QUESTION 1

1. ___________ are a distribution of profits to shareholders.
2. Assets
3. Expenses
4. Shares
5. Dividends

0.5 points

QUESTION 2

1. In the case of a share issue being oversubscribed, the common approaches include to:
2. issue additional shares to meet the excess demand
3. allocate the shares on a pro rata basis
4. increase the issue price of the shares
5. issue additional shares to meet the excess demand and increase the share issue price

0.5 points

QUESTION 3

1. Some companies establish general reserves as a means of transferring profits out of retained earnings for __________.
2. current expansion plans
3. paying past debts
4. future expansion plans
5. None of the given answers are correct.

0.5 points

QUESTION 4

1. The total market capitalisation of a company after a bonus issue is likely to:
2. be lower than it was before the bonus issue
3. be greater than it was before the bonus issue
4. be less than it was after the bonus issue
5. remain unchanged

0.5 points

QUESTION 5

1. At the end of the accounting period, the gain on revaluation recognised within other comprehensive income would, in accordance with accounting standards, then be transferred to equity in the form of a transfer to the revaluation ___________________.
2. surplus account
3. reserve
4. liability
5. None of the given answers are correct.

0.5 points

QUESTION 6

1. Holders of ordinary shares:
2. are assured of dividends each year
3. may not receive a cash dividend each year but the dividend will accrue and eventually be paid
4. will always receive a dividend if the company has made a profit in that financial year
5. receive dividends at the discretion of the directors

0.5 points

QUESTION 7

1. A company might decide to pay cash to shareholders in exchange for those shareholders selling some of their shares back to the company. This is an example of:
2. dividends
3. share buybacks
4. preference shares
5. rights issue

0.5 points

QUESTION 8

1. A debenture will be issued at par value:
2. on all occasions
3. on most occasions, because management is careful to issue the debentures at an amount close to the market rate
4. on those rare occasions when the coupon rate is the same as the market rate
5. on those occasions when the market rate is higher than the coupon rate

0.5 points

QUESTION 9

1. In accordance with AASB 137Provisions, Contingent Liabilities and Contingent Assets, which of the following statements is correct?
2. Contingent liabilities and provisions are required by AASB 137 to be disclosed in the financial statements.
3. Contingent assets where realisation of economic benefits is probable should be recognised in the financial statements.
4. Constructive obligations are recognised when entities have no realistic alternative to making future sacrifice of economic benefits.
5. Provisions for future necessary repairs and maintenance should be recognised in the financial statements.

0.5 points

QUESTION 10

1. There are many examples of a situation where an onerous contract might exist EXCEPT which of the following?
2. When the managers of an organisation enter a contract to supply particular products at an agreed price only to find that the cost to manufacture the products is likely to exceed the contracted sales price
3. When the managers of an organisation enter a contract to supply services for a given period and for an agreed pricefor example, gardening services for the next yearonly to find that the costs to be incurred are likely to exceed the contracted service revenues
4. When an organisation has entered a non-cancellable lease of property, but the lessee has moved out of the site and is unable to sublet the property. In this case the organisation (the lessee) would expect to receive no further economic benefits from the property pursuant to the lease contract, but still has an obligation to pay future rentals
5. When a manager cancels a contract at little or no cost to either party

0.5 points

QUESTION 11

1. The interest that a debenture holder receives at the time of each payment made by the issuer is:
2. the coupon rate multiplied by the face value of the net debenture liability
3. the market rate of interest multiplied by the present value of the opening balance of the net debenture liability
4. the market rate of interest multiplied by the present value of the closing balance of the net debenture liability
5. the coupon rate of interest multiplied by the present value of the opening balance of the net debenture liability

0.5 points

QUESTION 12

1. Which of the following statements is consistent with the positive accounting theory paradigm?
2. Managers avoid future sacrifice of economic benefits debt covenants when the company is close to violation of debt covenants.
3. Managers avoid constructive obligations in the presence of accounting based debt covenants even though there is no realistic alternative to making future sacrifice of economic benefits.
4. Managers choose accounting methods that will decrease income to reduce the probability of debt covenant violation.
5. Managers avoid income increasing accounting methods to reduce the probability of debt covenant violation.

0.5 points

QUESTION 13

1. Under AASB 101, something may be classified as a current liability even when it is expected to be settled for a period in excess of 12 months.
2. True
3. False

0.5 points

QUESTION 14

1. Consistent with the recognition requirements in many other accounting standards, a(n)____________must be recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably.
2. intangible asset
3. tangible asset
4. liabilities
5. cash flows

0.5 points

QUESTION 15

1. Purchased goodwill is recognised as the amount of:
2. the excess of the cost of acquisition incurred by an acquirer over the fair value of the identifiable net assets acquired
3. the difference between fair value and book value of the net assets of the company acquired
4. the lower of the sum of related expenditures on advertising and promotion undertaken in the past two years by the subsidiary being purchased and the independent valuation of the market value of that subsidiary's goodwill
5. the excess of the cost of acquisition incurred by an acquirer over the fair value of the identifiable net assets and contingent liabilities acquired

0.5 points

QUESTION 16

1. An asset can be considered as identifiable:
2. if it is either separable or arises from contractual or other legal rights
3. if it is either acquired or is internally generated
4. if it is carried at cost
5. if it has an active market

0.5 points

QUESTION 17

1. The AASB has followed ____________________.
2. the International Financial Reporting Standard
3. the International Auditing Standards
4. no standards
5. US accounting standards

0.5 points

QUESTION 18

1. An intangible asset with a finite useful life can be amortised when:
2. the asset has been purchased
3. the asset is available for use
4. the asset is derecognised
5. None of the given answers are correct.

0.5 points

QUESTION 19

1. Which among the following is not an intangible asset?
2. plant
3. brand name
4. patents
5. copyrights

0.5 points

QUESTION 20

1. Expenditure on internally generated brands, mastheads, publishing titles, customer lists and items similar in substance cannot be distinguished from the cost of developing the business as a whole. Therefore, such items are not recognised as___________ as per AASB 138.
2. tangible assets
3. intangible assets
4. expense
5. cost