Questions and Answers of Financial Accounting And Reporting

Describe any interrelationships between the concepts, principles, accounting standards and the Conceptual Framework.
Explain how both the cost principle and asset revaluations can coexist.
Many countries throughout the world have at various times worked on the development of a conceptual framework. Discuss the advantages of developing a generally accepted normative theory of financial
The AASB had issued four SACs prior to the decision to converge with international accounting standards. What were they?
Briefly describe the Conceptual Framework.
Under what circumstances are employees, suppliers and customers considered as primary users?
Identify the other users of financial reporting as outlined in the Conceptual Framework.
Define reporting entity as outlined in the Australian conceptual framework.
Explain the indicators of a reporting entity as outlined in the Australian conceptual framework.
Discuss the definition and features of a reporting entity as outlined in the exposure draft on the reporting entity.
Explain differential reporting.
Describe the constraint underlying financial statements in the Conceptual Framework.
Define assets, liabilities, equity, income and expenses as defined in the Conceptual Framework.
Explain asset, liability, revenue and expense recognition criteria as outlined in the Conceptual Framework.
Explain possible developments in financial reporting that may occur in the future.
Peter Liu has recently begun his accounting studies and is very confused about the concepts and principles underlying the recording of accounting information. He has been asked prepare a class
During year 1, Ray Ltd invoiced its customers $$100$ 000 for services performed. It received $$75$ 000 cash in year 1 and the balance in year 2. Expenses paid during year 1 amounted to $$45$
The accounting entity concept states that:(a) the life of an entity can be divided into artificial periods.(b) useful reports covering an accounting period can be prepared for the entity.(c)
Which of the following is not a concept or a principle underlying the recording of accounting information?(a) The monetary concept.(b) The accounting entity concept.(c) The going concern
The Conceptual Framework:(a) consists of 4 sections.(b) includes the objective of general purpose financial reporting.(c) defines the elements in financial reports and the qualitative
The Conceptual Framework:(a) has been completed and is awaiting approval by the International Accounting and Reporting Board (IARB).(b) is in the process of being prepared by the IARB.(c) is the
Due process is:(a) where governments from around the world work together to prepare unified accounting standards.(b) the process where all interested parties are consulted and invited to provide
The objective of general purpose financial reporting as defined in the Conceptual Framework is to provide:(a) information that is useful to present and potential investors in making rational
The primary users of financial information as outlined in the Conceptual Framework are:(a) resource providers, recipients of goods and services and parties performing a review or oversight
The primary users of financial information in the category of other creditors as outlined in the Conceptual Framework include:(a) employees, suppliers and customers.(b) employees, lenders and
Accounting entities are:(a) all reporting entities.(b) never reporting entities.(c) sometimes also reporting entities.(d) both accounting entities and reporting entities.
The criteria used to determine if an entity is a reporting entity include:(a) separation of ownership from management.(b) size measured in relation to sales, assets, borrowings, customers and
Reporting entities generally don’t include:(a) public companies.(b) government authorities.(c) some large private companies.(d) sole traders.
The enhancing qualitative characteristics of financial information outlined in the Conceptual Framework include:(a) understandability, timeliness, verifiability and comparability.(b)
Which of the following is considered to be a constraint of providing financial information in the Conceptual Framework?(a) Full disclosure.(b) Understandability.(c) Materiality.(d) Cost.
In the Conceptual Framework, an asset is defined as a resource:(a) owned by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.(b)
In the Conceptual Framework, expenses are defined as:(a) decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that
As outlined in the Conceptual Framework, income should be recognised when:(a) an inflow of future economic benefits is certain and can be measured reliably.(b) the cash is received.(c) an inflow of
Which of the following statements is not true in relation to the definitions and/or recognition criteria for elements in financial reports as outlined in the Conceptual Framework?(a) The definitions
When preparing general purpose financial reports, the elements of GAAP should be applied in the following order:(a) underlying concepts and principles, accounting standards, the Conceptual
Which of the following has/have been identified as future developments for financial reporting?(a) A definition of the reporting entity as part of the Conceptual Framework for financial reporting.(b)
The four major functions that are linked by an ERP system are: (a) sales/marking, manufacturing, accounting/finance, and human resources.(b) sales/marketing, manufacturing, customer, and
Which of the following is not an advantage of XBRL? (a) Interchangeable data.(b) Less accurate financial reporting.(c) Recognition by major accounting package vendors.(d) Paperless reporting.
Which of the following best describes the relationship between accounting informationsystems and accounting standards?(a) Accounting information systems must comply with all accounting standards.(b)
XBRL will potentially assist in strengthening information transparency because it: (a) offers greater search power and customised information for different stakeholders.(b) is a typology based on
Which of the following statements is not true about cloud computing? (a) It removes all concern about data and systems security for businesses.(b) It relies on the internet as the platform for
What best describes the big data phenomenon? (a) Computing software that can heal itself.(b) Green computing initiatives.(c) Software services that can be leased.(d) Data that has come from social
When using Xero, which accounting process is automatically performed when a sales invoice is ‘approved’?(a) Posting the transaction to the ledger accounts.(b) Updating the bank reconciliation.(c)
Integrated accounting packages and various modules can be purchased based on the: (a) size of the business.(b) nature of the business.(c) number of employees.(d) all of the above.
Describe each of the accounting functions that are available using Xero.
Explain how an ERP system integrates the activities within an organisation.
Explain the benefits of an ERP system.
What key business processes does an ERP system support?
Explain how an ERP system supports key business processes.
Discuss how XBRL is used in reporting systems.
What are the benefits of XBRL for internal and external users of financial information?
Describe the current state of adoption of XBRL reporting.
Discuss what cloud computing is.
Explain blockchain and bitcoin.
Compare and contrast financial accounting and management accounting, identifying the principal differences.
Identify and discuss the three broad functions of management.
What are the major cost classifications involved in manufacturing a product?
What are product and period costs and their relationship to the manufacturing process?
How are the work in process inventories reported in the cost of goods manufactured schedule?
In making bicycles, a business has the following costs: tyres, salaries of employees who put tyres on the wheels, factory building depreciation, grease, spokes, factory foreman’s salary,
Which of the following is not an example of management accounting tools?(a) Budgets.(b) Sales forecast.(c) Performance evaluation reports.(d) Costing analysis reports.
Direct materials are a: Conversion Manufacturing Prime cost cost cost (a) Yes Yes No (b) No Yes Yes (c) Yes Yes Yes (d) No No No
James Surfboard Manufacturing Ltd has beginning and ending work in process inventory of $$3500$ and $$7800$ respectively for the year. Direct materials used amounts to $$55$ 000, direct labour
Carlos Mann is an interim management accountant in MFC Manufacturing Ltd. He is confused about whether depreciation on the office building should be a product cost or a period cost. Explain how
In Fisher Ltd, direct materials are $12 000, direct labour $15 000 and manufacturing overhead is $9000. What is the amount of (a) prime costs and (b) conversion costs?
What source documents are used in assigning manufacturing costs to work in process inventory?
What is a job cost sheet, and what is its main purpose?
When are entries made to record the completion of a job and the sale of a job?
What costs are included in total manufacturing costs in the cost of goods manufactured schedule?
How is under- or overapplied manufacturing overhead reported in monthly financial statements?
What is cost accounting?
What type of manufacturing entities might use a process cost accounting system?
How do physical units differ from equivalent units of production?
What are the formulas for calculating unit costs of production?
How are costs assigned to units transferred out, and in ending work in process?
What factors indicate the applicability of ABC as the superior costing system?
Of what importance to managers is the differentiation of activities into unit-level, batch-level, productlevel and facility-level?
Danielle Ltd is working on two job orders. The job cost sheets show the following: direct materials —Job 120 $$6000,$ Job 121 $$3600;$ direct labour — Job 120 $$4000,$ Job 121 $$2000;$
A job cost sheet: (a) is used in process costing.(b) is the subsidiary ledger record for work in process.(c) records direct material requisitions only.(d) is used to record a factory employee’s
In a process cost system, costs are assigned only to: (a) one work in process account.(b) work in process and finished goods inventory.(c) work in process, finished goods and cost of sales.(d) work
Activity-based costing would be likely to be most beneficial to companies with: (a) a single product.(b) few products, each of which consumes about the same amount of resources.(c) many products,
Just-in-time processing requires all of the following except: (a) increasing operational efficiencies.(b) eliminating inventories.(c) basing production on future demand for the product.(d)
What are the effects of a change in activity on (a) a variable cost and (b) a fixed cost?
What does the term relevant range mean? Describe the behaviour of costs within this range.
What is contribution margin and how may it be expressed?
How can the break-even point be determined?
Explain how an entity that shifts its sales mix might actually increase its profit even though the total number of units it sells declines.
How does a CVP statement of profit or loss differ from a traditional statement of profit or loss?
Helena Ltd reports the following total costs at two levels of production:Classify each cost as variable, fixed or mixed.ReasoningA variable cost varies in total directly and proportionately with each
Lombardi Ltd has a unit selling price of $$400,$ variable costs per unit of $$240$ and fixed costs of $$160$ 000. Calculate the break-even point in units using(a) a mathematical equation and(b)
Under variable costing, fixed manufacturing costs are classified as: (a) period costs.(b) product costs.(c) both (a) and (b).(d) neither (a) nor (b).
Profit would be higher under absorption costing than under variable costing when: (a) units produced are less than units sold.(b) units produced are more than units sold.(c) units produced are the
Assume Domino’s sells 5 Supremes for every 3 Hawaiian and 2 Meatosaurus pizzas. What is the percentage of Supreme pizzas in the sales mix?(a) 5%.(b) 30%.(c) 20%.(d) 50%.
How does the budget process work?
How does budgeting differ from long-range planning?
How may the individual budgets in the master budget be classified?
What is the sequence for preparing the operating budgets?
How does budgeting in service and not-for-profit entities and government entities differ from budgeting in manufacturing and merchandising entities?
What are the criteria used in management by exception?
What conditions are essential for responsibility accounting?

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