Question 1

As the Urgent Issues Group (UIG)is now defunct,the interpretations issued by it are no longer enforceable.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following was not one of the objectives of the Corporate Law Economic Reform Program (CLERP)?

Accepted Answer

A) To make access to capital easier for small business. 
B) To make access to capital easier for large business. 
C) To improve takeover legislation. 
D) To facilitate the more widespread use of electronic commerce. 
A) To make access to capital easier for small business. 
B) To make access to capital easier for large business. 
C) To improve takeover legislation. 
D) To facilitate the more widespread use of electronic commerce. B

Question 3

Shares and debentures are the most common types of securities issued by companies when raising funds.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following statements is correct in relation to the Urgent Issues Group (UIG)?

Accepted Answer

A) The UIG is now defunct.As a result,previously issued UIG interpretations are no longer enforceable. 
B) The UIG has been replaced by the International Accounting Standards Board. 
C) Prior to ceasing to exist,the UIG provided consensus views on a range of topics peculiar to the Australian political,legal and economic systems. 
D) Prior to ceasing to exist,the UIG was a subcommittee of the IFRS Interpretations Committee. 
A) The UIG is now defunct.As a result,previously issued UIG interpretations are no longer enforceable. 
B) The UIG has been replaced by the International Accounting Standards Board. 
C) Prior to ceasing to exist,the UIG provided consensus views on a range of topics peculiar to the Australian political,legal and economic systems. 
D) Prior to ceasing to exist,the UIG was a subcommittee of the IFRS Interpretations Committee.

Question 5

The two main types of companies permitted to be registered under the Corporations Act 2001 are a:

Accepted Answer

A) private company,and a proprietary company. 
B) public company,and a trade union. 
C) proprietary company,and a public company. 
D) proprietary company,and a partnership. 
A) private company,and a proprietary company. 
B) public company,and a trade union. 
C) proprietary company,and a public company. 
D) proprietary company,and a partnership.

Question 6

The share capital of a company may consist of:

Accepted Answer

A) ordinary or preference shares issued by the company either fully paid or partly paid. 
B) loans from banks. 
C) secured and unsecured notes issued by the company. 
D) debentures issued by the company. 
A) ordinary or preference shares issued by the company either fully paid or partly paid. 
B) loans from banks. 
C) secured and unsecured notes issued by the company. 
D) debentures issued by the company.

Question 7

A proprietary company must have at least one shareholder and cannot have more than:

Accepted Answer

A) 100 shareholders. 
B) 50 shareholders. 
C) 20 shareholders. 
D) 500 shareholders. 
A) 100 shareholders. 
B) 50 shareholders. 
C) 20 shareholders. 
D) 500 shareholders.

Question 8

A disclosing entity includes:

Accepted Answer

A) a company that is not a reporting entity. 
B) an entity which has its shares listed on the ASX. 
C) an entity which issues its shares only to the company directors. 
D) a small proprietary company. 
A) a company that is not a reporting entity. 
B) an entity which has its shares listed on the ASX. 
C) an entity which issues its shares only to the company directors. 
D) a small proprietary company.

Question 9

Compared to IFRS standards,Australian accounting standards initially required:

Accepted Answer

A) less disclosure in notes to the financial statements. 
B) identical disclosures in notes to the financial statements. 
C) more information disclosed in the notes to the financial statements. 
D) different disclosures in the notes to the financial statements. 
A) less disclosure in notes to the financial statements. 
B) identical disclosures in notes to the financial statements. 
C) more information disclosed in the notes to the financial statements. 
D) different disclosures in the notes to the financial statements.

Question 10

In 2001,the International Accounting Standards Board replaced the:

Accepted Answer

A) International Accounting Standards Committee. 
B) Financial Reporting Council. 
C) Urgent Issues Group. 
D) Australian Accounting Research Foundation. 
A) International Accounting Standards Committee. 
B) Financial Reporting Council. 
C) Urgent Issues Group. 
D) Australian Accounting Research Foundation.

Question 11

Which of the following is not specifically excluded from the definition of a debenture under s.9 of the Corporations Act 2001?

Accepted Answer

A) Bank overdrafts in the ordinary course of business. 
B) Unsecured notes. 
C) Money orders. 
D) Cheques. 
A) Bank overdrafts in the ordinary course of business. 
B) Unsecured notes. 
C) Money orders. 
D) Cheques.

Question 12

The content and format of general purpose financial reports are determined by the company's management and the specific user group requiring the special purpose financial report.

Accepted Answer

A) True 
 B)False

Question 13

The replaceable rules that apply to a company have effect as a contract between:

Accepted Answer

A) the company and each member. 
B) the company and each director and company secretary. 
C) a member and each other member. 
D) all of the above. 
A) the company and each member. 
B) the company and each director and company secretary. 
C) a member and each other member. 
D) all of the above.

Question 14

According to the Corporations Act 2001,a small proprietary company is one which satisfies at least two of the following tests: it must have consolidated revenue of less than $25 million,consolidated gross assets of less than $12.5 million and:

Accepted Answer

A) total liabilities of less than $10 million. 
B) total liabilities of less than $20 million. 
C) fewer than 100 employees at the end of the financial year. 
D) fewer than 50 employees at the end of the financial year. 
A) total liabilities of less than $10 million. 
B) total liabilities of less than $20 million. 
C) fewer than 100 employees at the end of the financial year. 
D) fewer than 50 employees at the end of the financial year.

Question 15

Costs incurred in promoting and setting up a company are considered to be capital in nature and cannot be paid from the company's assets.

Accepted Answer

A) True 
 B)False

Question 16

The advantages of a company over a partnership and sole trader do not include which of the following?

Accepted Answer

A) Members are able to sell their shares at any time to another person without having to obtain permission from the other members. 
B) Members are liable for only a limited amount of the company's debts. 
C) A company has a legal existence distinct from its owners. 
D) A company is only entitled to raise small amounts of cash by issuing shares. 
A) Members are able to sell their shares at any time to another person without having to obtain permission from the other members. 
B) Members are liable for only a limited amount of the company's debts. 
C) A company has a legal existence distinct from its owners. 
D) A company is only entitled to raise small amounts of cash by issuing shares.

Question 17

Members of a company are allowed to sell their shares at any time,provided they obtain permission from the other members.

Accepted Answer

A) True 
 B)False

Question 18

The role of the Australian Securities and Investments Commission is to:
I.enforce and administer the Corporations Act.
II.make information about companies and other bodies available to the public as soon as practicable.
III.issue accounting standards for reporting entities.
IV.maintain,facilitate and improve the performance of the financial system and entities in it.

Accepted Answer

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

Question 19

The Australian Securities and Investments Commission (ASIC)does not determine accounting standards,but has the right to lobby for or against accounting standards as it sees fit.

Accepted Answer

A) True 
 B)False

Question 20

According to s.224 of the ASIC Act 2001,accounting standards should result in financial information which has which of the following characteristics?
I.Allows users to make and evaluate decisions about allocating scarce resources.
II.Assists directors in discharging their obligations in relation to financial reporting.
III.Is relevant to assessing performance,financial position,financing and investment.
IV.Is readily understandable.
V.Facilitates comparability.
VI.Is relevant and reliable.

Accepted Answer

A) I,IV and VI only. 
B) I,III,IV and VI only. 
C) I,II,IV,V and VI only. 
D) all of the above. 
A) I,IV and VI only. 
B) I,III,IV and VI only. 
C) I,II,IV,V and VI only. 
D) all of the above.

Exam 1: Nature and Regulation of Companies

As the Urgent Issues Group (UIG)is now defunct,the interpretations issued by it are no longer enforceable.

Which of the following was not one of the objectives of the Corporate Law Economic Reform Program (CLERP)?

Shares and debentures are the most common types of securities issued by companies when raising funds.

Which of the following statements is correct in relation to the Urgent Issues Group (UIG)?

The two main types of companies permitted to be registered under the Corporations Act 2001 are a:

The share capital of a company may consist of:

A proprietary company must have at least one shareholder and cannot have more than:

A disclosing entity includes:

Compared to IFRS standards,Australian accounting standards initially required:

In 2001,the International Accounting Standards Board replaced the:

Which of the following is not specifically excluded from the definition of a debenture under s.9 of the Corporations Act 2001?

The content and format of general purpose financial reports are determined by the company's management and the specific user group requiring the special purpose financial report.

The replaceable rules that apply to a company have effect as a contract between:

According to the Corporations Act 2001,a small proprietary company is one which satisfies at least two of the following tests: it must have consolidated revenue of less than $25 million,consolidated gross assets of less than $12.5 million and:

Costs incurred in promoting and setting up a company are considered to be capital in nature and cannot be paid from the company's assets.

The advantages of a company over a partnership and sole trader do not include which of the following?

Members of a company are allowed to sell their shares at any time,provided they obtain permission from the other members.

The Australian Securities and Investments Commission (ASIC)does not determine accounting standards,but has the right to lobby for or against accounting standards as it sees fit.

Financing Company Operations

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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