Question 1

Which of the following statements is incorrect?

Accepted Answer

A)   Financial records must be retained for 7 years.
B)   Financial records may be kept in any language.
C)   A company can decide where to keep its financial records.
D)   Financial records must be retained for 10 years. D

Question 2

The financial position of an entity as at reporting date is presented in a statement of comprehensive income.

Accepted Answer

A) True 
 B)False  False

Question 3

If a company is a small proprietary company, it must comply with accounting standards if directed to prepare an annual financial report by shareholders with at least:

Accepted Answer

A)   1% of the company's votes.
B)   2% of the company's votes.
C)   3% of the company's votes.
D)   5% of the company's votes. D

Question 4

Events occurring after the end of the reporting period which provide evidence of conditions that existed at the end of the reporting period are known as:

Accepted Answer

A)   non-adjusting events.
B)   reporting events.
C)   adjusting events.
D)   disclosing events.

Question 5

The financial statements of an entity are authorised for issue on:

Accepted Answer

A)   the day the directors' declaration is signed.
B)   30 June each year.
C)   the last day of the financial year.
D)   the day the auditor's report is signed.

Question 6

In the preparation of financial statements, it is necessary to present comparative information for:

Accepted Answer

A)   statement of profit or loss and other comprehensive income items only.
B)   statement of financial position items only.
C)   statement of cash flow items only.
D)   all amounts reported in the financial statements.

Question 7

If an accounting policy change is voluntary, which of the following disclosures is required by AASB 108/IAS 8?

Accepted Answer

A)   The nature of the change.
B)   The reasons that applying the new accounting policy provides reliable and more relevant information.
C)   The amount of the adjustment relating to periods prior to those presented to the extent practicable.
D)   All of the above.

Question 8

Disclosing entities must prepare a half year financial report in accordance with AASB 134/IAS 34 Interim Financial Reporting.

Accepted Answer

A) True 
 B)False

Question 9

The correction of a material error that occurred in a previous period must be accounted for by:

Accepted Answer

A)   disclosure in the notes to the financial statements.
B)   an adjustment in future accounting periods.
C)   a prospective adjustment to the financial statements.
D)   a retrospective restatement in the first financial statements issued after the discovery of the error.

Question 10

Companies must always disclose the fact that their financial statements are prepared using the going concern assumption.

Accepted Answer

A) True 
 B)False

Question 11

AASB 1048 Interpretation of Standards gives all IFRIC Interpretations the same status as AASB standards.

Accepted Answer

A) True 
 B)False

Question 12

Small proprietary companies are not required to prepare a directors' report to accompany their financial statements.

Accepted Answer

A) True 
 B)False

Question 13

Attached to the financial statements must be a set of notes providing disclosures required by corporate regulations and accounting standards.

Accepted Answer

A) True 
 B)False

Question 14

Errors can occur for which of the following reasons?

Accepted Answer

A)   Mistakes in applying accounting policies
B)   Misinterpretation of facts
C)   Fraud
D)   All of the above

Question 15

An entity is not permitted to change its accounting policies.

Accepted Answer

A) True 
 B)False

Question 16

Compliance with AASB accounting standards automatically results in meeting the Corporations Act requirements in relation to presenting a true and fair view in financial reports.

Accepted Answer

A) True 
 B)False

Question 17

Which type of financial statements is prepared for users who depend on them for information to enable them to make decisions about the allocation of scarce resources?

Accepted Answer

A)   Management financial statements
B)   Short-term financial statements
C)   Specific purpose financial statements
D)   General purpose financial statements

Question 18

Which of the following does not involve the use of estimates by an entity in preparing its financial statements?

Accepted Answer

A)   Doubtful debts expense
B)   Depreciation expense
C)   The original purchase price of an asset
D)   Employee benefit liabilities such as long-service leave

Question 19

The general information component of a Directors' Report must contain which of the following information? I. A review of operations and the results of operations.
II) The entity's principal activities.
III) Likely future developments in the entity's operations.
IV) Whether the financial report is in accordance with the Corporations Act.

Accepted Answer

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

Question 20

A complete set of financial statements will include a report on the entity's environmental activities.

Accepted Answer

A) True 
 B)False

Exam 4: Disclosure: Legal Requirements and Accounting Polices

Which of the following statements is incorrect?

The financial position of an entity as at reporting date is presented in a statement of comprehensive income.

If a company is a small proprietary company, it must comply with accounting standards if directed to prepare an annual financial report by shareholders with at least:

Events occurring after the end of the reporting period which provide evidence of conditions that existed at the end of the reporting period are known as:

The financial statements of an entity are authorised for issue on:

In the preparation of financial statements, it is necessary to present comparative information for:

If an accounting policy change is voluntary, which of the following disclosures is required by AASB 108/IAS 8?

Disclosing entities must prepare a half year financial report in accordance with AASB 134/IAS 34 Interim Financial Reporting.

The correction of a material error that occurred in a previous period must be accounted for by:

Companies must always disclose the fact that their financial statements are prepared using the going concern assumption.

AASB 1048 Interpretation of Standards gives all IFRIC Interpretations the same status as AASB standards.

Small proprietary companies are not required to prepare a directors' report to accompany their financial statements.

Attached to the financial statements must be a set of notes providing disclosures required by corporate regulations and accounting standards.

Errors can occur for which of the following reasons?

An entity is not permitted to change its accounting policies.

Compliance with AASB accounting standards automatically results in meeting the Corporations Act requirements in relation to presenting a true and fair view in financial reports.

Which type of financial statements is prepared for users who depend on them for information to enable them to make decisions about the allocation of scarce resources?

Which of the following does not involve the use of estimates by an entity in preparing its financial statements?

A complete set of financial statements will include a report on the entity's environmental activities.