Question 31

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In the Framework's definition of expenses:

Select one:

a.

expenses must be matched against income

b.

if the definition is satisfied the item must be recognised in the financial statements

c.

there is no distinction between expenses and losses

d.

the causes of expenses are specifically identified

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Question 32

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Which accounting assumption or principle is being violated if a company reports its corporate headquarter building at its fair value on the balance sheet?

Select one:

a.

Monetary unit

b.

Full disclosure

c.

Going concern

d.

Historical cost

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Question 33

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Which of the following is classified as a current asset according to AASB 101?

Select one:

a.

Accounts receivable

b.

Inventory

c.

Short-term deposits

d.

Each of the listed choices are considered current assets

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Question 34

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Depreciation and wages that have been accrued represent, respectively, expenses resulting from:

Select one:

a.

the using up of a liability: an increase in an asset

b.

the using up of an asset: an increase in a liability

c.

none of the above

d.

a decrease in an asset: a decrease in a liability

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Question 35

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Which valuation technique uses option pricing models to determine fair value?

Select one:

a.

Cost approach

b.

Asset approach

c.

Market approach

d.

Income approach

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Question 36

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Choosing a cost flow assumption to be applied to inventory, such as FIFO or weighted average, is to solve the problem of:

Select one:

a.

determining which costs to apply to sold and unsold inventory

b.

determining the quantity of inventory on hand

c.

determining the stock loss from theft or destruction

d.

determining net realisable value

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Question 37

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What is one difficulty encountered with asking users of financial information what they want?

Select one:

a.

Lack of available information

b.

The decision making process is not the same for all decision makers.

c.

Cost-benefit constraint

d.

Choice of information sources

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Question 38

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Which of the following is not a capital expenditure:

Select one:

a.

An addition

b.

A betterment

c.

A replacement

d.

Repairs that maintain an asset in operating condition

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Question 39

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Which of the following is a general limitation of "general purpose financial statements"?

Select one:

a.

General purpose financial statements are assumed to present fairly the company's financial operations

b.

General purpose financial statements may not be the most informative for a specific user

c.

None of the responses

d.

General purpose financial statements are comparable

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Question 40

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Under the Framework, profit is defined as:

Select one:

a.

an increase in wealth

b.

an increase in 'well-offness'

c.

including all changes in equity occurring during a period

d.

a matter of display