Question 1

Assume the opening balance of equity (01/07/2014)is $1,400,000.During 2014/15,there was a share issue of $540,000,dividends declared of $280,000 and a profit for the year of $710,000,What is the equity balance on the 30/06/2015?

Accepted Answer

A)  $2,650,000 
B)  $2,370,000 
C)  $2,930,000 
D)  Not enough data to calculate the closing balance.

Question 2

Currently worldwide,most major economies have either adopted IFRSs or:

Accepted Answer

A)  are moving towards the adoption of such. 
B)  have elected never to use IFRSs. 
C)  have set timelines to converge with IFRSs. 
D)  Both A and C.

Question 3

Which of the following statements is incorrect?

Accepted Answer

A)  A parent company holds a majority interest in a subsidiary company. 
B)  A takeover is when a company buys a controlling interest in another company. 
C)  A non-controlling interest is also known as a minority interest. 
D)  An associate company is another name for a subsidiary company.

Question 4

Information if by its omission,misstatement or non-disclosure has the potential to influence economic decision-making,is regarded as:

Accepted Answer

A)  reliable. 
B)  true and fair. 
C)  material. 
D)  objective.

Question 5

Calculate the total comprehensive income for the year if operating profit is $456,000,the tax rate is 30%,finance charges are $88,200 and other comprehensive income for the year (net of tax)is $195,000.

Accepted Answer

A)  $452,460 
B)  $514,200 
C)  $426,000 
D)  $562,800

Question 6

In a statement of financial position,trade debtors would normally be classified as a:

Accepted Answer

A)  current liability. 
B)  current asset. 
C)  non-current liability. 
D)  reserve.

Question 7

Which of the following financial statements does not have to be prepared by a publicly listed company?

Accepted Answer

A)  Statement of comprehensive income. 
B)  Statement of changes in equity. 
C)  Statement of cash flows. 
D)  All of the above must be prepared.

Question 8

Consolidated accounts are:

Accepted Answer

A)  another name for ledger accounts. 
B)  prepared by the parent company for a group of companies. 
C)  are an amalgamation of a set of accounts for a group of companies as if the group was a single entity. 
D)  Both B and C.

Question 9

An audit report that contains the opinion that the financial statements are true and fair and comply with the accounting standards is described as:

Accepted Answer

A)  a qualified report. 
B)  an authorised report. 
C)  a quantified report. 
D)  an unqualified report.

Question 10

Which of the following statements is correct? Consolidated statements:

Accepted Answer

A)  show all the financial details of the subsidiary companies. 
B)  only show the financial position and performance of the parent company. 
C)  eliminate all transactions between the companies within the group. 
D)  do not show the minority interests.

Question 11

Organised stock exchanges provide which of the following benefits?

Accepted Answer

A)  Facility for companies to raise new capital. 
B)  Allows shareholders to easily sell their shares. 
C)  Increases the amount of regulation for the listed company. 
D)  Both A and B.

Question 12

Which of the following comments in relation to the statement of cash flow is incorrect? The statement of cash flows:

Accepted Answer

A)  allows the user of the report to determine where cash has been generated. 
B)  is essentially a formal statement of all transactions affecting the cash account. 
C)  highlights where cash has been spent. 
D)  is a duplication of information already provided in the other financial statements.

Question 13

The statement of comprehensive income differs from a traditional statement of financial performance in that:

Accepted Answer

A)  it does not show a gross profit. 
B)  it only shows realised gains and losses. 
C)  it shows all realised and unrealised gains and losses. 
D)  it does not show financial expenses.

Question 14

Which of the following may be voluntarily disclosed in the annual report?
1)Human resource strategies.
2)Environmental initiatives.
3)Community contributions.
4)Financial forecasts.

Accepted Answer

A)  1 and 2. 
B)  1, 2 and 4. 
C)  1, 2, 3 and 4. 
D)  2 and 4.

Question 15

Which statement in relation to a company is not correct?

Accepted Answer

A)  The directors are required to report to the shareholders by means of financial statements. 
B)  The directors are appointed by the shareholders. 
C)  If the accounts are required to be audited, the auditors are appointed by the directors. 
D)  None of the above, i.e., all are correct statements.

Question 16

Which of the following is not included in an audit report?

Accepted Answer

A)  An audit opinion on whether or not the financial statements are 'true and fair.' 
B)  Identification of the financial reports audited. 
C)  A statement on the sustainable strategies of the reporting entity. 
D)  A statement that the financial reports were prepared in accordance with accounting standards.

Question 17

The statement of changes in equity includes:

Accepted Answer

A)  share issues. 
B)  changes to reserves. 
C)  changes to retained profits. 
D)  all of the above.

Exam 5: Regulatory Framework for Companies

Assume the opening balance of equity (01/07/2014) is $1,400,000.During 2014/15,there was a share issue of $540,000,dividends declared of $280,000 and a profit for the year of $710,000,What is the equity balance on the 30/06/2015?