Question 1

Which items bypass the profit figure under the operating-profit approach?

Accepted Answer

A)  Revenues and expenses resulting from changes in accounting policies 
B)  Revenue and expenses relating to prior periods 
C)  Revenues and expenses relating to events outside the ordinary operations of the entity 
D)  All of the above 
A)  Revenues and expenses resulting from changes in accounting policies 
B)  Revenue and expenses relating to prior periods 
C)  Revenues and expenses relating to events outside the ordinary operations of the entity 
D)  All of the above D

Question 2

Which statement in relation to the treatment of expenses under AASB 101 is correct?

Accepted Answer

A)  It is optional for an entity with revenue from the sale of goods to disclose cost of sales 
B)  Expenses should be classified according to their nature or their function 
C)  Expenses are defined exactly in accordance with the Framework 
D)  A and B are correct 
A)  It is optional for an entity with revenue from the sale of goods to disclose cost of sales 
B)  Expenses should be classified according to their nature or their function 
C)  Expenses are defined exactly in accordance with the Framework 
D)  A and B are correct B

Question 3

Which of these is correct? An advantage of the comprehensive income approach to profit measurement is:

Accepted Answer

A)  profit is determined conceptually not arbitrarily 
B)  no revenue or expense items bypass the income statement 
C)  the method gives the most useful profit for estimating future profit performance 
D)  A and B are both correct 
A)  profit is determined conceptually not arbitrarily 
B)  no revenue or expense items bypass the income statement 
C)  the method gives the most useful profit for estimating future profit performance 
D)  A and B are both correct D

Question 4

In the United States,SFAS 130 requires which profit figure to be disclosed?

Accepted Answer

A)  Profit after tax after applying all other accounting standards 
B)  The comprehensive income figure which includes all income and expenses that have previously bypassed the profit calculation after tax and been taken directly to equity 
C)  Neither A nor B 
D)  Both A and B 
A)  Profit after tax after applying all other accounting standards 
B)  The comprehensive income figure which includes all income and expenses that have previously bypassed the profit calculation after tax and been taken directly to equity 
C)  Neither A nor B 
D)  Both A and B

Question 5

Define income and explain how it differs from revenue.

Accepted Answer

Income,as defned in Framework 2014,encom

Question 6

Under AASB 101,the nature and amount of which type of items should be disclosed separately?

Accepted Answer

A)  Extraordinary items 
B)  Significant items 
C)  Material items 
D)  None of the above 
A)  Extraordinary items 
B)  Significant items 
C)  Material items 
D)  None of the above

Question 7

A difference between the all-inclusive and the comprehensive income approaches to profit measurement is that:

Accepted Answer

A)  the all-inclusive approach is broader than the comprehensive income approach 
B)  the two approaches have different treatments for prior-period adjustments 
C)  the comprehensive income approach includes all recognised changes in the carrying amount of assets and liabilities in the profit calculation 
D)  all are differences 
A)  the all-inclusive approach is broader than the comprehensive income approach 
B)  the two approaches have different treatments for prior-period adjustments 
C)  the comprehensive income approach includes all recognised changes in the carrying amount of assets and liabilities in the profit calculation 
D)  all are differences

Question 8

Explain and discuss the advantages and disadvantages of the operating-profit and the comprehensive income approaches to profit measurement.Which approach do you think is the most useful for decision making?

Accepted Answer

Under the operating-profit approach,prof

Question 9

AASB 101 allows preparers two options in the classification of items for the statement of comprehensive income statements.Discuss.

Accepted Answer

Paragraph 10A of AASB 101 provides an op

Question 10

Explain and discuss how profit results may be manipulated if the rules allow the separate reporting of operating items and extraordinary items.Explain how accounting standard setters in Australia have responded to a perceived creative approach to extraordinary items in the previous standard.Do you think their response is justified?

Accepted Answer

Under the all-inclusive approach, profit

Question 11

When items are required to be classified as extraordinary,which of the following is/are not true?

Accepted Answer

A)  Users of financial statements are able to make more accurate predictions of future performance 
B)  Management is able to classify gains as operating income and losses as extraordinary items 
C)  It allows managers to misclassify expenses as extraordinary 
D)  None; all are true 
A)  Users of financial statements are able to make more accurate predictions of future performance 
B)  Management is able to classify gains as operating income and losses as extraordinary items 
C)  It allows managers to misclassify expenses as extraordinary 
D)  None; all are true

Question 12

The approach where profit is measured as the revenue from operations minus expenses from operations is known as:

Accepted Answer

A)  the all-inclusive approach 
B)  the operating-profit approach 
C)  the comprehensive income approach 
D)  the working profit approach 
A)  the all-inclusive approach 
B)  the operating-profit approach 
C)  the comprehensive income approach 
D)  the working profit approach

Question 13

The Australian Accounting Standards Board changed the name 'statement of financial performance' to 'statement of profit and loss and other comprehensive income':

Accepted Answer

A)  to be consistent with the Corporations Act 
B)  to be consistent with international accounting standards 
C)  to be consistent with US accounting standards 
D)  because of the development of accounting standards that are applicable to both the private and public sectors 
A)  to be consistent with the Corporations Act 
B)  to be consistent with international accounting standards 
C)  to be consistent with US accounting standards 
D)  because of the development of accounting standards that are applicable to both the private and public sectors

Question 14

Which term describes items of income and expense (including reclassification adjustments)that are not recognised in profit or loss as required or permitted by other Australian Accounting Standards?

Accepted Answer

A)  Operating income 
B)  Other comprehensive income 
C)  Net income 
D)  Equity 
A)  Operating income 
B)  Other comprehensive income 
C)  Net income 
D)  Equity

Question 15

The standard that requires the disclosure of auditor's remuneration and executives' remuneration in the published reports is:

Accepted Answer

A)  AASB 1031 
B)  AASB 101 
C)  AASB 118 
D)  No accounting standard requires the disclosure of auditor's remuneration and executives' remuneration 
A)  AASB 1031 
B)  AASB 101 
C)  AASB 118 
D)  No accounting standard requires the disclosure of auditor's remuneration and executives' remuneration

Question 16

Which of the following is considered a disadvantage of the statement of value added?

Accepted Answer

A)  Could cause confusion with the statement of comprehensive income 
B)  Costs may exceed benefits 
C)  May be regarded as a preferable way of describing performance 
D)  All answers are correct 
A)  Could cause confusion with the statement of comprehensive income 
B)  Costs may exceed benefits 
C)  May be regarded as a preferable way of describing performance 
D)  All answers are correct

Question 17

The concept of profit that is generally regarded as the most useful in predicting future profits is:

Accepted Answer

A)  the comprehensive income approach 
B)  the operating-profit approach 
C)  the all-inclusive approach 
D)  No difference is seen in the usefulness of the different profit approaches in predicting future profits 
A)  the comprehensive income approach 
B)  the operating-profit approach 
C)  the all-inclusive approach 
D)  No difference is seen in the usefulness of the different profit approaches in predicting future profits

Question 18

The amount retained for asset replacement and growth is one feature of:

Accepted Answer

A)  The statement of value added 
B)  Other comprehensive income 
C)  Equity 
D)  Operating income 
A)  The statement of value added 
B)  Other comprehensive income 
C)  Equity 
D)  Operating income

Question 19

Benefits attributed to the comprehensive income approach include:

Accepted Answer

A)  the statements of comprehensive income is determined conceptually 
B)  no items that satisfy the definition and recognition for income or expense bypass the statement of comprehensive income 
C)  the statement of comprehensive income is more reliable than its predecessor 
D)  all of the above 
A)  the statements of comprehensive income is determined conceptually 
B)  no items that satisfy the definition and recognition for income or expense bypass the statement of comprehensive income 
C)  the statement of comprehensive income is more reliable than its predecessor 
D)  all of the above

Question 20

Which statement concerning Australian accounting standards is correct?

Accepted Answer

A)  Current Australian accounting standards do not identify any particular categories of 'unusual' items for special disclosure in the income statement 
B)  Current Australian accounting standards require activities that are attributable to transactions or other events outside the ordinary activities of the entity to be disclosed separately 
C)  AASB 101 requires the separate disclosure of significant items 
D)  None of the above is correct 
A)  Current Australian accounting standards do not identify any particular categories of 'unusual' items for special disclosure in the income statement 
B)  Current Australian accounting standards require activities that are attributable to transactions or other events outside the ordinary activities of the entity to be disclosed separately 
C)  AASB 101 requires the separate disclosure of significant items 
D)  None of the above is correct

Exam 14: The Statement of Comprehensive Income

Which items bypass the profit figure under the operating-profit approach?

Which statement in relation to the treatment of expenses under AASB 101 is correct?

Which of these is correct? An advantage of the comprehensive income approach to profit measurement is:

In the United States,SFAS 130 requires which profit figure to be disclosed?

Define income and explain how it differs from revenue.

Under AASB 101,the nature and amount of which type of items should be disclosed separately?

A difference between the all-inclusive and the comprehensive income approaches to profit measurement is that:

Explain and discuss the advantages and disadvantages of the operating-profit and the comprehensive income approaches to profit measurement.Which approach do you think is the most useful for decision making?

AASB 101 allows preparers two options in the classification of items for the statement of comprehensive income statements.Discuss.

When items are required to be classified as extraordinary,which of the following is/are not true?

The approach where profit is measured as the revenue from operations minus expenses from operations is known as:

The Australian Accounting Standards Board changed the name 'statement of financial performance' to 'statement of profit and loss and other comprehensive income':

Which term describes items of income and expense (including reclassification adjustments)that are not recognised in profit or loss as required or permitted by other Australian Accounting Standards?

The standard that requires the disclosure of auditor's remuneration and executives' remuneration in the published reports is:

Which of the following is considered a disadvantage of the statement of value added?

The concept of profit that is generally regarded as the most useful in predicting future profits is:

The amount retained for asset replacement and growth is one feature of:

Benefits attributed to the comprehensive income approach include:

Which statement concerning Australian accounting standards is correct?

Institutional Arrangements for Setting Accounting Standards in Australia

The Conceptual Framework: Purpose, reporting Entity, the Objective of Financial Reporting, and Qualitative Characteristics

The Conceptual Framework: Definition, recognition and Measurement of the Elements in General Purpose Financial Statements

Fair Value Measurement

The Choice of Accounting Methods

The Statement of Financial Position

Accounting for Current Assets

Accounting for Property, plant and Equipment

Accounting for Company Income Tax

Accounting for Intangible Assets

Accounting for Leases

Accounting for Employee Benefits

Accounting for Financial Instruments

Revenue

The Statement of Cash Flows

Financial Reporting: Segment Reporting and Highlights Statements

Further Financial Reporting Issues

Accounting for Extractive Industry

Accounting for Agricultural Activity

Accounting for Superannuation Entities

Accounting for Insurance

International Accounting Standards, harmonisation and Convergence

Foreign Currency Translation

Accounting for Corporate

Ethics in Accounting

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