Deck 6: The Statement of Financial Position

Question 1

Which accounting standard addresses the presentation of the statement of financial position?

A) AASB 129
B) AASB 10
C) ASX 1
D) AASB 101

Answer 1

D

Question 2

The fixed format for the statement of financial position required by AASB 101 is:

A) assets = liabilities + equity
B) assets - liabilities = equity
C) assets = equities
D) no fixed format is required

Answer 2

D

Question 3

What does the presentation of investments in shares in the statement of financial position depend upon?

A) The relationship between the investee and the investor
B) The debt-to-equity ratio of the investor
C) The debt-to-asset ratio of the investor
D) The intent of the investor as to the future disposal of the shares

Answer 3

A

Question 4

The availability of assets to meet financial commitments as they fall due is known as:

A) solvency
B) control over resources
C) gearing
D) asset turnover

Question 5

Australian standard setters have adopted the view that:

A) there should be some flexibility in the format of financial statements
B) companies should use a fixed format when preparing financial statements
C) Schedule 5 provides an example of a flexible format for preparers of financial statements
D) the statement of financial position is merely a link between successive income statements

Question 6

At a minimum,how many statements of financial position are required when an entity applies an accounting policy retrospectively?

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

Question 7

What is one way equity is described in the public sector?

A) Capital and reserves
B) Government equity
C) Capital
D) Partners' capital

Question 8

Identify and discuss the requirements concerning the classification of liabilities contained in AASB 101.

Question 9

Under AASB 101,the 'average time between the acquisition of materials entering into a process and their realisation in cash or as an instrument that is readily convertible into cash' is known as:

A) production cycle
B) production line
C) economic cycle
D) operating cycle

Question 10

What is the most common classification regarding liabilities?

A) Source
B) Longevity
C) Liquidity
D) Nature

Question 11

Discuss the concept of reserves and the sources from which they arise.

Question 12

What structure(s)is considered a component of the financial structure of an entity?

A) Capital structure
B) Asset structure
C) Both A and B
D) Neither A nor B

Question 13

What term endorses the selection of information that is relevant to a specific industry?

A) Standardised format
B) Flexible format
C) Creative accounting
D) Industry format

Question 14

The accounting standard relating to the statement of financial position is:

A) AASB 103
B) AASB 101
C) AASB 140
D) AASB 111

Question 15

Which of the following is not another name for share capital?

A) Paid-up capital
B) Contributed capital
C) Treasury capital
D) Issued capital

Question 16

Which of the following is a common classification of assets?

A) Nature of the asset
B) Source of the asset
C) Liquidity of the asset
D) All of the above are common classifications

Question 17

What are the two broad categories of changes in equity?

A) Current and long-term
B) Investor and investee
C) Less than 50% and 50% and more ownership interests
D) Owner and Non-owner

Question 18

Which statement concerning the statement of financial position and the requirements of the Corporations Act is not true?

A) The Act requires the statement of financial position to present a 'true and fair view' of the entity's financial position
B) The Act states that if the financial statement would not give a true and fair view, additional information must be included in the notes to the statements in order to provide that view
C) True and fair view is defined in the Act to mean in accordance with generally accepted accounting standards
D) None of the above, i.e., all of the statements are true

Question 19

Shares may not be held for what reason by the investor?

A) Delaying expansion
B) Capital gains
C) Obtaining a more influential holding
D) Dividend income

Question 20

Identify and discuss the requirements concerning the classification of assets contained in AASB 101.

Question 21

The correction of errors relating to prior periods is now covered by:

A) AASB 1034
B) AASB 101
C) AASB 108
D) none of the above

Question 22

Entities are required to disclose comparative information the previous period.Discuss how the correction of prior period errors may impact on the presentation of the financial statements.

Question 23

Which statement is incorrect?

A) Under AASB 101, assets and liabilities must not be set-off unless set-off is permitted or required by another accounting standard
B) Between 1979 and 1999, there was no Australian accounting standard dealing specifically with the statement of financial position
C) Under AASB 101, there is no materiality override
D) None of the statements is incorrect

Question 24

Current assets,as defined in AASB 101,are those that:

A) are expected to be realised within the normal course of the operating cycle
B) are held primarily for the purpose of being traded
C) are expected to be realised within 12 months after the end of the accounting period
D) any of the above

Question 25

Additional line items to those disclosed in accordance with paras 68 and Aus68.1 of AASB 101 may be included on the face of the statement of financial position when disclosure of these items is assessed to be relevant to an understanding of the entity's financial position.This assessment is based on which of the following?

A) The nature and liquidity of assets
B) The function of the assets within the entity
C) The amounts, nature and timing of liabilities
D) All of the above

Question 26

Which presentation of assets and liabilities is likely to result in more relevant financial information?

A) Increasing dollar amount
B) Decreasing order of liquidity
C) Order of acquisition
D) Alphabetical order

Question 27

Separate disclosure,on the face of the statement of financial position,is required under AASB 101 paragraph 54 for:

A) trade and other receivables
B) inventories
C) provisions
D) all of the above

Question 28

The statement in relation to AASB 108 and the correction of prior-period errors that is incorrect is:

A) Prior-period errors are material omissions from and misstatements in an entity's statement of financial position and associated notes
B) The correction must not be included in the profit or loss for the period in which the error is discovered
C) Comparative figures for prior periods need not be restated
D) A retrospective correction must be made which will normally affect retained earnings in the current statement of financial position

Question 29

AASB 101 allows which of these statements of financial position formats?

A) Current/non-current format
B) Order-of-liquidity format
C) A mixed basis of presentation using both the current/non-current basis and the order-of-liquidity format for different asset groups
D) All of the above are allowable formats.