Question 1

The financial statements of an entity are authorised for issue on:

Accepted Answer

A) the day the directors' declaration is signed. 
B) 30 June each year. 
C) the last day of the financial year. 
D) the day the auditor's report is signed. 
A) the day the directors' declaration is signed. 
B) 30 June each year. 
C) the last day of the financial year. 
D) the day the auditor's report is signed.

Question 2

Which of the following is not a type of specific information required to be included in a directors' report?

Accepted Answer

A) The name of each director and the period for which they were a director. 
B) Dividends paid to shareholders during the year. 
C) Details of options granted to any of the directors. 
D) The name of the company's auditor. 
A) The name of each director and the period for which they were a director. 
B) Dividends paid to shareholders during the year. 
C) Details of options granted to any of the directors. 
D) The name of the company's auditor.

Question 3

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 4

Prior to the finalisation of the financial statements for the year ended 30 June 2014,a company experienced a number of material events,including:
I on 10 July 2014 the directors decided to close a division of the company at an estimated cost of $1 000 000.
II on 10 August 2014 a court decision found the company liable to pay damages of $500 000 to a major customer who had commenced legal action in April 2012.
III an independent valuation of property conducted on 20 July 2014 revealed that the directors' valuation included in the 30 June 2014 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 5

Disclosing entities must prepare a half year financial report in accordance with AASB 134 Interim Financial Reporting.

Accepted Answer

A) True 
 B)False

Question 6

A company's workforce went on strike for an indefinite period commencing on 5 August 2014.The strike was expected to cause severe financial conditions for the company.The financial statements for the year ended 30 June 2014 were expected to be finalised by 7 August 2014.In accordance with AASB 110 Events after the Reporting Period,the appropriate treatment regarding this event is:

Accepted Answer

A) disclosure as a note to the financial statements,as it is a non-adjusting event. 
B) disclosure as a note to the financial statements,as it is an adjusting event. 
C) to adjust the financial statements,as it is a non-adjusting event. 
D) to adjust the financial statements,as it is an adjusting event. 
A) disclosure as a note to the financial statements,as it is a non-adjusting event. 
B) disclosure as a note to the financial statements,as it is an adjusting event. 
C) to adjust the financial statements,as it is a non-adjusting event. 
D) to adjust the financial statements,as it is an adjusting event.

Question 7

In the preparation of financial statements,it is necessary to present comparative information for:

Accepted Answer

A) statement of profit or loss and other comprehensive income items only. 
B) statement of financial position items only. 
C) statement of cash flow items only. 
D) all amounts reported in the financial statements. 
A) statement of profit or loss and other comprehensive income items only. 
B) statement of financial position items only. 
C) statement of cash flow items only. 
D) all amounts reported in the financial statements.

Question 8

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 9

If in the directors' opinion compliance with accounting standards will not provide a true and fair view,then a reporting entity must also provide:

Accepted Answer

A) additional information in the notes. 
B) a concise financial report. 
C) a letter of explanation from the auditors. 
D) a letter of explanation from the most senior financial officer in the company. 
A) additional information in the notes. 
B) a concise financial report. 
C) a letter of explanation from the auditors. 
D) a letter of explanation from the most senior financial officer in the company.

Question 10

A complete set of financial statements will include a report on the entity's environmental activities.

Accepted Answer

A) True 
 B)False

Question 11

Events occurring after the end of the reporting period which provide evidence of conditions that existed at the end of the reporting period are known as:

Accepted Answer

A) non-adjusting events. 
B) reporting events. 
C) adjusting events. 
D) disclosing events. 
A) non-adjusting events. 
B) reporting events. 
C) adjusting events. 
D) disclosing events.

Question 12

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.

Question 13

If an accounting policy change is voluntary,which of the following disclosures is required by AASB 108?

Accepted Answer

A) The nature of the change. 
B) The reasons that applying the new accounting policy provides reliable and more relevant information. 
C) The amount of the adjustment relating to periods prior to those presented to the extent practicable. 
D) All of the above. 
A) The nature of the change. 
B) The reasons that applying the new accounting policy provides reliable and more relevant information. 
C) The amount of the adjustment relating to periods prior to those presented to the extent practicable. 
D) All of the above.

Question 14

Correcting the recognition,measurement and disclosure of amounts of financial statement elements as if a prior period error had never occurred is known as:

Accepted Answer

A) historical restatement. 
B) retrospective restatement. 
C) retrospective application. 
D) prior period application. 
A) historical restatement. 
B) retrospective restatement. 
C) retrospective application. 
D) prior period application.

Question 15

The statement of profit or loss and other comprehensive income provides information relating to:

Accepted Answer

A) financial position and the capacity of an organisation to adapt. 
B) financial performance. 
C) cash flows and the liquidity and solvency of an entity. 
D) the debt and equity structure of an entity. 
A) financial position and the capacity of an organisation to adapt. 
B) financial performance. 
C) cash flows and the liquidity and solvency of an entity. 
D) the debt and equity structure of an entity.

Question 16

Which of the following statements is incorrect?

Accepted Answer

A) Financial records must be retained for 7 years. 
B) Financial records may be kept in any language. 
C) A company can decide where to keep its financial records. 
D) Financial records must be retained for 10 years. 
A) Financial records must be retained for 7 years. 
B) Financial records may be kept in any language. 
C) A company can decide where to keep its financial records. 
D) Financial records must be retained for 10 years.

Question 17

Companies must always disclose the fact that their financial statements are prepared using the going concern assumption.

Accepted Answer

A) True 
 B)False

Question 18

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 19

According to the Corporations Act,a company is required to include which of the following financial statements in its annual financial report?
I Statement of profit or loss and other comprehensive income
II Statement of financial income
III Statement of financial position
IV Statement of changes in equity
V Statement of cash flows

Accepted Answer

A) I,II,III and IV only 
B) II,III,IV and V only 
C) I,II,III and V only 
D) I,III,IV and V only 
A) I,II,III and IV only 
B) II,III,IV and V only 
C) I,II,III and V only 
D) I,III,IV and V only

Question 20

Which of the following matters does an auditor of the financial report not have to form an opinion about?

Accepted Answer

A) Whether the financial report gives a true and fair view. 
B) Whether any financial statement fraud has occurred. 
C) Whether the auditor has been given all information,explanation and assistance necessary for the conduct of the audit. 
D) Whether the company has kept financial records sufficient to enable the financial report to be prepared and audited. 
A) Whether the financial report gives a true and fair view. 
B) Whether any financial statement fraud has occurred. 
C) Whether the auditor has been given all information,explanation and assistance necessary for the conduct of the audit. 
D) Whether the company has kept financial records sufficient to enable the financial report to be prepared and audited.

Exam 14: Disclosure: Legal Requirements and Accounting Polices

The financial statements of an entity are authorised for issue on:

Which of the following is not a type of specific information required to be included in a directors' report?

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.

Disclosing entities must prepare a half year financial report in accordance with AASB 134 Interim Financial Reporting.

In the preparation of financial statements,it is necessary to present comparative information for:

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

If in the directors' opinion compliance with accounting standards will not provide a true and fair view,then a reporting entity must also provide:

A complete set of financial statements will include a report on the entity's environmental activities.

Events occurring after the end of the reporting period which provide evidence of conditions that existed at the end of the reporting period are known as:

Which of the following statement is correct?

If an accounting policy change is voluntary,which of the following disclosures is required by AASB 108?

Correcting the recognition,measurement and disclosure of amounts of financial statement elements as if a prior period error had never occurred is known as:

The statement of profit or loss and other comprehensive income provides information relating to:

Which of the following statements is incorrect?

Companies must always disclose the fact that their financial statements are prepared using the going concern assumption.

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:

Which of the following matters does an auditor of the financial report not have to form an opinion about?

Nature and Regulation of Companies

Financing Company Operations

Company Operations

Fundamental Concepts of Corporate Governance

Fair Value Measurement

Accounting for Company Income Tax

Financial Instruments

Foreign Currency Transactions and Forward Exchange Contracts

Property, Plant and Equipment

Leases

Intangible Assets

Business Combinations

Impairment of Assets

Disclosure: Presentation of Financial Statements

Disclosure: Statement of Cash Flows

Disclosure: 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

Investments in Joint Arrangements

Insolvency and Liquidation

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