Question 1

The concept of limited liability limits:

Accepted Answer

A) the liability of investors to the extent of their investment 
B) the liability of directors to the extent of their investment 
C) the liability of director to the extent of their contribution to the company's losses 
D) the liability of investors to the extent of their contribution to the company's losses

Question 2

With the separation of ownership from control arises the potential of a conflict of interest between:

Accepted Answer

A) managers and auditors 
B) owners and managers 
C) owners and shareholders 
D) creditors and managers

Question 3

The entity that facilitates the trade in financial securities such as stocks,stock options and bonds is known as the:

Accepted Answer

A) debt exchange 
B) Financial Reporting Council 
C) Australian Accounting Standards Board 
D) stock exchange

Question 4

A share in the profits of an entity distributed in proportion to the shareholders' shareholdings is referred to as:

Accepted Answer

A) equity 
B) interest 
C) dividends 
D) drawings

Question 5

The organisation in Australia that is responsible for developing,issuing and maintaining accounting standards and pronouncements in Australia is the:

Accepted Answer

A) AARF 
B) AASB 
C) FRC 
D) FASB

Question 6

The countries that are currently working towards convergence with IFRS include:

Accepted Answer

A) the United States 
B) Australia 
C) Japan 
D) both A and C

Question 7

Any party with an interest in,or affected by the actions of,an organisation is referred to as a:

Accepted Answer

A) creditholder 
B) stakeholder 
C) shareholder 
D) debtholder

Exam 1: The Nature and Environment of Companies