Question 1

Which of the following statements about consistency is true?

Accepted Answer

A)  A company has to use the same accounting methods in all parts of a company. 
B)  The same depreciation method should be employed for all assets of a company. 
C)  The same accounting methods must be used as those used by other companies in the industry. 
D)  The same accounting methods must be used from year to year,except where a change is made and the impact on profit is disclosed. 
A)  A company has to use the same accounting methods in all parts of a company. 
B)  The same depreciation method should be employed for all assets of a company. 
C)  The same accounting methods must be used as those used by other companies in the industry. 
D)  The same accounting methods must be used from year to year,except where a change is made and the impact on profit is disclosed.

Question 2

In reporting on its liability for long service leave to employees,a company is obliged to trade off:

Accepted Answer

A)  understandability and consistency 
B)  relevance and reliability 
C)  materiality and disclosure 
D)  comparability and prudence. 
A)  understandability and consistency 
B)  relevance and reliability 
C)  materiality and disclosure 
D)  comparability and prudence.

Question 3

Which of the following statements about a liability is true?

Accepted Answer

A)  A liability is restricted to being a legal debt. 
B)  A liability must result from a past transaction or event. 
C)  A liability arises when a business creates reserves for contingencies. 
D)  A liability results even if the entity can avoid the sacrifice of economic reasons. 
A)  A liability is restricted to being a legal debt. 
B)  A liability must result from a past transaction or event. 
C)  A liability arises when a business creates reserves for contingencies. 
D)  A liability results even if the entity can avoid the sacrifice of economic reasons.

Question 4

A decision by an accountant to disregard errors involving less than 1% of profits is an application of the concept of:

Accepted Answer

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

Question 5

Systemic effects arise when:

Accepted Answer

A)  the shares of a deceased estate are sold to enable a distribution to be made to beneficiaries 
B)  market-wide changes in share prices come from the economic system 
C)  an announcement is made regarding the future prospects of a particular company 
D)  the takeover of a large public company is announced. 
A)  the shares of a deceased estate are sold to enable a distribution to be made to beneficiaries 
B)  market-wide changes in share prices come from the economic system 
C)  an announcement is made regarding the future prospects of a particular company 
D)  the takeover of a large public company is announced.

Question 6

Which accounting concept is involved in the requirement that financial statements contain information that is useful to those who are making decisions?

Accepted Answer

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

Question 7

The practice by Woolworths Ltd of presenting their financial statements in millions of dollars is an application of the concept of:

Accepted Answer

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

Question 8

Which of the following statements about capital markets is true?

Accepted Answer

A)  Systematic risk refers to the risk arising from a firm's financing decision. 
B)  Returns of high-beta stocks tend to vary less than overall market prices. 
C)  The efficient market hypothesis states that it is not possible to consistently 'beat the market' by using publicly available information. 
D)  If the efficient market hypothesis were true,it would be impossible to make money in the stock market. 
A)  Systematic risk refers to the risk arising from a firm's financing decision. 
B)  Returns of high-beta stocks tend to vary less than overall market prices. 
C)  The efficient market hypothesis states that it is not possible to consistently 'beat the market' by using publicly available information. 
D)  If the efficient market hypothesis were true,it would be impossible to make money in the stock market.

Question 9

A security's price may NOT vary because:

Accepted Answer

A)  the whole share market is going up 
B)  of information specific to that security 
C)  of information specific to the company issuing the security 
D)  of consistent financial policies. 
A)  the whole share market is going up 
B)  of information specific to that security 
C)  of information specific to the company issuing the security 
D)  of consistent financial policies.

Question 10

An asset should be recognised in the financial statements when: 
(i)an exchange has occurred
(ii)it possesses a cost or other value that can be measured reliably
(iii)it is probable that the future economic benefits embodied in the asset will eventuate.

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 11

Which of the following statements about risk is NOT true?

Accepted Answer

A)  Unsystematic risk is the security's own residual variation not related to the market. 
B)  Beta is a measure of the security's relationship to overall market variations. 
C)  A low-beta security's prices vary more than overall market prices do. 
D)  Risk is calculated as the variance of the share price around the average price. 
A)  Unsystematic risk is the security's own residual variation not related to the market. 
B)  Beta is a measure of the security's relationship to overall market variations. 
C)  A low-beta security's prices vary more than overall market prices do. 
D)  Risk is calculated as the variance of the share price around the average price.

Question 12

Which of the following is NOT an example of an event that may give rise to general information-based trading?

Accepted Answer

A)  the outbreak of war 
B)  a change in the party in power as a result of an election 
C)  the announcement of a rise in inflation 
D)  a consistent dividend policy. 
A)  the outbreak of war 
B)  a change in the party in power as a result of an election 
C)  the announcement of a rise in inflation 
D)  a consistent dividend policy.

Question 13

The professional code of ethics of an accountant involves: 
(i)behaving in a professional manner
(ii)maintaining a level of expertise required in order to perform skillfully
(iii)following procedures that will ensure that high standards of work are met.

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 14

Which of the following items is/are generally NOT included in a directors' report to shareholders?

Accepted Answer

A)  names of directors 
B)  principal activities of the company 
C)  budgeted net profit for following year 
D)  significant changes in the company's state of affairs. 
A)  names of directors 
B)  principal activities of the company 
C)  budgeted net profit for following year 
D)  significant changes in the company's state of affairs.

Question 15

Assets are usually reported in the balance sheet at:

Accepted Answer

A)  liquidation value 
B)  value in use 
C)  current or market value 
D)  historical cost. 
A)  liquidation value 
B)  value in use 
C)  current or market value 
D)  historical cost.

Question 16

Which of the following is NOT true? The external auditor's report provides the auditor's opinion that:

Accepted Answer

A)  the financial statements give a true and fair view 
B)  the financial statements are in accordance with the provisions of the Corporations Act 2001 
C)  the financial statements are in accordance with applicable accounting standards 
D)  the financial statements are accurate. 
A)  the financial statements give a true and fair view 
B)  the financial statements are in accordance with the provisions of the Corporations Act 2001 
C)  the financial statements are in accordance with applicable accounting standards 
D)  the financial statements are accurate.

Question 17

Which of the following statements about agency theory is true?

Accepted Answer

A)  Accounting information is viewed as something that is 'right'. 
B)  Conflicts of interest are regarded as unnatural. 
C)  It tends to focus on the future-oriented,decision-making role of accounting information. 
D)  It is concerned with contractual relationships among people. 
A)  Accounting information is viewed as something that is 'right'. 
B)  Conflicts of interest are regarded as unnatural. 
C)  It tends to focus on the future-oriented,decision-making role of accounting information. 
D)  It is concerned with contractual relationships among people.

Question 18

The agency empowered to prepare and issue accounting standards for the purposes of the Corporations Act 2001 is the:

Accepted Answer

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

Question 19

In August 2011,Eggs 'R' Us was forced to destroy all its poultry as a result of an outbreak of Newcastle disease.In the annual report for the year ended 30 June 2012,published in late August,a footnote revealed the loss.This is an example of the concept or principle of:

Accepted Answer

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

Question 20

If the market is efficient with respect to accounting information,which of the following statements is true?

Accepted Answer

A)  Accounting reports are useless to investors. 
B)  It is impossible to 'beat the market' using only accounting information that was released to the market 1 month ago. 
C)  Knowing the contents of an annual report before it is released to the market would not be useful to an investor. 
D)  Capital markets respond only to expected new information. 
A)  Accounting reports are useless to investors. 
B)  It is impossible to 'beat the market' using only accounting information that was released to the market 1 month ago. 
C)  Knowing the contents of an annual report before it is released to the market would not be useful to an investor. 
D)  Capital markets respond only to expected new information.

Which of the following statements about consistency is true?

In reporting on its liability for long service leave to employees,a company is obliged to trade off:

Which of the following statements about a liability is true?

A decision by an accountant to disregard errors involving less than 1% of profits is an application of the concept of:

Systemic effects arise when:

Which accounting concept is involved in the requirement that financial statements contain information that is useful to those who are making decisions?

The practice by Woolworths Ltd of presenting their financial statements in millions of dollars is an application of the concept of:

Which of the following statements about capital markets is true?

A security's price may NOT vary because:

An asset should be recognised in the financial statements when: (i)an exchange has occurred (ii)it possesses a cost or other value that can be measured reliably (iii)it is probable that the future economic benefits embodied in the asset will eventuate.

Which of the following statements about risk is NOT true?

Which of the following is NOT an example of an event that may give rise to general information-based trading?

The professional code of ethics of an accountant involves: (i)behaving in a professional manner (ii)maintaining a level of expertise required in order to perform skillfully (iii)following procedures that will ensure that high standards of work are met.

Which of the following items is/are generally NOT included in a directors' report to shareholders?

Assets are usually reported in the balance sheet at:

Which of the following is NOT true? The external auditor's report provides the auditor's opinion that:

Which of the following statements about agency theory is true?

The agency empowered to prepare and issue accounting standards for the purposes of the Corporations Act 2001 is the:

In August 2011,Eggs 'R' Us was forced to destroy all its poultry as a result of an outbreak of Newcastle disease.In the annual report for the year ended 30 June 2012,published in late August,a footnote revealed the loss.This is an example of the concept or principle of:

If the market is efficient with respect to accounting information,which of the following statements is true?

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

Which of the following statements about consistency is true?

In reporting on its liability for long service leave to employees,a company is obliged to trade off:

Which of the following statements about a liability is true?

A decision by an accountant to disregard errors involving less than 1% of profits is an application of the concept of:

Systemic effects arise when:

Which accounting concept is involved in the requirement that financial statements contain information that is useful to those who are making decisions?

The practice by Woolworths Ltd of presenting their financial statements in millions of dollars is an application of the concept of:

Which of the following statements about capital markets is true?

A security's price may NOT vary because:

An asset should be recognised in the financial statements when: (i)an exchange has occurred (ii)it possesses a cost or other value that can be measured reliably (iii)it is probable that the future economic benefits embodied in the asset will eventuate.

Which of the following statements about risk is NOT true?

Which of the following is NOT an example of an event that may give rise to general information-based trading?

The professional code of ethics of an accountant involves: (i)behaving in a professional manner (ii)maintaining a level of expertise required in order to perform skillfully (iii)following procedures that will ensure that high standards of work are met.

Which of the following items is/are generally NOT included in a directors' report to shareholders?

Assets are usually reported in the balance sheet at:

Which of the following is NOT true? The external auditor's report provides the auditor's opinion that:

Which of the following statements about agency theory is true?

The agency empowered to prepare and issue accounting standards for the purposes of the Corporations Act 2001 is the:

In August 2011,Eggs 'R' Us was forced to destroy all its poultry as a result of an outbreak of Newcastle disease.In the annual report for the year ended 30 June 2012,published in late August,a footnote revealed the loss.This is an example of the concept or principle of:

If the market is efficient with respect to accounting information,which of the following statements is true?

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