Question 26 1 Point A company incurs significant costs in relation to a speculative project that intends to turn rocks into gold. In accordance with the AASBS Conceptual Framework the costs of this project are an: expense because the recognition criteria for an asset is not satisfied Basset because the company will control the future economic benefits. expense because there is little probability that future economic benefits will eventuate Dasset because the definition and recognition criteria for assets are satisfied Question 27 1 Point A Ltd company's capital consists 50 000 ordinary shares issued at $2 and paid to $1 per share. On 1 September 2013, a first call of 50c was made on the ordinary shares. By 30 September 2013, the call money received amounted to $22 500. No further payments were received, and on 31 October 2013, the shares on which calls were outstanding were forfeited. On 15 November 2013. the forfeited shares were reissued as paid to $1.50 for a payment of $1.00 per share. The appropriate cash amount from the reissue was received on 19 November 2013. Costs of reissue was $2.000. The company's constitution provided for any surplus on resale, after satisfaction of unpaid calls, accrued interest and costs, to be returned to the shareholders whose shares were forfeited. The entry to record the relssue of forfeited shares is: Cash Dr 2 500 A Forfeited shares Dr 2 500 Share capital - Ordinary Cr 5 000 Cash Dr 5000 Share capital - Ordinary cr 5 000 Cash Dr Forfeited shares Dr Share capital - Ordinary 5000 2 500 Cr 7500 7500 Share capital Dr Forfeited shares cr 7.500 X Question 28 1 Point The details below were extracted from the accounting records of Great East Ltd (a company in the process of liquidation) 40 000 $2 preference shares fully paid 80 000 120 000 $2 ordinary shares paid to $1 120 000 200.000 Cash available (after payment of all creditors) 20 000 Assume that the constitution of Great East Ltd states that in the event of liquidation all shares are to rank equally based on the number of shares held, in distributing any surplus or deficiency. For preference shareholders, what is the amount of the actual refund or call? a call of $45,000 B a call of $35,000 a refund of $35,000 O a refund of 20 000 X Question 29 1 Point Accounting Standards approved by the Accounting Standards Review Board (ASRB): had legal backing under the Companies Act, although companies could depart from the accounting standards if it was maintained that application did not result in the financial reports showing a true & fair view B had legal backing under the Companies Act, and their application was mandatory at all times. had no legal backing under the Companies Act, and their application was optional D had no legal backing under the Companies Act, although almost all companies followed their guidance. Question 30 Which of the following is a task of a liquidator under the Corporations Act? A to bring about the dissolution of the company. (B) to determine the creditors and order of priority of payment. ting to take possession of the company's assets. all of the above. X Question 31 A public company can raise funds by issuing securities: A Shares (equity) B Options (equity) C) Debentures (debt) D) All the above. Question 32 1 A key role of the Australian Securities and Investments Commission (ASIC) is to ensure that all company financial statements lodged with it: A comply with the Corporations Act, including accounting standards B comply with the ASX Listing Rules, hogy do not contain any fraud. are approved by the Financial Reporting Council. Question 33 A proprietary company must have at least one shareholder and cannot have more than: A 10 shareholders B 20 shareholders 100 shareholders D) 50 shareholders Question 35 Australian Accounting Standards Board (AASB) established in: A 1991 B 1992 C 1993 D) 1990 Question 36 1 Point At the commencement of a members' voluntary winding up, a written declaration must be provided by directors stating that all debts will be able to be paid in full within a period: more than one year but less than two years. B of no more than 30 days. not exceeding 12 months. of not more than 6 months. Question 37 The two main types of companies permitted to be registered under the Corporations Act are: A a public company, and a trade union B a proprietary company, and a public company a private company, and a proprietary company D a proprietary company, and a partnership. Question 38 1 Point Underwriting and other share issue costs paid to a stockbroker or financial institution should be reported in the statement of financial position as a/an: A decrease in share capital. B) asset liability increase in share capital. Question 39 1 Point Which of the following statements is incorrect? past members must contribute money for company debts which have been incurred after they cease to be members. if the company is limited by shares, members do not have to contribute more than the amount unpaid on the shares for which each is liable as a past or present member. most liquidations in Australia do not have sufficient funds to pay creditors. In the absence of any guidance in the company's constitution, calls in advance with related interest will be repaid before any payments are made to shareholders. Question 40 1 Point Without the prior approval of shareholders a company is restricted to private placements of shares, in any one year of no more than: 5% of existing capital 15% of existing capital 20% of existing capital 10% of existing capital