Question 1

If a company's investment in another company is between 20% and 50%, the company invested in is typically known as a/an:

Accepted Answer

A) subsidiary company. 
B) associate company. 
C) parent company. 
D) holding company. 
A) subsidiary company. 
B) associate company. 
C) parent company. 
D) holding company.

Question 2

For information in financial reports to be material, it must:

Accepted Answer

A) be prepared on a timely basis. 
B) affect the discharge of accountability by management of the reporting entity. 
C) influence the decisions of users of that information. 
D) Both B and C. 
A) be prepared on a timely basis. 
B) affect the discharge of accountability by management of the reporting entity. 
C) influence the decisions of users of that information. 
D) Both B and C.

Question 3

Which set of accounting standards did Australia adopt in recent years?

Accepted Answer

A) AAS standards. 
B) International accounting standards. 
C) GAAP. 
D) US standards. 
A) AAS standards. 
B) International accounting standards. 
C) GAAP. 
D) US standards.

Question 4

Organised stock exchanges provide which of the following benefits?

Accepted Answer

A) Facility for companies to raise new capital. 
B) Allows shareholders to easily sell their shares. 
C) Increases the amount of regulation for the listed company. 
D) Both A and B. 
A) Facility for companies to raise new capital. 
B) Allows shareholders to easily sell their shares. 
C) Increases the amount of regulation for the listed company. 
D) Both A and B.

Question 5

The harmonisation of accounting standards in Australia refers to:

Accepted Answer

A) the modification of accounting standards to meet the concerns of business. 
B) the blending of company accounting standards and standards for other entities. 
C) the development of a conceptual framework for accounting standards. 
D) the process of adapting international accounting standards for use in Australia. 
A) the modification of accounting standards to meet the concerns of business. 
B) the blending of company accounting standards and standards for other entities. 
C) the development of a conceptual framework for accounting standards. 
D) the process of adapting international accounting standards for use in Australia.

Question 6

Additional regulations set down for companies by the ASX, include the provision of:

Accepted Answer

A) interim reports. 
B) takeover information. 
C) changes to staff. 
D) Both A and B. 
A) interim reports. 
B) takeover information. 
C) changes to staff. 
D) Both A and B.

Question 7

Which of the following statements is correct? Consolidated statements:

Accepted Answer

A) show all the financial details of the subsidiary companies. 
B) only show the financial position and performance of the parent company. 
C) eliminate all transactions between the companies within the group. 
D) do not show the minority interests. 
A) show all the financial details of the subsidiary companies. 
B) only show the financial position and performance of the parent company. 
C) eliminate all transactions between the companies within the group. 
D) do not show the minority interests.

Question 8

Information if by its omission, misstatement or non-disclosure has the potential to influence economic decision-making, is regarded as:

Accepted Answer

A) reliable. 
B) true and fair. 
C) material. 
D) objective. 
A) reliable. 
B) true and fair. 
C) material. 
D) objective.

Question 9

Financial reports for a reporting entity should fairly reflect each of the following except:

Accepted Answer

A) capital budget. 
B) liquidity of the firm. 
C) financial performance. 
D) financial position. 
A) capital budget. 
B) liquidity of the firm. 
C) financial performance. 
D) financial position.

Question 10

The main difference between a subsidiary and an associate company is the:

Accepted Answer

A) number of investors. 
B) level of control the parent company has. 
C) annual turnover. 
D) size of the company. 
A) number of investors. 
B) level of control the parent company has. 
C) annual turnover. 
D) size of the company.

Question 11

Which of the following statements is incorrect?

Accepted Answer

A) A parent company holds a majority interest in a subsidiary company. 
B) A takeover is when a company buys a controlling interest in another company. 
C) A non-controlling interest is also known as a minority interest. 
D) An associate company is another name for a subsidiary company. 
A) A parent company holds a majority interest in a subsidiary company. 
B) A takeover is when a company buys a controlling interest in another company. 
C) A non-controlling interest is also known as a minority interest. 
D) An associate company is another name for a subsidiary company.

Question 12

What are consolidated accounts?

Accepted Answer

A) another name for ledger accounts. 
B) prepared by the parent company for a group of companies. 
C) are an amalgamation of a set of accounts for a group of companies as if the group was a single entity. 
D) Both B and C. 
A) another name for ledger accounts. 
B) prepared by the parent company for a group of companies. 
C) are an amalgamation of a set of accounts for a group of companies as if the group was a single entity. 
D) Both B and C.

Question 13

Which of the following is not a reason for acquiring a controlling interest in another company?

Accepted Answer

A) Possible economies of scale. 
B) Reducing business risk. 
C) Increasing competition. 
D) Safeguarding supply resources. 
A) Possible economies of scale. 
B) Reducing business risk. 
C) Increasing competition. 
D) Safeguarding supply resources.

Question 14

The annual report of a public company must contain:

Accepted Answer

A) an audit report. 
B) a directors' declaration. 
C) a directors' report. 
D) All of the above. 
A) an audit report. 
B) a directors' declaration. 
C) a directors' report. 
D) All of the above.

Question 15

An auditor's report does not provide the users of the report with:

Accepted Answer

A) a check on the credibility of the report. 
B) an assurance on whether the financial statements comply with accounting standards. 
C) an opinion on the reliability of the financial statements. 
D) a guarantee of no misstatements in the financial statements. 
A) a check on the credibility of the report. 
B) an assurance on whether the financial statements comply with accounting standards. 
C) an opinion on the reliability of the financial statements. 
D) a guarantee of no misstatements in the financial statements.

Question 16

Which of the following statements is true about the order of repayment for a company in liquidation?

Accepted Answer

A) creditors rank before ordinary shareholders. 
B) ordinary shareholders rank before preference shareholders. 
C) wages owing to employees rank last. 
D) All of the statements are true. 
A) creditors rank before ordinary shareholders. 
B) ordinary shareholders rank before preference shareholders. 
C) wages owing to employees rank last. 
D) All of the statements are true.

Question 17

The directors' report in the annual report contains each of the following except:

Accepted Answer

A) a summary of all share issues. 
B) a listing of all directors. 
C) a review of the current operations. 
D) details of any significant changes in the company's affairs. 
A) a summary of all share issues. 
B) a listing of all directors. 
C) a review of the current operations. 
D) details of any significant changes in the company's affairs.

Question 18

In relation to associate companies, which of the following investor's share does not have to be recorded in the consolidated accounts?

Accepted Answer

A) Fixed assets. 
B) Attributable tax. 
C) Retained profits. 
D) Profit or loss. 
A) Fixed assets. 
B) Attributable tax. 
C) Retained profits. 
D) Profit or loss.

Question 19

Why might a subsidiary company retain their own identity?

Accepted Answer

A) Maintain their market identity. 
B) Enable the parent company to retain a limited liability status. 
C) Allow their staff to remain autonomous. 
D) All of the above. 
A) Maintain their market identity. 
B) Enable the parent company to retain a limited liability status. 
C) Allow their staff to remain autonomous. 
D) All of the above.

Question 20

Currently worldwide, most major economies have either adopted IFRSs or:

Accepted Answer

A) are moving towards the adoption of such. 
B) have elected never to use IFRSs. 
C) have set timelines to converge with IFRSs. 
D) Both A and C. 
A) are moving towards the adoption of such. 
B) have elected never to use IFRSs. 
C) have set timelines to converge with IFRSs. 
D) Both A and C.

If a company's investment in another company is between 20% and 50%, the company invested in is typically known as a/an:

For information in financial reports to be material, it must:

Which set of accounting standards did Australia adopt in recent years?

Organised stock exchanges provide which of the following benefits?

The harmonisation of accounting standards in Australia refers to:

Additional regulations set down for companies by the ASX, include the provision of:

Which of the following statements is correct? Consolidated statements:

Information if by its omission, misstatement or non-disclosure has the potential to influence economic decision-making, is regarded as:

Financial reports for a reporting entity should fairly reflect each of the following except:

The main difference between a subsidiary and an associate company is the:

Which of the following statements is incorrect?

What are consolidated accounts?

Which of the following is not a reason for acquiring a controlling interest in another company?

The annual report of a public company must contain:

An auditor's report does not provide the users of the report with:

Which of the following statements is true about the order of repayment for a company in liquidation?

The directors' report in the annual report contains each of the following except:

In relation to associate companies, which of the following investor's share does not have to be recorded in the consolidated accounts?

Why might a subsidiary company retain their own identity?

Currently worldwide, most major economies have either adopted IFRSs or:

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters

Exam 5: Regulatory Framework for Companies

If a company's investment in another company is between 20% and 50%, the company invested in is typically known as a/an:

For information in financial reports to be material, it must:

Which set of accounting standards did Australia adopt in recent years?

Organised stock exchanges provide which of the following benefits?

The harmonisation of accounting standards in Australia refers to:

Additional regulations set down for companies by the ASX, include the provision of:

Which of the following statements is correct? Consolidated statements:

Information if by its omission, misstatement or non-disclosure has the potential to influence economic decision-making, is regarded as:

Financial reports for a reporting entity should fairly reflect each of the following except:

The main difference between a subsidiary and an associate company is the:

Which of the following statements is incorrect?

What are consolidated accounts?

Which of the following is not a reason for acquiring a controlling interest in another company?

The annual report of a public company must contain:

An auditor's report does not provide the users of the report with:

Which of the following statements is true about the order of repayment for a company in liquidation?

The directors' report in the annual report contains each of the following except:

In relation to associate companies, which of the following investor's share does not have to be recorded in the consolidated accounts?

Why might a subsidiary company retain their own identity?

Currently worldwide, most major economies have either adopted IFRSs or:

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters