Question 1

An argument to support the requirement that all companies over a certain size should adhere to accounting standards is:

Accepted Answer

A)  Larger companies have greater political and economic importance and this increases the demand for financial information about the entity by external users. 
B)  Larger companies can afford to pay for complex accounting systems and the experts necessary to design and maintain them. 
C)  The Conceptual Framework and accounting standards are designed for larger enterprises. 
D)  The Australian Securities and Investment Commission should only be responsible for large enterprises. 
A)  Larger companies have greater political and economic importance and this increases the demand for financial information about the entity by external users. 
B)  Larger companies can afford to pay for complex accounting systems and the experts necessary to design and maintain them. 
C)  The Conceptual Framework and accounting standards are designed for larger enterprises. 
D)  The Australian Securities and Investment Commission should only be responsible for large enterprises. A

Question 2

Directors could elect not to comply with an accounting standard on the grounds that applying the particular accounting standard would cause the accounts not to present a 'true and fair view'.

Accepted Answer

A) True 
 B)False  False

Question 3

The objective of the International Financial Reporting Interpretations Committee (IFRIC)is to:

Accepted Answer

A)  achieve consistent interpretations of IFRS by IFRS-adopters internationally. 
B)  address accounting issues that are likely to receive divergent or unacceptable treatment in the absence of authoritative guidance, with a view to reaching consensus on the appropriate accounting treatment. 
C)  address issues of reasonably widespread importance, and not issues of concern only to a small set of enterprises. 
D)  All the given answers are correct. 
A)  achieve consistent interpretations of IFRS by IFRS-adopters internationally. 
B)  address accounting issues that are likely to receive divergent or unacceptable treatment in the absence of authoritative guidance, with a view to reaching consensus on the appropriate accounting treatment. 
C)  address issues of reasonably widespread importance, and not issues of concern only to a small set of enterprises. 
D)  All the given answers are correct. D

Question 4

There has been a trend by governments and government departments towards adopting specialised public-sector related standards.

Accepted Answer

A) True 
 B)False

Question 5

The main role of the Financial Reporting Panel (FRP)is to resolve disputes between ASIC and companies concerning accounting treatments in their financial reports.

Accepted Answer

A) True 
 B)False

Question 6

The impact of adopting International Financial Reporting Standards (IFRSs)in Australia has led to a number of significant changes in the accounting for several items.Outline and discuss five of these significant changes.

Accepted Answer

1. Fair value measurement: One significa

Question 7

The process of issuing accounting standards by the IASB is:

Accepted Answer

A)  establish an Advisory Committee, develop and publish Discussion Documents, develop and publish an Exposure Draft; and issue a final International Financial Reporting Standard. 
B)  establish an Advisory Committee, develop and publish Discussion Documents, develop and publish an Exposure Draft; issue a final International Financial Reporting Standard; and publish a Basis for Conclusions. 
C)  establish an Advisory Committee, develop and publish Discussion Documents, develop and publish an Exposure Draft; issue a final International Financial Reporting Standard; and publish a Basis for Conclusions; and publish dissenting opinions. 
D)  none of the given answers. 
A)  establish an Advisory Committee, develop and publish Discussion Documents, develop and publish an Exposure Draft; and issue a final International Financial Reporting Standard. 
B)  establish an Advisory Committee, develop and publish Discussion Documents, develop and publish an Exposure Draft; issue a final International Financial Reporting Standard; and publish a Basis for Conclusions. 
C)  establish an Advisory Committee, develop and publish Discussion Documents, develop and publish an Exposure Draft; issue a final International Financial Reporting Standard; and publish a Basis for Conclusions; and publish dissenting opinions. 
D)  none of the given answers.

Question 8

The Australian Accounting Standards Board (AASB)issues only one set of accounting standards which have general applicability to the private,public and not-for-profit sectors.

Accepted Answer

A) True 
 B)False

Question 9

The International Accounting Standards Board (IASB)website explains how the IASB believes its relationship with national standards setters should be conducted.It notes that:

Accepted Answer

A)  There should be close coordination between the due process of the IASB and the process of national standard-setters. 
B)  The IASB will inform national standard-setters of directions they should take, projects they should undertake and the outcomes that are expected of them. 
C)  The IASB expects national standard-setters to develop all standards of a domestic nature pertaining to the public and non-for-profit sectors, as its standards do not apply to these areas. 
D)  National standard setters should cede all responsibility for matters pertaining to accounting standards to the IASB, but retain responsibility for making interpretations on all matters of uncertainty. 
A)  There should be close coordination between the due process of the IASB and the process of national standard-setters. 
B)  The IASB will inform national standard-setters of directions they should take, projects they should undertake and the outcomes that are expected of them. 
C)  The IASB expects national standard-setters to develop all standards of a domestic nature pertaining to the public and non-for-profit sectors, as its standards do not apply to these areas. 
D)  National standard setters should cede all responsibility for matters pertaining to accounting standards to the IASB, but retain responsibility for making interpretations on all matters of uncertainty.

Question 10

The role of the Financial Reporting Council is to provide broad oversight of the process for setting standards in Australia,including the authority to direct the AASB to develop,amend or revoke a particular standard.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statement(s)is/are true with respect to the differences between IFRS and US generally accepted accounting principles (GAAP)?

Accepted Answer

A)  There are no differences between IFRS and US GAAP. 
B)  There are only slight differences between IFRS and US GAAP. 
C)  There was a decision made by both the IASB and the US Financial Accounting Standards Board (FAS
B)  to pursue an intensification of the convergence program designed to bring a number of short-term fixes between the two sets of accounting standards. 
D)  There are only slight differences between IFRS and US GAAP and there was a decision made by both the IASB and the US Financial Accounting Standards Board (FAS
B)  to pursue an intensification of the convergence program designed to bring a number of short-term fixes between the two sets of accounting standards. 
A)  There are no differences between IFRS and US GAAP. 
B)  There are only slight differences between IFRS and US GAAP. 
C)  There was a decision made by both the IASB and the US Financial Accounting Standards Board (FAS
B)  to pursue an intensification of the convergence program designed to bring a number of short-term fixes between the two sets of accounting standards. 
D)  There are only slight differences between IFRS and US GAAP and there was a decision made by both the IASB and the US Financial Accounting Standards Board (FAS
B)  to pursue an intensification of the convergence program designed to bring a number of short-term fixes between the two sets of accounting standards.

Question 12

The main role of the Financial Reporting Council (FRC)is to develop a new conceptual framework for financial reporting.

Accepted Answer

A) True 
 B)False

Question 13

A criticism of the way the membership of the Financial Reporting Council has been structured is that:

Accepted Answer

A)  Groups that are primarily interested in the financial performance of entities are represented while lobby groups with other interests are not. 
B)  It has increased the breadth of representation too widely. 
C)  The Treasurer does not have sufficient input into the selection process. 
D)  It is dominated by professional accountants. 
A)  Groups that are primarily interested in the financial performance of entities are represented while lobby groups with other interests are not. 
B)  It has increased the breadth of representation too widely. 
C)  The Treasurer does not have sufficient input into the selection process. 
D)  It is dominated by professional accountants.

Question 14

The regulation of accounting can be argued to be necessary to protect the information rights of parties not involved in the day-to-day operations of the organisation.

Accepted Answer

A) True 
 B)False

Question 15

One of the main benefits of international harmonisation is the increase in the comparability of financial reports prepared in different countries yet differences persist that could have significant implications for profit comparisons.Discuss.

Accepted Answer

International harmonization of financial

Question 16

A company may be exempted from the requirements of s.296 of The Corporations Act if:

Accepted Answer

A)  It is a small proprietary company within the definition of the Act. 
B)  A special meeting of 75 per cent of the shareholders convened under s. 293 agrees to the preparation of financial reports that do not comply with those accounting standards. 
C)  The report is prepared in response to a shareholder direction under s. 293 and the direction specifies that the report does not have to comply with those accounting standards. 
D)  It is a small proprietary company within the definition of the Act, the report is prepared in response to a shareholder direction under s. 293 and the direction specifies that the report does not have to comply with those accounting standards. 
A)  It is a small proprietary company within the definition of the Act. 
B)  A special meeting of 75 per cent of the shareholders convened under s. 293 agrees to the preparation of financial reports that do not comply with those accounting standards. 
C)  The report is prepared in response to a shareholder direction under s. 293 and the direction specifies that the report does not have to comply with those accounting standards. 
D)  It is a small proprietary company within the definition of the Act, the report is prepared in response to a shareholder direction under s. 293 and the direction specifies that the report does not have to comply with those accounting standards.

Question 17

Arguments against the regulation of accounting information include:

Accepted Answer

A)  Mandated disclosures are cheap to provide and by their nature will devalue the worth of the information being provided. 
B)  By making so many choices of accounting methods available under the standards, the efficiency with which the information is provided will be enhanced. 
C)  Companies will be motivated to disclose good news but not disclose bad news if they are not forced to make certain mandated disclosures (the 'lemons' argument). 
D)  Managers of the organisation are in the best place to determine what information should be produced to increase the confidence of external stakeholders. 
A)  Mandated disclosures are cheap to provide and by their nature will devalue the worth of the information being provided. 
B)  By making so many choices of accounting methods available under the standards, the efficiency with which the information is provided will be enhanced. 
C)  Companies will be motivated to disclose good news but not disclose bad news if they are not forced to make certain mandated disclosures (the 'lemons' argument). 
D)  Managers of the organisation are in the best place to determine what information should be produced to increase the confidence of external stakeholders.

Question 18

Corporate governance is the framework of rules,relationships,systems and processes within and by which authority is exercised and controlled in corporations.

Accepted Answer

A) True 
 B)False

Question 19

AASB elected not to adopt the IASB's approach to differential reporting because of the:

Accepted Answer

A)  additional costs of training and education in preparing two sets of standards at professional and education level. 
B)  burden placed on some subsidiaries to prepare financial information based on the requirements of full IFRSs for the purposes of the parent entity consolidation. 
C)  loss of comparability across all types of Australian entities financial statements. 
D)  all the given answers. 
A)  additional costs of training and education in preparing two sets of standards at professional and education level. 
B)  burden placed on some subsidiaries to prepare financial information based on the requirements of full IFRSs for the purposes of the parent entity consolidation. 
C)  loss of comparability across all types of Australian entities financial statements. 
D)  all the given answers.

Question 20

The financial statements and supporting notes included in an annual report presented to shareholders at a company's annual general meeting is an example of general-purpose financial statements.

Accepted Answer

A) True 
 B)False

Exam 1: An Overview of the Australian External Reporting Environment

An argument to support the requirement that all companies over a certain size should adhere to accounting standards is:

Directors could elect not to comply with an accounting standard on the grounds that applying the particular accounting standard would cause the accounts not to present a 'true and fair view'.

The objective of the International Financial Reporting Interpretations Committee (IFRIC)is to:

There has been a trend by governments and government departments towards adopting specialised public-sector related standards.

The main role of the Financial Reporting Panel (FRP)is to resolve disputes between ASIC and companies concerning accounting treatments in their financial reports.

The impact of adopting International Financial Reporting Standards (IFRSs)in Australia has led to a number of significant changes in the accounting for several items.Outline and discuss five of these significant changes.

The process of issuing accounting standards by the IASB is:

The Australian Accounting Standards Board (AASB)issues only one set of accounting standards which have general applicability to the private,public and not-for-profit sectors.

The International Accounting Standards Board (IASB)website explains how the IASB believes its relationship with national standards setters should be conducted.It notes that:

The role of the Financial Reporting Council is to provide broad oversight of the process for setting standards in Australia,including the authority to direct the AASB to develop,amend or revoke a particular standard.

Which of the following statement(s)is/are true with respect to the differences between IFRS and US generally accepted accounting principles (GAAP)?

The main role of the Financial Reporting Council (FRC)is to develop a new conceptual framework for financial reporting.

A criticism of the way the membership of the Financial Reporting Council has been structured is that:

The regulation of accounting can be argued to be necessary to protect the information rights of parties not involved in the day-to-day operations of the organisation.

One of the main benefits of international harmonisation is the increase in the comparability of financial reports prepared in different countries yet differences persist that could have significant implications for profit comparisons.Discuss.

A company may be exempted from the requirements of s.296 of The Corporations Act if:

Arguments against the regulation of accounting information include:

Corporate governance is the framework of rules,relationships,systems and processes within and by which authority is exercised and controlled in corporations.

AASB elected not to adopt the IASB's approach to differential reporting because of the:

The financial statements and supporting notes included in an annual report presented to shareholders at a company's annual general meeting is an example of general-purpose financial statements.

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

The Statement of Comprehensive Income and Statement of Changes in Equity

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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