Deck 11: Additional Accounting Standards and Disclosures

Question 1

Applying a new accounting policy to transactions,other events or conditions as if that policy had always been applied is known as:

A)consequent application
B)retrospective application
C)prospective application
D)subsequent application

Answer 1

B

Question 2

Which of the following is an example of a non- adjusting events after the reporting date?

A)a bank's withdrawal of a necessary line of credit to a company that had been facing financial difficulties during the financial year
B)the discovery of fraud or errors that show that the financial statements are incorrect
C)a decline in the market value of listed investments after the end of the reporting period
D)settlement,after the end of the reporting period,of legal action taken against the entity that establishes the exact amount of the claim that was in existence,but uncertain,at reporting date

Answer 2

C

Question 3

If the omission,misstatement or non- disclosure of information could have the potential,individually or collectively,to influence decisions by users taken on the basis of the financial report,the information is defined by AASB 1031 as being:

A)important
B)significant
C)material
D)none of the above

Answer 3

C

Question 4

Explain the purpose of AASB 101 and its requirements for the statement of changes in equity.

Question 5

AASB 133 requires the basic and diluted EPS figures to be:

A)presented in the statement of financial position
B)presented in the statement of changes in equity
C)disclosed in the notes to the financial statements
D)presented in the statement of comprehensive income

Question 6

Which of the following statements is correct regarding the quantitative guidelines for materiality in AASB 1031?

A)if the particular item is equal to or greater than 20% of the appropriate base amount,it would be presumed to be material unless there is evidence or convincing argument to the contrary
B)amounts equal to or greater than 5% of the base amount would be presumed to be material unless there is evidence or convincing argument to the contrary
C)if the particular item is less than 10% of the appropriate base amount,it would be presumed to be material unless there is evidence or convincing argument to the contrary
D)if the particular item is equal to or greater than 10% of the appropriate base amount,it would be presumed to be material unless there is evidence or convincing argument to the contrary

Question 7

The principal revenue- producing activities of the entity and other activities that are not investing or financing activities are referred to as:

A)investing activities
B)financing activities
C)equity activities
D)operating activities

Question 8

Which of the following factors does not provide the rationale for the provision of cash flow information?

A)a positive cash flow is essential for an entity's financial viability and survival
B)accrual- based profit always equals cash flow
C)most financial statement users have an interest in cash flow in terms of the cash returns they can expect from their investments
D)accrual- based profit does not necessarily equal cash flow

Question 9

Adjusting events after the reporting period:

A)reveal for the first time a condition that existed at reporting date
B)provide additional evidence that assists in determining the amount of an item which was uncertain at reporting date
C)both A and B
D)involve the creation of new conditions that did not exist at reporting date

Question 10

The gross inflow of economic benefits during the period arising from ordinary activities which result in increases in equity other than contributions from equity holders is known as:

A)asset
B)liability
C)revenue
D)expense

Question 11

Which of the following is not one of the conditions in AASB 118 when revenue from the sale of goods should be recognised?

A)the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold
B)it is probable that the economic benefits associated with the transaction will flow to the entity
C)it is possible that the economic benefits associated with the transaction will flow to the entity
D)the entity has transferred to the buyer the significant risks and rewards of ownership of the goods

Question 12

Specific disclosure requirements for concise financial reports mandated in AASB 1039 include:

A)sales revenue in accordance with AASB 118
B)comparative information for the preceding financial year
C)the presentation currency used
D)all of the above

Question 13

AASB 8 suggests that an entity should consider whether a practical limit to the number of reportable segments has been achieved when that number exceeds:

A)10 segments
B)50 segments
C)5 segments
D)20 segments

Question 14

Which of the following is the name given to an abbreviated financial report derived from and consistent with the full financial report but excluding much of the detailed disclosures commonly found in the notes?

A)mini- financial report
B)concise financial report
C)short- form financial report
D)none of the above

Question 15

A person or entity that is related to the entity preparing its financial statements is referred to as a/an:

A)financial party
B)related party
C)unrelated party
D)none of the above

Question 16

The denominator for the basic EPS calculation is the:

A)operating profit before tax
B)operating profit after tax
C)weighted average number of ordinary shares
D)number of ordinary share issued as at the end of the year

Question 17

According to AASB 101,a complete set of financial statements comprises:

A)a statement of changes in equity for the period
B)a statement of comprehensive income for the period
C)a statement of cash flows for the period
D)all of the above

Question 18

For the purpose of AASB 108,which of the following is not considered to represent a change in an accounting policy?

A)the change from the use of straight- line depreciation to reducing- balance depreciation
B)the application of a new accounting policy for transactions,other events or conditions that did not occur previously or were immaterial
C)the application of an accounting policy for transactions,other events or conditions that differ in substance from those previously occurring
D)both B and C

Question 19

According to AASB 124,an entity is related to a reporting entity if which of the following conditions applies:

A)one entity is a joint venture of a third entity and the other entity is an associate of the third entity
B)both entities are joint ventures of the same third party
C)the entity and the reporting entity are members of the same group
D)all of the above

Question 20

Which of the following is not one of the quantitative thresholds in AASB 8 for determining whether an operating segment is a reportable segment?

A)its reported revenue,including both sales to external customers and intersegment sales or transfers,is 10 per cent or more of the combined revenue,internal and external,of all operating segments
B)the absolute amount of its reported profit or loss is 10 per cent or more of the greater,in absolute amount,of (i)the combined reported profit of all operating segments that did not report a loss and (ii)the combined reported loss of all operating segments that reported a loss
C)its reported revenue,including sales to external customers but excluding intersegment sales or transfers,is 10 per cent or more of the combined revenue of all operating segments
D)its assets are 10 per cent or more of the combined assets of all operating segments

Question 21

Discuss the AASB 101 requirements regarding the structure and content of financial statements.

Question 22

Explain the purpose of and rational for a statement of cash flows.

Question 23

Identify the quantitative thresholds in AASB 8 for determining whether an operating segment is a reportable segment.

Question 24

Define the concept of materiality and identify the requirements in AASB 1031 for determining whether information is material.

Question 25

Explain the importance of related party disclosures.

Question 26

Explain the AASB 108 requirements for the selection and application of accounting policies..

Question 27

Explain the likely contents of the discussion and analysis in concise financial reports as required by AASB 1039.

Question 28

Identify the conditions in AASB 118 to be satisfied for revenue to be recognised in the case of the sale of goods.