Biological Assets

An Overview of Accounting for Liabilities

Accounting for Leases

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

Accounting for Share-Based Payments

Accounting for Income Taxes

The Statement of Cash Flows

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Accounting for Superannuation Plans

Events Occurring After the End of the Reporting Period

Segment Reporting

Related Party Disclosures

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues IV: Accounting for Changes in the Degree of Ownership of a Subsidiary

Accounting for Equity Investments,including Investments in Associates and Joint Arrangements

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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