Question 1

Which of these has not been a significant influence on the development of modern accounting principles?

Accepted Answer

A)  Globalisation 
B)  Global warming 
C)  The rise of the multinational corporation 
D)  Series of company failures 
A)  Globalisation 
B)  Global warming 
C)  The rise of the multinational corporation 
D)  Series of company failures B

Question 2

According to the Conceptual Framework which statement concerning the recognition of liabilities is not true?

Accepted Answer

A)  All liabilities that meet the definition of a liability should be recognised in the accounting records. 
B)  A recognition criteria is that it is probable that a sacrifice of future economic benefits will be required. 
C)  A recognition criteria is that the amount of the liability must be able to be measured reliably. 
D)  Liabilities that do not satisfy the recognition criteria can be recognised in the notes attached to the accounts. 
A)  All liabilities that meet the definition of a liability should be recognised in the accounting records. 
B)  A recognition criteria is that it is probable that a sacrifice of future economic benefits will be required. 
C)  A recognition criteria is that the amount of the liability must be able to be measured reliably. 
D)  Liabilities that do not satisfy the recognition criteria can be recognised in the notes attached to the accounts. A

Question 3

Which of these is a fundamental purpose of accounting standards? Improving:
i. accountants' ethics.
ii. social accountability.
iii. share price.
iv. resource allocation.

Accepted Answer

A)  i, ii, iii, iv 
B)  i, ii, 
C)  iv 
D)  iii 
A)  i, ii, iii, iv 
B)  i, ii, 
C)  iv 
D)  iii C

Question 4

A characteristic of equity as specified in the Conceptual Framework is it:

Accepted Answer

A)  ranks before liabilities as a claim on assets. 
B)  must be controlled by the entity. 
C)  is a residual. 
D)  is a present obligation. 
A)  ranks before liabilities as a claim on assets. 
B)  must be controlled by the entity. 
C)  is a residual. 
D)  is a present obligation.

Question 5

An entity where it is reasonable to expect the existence of users dependant on general- purpose financial reports for information to use in economic decision making is known as a:

Accepted Answer

A)  public company. 
B)  large business. 
C)  reporting entity. 
D)  non-reporting entity. 
A)  public company. 
B)  large business. 
C)  reporting entity. 
D)  non-reporting entity.

Question 6

The body whose role it is to act as overseer and advisor to the AASB is the:

Accepted Answer

A)  Financial Reporting Council. 
B)  Australian Accounting Research Foundation. 
C)  The Accounting Professional and Ethical Standards Board. 
D)  Australian Securities and Investments Commission. 
A)  Financial Reporting Council. 
B)  Australian Accounting Research Foundation. 
C)  The Accounting Professional and Ethical Standards Board. 
D)  Australian Securities and Investments Commission.

Question 7

Which statement relating to comparability is true?

Accepted Answer

A)  It requires an entity, as far as possible, to use the same accounting method from year to year. 
B)  It means a company can never change an accounting method. 
C)  It means all firms in the same industry should use the same accounting methods. 
D)  It means the same depreciation method must be employed for all classes of non-current assets. 
A)  It requires an entity, as far as possible, to use the same accounting method from year to year. 
B)  It means a company can never change an accounting method. 
C)  It means all firms in the same industry should use the same accounting methods. 
D)  It means the same depreciation method must be employed for all classes of non-current assets.

Question 8

In the current Conceptual Framework the qualitative characteristic of reliability has been replaced by the characteristic of:

Accepted Answer

A)  trustworthiness. 
B)  truth and fairness. 
C)  honesty. 
D)  faithful representation. 
A)  trustworthiness. 
B)  truth and fairness. 
C)  honesty. 
D)  faithful representation.

Question 9

Which of these is not a cost of financial reporting?

Accepted Answer

A)  Costs of preparing the annual report. 
B)  Costs of adhering to accounting standards. 
C)  Loss of competitive position as a result of the disclosure of financial information outside the business. 
D)  Cost of budgeting within the organisation. 
A)  Costs of preparing the annual report. 
B)  Costs of adhering to accounting standards. 
C)  Loss of competitive position as a result of the disclosure of financial information outside the business. 
D)  Cost of budgeting within the organisation.

Question 10

The capital maintenance concept underlying the traditional historical cost system is maintaining intact:

Accepted Answer

A)  the purchasing power of equity at the beginning of the period. 
B)  the realisable value of equity at the beginning of the period. 
C)  the current value of equity at the beginning of the period. 
D)  the dollar value of equity at the beginning of the period. 
A)  the purchasing power of equity at the beginning of the period. 
B)  the realisable value of equity at the beginning of the period. 
C)  the current value of equity at the beginning of the period. 
D)  the dollar value of equity at the beginning of the period.

Question 11

Under the Conceptual Framework, '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', is the definition of:

Accepted Answer

A)  contributions. 
B)  income. 
C)  equity. 
D)  expense. 
A)  contributions. 
B)  income. 
C)  equity. 
D)  expense.

Question 12

Under IAS 18/AASB 118 interest income should be recognised:

Accepted Answer

A)  proportionately over time, as the interest is earned. 
B)  at the point of sale. 
C)  when the contract for the loan is signed. 
D)  at the end of the loan period. 
A)  proportionately over time, as the interest is earned. 
B)  at the point of sale. 
C)  when the contract for the loan is signed. 
D)  at the end of the loan period.

Question 13

In relation to the conceptual framework, SAC stands for:

Accepted Answer

A)  sensible accounting constructs. 
B)  standard auditing controls. 
C)  statements of accounting concepts. 
D)  statements from accounting committees. 
A)  sensible accounting constructs. 
B)  standard auditing controls. 
C)  statements of accounting concepts. 
D)  statements from accounting committees.

Question 14

Under SAC 1, which entity is the least likely to have users dependent on general-purpose financial reports?

Accepted Answer

A)  A small proprietary company whose shareholders also run the business. 
B)  A company which is listed on the stock exchange. 
C)  A company with a large number of shareholders. 
D)  A company which issues debentures to the public. 
A)  A small proprietary company whose shareholders also run the business. 
B)  A company which is listed on the stock exchange. 
C)  A company with a large number of shareholders. 
D)  A company which issues debentures to the public.

Question 15

Accounting information that is supported by adequate evidence is more likely to meet the Conceptual Framework's criteria of:

Accepted Answer

A)  faithful representation. 
B)  relevance. 
C)  comparability. 
D)  understandability. 
A)  faithful representation. 
B)  relevance. 
C)  comparability. 
D)  understandability.

Question 16

The statement that is not correct concerning the definition of expenses in the Conceptual Framework is which of the following?

Accepted Answer

A)  An expense arises whenever the economic benefits in an asset are consumed or lost. 
B)  The definition of expenses does not encompass items that have traditionally been reported in the financial statements as losses. 
C)  An expense must result in a decrease in equity. 
D)  The definition of expenses is expressed in terms of changes in assets, liabilities and equity. 
A)  An expense arises whenever the economic benefits in an asset are consumed or lost. 
B)  The definition of expenses does not encompass items that have traditionally been reported in the financial statements as losses. 
C)  An expense must result in a decrease in equity. 
D)  The definition of expenses is expressed in terms of changes in assets, liabilities and equity.

Question 17

Currently which body has the role of supervising real-time trading on the Australian Stock Exchange and enforcing laws against misconduct?

Accepted Answer

A)  The Australian Securities Exchange 
B)  The Australian Accounting Standards Board 
C)  The Financial Reporting Council 
D)  The Australian Securities and Investments Commission 
A)  The Australian Securities Exchange 
B)  The Australian Accounting Standards Board 
C)  The Financial Reporting Council 
D)  The Australian Securities and Investments Commission

Question 18

In the current Conceptual Framework the qualitative characteristic of _________________ has been replaced by faithful representation and verifiability.

Accepted Answer

A)  relevance 
B)  reliability 
C)  comparability 
D)  understandability 
A)  relevance 
B)  reliability 
C)  comparability 
D)  understandability

Question 19

In the Conceptual Framework, materiality is an aspect of:

Accepted Answer

A)  verifiability. 
B)  faithful representation. 
C)  understandability. 
D)  relevance. 
A)  verifiability. 
B)  faithful representation. 
C)  understandability. 
D)  relevance.

Question 20

Under the Conceptual Framework there are ____ recognition criteria for each of assets, liabilities, income and expenses

Accepted Answer

A)  one 
B)  two 
C)  three 
D)  four 
A)  one 
B)  two 
C)  three 
D)  four

Exam 17: Regulation and the Conceptual Framework

Which of these has not been a significant influence on the development of modern accounting principles?

According to the Conceptual Framework which statement concerning the recognition of liabilities is not true?

Which of these is a fundamental purpose of accounting standards? Improving: i. accountants' ethics. ii. social accountability. iii. share price. iv. resource allocation.

A characteristic of equity as specified in the Conceptual Framework is it:

An entity where it is reasonable to expect the existence of users dependant on general- purpose financial reports for information to use in economic decision making is known as a:

The body whose role it is to act as overseer and advisor to the AASB is the:

Which statement relating to comparability is true?

In the current Conceptual Framework the qualitative characteristic of reliability has been replaced by the characteristic of:

Which of these is not a cost of financial reporting?

The capital maintenance concept underlying the traditional historical cost system is maintaining intact:

Under the Conceptual Framework, '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', is the definition of:

Under IAS 18/AASB 118 interest income should be recognised:

In relation to the conceptual framework, SAC stands for:

Under SAC 1, which entity is the least likely to have users dependent on general-purpose financial reports?

Accounting information that is supported by adequate evidence is more likely to meet the Conceptual Framework's criteria of:

The statement that is not correct concerning the definition of expenses in the Conceptual Framework is which of the following?

Currently which body has the role of supervising real-time trading on the Australian Stock Exchange and enforcing laws against misconduct?

In the current Conceptual Framework the qualitative characteristic of _________________ has been replaced by faithful representation and verifiability.

In the Conceptual Framework, materiality is an aspect of:

Under the Conceptual Framework there are ____ recognition criteria for each of assets, liabilities, income and expenses

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Accounting for Manufacturing

Cost Accounting Systems

Cash Management and Control

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis, Profitability Analysis and Capital Budgeting

Partnerships: Formation, Operation and Reporting

Companies: Formation and Operations

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation, Disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

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