Question 1

According to the AASB's Conceptual Framework an asset is defined as a/an:

Accepted Answer

A) contingent item depending on another event occurs at some time in the future. 
B) resource controlled by the entity as a result of future events and from which future economic benefits are expected to flow to the entity. 
C) resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. 
D) item that has a physical existence and can be converted into cash within the next accounting period. 
A) contingent item depending on another event occurs at some time in the future. 
B) resource controlled by the entity as a result of future events and from which future economic benefits are expected to flow to the entity. 
C) resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. 
D) item that has a physical existence and can be converted into cash within the next accounting period. C

Question 2

As well as expenses that arise in the ordinary activities of a business,which of the following is recognised as an expense of a company?

Accepted Answer

A) Losses 
B) Dividends 
C) Gains 
D) Transfers out of retained earnings 
A) Losses 
B) Dividends 
C) Gains 
D) Transfers out of retained earnings A

Question 3

When making a transfer from a general reserve to retained earnings,which of the following journals could be used?

Accepted Answer

A) DR General reserve CR Retained earnings 
B) DR General reserve CR Share capital 
C) DR Retained earnings CR General reserve 
D) DR Share capital CR General reserve 
A) DR General reserve CR Retained earnings 
B) DR General reserve CR Share capital 
C) DR Retained earnings CR General reserve 
D) DR Share capital CR General reserve A

Question 4

The Reserves accounts of a company are disclosed in the statement of financial position as liabilities.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is correct in relation to the payment of dividends?

Accepted Answer

A) Dividends can only be paid if a company has generated a profit in the current period. 
B) The payment of dividends is regulated by the Corporations Act. 
C) A company can only pay an interim dividend if its constitution allows it. 
D) Preference dividends must be paid on a cumulative basis. 
A) Dividends can only be paid if a company has generated a profit in the current period. 
B) The payment of dividends is regulated by the Corporations Act. 
C) A company can only pay an interim dividend if its constitution allows it. 
D) Preference dividends must be paid on a cumulative basis.

Question 6

AASB 137 defines a provision as a:

Accepted Answer

A) present obligation arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. 
B) liability of uncertain timing and amount. 
C) possible obligation that arises from past events and whose existence will be confirmed only by the occurrence/non-occurrence of one or more uncertain events not wholly within the control of the entity. 
D) present obligation that arises from a past event but is not recognised because the amount of the obligation cannot be measured with sufficient reliability. 
A) present obligation arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. 
B) liability of uncertain timing and amount. 
C) possible obligation that arises from past events and whose existence will be confirmed only by the occurrence/non-occurrence of one or more uncertain events not wholly within the control of the entity. 
D) present obligation that arises from a past event but is not recognised because the amount of the obligation cannot be measured with sufficient reliability.

Question 7

Reserves that are not required by accounting standards are known as:

Accepted Answer

A) specific reserves. 
B) general reserves. 
C) current reserves. 
D) retained reserves. 
A) specific reserves. 
B) general reserves. 
C) current reserves. 
D) retained reserves.

Question 8

The AASB's Conceptual Framework defines income as:

Accepted Answer

A) increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity,other than those relating to contributions from equity participants. 
B) the gross inflow of economic benefits during the period arising in the course of ordinary activities of an entity when those inflows result in increases in equity,other than increases relating to contributions from equity participants. 
C) income that arises in the ordinary course of business and is referred to by a variety of different names,including sales,fees,interest,dividends and royalties. 
D) increases in economic benefits during the accounting period in the from of outflows or decreases in assets or increases in liabilities that result in increases in equity,other than those relating to contributions from equity participants. 
A) increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity,other than those relating to contributions from equity participants. 
B) the gross inflow of economic benefits during the period arising in the course of ordinary activities of an entity when those inflows result in increases in equity,other than increases relating to contributions from equity participants. 
C) income that arises in the ordinary course of business and is referred to by a variety of different names,including sales,fees,interest,dividends and royalties. 
D) increases in economic benefits during the accounting period in the from of outflows or decreases in assets or increases in liabilities that result in increases in equity,other than those relating to contributions from equity participants.

Question 9

There are no separate measurement methods for equity.

Accepted Answer

A) True 
 B)False

Question 10

The statement of financial position shows which of the following?
I.Expenses
II.Revenues
III.Equity
IV.Assets
V.Liabilities

Accepted Answer

A) I,II and III only 
B) I,III,IV and V only 
C) II,III and V only 
D) III,IV and V only. 
A) I,II and III only 
B) I,III,IV and V only 
C) II,III and V only 
D) III,IV and V only.

Question 11

All assets are measured initially at historical cost.

Accepted Answer

A) True 
 B)False

Question 12

Constructive obligations are those that arise from legally binding contracts.

Accepted Answer

A) True 
 B)False

Question 13

Under the AASB's Conceptual Framework liabilities are defined as:

Accepted Answer

A) future economic benefits under the control of the entity. 
B) future sacrifices of economic benefits that are contingent upon the occurrence of an unusual event. 
C) future sacrifices of profits payable to owners in the form of dividends. 
D) a present obligation of the entity arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. 
A) future economic benefits under the control of the entity. 
B) future sacrifices of economic benefits that are contingent upon the occurrence of an unusual event. 
C) future sacrifices of profits payable to owners in the form of dividends. 
D) a present obligation of the entity arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

Question 14

According to the Corporations Act,dividends can only be paid out of the profits earned by a company.

Accepted Answer

A) True 
 B)False

Question 15

Assets must always be classified in the statement of financial position on the basis of the expected timing of cash flows to be derived from their use or sale.

Accepted Answer

A) True 
 B)False

Question 16

AASB 101 requires which of the following in relation to the classification of expenses?

Accepted Answer

A) Expenses to be classified by either nature or function. 
B) Expenses to be classified by nature,unless classification by function is more relevant. 
C) Expenses to be classified by function,unless classification by nature is more relevant. 
D) Expenses to be classified by both nature and function. 
A) Expenses to be classified by either nature or function. 
B) Expenses to be classified by nature,unless classification by function is more relevant. 
C) Expenses to be classified by function,unless classification by nature is more relevant. 
D) Expenses to be classified by both nature and function.

Question 17

According to AASB 111 Construction Contracts,revenue and expenses relating to long-term construction contracts are recognised on the basis of the:

Accepted Answer

A) effective interest method. 
B) discounted cash flows method. 
C) receipt of cash flows. 
D) percentage of completion method. 
A) effective interest method. 
B) discounted cash flows method. 
C) receipt of cash flows. 
D) percentage of completion method.

Question 18

In relation to selecting appropriate accounting policies,the hierarchy in AASB 108 Accounting Policies,Changes in Accounting Estimates and Errors requires that consideration is secondly given to:

Accepted Answer

A) management using its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. 
B) the requirements in Australian Accounting Standards dealing with similar and related issues. 
C) any Australian Accounting Standard that specifically applies to the transaction,other event or condition. 
D) the definitions,recognition criteria and measurement concepts for assets,liabilities,income and expenses in the Conceptual Framework. 
A) management using its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. 
B) the requirements in Australian Accounting Standards dealing with similar and related issues. 
C) any Australian Accounting Standard that specifically applies to the transaction,other event or condition. 
D) the definitions,recognition criteria and measurement concepts for assets,liabilities,income and expenses in the Conceptual Framework.

Question 19

The statement of financial position must be presented to show assets less liabilities equals equity.

Accepted Answer

A) True 
 B)False

Question 20

In relation to a revaluation surplus,an entity:

Accepted Answer

A) cannot use this surplus for the payment of future dividends. 
B) can transfer this surplus to retained earnings when the asset is derecognised or used. 
C) cannot transfer this surplus to any other reserve account. 
D) can transfer the surplus to the current period profit or loss when the asset is disposed of. 
A) cannot use this surplus for the payment of future dividends. 
B) can transfer this surplus to retained earnings when the asset is derecognised or used. 
C) cannot transfer this surplus to any other reserve account. 
D) can transfer the surplus to the current period profit or loss when the asset is disposed of.

Exam 3: Company Operations

According to the AASB's Conceptual Framework an asset is defined as a/an:

As well as expenses that arise in the ordinary activities of a business,which of the following is recognised as an expense of a company?

When making a transfer from a general reserve to retained earnings,which of the following journals could be used?

The Reserves accounts of a company are disclosed in the statement of financial position as liabilities.

Which of the following statements is correct in relation to the payment of dividends?

AASB 137 defines a provision as a:

Reserves that are not required by accounting standards are known as:

The AASB's Conceptual Framework defines income as:

There are no separate measurement methods for equity.

The statement of financial position shows which of the following? I.Expenses II.Revenues III.Equity IV.Assets V.Liabilities

All assets are measured initially at historical cost.

Constructive obligations are those that arise from legally binding contracts.

Under the AASB's Conceptual Framework liabilities are defined as:

According to the Corporations Act,dividends can only be paid out of the profits earned by a company.

Assets must always be classified in the statement of financial position on the basis of the expected timing of cash flows to be derived from their use or sale.

AASB 101 requires which of the following in relation to the classification of expenses?

According to AASB 111 Construction Contracts,revenue and expenses relating to long-term construction contracts are recognised on the basis of the:

In relation to selecting appropriate accounting policies,the hierarchy in AASB 108 Accounting Policies,Changes in Accounting Estimates and Errors requires that consideration is secondly given to:

The statement of financial position must be presented to show assets less liabilities equals equity.

In relation to a revaluation surplus,an entity:

Nature and Regulation of Companies

Financing Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Accounting for Company Income Tax

Financial Instruments

Foreign Currency Transactions and Forward Exchange Contracts

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Disclosure: Legal Requirements and Accounting Polices

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Disclosure: Translation of Financial Statements Into a Presentation Currency

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Associates and Joint Ventures

Investments in Joint Arrangements

Insolvency and Liquidation

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