Question 1

Agency theory regards conflicts of interest as:

Accepted Answer

A)  something to be eliminated before a contract can be finalised 
B)  the natural state of affairs 
C)  something bad 
D)  a method for solving problems. 
A)  something to be eliminated before a contract can be finalised 
B)  the natural state of affairs 
C)  something bad 
D)  a method for solving problems. B

Question 2

The decision by a motor repair company to expense small tools immediately on acquisition rather than depreciate them over their useful lives is an application of the concept of:

Accepted Answer

A)  timeliness 
B)  materiality 
C)  disclosure 
D)  understandability. 
A)  timeliness 
B)  materiality 
C)  disclosure 
D)  understandability. B

Question 3

The external auditor renders an 'except for' opinion when he/she:

Accepted Answer

A)  is unable to express an opinion either way because of a limitation in the work he or she was able to do 
B)  considers that the financial statements are not presented fairly in accordance with GAAP 
C)  is generally satisfied except for a specified departure from GAAP in the statements 
D)  is unable to obtain sufficient reliable audit evidence. 
A)  is unable to express an opinion either way because of a limitation in the work he or she was able to do 
B)  considers that the financial statements are not presented fairly in accordance with GAAP 
C)  is generally satisfied except for a specified departure from GAAP in the statements 
D)  is unable to obtain sufficient reliable audit evidence. C

Question 4

Systemic effects on the share prices of companies are:

Accepted Answer

A)  changes arising from the installation of a new accounting system 
B)  market-wide price changes coming from the economic system 
C)  changes resulting from government legislation 
D)  changes in accounting policies. 
A)  changes arising from the installation of a new accounting system 
B)  market-wide price changes coming from the economic system 
C)  changes resulting from government legislation 
D)  changes in accounting policies.

Question 5

A policy of caution when estimating uncertain amounts is an example of:

Accepted Answer

A)  consistency 
B)  prudence 
C)  understandability 
D)  materiality. 
A)  consistency 
B)  prudence 
C)  understandability 
D)  materiality.

Question 6

The agency charged with the administration and enforcement of the Corporations Act 2001 is the:

Accepted Answer

A)  Australian Accounting Standards Board 
B)  Australian Securities Exchange 
C)  Australian Securities and Investments Commission 
D)  Australian Accounting Research Foundation. 
A)  Australian Accounting Standards Board 
B)  Australian Securities Exchange 
C)  Australian Securities and Investments Commission 
D)  Australian Accounting Research Foundation.

Question 7

Which of the following is NOT true of capital markets?

Accepted Answer

A)  Capital markets operate somewhere in the world pretty much 24 hours a day. 
B)  Capital markets include trading in shares and other securities. 
C)  Capital markets operate in conjunction with organisations that initially issue the securities. 
D)  Some bonds traded in capital markets carry the right to be converted into shares at the option of the holder. 
A)  Capital markets operate somewhere in the world pretty much 24 hours a day. 
B)  Capital markets include trading in shares and other securities. 
C)  Capital markets operate in conjunction with organisations that initially issue the securities. 
D)  Some bonds traded in capital markets carry the right to be converted into shares at the option of the holder.

Question 8

The letters GAAP stand for:

Accepted Answer

A)  government approved accounting principles 
B)  generally accepted audit procedures 
C)  generally accepted audit principles 
D)  generally accepted accounting principles. 
A)  government approved accounting principles 
B)  generally accepted audit procedures 
C)  generally accepted audit principles 
D)  generally accepted accounting principles.

Question 9

Identify the accounting concept or principle that relates to the statement in each of the following  questions:
-If a particular item is,by reason of its nature or its size,significant to a proper understanding of the situation,it should be separately stated.

Accepted Answer

A)  relevance 
B)  reliability 
C)  materiality 
D)  prudence. 
A)  relevance 
B)  reliability 
C)  materiality 
D)  prudence.

Question 10

Which of the following is NOT a policy of stock exchanges?

Accepted Answer

A)  To ensure that all persons investing in securities listed on the exchange have equal access to information that may affect investment decisions. 
B)  To regulate the conduct of securities markets. 
C)  To enable companies to maximise profits. 
D)  To protect investors and retain their confidence. 
A)  To ensure that all persons investing in securities listed on the exchange have equal access to information that may affect investment decisions. 
B)  To regulate the conduct of securities markets. 
C)  To enable companies to maximise profits. 
D)  To protect investors and retain their confidence.

Question 11

Identify the accounting concept or principle that relates to the statement in each of the following  questions:
-Information should have predictive value and/or feedback value.

Accepted Answer

A)  relevance 
B)  reliability 
C)  materiality 
D)  prudence. 
A)  relevance 
B)  reliability 
C)  materiality 
D)  prudence.

Question 12

The external auditor renders an adverse opinion when he/she:

Accepted Answer

A)  is unable to express an opinion either way because of a limitation in the work he or she was able to carry out 
B)  considers that the financial statements are not presented fairly in accordance with GAAP 
C)  is generally satisfied except for a specified departure from GAAP in the statements 
D)  is unable to obtain sufficient reliable audit evidence. 
A)  is unable to express an opinion either way because of a limitation in the work he or she was able to carry out 
B)  considers that the financial statements are not presented fairly in accordance with GAAP 
C)  is generally satisfied except for a specified departure from GAAP in the statements 
D)  is unable to obtain sufficient reliable audit evidence.

Question 13

Which of the following statements is NOT true of parties interested in a company's financial accounting?

Accepted Answer

A)  In smaller companies,managers and owners may be the same people. 
B)  All parties share the same interest in the company's accounting. 
C)  They assess past financial performance. 
D)  It is difficult for financial statements to meet the needs of all users. 
A)  In smaller companies,managers and owners may be the same people. 
B)  All parties share the same interest in the company's accounting. 
C)  They assess past financial performance. 
D)  It is difficult for financial statements to meet the needs of all users.

Question 14

Which of the following is/are included in the corporate governance statement required under stock exchange regulations? 
(i)composition of audit committee
(ii)statement of ethical standards
(iii)procedures for identifying and managing business risks

Accepted Answer

A)  (i)and (ii)only 
B)  (i)and (iii)only 
C)  (ii)and (iii)only 
D)  (i),(ii)and (iii). 
A)  (i)and (ii)only 
B)  (i)and (iii)only 
C)  (ii)and (iii)only 
D)  (i),(ii)and (iii).

Question 15

Which of the following statements about accounting regulation is NOT true?

Accepted Answer

A)  The Financial Reporting Council is responsible for providing broad oversight of the accounting standard-setting process in the private and public sectors. 
B)  One of the key functions of the Australian Accounting Standards Board is to oversee the operation of the Financial Reporting Council. 
C)  The Australian Securities and Investments Commission monitors compliance with accounting standards. 
D)  ASIC promotes honesty and fairness in financial markets. 
A)  The Financial Reporting Council is responsible for providing broad oversight of the accounting standard-setting process in the private and public sectors. 
B)  One of the key functions of the Australian Accounting Standards Board is to oversee the operation of the Financial Reporting Council. 
C)  The Australian Securities and Investments Commission monitors compliance with accounting standards. 
D)  ASIC promotes honesty and fairness in financial markets.

Question 16

A liability should only be recognised in the financial statements when: (i)reserves have been set aside by the entity
(ii)the amount can be measured reliably
(iii)it is probable that the future sacrifice of economic benefits will be required.

Accepted Answer

A)  (i)and (ii)only 
B)  (i)and (iii)only 
C)  (ii)and (iii)only 
D)  (i),(ii)and (iii). 
A)  (i)and (ii)only 
B)  (i)and (iii)only 
C)  (ii)and (iii)only 
D)  (i),(ii)and (iii).

Question 17

The application of the lower of cost or market rule in valuing inventory is an example of:

Accepted Answer

A)  prudence 
B)  materiality 
C)  disclosure 
D)  consistency. 
A)  prudence 
B)  materiality 
C)  disclosure 
D)  consistency.

Question 18

Identify the accounting concept or principle that relates to the statement in each of the following  questions:
-Information must represent faithfully the transactions or events that have occurred.

Accepted Answer

A)  relevance 
B)  reliability 
C)  materiality 
D)  prudence. 
A)  relevance 
B)  reliability 
C)  materiality 
D)  prudence.

Question 19

Which of the following statements about a portfolio is NOT true?

Accepted Answer

A)  A portfolio is a way of diversifying away the unsystematic risk. 
B)  A portfolio made up of a group of securities with different unsystematic risks is generally more risky than any individual security. 
C)  The investor can assemble a portfolio with whatever risk he/she wishes. 
D)  Investing in a portfolio is riskier than investing in individual securities. 
A)  A portfolio is a way of diversifying away the unsystematic risk. 
B)  A portfolio made up of a group of securities with different unsystematic risks is generally more risky than any individual security. 
C)  The investor can assemble a portfolio with whatever risk he/she wishes. 
D)  Investing in a portfolio is riskier than investing in individual securities.

Question 20

Which of the following is/are essential requirements for an asset to exist for accounting purposes? 
(i)The entity must be able to control the future economic benefits associated with the item.
(ii)The entity must be the legal owner of the item.
(iii)The entity must have purchased the item.

Accepted Answer

A)  (i)only 
B)  (i)and (ii)only 
C)  (i)and (iii)only 
D)  (ii)and (iii)only. 
A)  (i)only 
B)  (i)and (ii)only 
C)  (i)and (iii)only 
D)  (ii)and (iii)only.

Agency theory regards conflicts of interest as:

The decision by a motor repair company to expense small tools immediately on acquisition rather than depreciate them over their useful lives is an application of the concept of:

The external auditor renders an 'except for' opinion when he/she:

Systemic effects on the share prices of companies are:

A policy of caution when estimating uncertain amounts is an example of:

The agency charged with the administration and enforcement of the Corporations Act 2001 is the:

Which of the following is NOT true of capital markets?

The letters GAAP stand for:

Identify the accounting concept or principle that relates to the statement in each of the following questions: -If a particular item is,by reason of its nature or its size,significant to a proper understanding of the situation,it should be separately stated.

Which of the following is NOT a policy of stock exchanges?

Identify the accounting concept or principle that relates to the statement in each of the following questions: -Information should have predictive value and/or feedback value.

The external auditor renders an adverse opinion when he/she:

Which of the following statements is NOT true of parties interested in a company's financial accounting?

Which of the following is/are included in the corporate governance statement required under stock exchange regulations? (i)composition of audit committee (ii)statement of ethical standards (iii)procedures for identifying and managing business risks

Which of the following statements about accounting regulation is NOT true?

A liability should only be recognised in the financial statements when: (i)reserves have been set aside by the entity (ii)the amount can be measured reliably (iii)it is probable that the future sacrifice of economic benefits will be required.

The application of the lower of cost or market rule in valuing inventory is an example of:

Identify the accounting concept or principle that relates to the statement in each of the following questions: -Information must represent faithfully the transactions or events that have occurred.

Which of the following statements about a portfolio is NOT true?

Which of the following is/are essential requirements for an asset to exist for accounting purposes? (i)The entity must be able to control the future economic benefits associated with the item. (ii)The entity must be the legal owner of the item. (iii)The entity must have purchased the item.

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Sustainability Reporting

Internal Control and Cash

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Appendix: Special Journals, subsidiary Ledgers and Control Accounts

Filters

Exam 6: Financial Reporting Principles, accounting Standards and Auditing

Agency theory regards conflicts of interest as:

The decision by a motor repair company to expense small tools immediately on acquisition rather than depreciate them over their useful lives is an application of the concept of:

The external auditor renders an 'except for' opinion when he/she:

Systemic effects on the share prices of companies are:

A policy of caution when estimating uncertain amounts is an example of:

The agency charged with the administration and enforcement of the Corporations Act 2001 is the:

Which of the following is NOT true of capital markets?

The letters GAAP stand for:

Identify the accounting concept or principle that relates to the statement in each of the following questions: -If a particular item is,by reason of its nature or its size,significant to a proper understanding of the situation,it should be separately stated.

Which of the following is NOT a policy of stock exchanges?

Identify the accounting concept or principle that relates to the statement in each of the following questions: -Information should have predictive value and/or feedback value.

The external auditor renders an adverse opinion when he/she:

Which of the following statements is NOT true of parties interested in a company's financial accounting?

Which of the following is/are included in the corporate governance statement required under stock exchange regulations? (i)composition of audit committee (ii)statement of ethical standards (iii)procedures for identifying and managing business risks

Which of the following statements about accounting regulation is NOT true?

A liability should only be recognised in the financial statements when: (i)reserves have been set aside by the entity (ii)the amount can be measured reliably (iii)it is probable that the future sacrifice of economic benefits will be required.

The application of the lower of cost or market rule in valuing inventory is an example of:

Identify the accounting concept or principle that relates to the statement in each of the following questions: -Information must represent faithfully the transactions or events that have occurred.

Which of the following statements about a portfolio is NOT true?

Which of the following is/are essential requirements for an asset to exist for accounting purposes? (i)The entity must be able to control the future economic benefits associated with the item. (ii)The entity must be the legal owner of the item. (iii)The entity must have purchased the item.

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Sustainability Reporting

Internal Control and Cash

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Appendix: Special Journals, subsidiary Ledgers and Control Accounts

Filters