7. The most important qualitative characteristics of useful information are:

a. comparability and faithful representation

b. understandability and verifiability.

c. relevance and faithful representation.

d. materiality and timeliness.

8. Materiality of information means:

a. Unbiased information

b. Complete information.

c. Information carrying high dollar figure.

d. Information with capacity to influence user decision making.

9. When two auditors reach the same conclusions about an information then which of the following quality is satisfied by the information?

a. comparability.

b. neutrality.

c. understandability.

d. verifiability.

10.

Which of the following are the three essential criteria in the definition of an asset:

I.	Control.	IV.	Past event.
II.	Future economic benefits.	V.	Legal ownership.
III.	Past obligation.	VI.	Present obligation

a. I, III, VI.

b. II, IV, VI.

c. I, II, IV.

d. I, III, V.

11. An example of an expense, as defined in the Conceptual Framework, is:

a. Dividends paid to shareholders.

b. Payment to a supplier for purchases previously made on credit.

c. Bank transfer to employee accounts for salaries

d. Cash payment for purchase of office equipment

12. Bundaberg Ltd purchased a block of land on 31 March and paid $500 000 cash to the land owner. An independent evaluation reveals that the land is worth $400 000. Using Historical cost as a measurement base, how should Bundaberg Ltd recognise this purchase of land in its financial statements?

a. $400 000 recognised as an asset (land) and $100 000 as a liability.

b. $400 000 recognised as an asset (land).

c. $500 000 recognised as an asset (land).

d. The land should not be recognised as an asset as it cannot be reliably measured.

13. According to the Australian Accounting Standards, which of the following assets may be recorded at market value even if all other assets are recorded at historical cost?

a. Buildings.

b. Inventories.

c. Land.

d. Motor vehicles.

14.

Which of the following is not a proper way for settling a liability?

a. Cash payment.

b. Provision of services.

c. Creditor waiving their rights to the obligation.

d. Declaring bankruptcy.

15.

Which of the following statements is incorrect about the capital maintenance concept?

a. All physical assets are maintained in good working order.

b. Capital is seen as the operating capability of the entitys assets.

c. Profit is earned after an entity has set aside enough capital to maintain the operating capability of the entitys assets.

d. Depreciation is used as a mechanism of capital maintenance.

16.

A set of financial statements prepared in accordance with AASB 101 comprises:

I. A statement of cash flows.

II. A statement of financial position.

III. A statement of changes in equity.

IV. A statement of profit or loss and other comprehensive income.

17.

Under AASB 101 Presentation of Financial Statements, which of the following items is disclosed separately on the face of a statement of financial position?

a. Investment property.

b. Cash and cash equivalents.

c. Current tax liability.

d. All of these items.

18.

Apollo Limited had a bank overdraft of $60,000 that is expected to settle before 30 June 2022, its accounts closing date. However, the company could not settle the overdraft within that date. In July 10 the bank had agreed to convert the overdraft amount to a long-term loan. For the purposes of financial statement presentation for the year ending 30 June 2022, this overdraft should be classified as a:

a. current liability.

b. contingent liability.

c. non-current liability.

d. bank overdraft under negotiation.