Question 1

Profit is:

Accepted Answer

A)  An ideal measure of the 'well-offness' of a firm because income and expenses are clearly defined. 
B)  Only a measure of financial performance and therefore not useful in decision-making. 
C)  Directly affected by the accounting policy choices implemented by management. 
D)  Comparable across all firms as it is simply calculated by subtracting expense from revenues. 
E)  None of the given answers. 
A)  An ideal measure of the 'well-offness' of a firm because income and expenses are clearly defined. 
B)  Only a measure of financial performance and therefore not useful in decision-making. 
C)  Directly affected by the accounting policy choices implemented by management. 
D)  Comparable across all firms as it is simply calculated by subtracting expense from revenues. 
E)  None of the given answers. C

Question 2

Total comprehensive income for the year is profit for the year plus comprehensive income.

Accepted Answer

A) True 
 B)False  True

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. 
E)  None of the given answers. 
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. 
E)  None of the given answers. A

Question 4

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 5

AASB 2 requires that the fair value of the option issued as a share-based payment to an employee,be determined and this value be deemed to be the cost of the options:

Accepted Answer

A) True 
 B)False

Question 6

According to AASB 101,the income statement provides a total profit figure to which opening retained earnings is added and from which dividends are deducteD.

Accepted Answer

A) True 
 B)False

Question 7

Following are the items of income and expense recognised during the period by Gordon Field LtD.   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; 
E)  III, 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; 
E)  III, V and VI;

Question 8

'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 income statement. 
D)  All of the given answers. 
E)  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 income statement. 
D)  All of the given answers. 
E)  None of the given answers.

Question 9

Which of the following statements is not in accordance with AASB 101 "Presentation of Financial Statements" with respect to the statement of comprehensive income?

Accepted Answer

A)  An entity shall not present any items of income or expense as extraordinary items, in the statement of comprehensive income or the separate income statement (if presented), or in the notes. 
B)  An entity shall disclose the amount of income tax relating to each component of other comprehensive income, including reclassification adjustments, either in the statement of comprehensive income or in the notes. 
C)  As a minimum, the statement of comprehensive income shall include line items of each component of other comprehensive income classified by nature. 
D)  An entity shall recognise all items of income and expense in a period in profit or loss unless an Australian Accounting Standard requires or permits otherwise. For example, the financial effect of changes in accounting estimates. 
E)  All of the given answers. 
A)  An entity shall not present any items of income or expense as extraordinary items, in the statement of comprehensive income or the separate income statement (if presented), or in the notes. 
B)  An entity shall disclose the amount of income tax relating to each component of other comprehensive income, including reclassification adjustments, either in the statement of comprehensive income or in the notes. 
C)  As a minimum, the statement of comprehensive income shall include line items of each component of other comprehensive income classified by nature. 
D)  An entity shall recognise all items of income and expense in a period in profit or loss unless an Australian Accounting Standard requires or permits otherwise. For example, the financial effect of changes in accounting estimates. 
E)  All of the given answers.

Question 10

Discovery of an error from a prior period corrected retrospectively is an example of an item reportable under other comprehensive income.

Accepted Answer

A) True 
 B)False

Question 11

An income statement that includes the following items: Revenue
Other Income
Employee Benefits and Costs
Motor Vehicle Expenses
Would have been prepared using the:

Accepted Answer

A)  Nature of expense method. 
B)  Narrative method. 
C)  Revenues and gains approach. 
D)  The function of expense approach. 
E)  None of the given answers. 
A)  Nature of expense method. 
B)  Narrative method. 
C)  Revenues and gains approach. 
D)  The function of expense approach. 
E)  None of the given answers.

Question 12

Total recognised income and expense is also defined as:

Accepted Answer

A)  Net profit reported in the income statement. 
B)  Net operating cash flows reported on the cash flow statement. 
C)  Net profit reported on the income statement, plus total of all income and expenses recognised directly in equity. 
D)  Net operating cash flows reported on the cash flow statement, plus total of all income and expenses recognised directly in equity. 
E)  Net operating cash flows reported on the cash flow statement, plus net profit reported in the income statement. 
A)  Net profit reported in the income statement. 
B)  Net operating cash flows reported on the cash flow statement. 
C)  Net profit reported on the income statement, plus total of all income and expenses recognised directly in equity. 
D)  Net operating cash flows reported on the cash flow statement, plus total of all income and expenses recognised directly in equity. 
E)  Net operating cash flows reported on the cash flow statement, plus net profit reported in the income statement.

Question 13

Which of the following items does not give rise to a reclassification adjustment from components of other comprehensive income to profit and loss?

Accepted Answer

A)  Disposal of a foreign operation; 
B)  De-recognition of revalued assets; 
C)  Sale of a foreign subsidiary; 
D)  De-recognition of available-for sale financial assets; 
E)  Cash flow hedge forecast transaction that affects profit or loss. 
A)  Disposal of a foreign operation; 
B)  De-recognition of revalued assets; 
C)  Sale of a foreign subsidiary; 
D)  De-recognition of available-for sale financial assets; 
E)  Cash flow hedge forecast transaction that affects profit or loss.

Question 14

Government departments are now required to report in accordance with AAS 29 'Financial reporting by government departments'.The broad effect of the requirements of this standard is to:

Accepted Answer

A)  Emphasise the reporting of the service role of government departments. 
B)  Emphasise the use of cash accounting by government departments. 
C)  Introduce accrual accounting and an emphasis on profit. 
D)  Introduce value added reporting. 
E)  None of the given answers. 
A)  Emphasise the reporting of the service role of government departments. 
B)  Emphasise the use of cash accounting by government departments. 
C)  Introduce accrual accounting and an emphasis on profit. 
D)  Introduce value added reporting. 
E)  None of the given answers.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Comprehensive income includes dividend payments to shareholders.

Accepted Answer

A) True 
 B)False

Question 17

Profit is calculated as the difference between income and expenses as defined by the AASB Framework.As a result:

Accepted Answer

A)  The matching principle is of prime importance in calculating profit. 
B)  Profit is influenced directly by the definitions and measurement rules for assets and liabilities. 
C)  There is no need for separate recognition criteria for profit. 
D)  Profit is influenced directly by the definitions and measurement rules for assets and liabilities and there is no need for separate recognition criteria for profit. 
E)  None of the given answers. 
A)  The matching principle is of prime importance in calculating profit. 
B)  Profit is influenced directly by the definitions and measurement rules for assets and liabilities. 
C)  There is no need for separate recognition criteria for profit. 
D)  Profit is influenced directly by the definitions and measurement rules for assets and liabilities and there is no need for separate recognition criteria for profit. 
E)  None of the given answers.

Question 18

Hicks' notion of income is that:

Accepted Answer

A)  An individual's income is what they consume. 
B)  An individual's income is the minimum value that they can consume during a period and still be as well off at the end as they were in the beginning. 
C)  An individual's income is the difference between their revenues and expenses. 
D)  An individual's income is the maximum value that they can consume during a period and still be as well off at the end as they were in the beginning. 
E)  None of the given answers. 
A)  An individual's income is what they consume. 
B)  An individual's income is the minimum value that they can consume during a period and still be as well off at the end as they were in the beginning. 
C)  An individual's income is the difference between their revenues and expenses. 
D)  An individual's income is the maximum value that they can consume during a period and still be as well off at the end as they were in the beginning. 
E)  None of the given answers.

Question 19

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:

Accepted Answer

A)  that 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 who 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 who are not. 
E)  it does not enable readers of financial reports to make their own judgements about the future worth of the entity. 
A)  that 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 who 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 who are not. 
E)  it does not enable readers of financial reports to make their own judgements about the future worth of the entity.

Question 20

AASB 118 'Revenue' requires a number of disclosures,including information about:

Accepted Answer

A)  Rents, interest, royalties and dividends. 
B)  Accounting policies adopted for the recognition of revenues. 
C)  Methods adopted to determine the stage of completion of contracts involving the rendering of services. 
D)  All of the given answers. 
E)  None of the given answers. 
A)  Rents, interest, royalties and dividends. 
B)  Accounting policies adopted for the recognition of revenues. 
C)  Methods adopted to determine the stage of completion of contracts involving the rendering of services. 
D)  All of the given answers. 
E)  None of the given answers.

Exam 17: The Statement of Comprehensive Income and Statement of Changes in E

Profit is:

Total comprehensive income for the year is profit for the year plus comprehensive income.

Profit is not defined in the AASB Framework:

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.

AASB 2 requires that the fair value of the option issued as a share-based payment to an employee,be determined and this value be deemed to be the cost of the options:

According to AASB 101,the income statement provides a total profit figure to which opening retained earnings is added and from which dividends are deducteD.

Following are the items of income and expense recognised during the period by Gordon Field LtD. Which of the following combinations identify all items permitted in AASB 101 "Presentation of Financial Statements" to be presented under other comprehensive income?

'Comprehensive income' refers to:

Which of the following statements is not in accordance with AASB 101 "Presentation of Financial Statements" with respect to the statement of comprehensive income?

Discovery of an error from a prior period corrected retrospectively is an example of an item reportable under other comprehensive income.

An income statement that includes the following items: Revenue Other Income Employee Benefits and Costs Motor Vehicle Expenses Would have been prepared using the:

Total recognised income and expense is also defined as:

Which of the following items does not give rise to a reclassification adjustment from components of other comprehensive income to profit and loss?

Government departments are now required to report in accordance with AAS 29 'Financial reporting by government departments'.The broad effect of the requirements of this standard is to:

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

Comprehensive income includes dividend payments to shareholders.

Profit is calculated as the difference between income and expenses as defined by the AASB Framework.As a result:

Hicks' notion of income is that:

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:

AASB 118 'Revenue' requires a number of disclosures,including information about:

An Overview of the Australian External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financ

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, plant and Equipment

Revaluation 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 Lease

Set-Off and Extinguishment of Debt

Accounting for Employee Benefits

Share Capital and Reserves

Accounting for Financial Instruments

Revenue Recognition Issues

Accounting for Share-Based Payments

Accounting for Income Taxes

Cash-Flow Statements

Accounting for the Extractive Industries

Accounting for General Insurance Contracts

Accounting for Superannuation Plans

Events Occurring After Balance Sheet Date

Segment Reporting

Related-Party Disclosures

Earnings Per Share

Accounting for Group Structures

Further Consolidation Issues I: Accounting for Intragroup Transact

Further Consolidation Issues II: Accounting for Minority Interests

Further Consolidation Issues III: Accounting for Indirect Ownershi

Further Consolidation Issues Iv: Accounting for Changes in the Deg

Accounting for Equity Investments

Accounting for Equity Investments

Accounting for Foreign Currency Transactions

Translation of the Accounts of Foreign Operations

Accounting for Corporate Social Responsibility

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