Deck 4: Published Financial Statements

Question 1

The requirement that financial report information is comprehensible to users who have a reasonable knowledge of business and accounting is known as:

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

Answer 1

A

Question 2

The tests to be used for determining if a proprietary company will be classified as small rather than large include:

A)fewer than 50 full- time equivalent employees of the company or entities it controls at the end of the financial year
B)gross assets of the company and any entities it controls of less than $12.5 million at the end of the financial year
C)revenue of the company and any entities it controls of less than $25 million for the financial year
D)all of the above

Answer 2

D

Question 3

Potential users of company financial statements include:

A)special interest community groups
B)suppliers and customers
C)prospective investors and financial analysts
D)all of the above

Answer 3

D

Question 4

Which of the following statements regarding the directors' declaration is incorrect?

A)it must be signed by a director
B)it must specify the date on which the declaration is made
C)it must be made in accordance with a resolution of directors
D)it must be signed by the auditor

Question 5

Which of the following companies are not regarded as a disclosing entities according to the Corporations Act?

A)companies issuing securities,other than debentures,pursuant to a prospectus
B)companies issuing debentures where a trustee for debenture holders has been appointed
C)listed companies
D)small proprietary companies

Question 6

Financial statements are primarily addressed and directed towards the information needs of:

A)creditors
B)shareholders
C)employees
D)suppliers

Question 7

Which of the following statements is incorrect?

A)internal reports are provided to company management from within the organisation for planning and control purposes
B)published financial reports of companies are primarily designed to fulfil the information needs of users and to discharge the company's accountability requirements
C)the published financial statements of companies are often referred to as external reports
D)the published financial statements of companies are often referred to as internal reports

Question 8

Which of the following statements is incorrect?

A)the Corporations Act provides very detailed rules as to the required form and content of the accounts
B)major ASX listing rule requirements are for the continuous disclosure of price- sensitive financial information and half- yearly reporting
C)companies listed on the ASX must comply with the securities exchange listing rules
D)the ASX listing rules specify certain disclosure requirements for financial reports additional to those required by the Corporations Act and accounting standards

Question 9

The Corporations Act requires the accounts of a company to convey which type of view?

A)fair and correct
B)true and correct
C)true and fair
D)true and unbiased

Question 10

The statement that reconciles the opening and closing balances of shareholders' equity is referred to as a:

A)statement of changes in equity
B)statement of financial position
C)statement of comprehensive income
D)none of the above

Question 11

Reliability exists when information:

A)can be depended upon by users to represent faithfully that which it either purports to represent or could reasonably be expected to represent
B)is free from material error and bias
C)both A and B
D)contains material error and bias

Question 12

A statement of financial position is also known as a:

A)statement of changes in equity
B)statement of assets and liabilities
C)balance sheet
D)none of the above

Question 13

In order to comply with the legislative provisions of the Corporations Act 2001 and other sources of authority and guidance,company financial statements comprise which of the following reports?

A)directors' report
B)financial report
C)auditor's report
D)all of the above

Question 14

An entity in respect of which it is reasonable to expect the existence of users dependent on general purpose financial reports for information which will be useful to them for making and evaluating decisions about the allocation of scarce resources is known as a:

A)reporting entity
B)non- reporting entity
C)disclosing entity
D)none of the above

Question 15

Explain reporting entities and general purpose financial reports.

Question 16

The financial statement that records all items of income and expense,whether included in profit and loss or not is the:

A)balance sheet
B)statement of comprehensive income
C)statement of financial position
D)statement of cash flows

Question 17

Which financial reports are designed to satisfy the common information needs of a wide range of users who are unable to command the preparation of reports tailored to their particular information needs?

A)special purpose
B)general purpose
C)particular purpose
D)specific purpose

Question 18

Which of the following is not included in a concise financial report?

A)a concise financial report drawn up in accordance with relevant concise reporting accounting standards
B)the directors' report
C)a detailed set of notes to the financial statements
D)a statement that the report is a concise report and that the full financial report and auditor's report will be sent free of charge if the member asks

Question 19

The general management discussion section of an annual report should include:

A)details of the entity's performance in relation to any applicable Australian environmental regulations
B)a review of operations and the results of those operations
C)the entity's principal activities during the year and any significant changes in the nature of those activities during the year
D)all of the above

Question 20

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

A)a statement of cash flows for the period
B)notes,comprising a summary of significant accounting policies and other explanatory information
C)a statement of comprehensive income for the period
D)all of the above

Question 21

Discuss the qualitative characteristics of financial information according to the AASB Framework.

Question 22

Explain the purpose of company financial reporting.

Question 23

Explain the difference between external and internal reports.

Question 24

Explain the company size test as specified in the Corporations Act.