Chapter 4 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A small proprietary company will be required to prepare financial reports if A) the company's memorandum or articles of association, or otherrequirements or agreements, require the preparation of financial statements B) the ASX directs the company to prepare a financial report C) shareholders holding at least 5% of votes in the company request financial reports D) both A and C 2) primarily add ressed and directed towards the information needs of A) creditors C) employees D) suppliers 3) A statement of financial position is also known as a: A) statement of changes in equity C) balance sheet B) statement of assets and liabilities D) none of the above ) In order to comply with the legislative provisions of the Corporations Act 2001 and other sources of authority and guidance, company financial statements which of the following reports? A) directors' report C) auditor's report B) financial report D) all of the above 5) An entity in respect of which it is reasonable to expect the existence of users dependent on general purpose financial reports for information which will be useful to them for making and evaluating decisions about the allocation of scarce resources is known asa: A) reporting entity C) disclosing entity B) non- reporting entity D) none of the abo 6) The requirement that financial report information is comprehensible to users who have a reasonable knowledge of business and accounting is known as: B) relevance D) reliability C) materiality 7) The tests to be used for determining if a proprietary company will be classified as small rather than large include A) fewer than50 full-time equivalent employees of the company or entities it controls at the end of the financial year B) gross assets of the company and any entities it controls of less than $12.5 million at the end of the financial year C) revenue of the company and any entities it controls of less than $25 million for the financial year D) all of the above 8) Reliability exists when information: A) can be depended upon by users to represent faithfully that which it either purports to represent or could reasonably be expected to represent B) is free from material error and bias Q) both A and B D) contains material error and bias