Question 1

In determining whether an item is material, consideration must be given to:

Accepted Answer

A)  its size only. 
B)  both its size and nature. 
C)  its nature only. 
D)  none of the above. 
A)  its size only. 
B)  both its size and nature. 
C)  its nature only. 
D)  none of the above.

Question 2

Under the Corporations Act, directors have a choice of providing either a directors' declaration or a directors' report to accompany a set of annual financial statements.

Accepted Answer

A) True 
 B)False

Question 3

Canetoads Ltd has discovered that the estimated useful life made on a material depreciable asset was incorrect due to a change in the way the asset was being used. The correct accounting treatment of this event is to:

Accepted Answer

A)  disclose the change in the notes to the financial statements. 
B)  treat it as an error and adjust retrospectively. 
C)  treat it as a change in an accounting estimate and adjust prospectively. 
D)  treat it as a change in an accounting estimate and adjust retrospectively. 
A)  disclose the change in the notes to the financial statements. 
B)  treat it as an error and adjust retrospectively. 
C)  treat it as a change in an accounting estimate and adjust prospectively. 
D)  treat it as a change in an accounting estimate and adjust retrospectively.

Question 4

If a mistake in applying an accounting policy is discovered in a subsequent period, that mistake must be corrected retrospectively.

Accepted Answer

A) True 
 B)False

Question 5

Information about the financial position of an entity is largely contained in the:

Accepted Answer

A)  statement of financial position. 
B)  statement of comprehensive income. 
C)  statement of cash flows. 
D)  directors' report. 
A)  statement of financial position. 
B)  statement of comprehensive income. 
C)  statement of cash flows. 
D)  directors' report.

Question 6

The assessment of materiality is a matter of judgement in light of the reporting entity's particular circumstances.

Accepted Answer

A) True 
 B)False

Question 7

Information about how a company has financed its operations and invested surplus cash is found in the:

Accepted Answer

A)  directors' report. 
B)  statement of profit or loss and other comprehensive income. 
C)  statement of cash flows. 
D)  statement of financial position. 
A)  directors' report. 
B)  statement of profit or loss and other comprehensive income. 
C)  statement of cash flows. 
D)  statement of financial position.

Question 8

Instead of sending each shareholder a full set of financial statements including notes and the directors' and auditor's reports to members, a company has a right to instead send:

Accepted Answer

A)  a notice that the report has been lodged with ASIC. 
B)  a statement of financial position only. 
C)  a concise report. 
D)  an income statement and statement of financial position only. 
A)  a notice that the report has been lodged with ASIC. 
B)  a statement of financial position only. 
C)  a concise report. 
D)  an income statement and statement of financial position only.

Question 9

Prior to the finalisation of the financial statements for the year ended 30 June 2017, a company experienced a number of material events, including: I on 10 July 2017 the directors decided to close a division of the company at an estimated cost of $1 000 000.
II on 10 August 2017 a court decision found the company liable to pay damages of $500 000 to a major customer who had commenced legal action in April 2015.
III an independent valuation of property conducted on 20 July 2017 revealed that the directors' valuation included in the 30 June 2017 financial statements was overstated by $700 000.
In respect of the events listed above, it will be necessary to adjust the financial statements, by way of general journal entries, for:

Accepted Answer

A)  I, II and III. 
B)  II only, and make a note disclosure for I and III. 
C)  III only, and make a note disclosure for I and II. 
D)  II and III only, and make a note disclosure for I. 
A)  I, II and III. 
B)  II only, and make a note disclosure for I and III. 
C)  III only, and make a note disclosure for I and II. 
D)  II and III only, and make a note disclosure for I.

Question 10

Which of the following statement is correct?

Accepted Answer

A)  Extensive guidance is given in accounting standards on the concept of materiality. 
B)  The disclosure provisions of accounting standards must always be applied even if the resulting information is immaterial. 
C)  Materiality only depends only ever depends on the size of an item. 
D)  The disclosure provisions of accounting standards do not need to be applied if the resulting information is immaterial. 
A)  Extensive guidance is given in accounting standards on the concept of materiality. 
B)  The disclosure provisions of accounting standards must always be applied even if the resulting information is immaterial. 
C)  Materiality only depends only ever depends on the size of an item. 
D)  The disclosure provisions of accounting standards do not need to be applied if the resulting information is immaterial.

In determining whether an item is material, consideration must be given to:

Under the Corporations Act, directors have a choice of providing either a directors' declaration or a directors' report to accompany a set of annual financial statements.

Canetoads Ltd has discovered that the estimated useful life made on a material depreciable asset was incorrect due to a change in the way the asset was being used. The correct accounting treatment of this event is to:

If a mistake in applying an accounting policy is discovered in a subsequent period, that mistake must be corrected retrospectively.

Information about the financial position of an entity is largely contained in the:

The assessment of materiality is a matter of judgement in light of the reporting entity's particular circumstances.

Information about how a company has financed its operations and invested surplus cash is found in the:

Instead of sending each shareholder a full set of financial statements including notes and the directors' and auditor's reports to members, a company has a right to instead send:

Which of the following statement is correct?

Nature and Regulation of Companies

Financing Company Operations

Business Combinations

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Foreign Currency Transactions and Forward Exchange Contracts

Translation of Financial Statements Into a Presentation Currency

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Associates and Joint Ventures

Joint Arrangements

Insolvency and Liquidation

Accounting for Company Income Tax

Property, Plant Equipment

Filters

Exam 4: Disclosure: Legal Requirements and Accounting Polices

In determining whether an item is material, consideration must be given to:

Under the Corporations Act, directors have a choice of providing either a directors' declaration or a directors' report to accompany a set of annual financial statements.

Canetoads Ltd has discovered that the estimated useful life made on a material depreciable asset was incorrect due to a change in the way the asset was being used. The correct accounting treatment of this event is to:

If a mistake in applying an accounting policy is discovered in a subsequent period, that mistake must be corrected retrospectively.

Information about the financial position of an entity is largely contained in the:

The assessment of materiality is a matter of judgement in light of the reporting entity's particular circumstances.

Information about how a company has financed its operations and invested surplus cash is found in the:

Instead of sending each shareholder a full set of financial statements including notes and the directors' and auditor's reports to members, a company has a right to instead send:

Which of the following statement is correct?

Nature and Regulation of Companies

Financing Company Operations

Business Combinations

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Foreign Currency Transactions and Forward Exchange Contracts

Translation of Financial Statements Into a Presentation Currency

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interest

Consolidation: Other Issues

Associates and Joint Ventures

Joint Arrangements

Insolvency and Liquidation

Accounting for Company Income Tax

Property, Plant Equipment

Filters