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NEW QUESTION 57
Which one of these is a disadvantage of a conceptual framework?
- A. It increases the chances of political interference in the development of accounting standards.
- B. It mandates the formats of various financial statements.
- C. It replaces the established principles.
- D. A single framework is not suitable for all users of financial statements.
Answer: D
NEW QUESTION 58
Which one of the following statements is not correct in respect of manual accounting systems?
- A. Risk of error is greater and the quality of outputs is inferior.
- B. It is easy to make corrections.
- C. Productivity in manual systems is lower than computer systems.
- D. They are bulky to store compared to computer systems.
Answer: B
NEW QUESTION 59
You assumed the role as the Chairperson of the Board of Directors of Daylight Ltd. As you start to write your first directors' report, which one of the following areas are you not required to include in your report?
- A. Review of operations of Daylight during the year just ended and any likely developments in the future that may impact Daylight.
- B. Details of any dividends paid or proposed.
- C. Details regarding any significant changes to Daylight's state of affairs for the year that just ended.
- D. Details regarding accounting policies pursued by Daylight in preparation of its financial statements.
Answer: D
NEW QUESTION 60
A decision has been made to change the value of a major non-current asset, upon which depreciation is based, from original cost to a revalued amount. This results in a change in
- A. measurement basis and must be disclosed.
- B. accounting estimate and must be disclosed.
- C. measurement basis and does not need to be disclosed.
- D. accounting estimate and does not need to be disclosed.
Answer: A
NEW QUESTION 61
Which form of capital market efficiency exists when share prices on the stock market reflect all information whether public or not?
- A. information processing efficiency
- B. allocative efficiency
- C. semi-strong form efficiency
- D. strong form efficiency
Answer: D
NEW QUESTION 62
Which one of the following is an accurate definition of fair value of an asset?
- A. The amount yet to be written off over the remainder of the asset's useful life.
- B. The price for which an asset could be sold in an orderly transaction between market participants at the measurement date.
- C. The cost of replacing an asset with an identical item.
- D. The price for which an asset could be sold net of disposal costs.
Answer: B
NEW QUESTION 63
What is the difference between positive and normative accounting theories?
- A. Normative accounting theory explains what should occur instead of predicting what is expected to occur.
- B. Normative accounting theory specifies the prediction rules for items.
- C. Normative accounting theory predicts what is expected to occur rather than explaining what should occur.
- D. Positive accounting theory explains what should occur.
Answer: A
NEW QUESTION 64
The use of the principle of substance over form is found in which one of the following accounting treatments?
- A. accounting for non-current assets
- B. accounting for finance leases
- C. accounting for property, plant and equipment
- D. accounting for inventories
Answer: B
NEW QUESTION 65
Which one of the following methods is not used for 'creative accounting'?
- A. aggressive debt management
- B. profit smoothing
- C. off balance sheet financing
- D. window dressing
Answer: A
NEW QUESTION 66
Which one of the following statements is correct?
- A. Current and non-current assets are shown as separate classifications in the statement of financial position.
- B. Liabilities are future obligations that will cause outflow of resources embodying economic benefits.
- C. A statement of financial position explains the reasons for movement of assets and liabilities through the accounting period.
- D. Assets used for long-term operations are shown under working capital in the statement of financial position.
Answer: A
NEW QUESTION 67
Which one of the following reports sets out how directors have run a company and if they implemented proper procedures to deal with matters like accountability, audits, directors' roles and responsibilities, internal controls and relations with shareholders?
- A. chairman's statement
- B. corporate social responsibility report
- C. director's report
- D. corporate governance statement
Answer: D
NEW QUESTION 68
Which one of the following contributes to an efficient capital market?
- A. having stock markets in every country
- B. stock markets ensuring that companies do not overcharge for their products
- C. stock markets being managed by directors of companies that are listed on the stock market
- D. information about the stock market can be obtained cheaply
Answer: D
NEW QUESTION 69
Which one of the following situations would result in either a new liability being recognised or an existing liability being increased?
- A. A company establishes an asset revaluation reserve.
- B. A company pays only half of an overdue invoice.
- C. A company recognises the depreciation expense for the current period.
- D. At the end of the reporting period, there are unpaid wages.
Answer: D
NEW QUESTION 70
The amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal, refers to which basis of measurement?
- A. historical cost
- B. present value
- C. realisable value
- D. current cost
Answer: C
NEW QUESTION 71
Venturer Ltd has received fees from venture capital activities and has engaged you as the accountant to prepare the financial report for 31 December 20X0. Unable to find a specific reference to venture capital fees in either the conceptual framework or the accounting standards, you establish the appropriate accounting treatment by
- A. consulting with the International Accounting Standards Board.
- B. referring to the fundamental accounting assumptions and conventions.
- C. using your professional judgment and referring to the conceptual framework's definitions and recognition criteria.
- D. using your professional judgment and referring to generally accepted accounting principles and practice.
Answer: C
NEW QUESTION 72
In applying accounting standards, an entity develops accounting policies that ensure that the financial statements present
- A. comparable and accurate financial information to all shareholders.
- B. relevant and reliable financial information.
- C. relevant and correct financial information to all interested shareholders.
- D. understandable and clear financial information to all interested shareholders.
Answer: B
NEW QUESTION 73
The objective of the International Accounting Standards Board (IASB) is to
- A. oversee the standard setting process and International Financial Reporting Standards Advisory Council.
- B. enforce International Financial Reporting Standards.
- C. set International Financial Reporting Standards.
- D. provide strategic advice to the International Financial Reporting Standards Advisory Council.
Answer: C
NEW QUESTION 74
Variations in the regulatory regime over financial reporting in different countries is attributable to a range of differences including
- A. the needs of investors, creditors, employees, lending institutions and taxation authorities.
- B. consumer laws, taxation requirements and the extent to which the country has adopted international financial reporting standards.
- C. company structures, ownership, local culture and the level of development of the country.
- D. the extent to which the country has adopted international financial reporting standards and the requirements of local securities exchange.
Answer: C
NEW QUESTION 75
Which accounting theory is best described by the statement 'An approach to accounting is one where a theory is thought of as a body of knowledge that explains and attempts to predict actual accounting practice'?
- A. normative accounting theory
- B. historical cost accounting theory
- C. general accounting theory
- D. positive accounting theory
Answer: D
NEW QUESTION 76
An example of voluntary reporting in Australia is a
- A. statement of comprehensive income.
- B. sustainability report.
- C. statement of cash flows.
- D. statement of financial position.
Answer: B
NEW QUESTION 77
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