Which of the following is not a basic element of financial statements?

Select one:

a.

Assets

b.

Balance Sheet

c.

Revenue

d.

Expenses

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The elements of financial statements, as outlined in the conceptual framework, are:

Select one:

a.

historical cost, current cost, net market value, constant purchasing power

b.

assets, liabilities, equity, income, expenses

c.

materiality, comparability, relevance, reliability

d.

balance sheet, income statement, cash flow statement

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At which date must an entity have access to the principal or most advantageous market?

Select one:

a.

Balance sheet date

b.

The last date of the fiscal quarter

c.

Reporting date

d.

Measurement date

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Under the LIFO method, in periods of rising prices:

Select one:

a.

profits could be increased by reducing unit purchases to a lower level than unit sales

b.

profits could be decreased by reducing unit purchases to a lower level than unit sales

c.

profits could be increased by increasing unit purchases to a higher level than unit sales

d.

profit cannot be manipulated by changes in purchasing patterns

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A soundly developed conceptual framework of concepts and objectives should?

Select one:

a.

enhance comparability among companies' financial statements

b.

increase financial statement users' understanding of and confidence in financial reporting

c.

all of these

d.

allow new and emerging practical problems to be more quickly solved

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To practice in Australia, an accountant:

Select one:

a.

must be registered by the government

b.

must be a member of CPA Australia or ICAA

c.

none of the above

d.

must be registered by the AASB

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Which of the following is not a category of investment in non-current assets?

Select one:

a.

Inventory

b.

Financial investments in the form of share investments

c.

Property, plant, and equipment

d.

Investment property

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Where an allowance for doubtful debts account is maintained, the accounting entry to write off a bad debt is:

Select one:

a.

debit doubtful debts expense; credit accounts receivable

b.

debit allowance for doubtful debts; credit accounts receivable

c.

debit bad debts; credit accounts receivable

d.

none of the responses

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An expenditure made in connection with a machine being used by an enterprise should be:

Select one:

a.

capitalized if it increases the quantity of units produced by the machine.

b.

expensed immediately if it merely improves the quality but does not extend the useful life.

c.

capitalized if it maintains the machine in normal operating condition.

d.

expensed immediately if it merely extends the useful life but does not improve the quality.

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Allowance for doubtful debts is a/an:

Select one:

a.

liability account

b.

expense account

c.

contra asset account

d.

contra expense account

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The Corporations Act 2001 requires that the governing board of the company:

Select one:

a.

provide a true and fair view of the accounting standards

b.

table standards in the Commonwealth House of Representative and the Senate

c.

establish accounting standards in preparing financial statements

d.

comply with AASB accounting standards in preparing financial statements

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In the Framework, 'the present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits' is the definition of:

Select one:

a.

assets

b.

liabilities

c.

revenues

d.

expenses

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The purpose of the International Accounting Standards Board is to?

Select one:

a.

arbitrate accounting disputes between auditors and international companies

b.

promote uniform accounting standards among countries of the world

c.

issue enforceable standards which regulate the financial accounting and reporting of multinational corporations

d.

develop a uniform currency in which the financial transactions of companies through-out the world would be measured

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Which of these is not an essential characteristic of a liability under the Framework?

Select one:

a.

Control

b.

Existence of a present obligation to another entity

c.

Future sacrifice of economic benefits

d.

A past transaction or other past event

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Which of the following is not an advantage of the contract-price method?

Select one:

a.

It ignores the time value of money

b.

It is simple to apply

c.

It recognizes the interest obligation as a liability

d.

It relies on readily verifiable documentary evidence

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Goods in transit which are shipped f.o.b. shipping point should be

Select one:

a.

included in the inventory of the buyer

b.

included in the inventory of the seller

c.

none of these

d.

included in the inventory of the shipping company

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Which of the following is an example of a non-recurring fair value measurement?

Select one:

a.

Current liabilities

b.

Land held for sale

c.

Income taxes payable

d.

Inventory

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The body that oversees the operation of the Auditing and Assurance Standards Board is:

Select one:

a.

ASIC

b.

ASX

c.

The Financial Reporting Council (FRC)

d.

AASB

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If borrowing costs are capitalised, capitalisation continues:

Select one:

a.

for the life of the business

b.

for the life of the qualifying asset

c.

no responses are correct

d.

up to where substantially all the activities necessary to prepare the qualifying assets for its intended use or sale are complete

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A disadvantage of the LIFO method of inventory valuation is:

Select one:

a.

it gives a poor matching of current costs with current revenues

b.

its use accentuates the business cycle

c.

all are disadvantages

d.

closing inventory on the balance sheet may be undervalued

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As defined in AASB 102 Inventories, these assets are:

Select one:

a.

Neither response is correct

b.

In the process of production

c.

Both responses are correct

d.

Held for sale in the ordinary course of business

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According to the AASBs Conceptual Framework a Liability is:

Select one:

a.

A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits

b.

A contingent item depending on another event occurring at some time in the future

c.

A future obligation owed by an entity as the result of past transactions or events

d.

An item that has a physical existence and can be converted into cash

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Which of these are the main sources of regulations governing financial reporting in Australia?

Select one:

a.

Accounting standards, conceptual framework, stock exchange listing rules

b.

The Corporations Act, the AASB, CLERP

c.

AASB, FRC, government legislation

d.

Government legislation, stock exchange listing rules, accounting standards and pronouncement of FAASB

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What is likely to occur when a seller is in financial distress or is legally required to dispose of an asset or liability?

Select one:

a.

The objective of fair value measurement changes

b.

Marketing activities are hot adhered to

c.

The transaction will not be orderly

d.

The transaction price can be confidently relied upon

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The fair value definition relates to which elements of financial statements?

Select one:

a.

Equity and Liabilities

b.

Assets and Liabilities

c.

Revenues and expenses

d.

Dividends and Taxes

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Where should goods in transit that were recently purchased f.o.b. destination be included on the balance sheet?

Select one:

a.

Equipment

b.

Not on the balance sheet

c.

Inventory

d.

Accounts payable

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