Exam 17: The Framework of Accounting

AASB stands for Australian Accounting Standards Board.

Table 17-1 In 2016, a developer sells land for $\$ 800,000$ . The cost of the land was $\$ 500,000$ . He receives a $\$ 200000$ down payment plus three instalments of $\$ 300,000$ , $\$ 200000$ and $\$ 100,000$ which will be paid in 2017, 2018 and 2019 . He uses the instalment method to record revenue. It is decided that $10 \%$ is the appropriate rate of interest. -Refer to Table 17-1.What amount of profit will be recorded when the 2017 payment is received?

The authority responsible for enforcing accounting and other corporate rules for companies in Australia is:

AASB 101 requires a summary of significant accounting policies to be included in the director's report that accompanies the financial statements.

Table 17-1 In 2016, a developer sells land for $\$ 800,000$ . The cost of the land was $\$ 500,000$ . He receives a $\$ 200000$ down payment plus three instalments of $\$ 300,000$ , $\$ 200000$ and $\$ 100,000$ which will be paid in 2017, 2018 and 2019 . He uses the instalment method to record revenue. It is decided that $10 \%$ is the appropriate rate of interest. -Refer to Table 17-1.What amount of profit will be recorded when the 2018 payment is received?

Under AASB 108,a change in the useful life of a fixed asset which affects the depreciation charge is regarded as a change in accounting policy,not a change in an accounting estimate.

AASB 110 refers to subsequent events that relate to new matters that have arisen after balance date.Which of the following occurrences after balance date is not an example of a new event?

Which of the following statements is false?

Under the comparability principle,financial statements should,as far as possible,be:

Due process in standard setting involves public consultation with all interested parties.

Professionals such as solicitors may use the ________ to record income if the receipt of fees is regarded as very uncertain.

The Australian Accounting Standard dealing with hyperinflation is:

Under the percentage of completion method,which is used to record profit on assets that take several years to construct,profit is reported as the instalments of contract income that are received.

The underlying basis for the use of historical cost is the:

Accounting principles initially drew their authority from acceptance by the business community.

Table 17-1 In 2016, a developer sells land for $\$ 800,000$ . The cost of the land was $\$ 500,000$ . He receives a $\$ 200000$ down payment plus three instalments of $\$ 300,000$ , $\$ 200000$ and $\$ 100,000$ which will be paid in 2017, 2018 and 2019 . He uses the instalment method to record revenue. It is decided that $10 \%$ is the appropriate rate of interest. -Refer to Table 17-1.What amount of profit will be recorded when the developer makes the sale and receives the down payment?

Which type of business would be most likely to use the instalment method to record revenue?

Which of the following are NOT potential users of financial reports as identified in SAC 2?

In 2017,Amana sold 10 refrigerators that cost $825 each for a price of $1 285 each.Payments are made in 10 equal instalments with no down payment.During 2018,Amana collected $10 285 on the 2017 sales.Using the instalment method and assuming an interest rate of 10%,how much gross profit will Amana recognise in 2018?

A construction firm was contracted to build a bridge for $100 000 000.It is estimated that the total cost will be roughly $95 000 000 spread over five years,but it is unable to estimate reliably the yearly percentage of completion.Under the completed contract method,what amount of profit will be recorded in Year 2?