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NEW QUESTION # 39
Which one of the following is the correct treatment of sales?
- A. Credit sales are recorded in the receivables ledger prior to posting to the general ledger.
- B. Cash sales are recorded in the receivables ledger prior to posting to the general ledger.
- C. Credit sales are not recorded in the receivables ledger prior to posting to the general ledger.
- D. Cash and credit sales are recorded in the receivables ledger prior to posting to the general ledger.
Answer: A
NEW QUESTION # 40
Which one of the following statements is correct?
- A. Australian accounting standards are based on the US GAAP.
- B. Accounting standards provide the basic knowledge upon which the conceptual framework is developed.
- C. Accounting standards prescribe the possible accounting treatments.
- D. Accounting standards are developed and maintained using a consultative process with the OECD.
Answer: C
NEW QUESTION # 41
Which one of the following reports sets out how directors have run a company and if they implemented proper procedures to deal with matters like accountability, audits, directors' roles and responsibilities, internal controls and relations with shareholders?
- A. corporate governance statement
- B. director's report
- C. corporate social responsibility report
- D. chairman's statement
Answer: A
NEW QUESTION # 42
XYZ Ltd is listed on the Australian Securities Exchange (ASX). Which one of the following reports is the company required to prepare as a part of its annual financial report?
- A. corporate governance statement
- B. sustainability report
- C. chairman's statement
- D. management commentary
Answer: A
NEW QUESTION # 43
The accounting policies used by companies must result in financial reports that are
- A. easy to read.
- B. independently audited.
- C. comparable with previous years' reports.
- D. signed by the CEO or equivalent.
Answer: C
NEW QUESTION # 44
Liquidity of a company is based on its ability to
- A. meet long term commitments.
- B. buy back shares.
- C. meet short term commitments.
- D. pay dividends to shareholders.
Answer: C
NEW QUESTION # 45
Which one of the following examples would not represent an agency cost?
- A. the cost of preparing a cost-benefit report for a new project
- B. the cost of employing an internal auditor
- C. the cost of engaging an external auditor
- D. the cost of preparing a financial report for shareholders
Answer: A
NEW QUESTION # 46
Venturer Ltd has received fees from venture capital activities and has engaged you as the accountant to prepare the financial report for 31 December 20X0. Unable to find a specific reference to venture capital fees in either the conceptual framework or the accounting standards, you establish the appropriate accounting treatment by
- A. referring to the fundamental accounting assumptions and conventions.
- B. consulting with the International Accounting Standards Board.
- C. using your professional judgment and referring to generally accepted accounting principles and practice.
- D. using your professional judgment and referring to the conceptual framework's definitions and recognition criteria.
Answer: D
NEW QUESTION # 47
Which one of the following statements is correct in relation to presenting the financial position of an entity?
- A. Solvency is the availability of total assets over a long-term, while liquidity is the availability of total assets over the short-term to meet financial commitments as they fall due.
. - B. Liquidity represents cash holdings, while solvency is long-term profitability.
- C. Solvency is the availability of cash over the long-term, while liquidity is the availability of funds over the short-term to meet financial commitments as they fall due.
- D. Liquidity is the ability to repay long-term financial commitments, whereas solvency is the ability to repay short-term commitments.
Answer: C
NEW QUESTION # 48
Which one of the following practices is not considered creative accounting?
- A. trading in derivatives
- B. profit smoothing
- C. aggressive earnings management
- D. window dressing
Answer: A
NEW QUESTION # 49
A statement of generally accepted theoretical principles which form the frame of reference for financial reporting refers to the
- A. Conceptual Framework.
- B. Regulatory Framework.
- C. Generally Accepted Accounting Principles.
- D. International Financial Reporting Standards.
Answer: A
NEW QUESTION # 50
In an efficient market, normally if interest rates rise, share prices will
- A. rise due to the overall positive sentiment.
- B. fall since investors expect a higher return.
- C. rise since banks invest their increased profits.
- D. fall in anticipation of a reversal in the interest rate cycle.
Answer: B
NEW QUESTION # 51
Which one of the following statements is correct about using judgement in the financial reporting process?
- A. Use of individual judgement is required to choose between alternative methods available within accounting standards.
- B. Accountants should not be allowed to use their own judgement.
- C. Judgement can be allowed in the statement of comprehensive income but not in the statement of financial position.
- D. A true and fair view cannot be assured if individual judgement is allowed.
Answer: A
NEW QUESTION # 52
In a stock market that displays strong efficiency, share prices reflect all available
- A. information about future expansion plans.
- B. public information.
- C. public and inside information.
- D. information about past changes in share prices.
Answer: C
NEW QUESTION # 53
Which of the following are the stated objectives of the International Accounting Standards Board (IASB)?
I)Enforce accounting standards.
II)Develop accounting standards.
III)Work for convergence of accounting standards.
- A. III only
- B. II and III only
- C. I only
- D. I and II only
Answer: B
NEW QUESTION # 54
Variations in the regulatory regime over financial reporting in different countries is attributable to a range of differences including
- A. consumer laws, taxation requirements and the extent to which the country has adopted international financial reporting standards.
- B. the needs of investors, creditors, employees, lending institutions and taxation authorities.
- C. the extent to which the country has adopted international financial reporting standards and the requirements of local securities exchange.
- D. company structures, ownership, local culture and the level of development of the country.
Answer: D
NEW QUESTION # 55
Which one of the following is an accurate definition of fair value of an asset?
- A. The price for which an asset could be sold in an orderly transaction between market participants at the measurement date.
- B. The cost of replacing an asset with an identical item.
- C. The amount yet to be written off over the remainder of the asset's useful life.
- D. The price for which an asset could be sold net of disposal costs.
Answer: A
NEW QUESTION # 56
When business managers seek detailed information about the profitability or efficiency of different parts of their operations, they would find the most useful information in
- A. financial statements as specified by IAS 1 Presentation of Financial Statements.
- B. the company's accounting policies.
- C. various management accounting reports.
- D. the annual financial report.
Answer: C
NEW QUESTION # 57
The International Federation of Accountants (IFAC) was established by
- A. the United Nations.
- B. the Organization for Economic Co-operation & Development.
- C. various professional accounting bodies.
- D. the International Accounting Standards Board.
Answer: C
NEW QUESTION # 58
The ability of a company to pay its bills when and as they fall due is a measure of
- A. economic value.
- B. compliance with the conceptual framework.
- C. the true and fair view of the financial report.
- D. solvency.
Answer: D
NEW QUESTION # 59
Which one of the following parties provides information to ensure that the financial statements show a true and fair view?
- A. financial Institutions
- B. shareholders
- C. tax consultants
- D. directors of the company
Answer: D
NEW QUESTION # 60
The IASB evaluates the merits of adding a potential item to its agenda mainly by reference to the needs of
- A. suppliers.
- B. investors.
- C. tax agencies.
- D. regulatory authorities.
Answer: B
NEW QUESTION # 61
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