Question 13

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Which fundamental qualitative characteristic best describes the capability of financial information making a difference in decisions made by users?

Select one:

a.

Faithful representation

b.

Reliability

c.

Comparability

d.

Relevance

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Question 14

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The justification for the inventory valuation rule, the lower of cost and net realisable value, is:

Select one:

a.

cost versus benefit

b.

reliability

c.

materiality

d.

conservatism

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Question 15

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What is the meaning of the word 'depreciation' in contemporary accounting?

Select one:

a.

A fall in value

b.

An allocation of cost

c.

A physical deterioration

d.

A fall in price

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Question 16

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Under the provisions of AASB 116, concerning an asset that has been re-valued upward, which statement is correct?

Select one:

a.

Neither of the statements is correct

b.

If the asset is disposed of, the revaluation surplus can remain in the accounts after the disposal of the asset that created it

c.

The amount of the revaluation increment is included in equity without being included in net profit

d.

Both of the statements are correct

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Question 17

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General-purpose financial statements are the product of?

Select one:

a.

managerial accounting

b.

financial accounting

c.

both financial and managerial accounting

d.

neither financial nor managerial accounting

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Question 18

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Which item listed indicates an effect of a legislative instrument?

Select one:

a.

The ASIC votes to make a standard.

b.

The making of a standard is to be notified in the Commonwealth of Australia Gazette.

c.

The Senate is given the final authority to approve accounting standards for application.

d.

Standards are to be tabled in the Commonwealth House of Representatives for 30 sitting days.

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Question 19

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An asset should be depreciated over its:

Select one:

a.

physical life

b.

legal life

c.

economic life

d.

technical life

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Question 20

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An impairment loss results when the ________ of an asset is less than its ________.

Select one:

a.

carrying amount; recoverable amount

b.

original cost, fair value

c.

fair value, carrying amount

d.

recoverable amount, carrying amount

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Question 21

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According to a study from the 1980s, what are the three components of the objective of accounting?

Select one:

a.

Accountability, decision usefulness, and control

b.

Accountability, relevance, and decision usefulness

c.

Relevance, control, and reliability

d.

Faithful representation, control, and fair value

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Question 22

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Which measurement is utilised when non-financial assets are assessed for fair value purposes?

Select one:

a.

Highest and best use

b.

Lower-of-cost-or-market

c.

Historical cost

d.

Average use

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Question 23

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Two approaches to determining the number of units of inventory on hand are:

Select one:

a.

periodic / perpetual

b.

FIFO / weighted average

c.

lower of cost and net realisable value

d.

periodic / physical

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Question 24

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Which of the following is not considered cash for financial reporting purposes?

Select one:

a.

Petty cash funds and change funds

b.

Money orders, certified checks, and personal checks

c.

Bitcoin

d.

Coin, currency, and available funds

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Question 25

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All of the following may be included under the heading of "cash" except

Select one:

a.

Cheque accounts

b.

Savings accounts

c.

Money market funds

d.

Currency

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Question 26

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Which of the following is not a criticism of fair value measurement?

Select one:

a.

The measurements are not always relevant

b.

Fair value measures can be unreliable

c.

The measurements impact the statement of financial position

d.

Fair value measurements caused the global financial crisis of 2007

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Question 27

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SAC1 defines an entity which has users who are dependent on general purpose financial reports as a/an:

Select one:

a.

legal entity

b.

accounting entity

c.

reporting entity

d.

company entity

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Question 28

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Which of the following most accurately reflects the concept of depreciation as a cost allocation?

Select one:

a.

A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved.

b.

The process in which an outlay to acquire a non-current asset is allocated as an expense to the reporting periods in which the economic benefits embodied in the asset are consumed

c.

An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets.

d.

The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred.

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Question 29

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AASB 102 requires that any write down to net realisable value:

Select one:

a.

must be recognised as an expense and reversed when there is clear evidence of an increase in value

b.

must be applied only on an item by item basis

c.

must be recognised as an expense in the period that the write down occurs

d.

must be reversed when there is clear evidence of an increase in value

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Question 30

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AASB 136 requires that assets are carried at no more than which amount?

Select one:

a.

Current market value

b.

Original cost

c.

Recoverable amount

d.

Cost less accumulated depreciation