1. Which of the following actions is consistent with the Doctrine of Conservatism?

a. deliberate overstatement of expenses to reduce profits

b. excessive provisions for warranty expenses

c. careful assessment of doubtful debts

d. adoption of accelerated depreciation method to reduce profits.

4. Chopin Ltd has a debt contract and is close to violating the return on equity ratio as stipulated in the debt agreement. What is the most appropriate action Chopin Ltd can take?

a. Negotiate a loan to increase cash balance.

b. Accelerate the collection of receivables.

c. Negotiate to prepay long-term debt.

d. Revalue a class of non-current asset.

7. A statement of changes in equity:

a. is identical to a statement of comprehensive income.

b. is required to include only the components of equity and others listed in paragraph 106 of AASB 101.

c. includes the effects of changes in accounting policies recognised in accordance with AASB 108.

d. is required to include only the components of equity and others listed in paragraph 106 of AASB 101 and includes the effects of changes in accounting policies recognised in accordance with AASB 108.