Question 1

A statement of comprehensive income that includes revenue,other income,employee benefits and costs,motor vehicle expenses would have been prepared using the:

Accepted Answer

A)   nature of expense method.
B)   narrative method.
C)   revenues and gains approach.
D)   function of expense approach. A

Question 2

Following are the items of income and expense recognised during the period by Murray Ltd:
$\begin{array}{|l|l|}
\hline \text { I }& \text { Foreign exchange differences } \
\hline \text { II } & \text { Losses on ineffective cash flow hedges } \
\hline \text { III } & \text { Retrospective adjustment from a change in accounting policy } \
\hline \mathrm{V} & \text { Actuarial losses on defined benefit pension plans } \
\hline IV & \text { Prior period error discovered } \
\hline VI & \text { Prospective adjustment resulting from a change in accounting estimates }\
\hline
\end{array}$
Which of the following combinations identify all items permitted in AASB 101 'Presentation of Financial Statements to be presented under other comprehensive income?

Accepted Answer

A)   I, II, V and VI
B)   II, III, VI and V
C)   I, III, and VI
D)   III, IV and V  D

Question 3

Paragraph 98 of AASB 101 lists some circumstances that may give rise to separate disclosure of items of income and expense.They include:

Accepted Answer

A)   reversals of inventory write-downs.
B)   extraordinary items.
C)   finance costs.
D)   distribution costs. A

Question 4

Which of the following statements is not in accordance with AASB 101 Presentation of Financial Statements with respect to the statement of comprehensive income?

Accepted Answer

A)   All items of income and expense recognised in a period are to be presented in a single statement of comprehensive income.
B)   All items of income and expense recognised in a period are permitted to be presented in two statements: 1)  a separate income statement and 2)  a statement beginning with profit or loss and displaying components of other comprehensive income.
C)   An entity shall present an analysis of expenses in profit or loss using a classification based on either the nature of expenses or their function within the entity, whichever provides information that is reliable and more relevant.
D)   Components of other comprehensive income include gain on sale of property plant and equipment.

Question 5

AASB 101 permits entities to present the components of other comprehensive income either before tax effects (gross presentation)or after their related tax effects (net presentation).

Accepted Answer

A) True 
 B)False

Question 6

When items of income and expense are material,and their nature and amount are separately disclosed,this could indicate the existence of:

Accepted Answer

A)   an extraordinary item.
B)   an abnormal item.
C)   an adjusting item.
D)   an unusual item.

Question 7

The choice between reporting expenses by nature or by function is extremely important,as different net profit figures are derived depending upon the choice made.

Accepted Answer

A) True 
 B)False

Question 8

An entity is required in AASB 101 to produce:

Accepted Answer

A)   a statement of changes in equity.
B)   a statement of financial position.
C)   a statement of comprehensive income.
D)   all of the given answers.

Question 9

'If we were to look only at the expenses and income … recorded in the income statement we would not get a full picture of all expenses and income that were recognised in the current period'.Explain what this statement means,and other items that need to be 'looked at'?

Accepted Answer

The answer of 'If we were to look only at...

Question 10

Amounts reclassified to profit or loss in the current period that were recognised in 'other comprehensive income' in the current or previous periods are known as a:

Accepted Answer

A)   disposal of revenue or expenses
B)   de-recognition of transactions
C)   reclassification adjustment
D)   reprocessed transaction

Question 11

Where a change in accounting estimates occurs,the following should be disclosed:

Accepted Answer

A)   the fact that the amount of the effect on future periods will not be disclosed because estimating that amount is impracticable.
B)   the reason for the change and comparative data to show the effect with and without the change.
C)   the nature of the change and the impact on previous income statements.
D)   the fact that the amount of the effect on future periods will not be disclosed because estimating that amount is impracticable and the reason for the change and comparative data to show the impact with and without the change.

Question 12

All adjustments to equity other than those related to transactions with owners in their capacity as owners are disclosed in the statement of comprehensive income (AASB 101).

Accepted Answer

A) True 
 B)False

Question 13

When selecting a presentation format for the statement of comprehensive income management must select the one that is:

Accepted Answer

A)   most relevant.
B)   most reliable.
C)   most consistent.
D)   most relevant and the most reliable.

Question 14

If the exercise (strike)price of a call option is greater than the current share price,the option is said to be 'in-the-money'.

Accepted Answer

A) True 
 B)False

Question 15

According to AASB 101,the income statement provides a total profit figure to which opening retained earnings is added and from which dividends are deducted.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following items does not give rise to a reclassification adjustment from components of other comprehensive income to profit and loss?

Accepted Answer

A)   disposal of a foreign operation
B)   de-recognition of revalued assets
C)   sale of a foreign subsidiary
D)   de-recognition of available-for-sale financial assets

Question 17

Changes in accounting policy are to be made retrospectively or prospectively,depending upon the background to the change.

Accepted Answer

A) True 
 B)False

Question 18

Components of 'other comprehensive income' would include:

Accepted Answer

A)   net profit reported in the statement of comprehensive income.
B)   net operating cash flows reported on the statement of cash flows.
C)   changes in revaluation surplus.
D)   net operating cash flows reported on the statement of cash flows, plus total of all income and expenses recognised directly in equity.

Question 19

Government departments are now required to embrace traditional financial accounting methods.Opponents of this requirement suggest that:

Accepted Answer

A)   It is not a good move as it makes managers more accountable for their department's performance.
B)   It is not a good move as it emphasises the use of cash accounting by government departments.
C)   It is not a good move as it distracts managers from pursuing their proper goals: the provision of social services.
D)   It is not a good move as it introduces value added reporting.

Question 20

Under AASB 101 additional line items,headings and subtotals:

Accepted Answer

A)   are precluded as they provide unnecessary information that may confuse the user.
B)   shall be presented on the face of the statement when such presentation is relevant to an understanding of the entity's financial performance.
C)   shall be presented on the face of the statement when such items can be measured reliably and it is probable these events will occur.
D)   will only be included in the notes to the income statement if they are relevant to an understanding of the entity's financial performance.

Exam 16: The Statement of Comprehensive Income and Statement of Changes in Equity

A statement of comprehensive income that includes revenue,other income,employee benefits and costs,motor vehicle expenses would have been prepared using the:

Paragraph 98 of AASB 101 lists some circumstances that may give rise to separate disclosure of items of income and expense.They include:

Which of the following statements is not in accordance with AASB 101 Presentation of Financial Statements with respect to the statement of comprehensive income?

AASB 101 permits entities to present the components of other comprehensive income either before tax effects (gross presentation)or after their related tax effects (net presentation).

When items of income and expense are material,and their nature and amount are separately disclosed,this could indicate the existence of:

The choice between reporting expenses by nature or by function is extremely important,as different net profit figures are derived depending upon the choice made.

An entity is required in AASB 101 to produce:

'If we were to look only at the expenses and income … recorded in the income statement we would not get a full picture of all expenses and income that were recognised in the current period'.Explain what this statement means,and other items that need to be 'looked at'?

Amounts reclassified to profit or loss in the current period that were recognised in 'other comprehensive income' in the current or previous periods are known as a:

Where a change in accounting estimates occurs,the following should be disclosed:

All adjustments to equity other than those related to transactions with owners in their capacity as owners are disclosed in the statement of comprehensive income (AASB 101).

When selecting a presentation format for the statement of comprehensive income management must select the one that is:

If the exercise (strike)price of a call option is greater than the current share price,the option is said to be 'in-the-money'.

According to AASB 101,the income statement provides a total profit figure to which opening retained earnings is added and from which dividends are deducted.

Which of the following items does not give rise to a reclassification adjustment from components of other comprehensive income to profit and loss?

Changes in accounting policy are to be made retrospectively or prospectively,depending upon the background to the change.

Components of 'other comprehensive income' would include:

Government departments are now required to embrace traditional financial accounting methods.Opponents of this requirement suggest that:

Under AASB 101 additional line items,headings and subtotals: