Question 1

Which is the main government regulator of companies in Australia?

Accepted Answer

A) The Australian Securities and Investments Commission 
B) The Auditors Board 
C) The Australian Securities Exchange 
D) The Australian Accounting Standards Board 
A) The Australian Securities and Investments Commission 
B) The Auditors Board 
C) The Australian Securities Exchange 
D) The Australian Accounting Standards Board

Question 2

A bonus issue of shares will result in:

Accepted Answer

A) an increase in cash at bank. 
B) an increase in the number of issued shares. 
C) an increase in shareholders' equity. 
D) All of the above 
A) an increase in cash at bank. 
B) an increase in the number of issued shares. 
C) an increase in shareholders' equity. 
D) All of the above

Question 3

An investor invests in Canta Ltd by purchasing 2 000 shares for $2.50 each. In the following year, the company distributes a 1 for 1 share dividend (bonus issue). After the issue, the number of shares held by the investor:

Accepted Answer

A) will increase by 200 and the market price of the shares will fall. 
B) will increase by 2 000 and the market price of the shares will remain the same. 
C) will increase by 2 000 and the market price of the shares will rise. 
D) will increase by 2 000 and the market price of the shares will fall. 
A) will increase by 200 and the market price of the shares will fall. 
B) will increase by 2 000 and the market price of the shares will remain the same. 
C) will increase by 2 000 and the market price of the shares will rise. 
D) will increase by 2 000 and the market price of the shares will fall.

Question 4

A bonus issue of shares by a company will:

Accepted Answer

A) increase total shareholders' equity. 
B) sometimes increase shareholders' equity and sometimes leave it unchanged. 
C) leave total shareholders' equity unchanged. 
D) reduce total shareholders' equity. 
A) increase total shareholders' equity. 
B) sometimes increase shareholders' equity and sometimes leave it unchanged. 
C) leave total shareholders' equity unchanged. 
D) reduce total shareholders' equity.

Question 5

Which of the following equations relating to a company's statements of financial performance is incorrect?

Accepted Answer

A) Operating profit - Interest = Profit before tax 
B) Revenues - Cost of sales = Gross profit 
C) Profit before tax - Tax expense = Profit for the period 
D) Gross profit - Tax expense - Interest expense = Operating profit 
A) Operating profit - Interest = Profit before tax 
B) Revenues - Cost of sales = Gross profit 
C) Profit before tax - Tax expense = Profit for the period 
D) Gross profit - Tax expense - Interest expense = Operating profit

Question 6

A company needs $3 000 000 for expansion. They decide to raise the capital by issuing new shares. How many shares does the company need to sell to raise the amount, if the last share issue was at a price of $1 each and the current market price for the company's shares is $1.50 per share?

Accepted Answer

A) 500 000 shares 
B) 100 000 shares 
C) 1 million shares 
D) 2 million shares 
A) 500 000 shares 
B) 100 000 shares 
C) 1 million shares 
D) 2 million shares

Question 7

Under the Corporations Act 2001, a proprietary (Pty Ltd)company is restricted to a maximum of:

Accepted Answer

A) 100 shareholders. 
B) 2 shareholders. 
C) 50 shareholders. 
D) 10 shareholders. 
A) 100 shareholders. 
B) 2 shareholders. 
C) 50 shareholders. 
D) 10 shareholders.

Question 8

A company issued 500 000 ordinary shares to the public, priced at $1. The shares were payable 50 cents on 1 July 2018 and 50 cents was uncalled. How much cash was due to the company on 1 July from the issue?

Accepted Answer

A) $150 000 
B) $300 000 
C) $100 000 
D) $250 000 
A) $150 000 
B) $300 000 
C) $100 000 
D) $250 000

Question 9

Assume the balance in the retained profit account 03/06/2017 is $55 000. The profit for 2017/18 is $35 000 and dividends declared are $40 000. What is the balance in retained profits 03/06/2018?

Accepted Answer

A) $49 000 
B) $89 000 
C) $50 000 
D) None of the above 
A) $49 000 
B) $89 000 
C) $50 000 
D) None of the above

Question 10

If a company has a share capital of $150 000, revenue reserves of $25 000 and retained profits of $50 000, what is the maximum amount it can legally distribute as cash dividends?

Accepted Answer

A) $130 000 
B) $75 000 
C) $145 000 
D) $30 000 
A) $130 000 
B) $75 000 
C) $145 000 
D) $30 000

Question 11

Which type of company operating under the Corporations Act 2001 must have the words Proprietary Limited (Pty Ltd)after its name?

Accepted Answer

A) Proprietary company 
B) No liability company 
C) Company listed on the stock exchange 
D) Public company 
A) Proprietary company 
B) No liability company 
C) Company listed on the stock exchange 
D) Public company

Question 12

In what order do the following items appear in a company's statement of financial performance? 1. $\quad$Tax expense
2. $\quad$Revenue
3. $\quad$Gross profit
4. $\quad$Operating profit
5. $\quad$Cost of sales

Accepted Answer

A) 1, 2, 3, 5 & 4 
B) 2, 3, 5, 1 & 4 
C) 2, 5, 3, 1, & 4 
D) 2, 5, 3, 4 & 1 
A) 1, 2, 3, 5 & 4 
B) 2, 3, 5, 1 & 4 
C) 2, 5, 3, 1, & 4 
D) 2, 5, 3, 4 & 1

Question 13

Which of the following statements in relation to dividends is true?

Accepted Answer

A) Dividends represent drawings by the owners (shareholders)of the company. 
B) Dividends can be paid out of any equity account. 
C) Shareholders must be paid an annual dividend regardless of the type of share they hold. 
D) A company cannot declare both an interim and a final dividend. 
A) Dividends represent drawings by the owners (shareholders)of the company. 
B) Dividends can be paid out of any equity account. 
C) Shareholders must be paid an annual dividend regardless of the type of share they hold. 
D) A company cannot declare both an interim and a final dividend.

Question 14

The part of shareholders' equity that may not be used to pay cash dividends is:

Accepted Answer

A) retained profits. 
B) share capital. 
C) revenue reserves. 
D) Both A and B 
A) retained profits. 
B) share capital. 
C) revenue reserves. 
D) Both A and B

Question 15

If operating profit is $131 000, tax expense is $39 000 and profit for the year is $82 000, what is the interest expense?

Accepted Answer

A) $43 000 
B) $49 000 
C) $10 000 
D) Unable to be calculated 
A) $43 000 
B) $49 000 
C) $10 000 
D) Unable to be calculated

Question 16

Which feature is not a characteristic of a company?

Accepted Answer

A) Limited liability 
B) Less government regulation than other types of entities 
C) Legal entity 
D) Perpetual life 
A) Limited liability 
B) Less government regulation than other types of entities 
C) Legal entity 
D) Perpetual life

Question 17

Which of these is a disadvantage of a country adopting international accounting standards compared to the country developing its own standards?

Accepted Answer

A) Standards by their nature must be general and involve compromises. 
B) It will increase accounting and reporting costs for multinational companies. 
C) It will reduce the comparability of different countries' financial reports. 
D) All are disadvantages 
A) Standards by their nature must be general and involve compromises. 
B) It will increase accounting and reporting costs for multinational companies. 
C) It will reduce the comparability of different countries' financial reports. 
D) All are disadvantages

Question 18

Which of the following is a legal entity?

Accepted Answer

A) Company 
B) Partnership 
C) Sole proprietorship 
D) All of the above 
A) Company 
B) Partnership 
C) Sole proprietorship 
D) All of the above

Question 19

A company issued 120 000 fully paid, 5% preference shares priced at $2 each. The dividend to be paid on the shares for a financial year is:

Accepted Answer

A) $5 000 
B) $10 000 
C) $20 000 
D) $12 000 
A) $5 000 
B) $10 000 
C) $20 000 
D) $12 000

Question 20

Which general standard of reporting must financial accounts prepared by companies under the Corporations Act 2001 meet?

Accepted Answer

A) Accurate 
B) Satisfactory 
C) True and fair 
D) Beyond a reasonable doubt 
A) Accurate 
B) Satisfactory 
C) True and fair 
D) Beyond a reasonable doubt

Which is the main government regulator of companies in Australia?

A bonus issue of shares will result in:

An investor invests in Canta Ltd by purchasing 2 000 shares for $2.50 each. In the following year, the company distributes a 1 for 1 share dividend (bonus issue). After the issue, the number of shares held by the investor:

A bonus issue of shares by a company will:

Which of the following equations relating to a company's statements of financial performance is incorrect?

A company needs $3 000 000 for expansion. They decide to raise the capital by issuing new shares. How many shares does the company need to sell to raise the amount, if the last share issue was at a price of $1 each and the current market price for the company's shares is $1.50 per share?

Under the Corporations Act 2001, a proprietary (Pty Ltd)company is restricted to a maximum of:

A company issued 500 000 ordinary shares to the public, priced at $1. The shares were payable 50 cents on 1 July 2018 and 50 cents was uncalled. How much cash was due to the company on 1 July from the issue?

Assume the balance in the retained profit account 03/06/2017 is $55 000. The profit for 2017/18 is $35 000 and dividends declared are $40 000. What is the balance in retained profits 03/06/2018?

If a company has a share capital of $150 000, revenue reserves of $25 000 and retained profits of $50 000, what is the maximum amount it can legally distribute as cash dividends?

Which type of company operating under the Corporations Act 2001 must have the words Proprietary Limited (Pty Ltd)after its name?

In what order do the following items appear in a company's statement of financial performance? 1. $\quad$ Tax expense 2. $\quad$ Revenue 3. $\quad$ Gross profit 4. $\quad$ Operating profit 5. $\quad$ Cost of sales

Which of the following statements in relation to dividends is true?

The part of shareholders' equity that may not be used to pay cash dividends is:

If operating profit is $131 000, tax expense is $39 000 and profit for the year is $82 000, what is the interest expense?

Which feature is not a characteristic of a company?

Which of these is a disadvantage of a country adopting international accounting standards compared to the country developing its own standards?

Which of the following is a legal entity?

A company issued 120 000 fully paid, 5% preference shares priced at $2 each. The dividend to be paid on the shares for a financial year is:

Which general standard of reporting must financial accounts prepared by companies under the Corporations Act 2001 meet?

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Recording Transactionsthe Journal and Ledger Accounts

Accounting Systems and Internal Control

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Planning and Budgeting

Capital Investment Decisions

Filters

Exam 6: Introduction to Limited Companies

Which is the main government regulator of companies in Australia?

A bonus issue of shares will result in:

An investor invests in Canta Ltd by purchasing 2 000 shares for $2.50 each. In the following year, the company distributes a 1 for 1 share dividend (bonus issue). After the issue, the number of shares held by the investor:

A bonus issue of shares by a company will:

Which of the following equations relating to a company's statements of financial performance is incorrect?

A company needs $3 000 000 for expansion. They decide to raise the capital by issuing new shares. How many shares does the company need to sell to raise the amount, if the last share issue was at a price of $1 each and the current market price for the company's shares is $1.50 per share?

Under the Corporations Act 2001, a proprietary (Pty Ltd)company is restricted to a maximum of:

A company issued 500 000 ordinary shares to the public, priced at $1. The shares were payable 50 cents on 1 July 2018 and 50 cents was uncalled. How much cash was due to the company on 1 July from the issue?

Assume the balance in the retained profit account 03/06/2017 is $55 000. The profit for 2017/18 is $35 000 and dividends declared are $40 000. What is the balance in retained profits 03/06/2018?

If a company has a share capital of $150 000, revenue reserves of $25 000 and retained profits of $50 000, what is the maximum amount it can legally distribute as cash dividends?

Which type of company operating under the Corporations Act 2001 must have the words Proprietary Limited (Pty Ltd)after its name?

In what order do the following items appear in a company's statement of financial performance? 1. \quad Tax expense 2. \quad Revenue 3. \quad Gross profit 4. \quad Operating profit 5. \quad Cost of sales

Which of the following statements in relation to dividends is true?

The part of shareholders' equity that may not be used to pay cash dividends is:

If operating profit is $131 000, tax expense is $39 000 and profit for the year is $82 000, what is the interest expense?

Which feature is not a characteristic of a company?

Which of these is a disadvantage of a country adopting international accounting standards compared to the country developing its own standards?

Which of the following is a legal entity?

A company issued 120 000 fully paid, 5% preference shares priced at $2 each. The dividend to be paid on the shares for a financial year is:

Which general standard of reporting must financial accounts prepared by companies under the Corporations Act 2001 meet?

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Recording Transactionsthe Journal and Ledger Accounts

Accounting Systems and Internal Control

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Planning and Budgeting

Capital Investment Decisions

Filters

In what order do the following items appear in a company's statement of financial performance? 1. $\quad$ Tax expense 2. $\quad$ Revenue 3. $\quad$ Gross profit 4. $\quad$ Operating profit 5. $\quad$ Cost of sales