Question 1

Which of the following statements about agency theory is NOT true?

Accepted Answer

A)  Agency theory tends to focus on the stewardship role of accounting information. 
B)  Agency theory develops ideas about how the agent can be induced to act properly. 
C)  Conflict of interest is unfavourable and to be avoided at all costs. 
D)  For the agent,effort is costly and therefore to be minimised. 
A)  Agency theory tends to focus on the stewardship role of accounting information. 
B)  Agency theory develops ideas about how the agent can be induced to act properly. 
C)  Conflict of interest is unfavourable and to be avoided at all costs. 
D)  For the agent,effort is costly and therefore to be minimised.

Question 2

Identify the accounting concept or principle that relates to the statement in each of the following  questions:
-The financial statements need to contain information that is useful to decision-makers.

Accepted Answer

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

Question 3

Which of the following opinions is NOT included in the directors' statement accompanying the financial statements?

Accepted Answer

A)  whether the company can pay its debts when they fall due 
B)  whether the financial statements give a true and fair view of the financial performance of the company 
C)  whether the cash budget fairly indicates the anticipated cash flows from operations 
D)  whether the financial statements comply with the requirements of the Corporations Act 2001. 
A)  whether the company can pay its debts when they fall due 
B)  whether the financial statements give a true and fair view of the financial performance of the company 
C)  whether the cash budget fairly indicates the anticipated cash flows from operations 
D)  whether the financial statements comply with the requirements of the Corporations Act 2001.

Question 4

Which of the following statements about the efficient market hypothesis is NOT true?

Accepted Answer

A)  Markets respond quickly and smoothly to public information. 
B)  Markets tend to respond to new information only if it is unexpected. 
C)  Public financial statements can be used to 'beat the market'. 
D)  Markets can be efficient with respect to publically available information. 
A)  Markets respond quickly and smoothly to public information. 
B)  Markets tend to respond to new information only if it is unexpected. 
C)  Public financial statements can be used to 'beat the market'. 
D)  Markets can be efficient with respect to publically available information.

Question 5

Which of the following is an essential requirement for an asset to exist for accounting purposes?

Accepted Answer

A)  An asset must be tangible. 
B)  An asset must have been exchanged for another asset. 
C)  An asset must be under the control of the entity. 
D)  An asset must have been acquired at a cost to the entity. 
A)  An asset must be tangible. 
B)  An asset must have been exchanged for another asset. 
C)  An asset must be under the control of the entity. 
D)  An asset must have been acquired at a cost to the entity.

Question 6

Agency theory tends to focus on:

Accepted Answer

A)  the decision-making role of accounting information 
B)  the stewardship role of accounting information 
C)  future orientated decision making 
D)  the role of accountants. 
A)  the decision-making role of accounting information 
B)  the stewardship role of accounting information 
C)  future orientated decision making 
D)  the role of accountants.

Question 7

Which of the following is NOT an essential characteristic of an asset?

Accepted Answer

A)  It must be legally owned by the entity. 
B)  The entity must have control over the asset. 
C)  The transaction giving the entity control over the asset must have occurred. 
D)  It is probable that future economic benefits will flow to the entity. 
A)  It must be legally owned by the entity. 
B)  The entity must have control over the asset. 
C)  The transaction giving the entity control over the asset must have occurred. 
D)  It is probable that future economic benefits will flow to the entity.

Question 8

Which of the following items would be recognised as a liability?

Accepted Answer

A)  advances from customers for goods and services to be provided next year 
B)  accumulated depreciation 
C)  the estimated cost of maintenance of plant deferred from this year to next year 
D)  interest earned but not yet received. 
A)  advances from customers for goods and services to be provided next year 
B)  accumulated depreciation 
C)  the estimated cost of maintenance of plant deferred from this year to next year 
D)  interest earned but not yet received.

Question 9

The area of economic and accounting thought that focuses on contractual relationships among people is NOT known as:

Accepted Answer

A)  contract theory 
B)  financial accounting 
C)  principal-agent theory 
D)  efficient market theory. 
A)  contract theory 
B)  financial accounting 
C)  principal-agent theory 
D)  efficient market theory.

Question 10

The Framework states that an asset should be recognised when and only when: (i)the asset possesses a cost or other value that can be measured reliably
(ii)it is legally owned by the entity
(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

The standard version of the audit report does NOT state that:

Accepted Answer

A)  the financial statements are the responsibility of management 
B)  the auditor's responsibility is to express an opinion on the financial statements 
C)  the company will remain a going concern 
D)  the financial statements give a true and fair view. 
A)  the financial statements are the responsibility of management 
B)  the auditor's responsibility is to express an opinion on the financial statements 
C)  the company will remain a going concern 
D)  the financial statements give a true and fair view.

Question 12

Accounting research shows that share price changes generally happen:

Accepted Answer

A)  at the same time as official earnings reports are released 
B)  before the official earnings reports are released 
C)  after the official earnings reports are released 
D)  at the same time as official earnings reports are released or after the official report is released. 
A)  at the same time as official earnings reports are released 
B)  before the official earnings reports are released 
C)  after the official earnings reports are released 
D)  at the same time as official earnings reports are released or after the official report is released.

Question 13

Which of the following is not a key point of the Framework?

Accepted Answer

A)  Relevance and reliability are the primary qualitative characteristics that financial information should possess. 
B)  Consistency should not be an end in itself. 
C)  The concept of prudence should always take precedence over reliability. 
D)  Financial information may lose its relevance if there is undue delay in reporting it. 
A)  Relevance and reliability are the primary qualitative characteristics that financial information should possess. 
B)  Consistency should not be an end in itself. 
C)  The concept of prudence should always take precedence over reliability. 
D)  Financial information may lose its relevance if there is undue delay in reporting it.

Question 14

Which of the following statements about liabilities is NOT true?

Accepted Answer

A)  An intention to repair a machine in 6 months' time does not give rise to a liability. 
B)  If a liability is to be reliably measured,estimation procedures cannot be used. 
C)  For a liability to exist,the entity must not be able to avoid the sacrifice of economic resources. 
D)  A liability is a present obligation arising from past events. 
A)  An intention to repair a machine in 6 months' time does not give rise to a liability. 
B)  If a liability is to be reliably measured,estimation procedures cannot be used. 
C)  For a liability to exist,the entity must not be able to avoid the sacrifice of economic resources. 
D)  A liability is a present obligation arising from past events.

Question 15

Which of the following is a liability?

Accepted Answer

A)  sales returns and allowances 
B)  general reserve 
C)  allowance for doubtful debts 
D)  unearned revenue. 
A)  sales returns and allowances 
B)  general reserve 
C)  allowance for doubtful debts 
D)  unearned revenue.

Question 16

The return you earn by owning a share is:

Accepted Answer

A)  the cash from dividends 
B)  the current price of the share on the Australian Securities Exchange 
C)  the change in the market price of the share 
D)  cash from dividends plus the change in the market price of the share. 
A)  the cash from dividends 
B)  the current price of the share on the Australian Securities Exchange 
C)  the change in the market price of the share 
D)  cash from dividends plus the change in the market price of the share.

Question 17

Which of the following is NOT included in the corporate governance statement required under stock exchange regulations?

Accepted Answer

A)  composition of audit committee 
B)  audit report 
C)  remuneration policy for directors 
D)  statement of ethical standards. 
A)  composition of audit committee 
B)  audit report 
C)  remuneration policy for directors 
D)  statement of ethical standards.

Question 18

The preparation of financial statements in a similar form to those of other companies facilitates:

Accepted Answer

A)  comparability 
B)  materiality 
C)  reliability 
D)  understandability. 
A)  comparability 
B)  materiality 
C)  reliability 
D)  understandability.

Question 19

Use of the same accounting methods over time facilitates:

Accepted Answer

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

Which of the following statements about agency theory is NOT true?

Identify the accounting concept or principle that relates to the statement in each of the following questions: -The financial statements need to contain information that is useful to decision-makers.

Which of the following opinions is NOT included in the directors' statement accompanying the financial statements?

Which of the following statements about the efficient market hypothesis is NOT true?

Which of the following is an essential requirement for an asset to exist for accounting purposes?

Agency theory tends to focus on:

Which of the following is NOT an essential characteristic of an asset?

Which of the following items would be recognised as a liability?

The area of economic and accounting thought that focuses on contractual relationships among people is NOT known as:

The Framework states that an asset should be recognised when and only when: (i)the asset possesses a cost or other value that can be measured reliably (ii)it is legally owned by the entity (iii)it is probable that the future economic benefits embodied in the asset will eventuate.

The standard version of the audit report does NOT state that:

Accounting research shows that share price changes generally happen:

Which of the following is not a key point of the Framework?

Which of the following statements about liabilities is NOT true?

Which of the following is a liability?

The return you earn by owning a share is:

Which of the following is NOT included in the corporate governance statement required under stock exchange regulations?

The preparation of financial statements in a similar form to those of other companies facilitates:

Use of the same accounting methods over time facilitates:

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

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Exam 6: Financial Reporting Principles, accounting Standards and Auditing

Which of the following statements about agency theory is NOT true?

Identify the accounting concept or principle that relates to the statement in each of the following questions: -The financial statements need to contain information that is useful to decision-makers.

Which of the following opinions is NOT included in the directors' statement accompanying the financial statements?

Which of the following statements about the efficient market hypothesis is NOT true?

Which of the following is an essential requirement for an asset to exist for accounting purposes?

Agency theory tends to focus on:

Which of the following is NOT an essential characteristic of an asset?

Which of the following items would be recognised as a liability?

The area of economic and accounting thought that focuses on contractual relationships among people is NOT known as:

The Framework states that an asset should be recognised when and only when: (i)the asset possesses a cost or other value that can be measured reliably (ii)it is legally owned by the entity (iii)it is probable that the future economic benefits embodied in the asset will eventuate.

The standard version of the audit report does NOT state that:

Accounting research shows that share price changes generally happen:

Which of the following is not a key point of the Framework?

Which of the following statements about liabilities is NOT true?

Which of the following is a liability?

The return you earn by owning a share is:

Which of the following is NOT included in the corporate governance statement required under stock exchange regulations?

The preparation of financial statements in a similar form to those of other companies facilitates:

Use of the same accounting methods over time facilitates:

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