Deck 17: Presentation of Financial Statements

Question 1

Under the Corporations Act 2001 a set of financial statements to be included in the annual report are specified as:

A)those required by the accounting standards.
B)a balance sheet,profit and loss statement and statement of cash flows.
C)a balance sheet,profit and loss statement,statement of cash flows and a director's report.
D)a balance sheet,profit and loss statement,statement of cash flows,director's report and an audit report.

Answer 1

A

Question 2

The overall criteria for financial reporting contained in the Corporations Act is:

A)beyond a reasonable doubt.
B)true and fair.
C)materiality.
D)the balance of probabilities.

Answer 2

B

Question 3

Which statement concerning AASB 1053 is untrue?

A)Its publication is meant to lessen the reporting burden on the majority of disclosing Australian entities.
B)Entities classed as Tier 1 will have their financial disclosure requirements increased.
C)Entities classed as Tier 2 will have their financial disclosure requirements in relation to the accounting standards reduced.
D)In effect only publicly accountable entities will be required to report using full Australian accounting standards.

Answer 3

B

Question 4

The accounting standard Presentation of Financial Statements is:

A)AASB 1039.
B)IAS 1/AASB 101.
C)IAS 20/AASB 120.
D)AASB 1004.

Question 5

Which of these is not one of the general reporting requirements of IAS 1/AASB 101 as it applies to Australia?

A)The reports must be in English.
B)Comparative figures must be provided.
C)The name of the ultimate parent entity must be disclosed.
D)The name and address of each shareholder must be disclosed.

Question 6

An interim report required to be prepared by a disclosing entity under IAS 34/AASB 134 Interim Financial Reporting is defined as a report for:

A)each three months.
B)each half-year.
C)a period shorter than a full reporting period.
D)nine months.

Question 7

How many of these are general reporting requirements for companies required under IAS 1/AASB 101?
The domicile and legal form of the entity
The country of incorporation
The name of the ultimate parent entity
The address of the registered office
The names of the 10 largest shareholders

A)3
B)4
C)5
D)6

Question 8

AASB 1039:

A)requires a company to prepare interim financial reports.
B)permits a company to prepare concise financial reports.
C)requires a company to prepare a statement of changes in equity.
D)designates a company as a disclosing entity.

Question 9

As set out in IAS 1/AASB 101,there is a general requirement that the financial statements must provide comparative and corresponding financial disclosures for:

A)the previous three years.
B)the previous five years.
C)the previous twelve month period.
D)the previous reporting period.

Question 10

The major difference between the financial statements of a company and those of a sole trader or partnership is in the area of:

A)liabilities.
B)equity.
C)assets.
D)liabilities and assets.

Question 11

Under AASB 1039 and the Corporations Act how many of these must be included in a concise financial report?
Sales revenue
Earnings per share
Details of any changes in accounting policies

A)0
B)1
C)2
D)3

Question 12

In the 2011 version of IAS 1/AASB 101,what is the recommended title for the income statement?

A)Statement of profit and loss and other comprehensive income
B)Profit and loss statement and other comprehensive income
C)Statement of profit or loss and other comprehensive income
D)Statement of financial performance

Question 13

Which of these is not required by the Corporations Act to be included in the annual financial report of a company?

A)A five year summary
B)A directors' report
C)A directors' declaration
D)An auditor's report

Question 14

How many financial statements must be included,as a minimum,in an interim financial report required to be prepared by a disclosing entity?

A)1
B)2
C)3
D)4

Question 15

IAS 1/AASB 101 is titled:

A)Information to be disclosed in Financial Reports.
B)Presentation of Financial Statements.
C)General Purpose Financial Reports.
D)Disclosure of Financial Performance and Position.

Question 16

An income statement prepared for external use would normally disclose ____ expense and revenue items than one prepared for internal use.

A)more
B)less
C)the same
D)varied

Question 17

Under the Corporations Act a 'disclosing entity' must prepare a half-yearly financial report in addition to an annual report.How many of these are 'disclosing entities'?
A company listed on the stock exchange
A borrowing corporation
A company raising funds through a prospectus

A)0
B)1
C)2
D)3

Question 18

Under AASB 1039 and the Corporations Act,which of these does not have to be included in a concise financial report?

A)Notes to the financial statements
B)Directors report
C)Statement of cash flows
D)A copy of any qualification in the auditor's report

Question 19

A concise financial report is for:

A)three months.
B)six months.
C)nine months.
D)twelve months.

Question 20

IAS 1/AASB 101 defines a complete set of financial statements as comprising:

A)a balance sheet,a profit or loss report,a statement of cash flows and a director's report.
B)a statement of financial position,a statement of profit or loss and other comprehensive income for the period,a statement of changes in equity,a statement of cash flows ,and notes comprising a summary of accounting policies and other explanatory information.
C)a statement of financial position,a statement of profit or loss and other comprehensive income for the period,a statement of changes in equity and a statement of cash flows.
D)a statement of financial position,a statement of profit or loss and other comprehensive income for the period,and a statement of cash flows.

Question 21

Which statement about concise financial reports is true?

A)The company has the right to send a concise report to the shareholder unless they request a full report.
B)Concise reports do not have to include a statement of changes in equity.
C)A full report must be sent to the shareholder unless they request a concise report.
D)The company must apply to ASIC if they want the right to issue concise reports rather than full reports.

Question 22

In the accompanying commentary to the current version of IAS 1/AASB 101,what is the recommended title for the balance sheet?

A)Balance sheet
B)Statement of assets and liabilities
C)Statement of financial position
D)Statement of changes in equity

Question 23

As set out in IAS 1/AASB 101,all of these are general requirements that apply to annual reports except:

A)There must be a description of the entity's operations and its principal activities.
B)Comparative figures for the previous reporting period must be disclosed.
C)The reporting date or period covered by each financial statement must be included.
D)A list of all the accounting standards followed must be included.

Question 24

An interim report required to be prepared by a disclosing entity under IAS 34/AASB 134 Interim Financial Reporting is defined as a report for:

A)each three months.
B)each half-year.
C)a period shorter than a full reporting period.
D)nine months.

Question 25

Under the Corporations Act which of these is not necessarily a disclosing entity?

A)A public company
B)A corporation that raises funds via a prospectus
C)A borrowing corporation
D)A stock exchange listed company

Question 26

According to AASB 1039,in order to provide clear information to shareholders the concise financial report must disclose how many of the following?
-Details of any events occurring after the end of the reporting period
-That the report is an extract only from the full financial report
-The amount of dividends paid and dividends proposed
-Graphs of profits for the last five years

A)1
B)2
C)3
D)4

Question 27

Under the Corporations Act 2001,the financial statements included in the annual report are specified as:

A)a balance sheet,profit and loss statement,statement of cash flows and note 1 to the statements.
B)those required by the accounting standards.
C)a balance sheet,profit and loss statement,statement of cash flows and a director's report.
D)a balance sheet,profit and loss statement,statement of cash flows,director's report,an audit report and a statement of comprehensive income.

Question 28

An entity defined as a 'disclosing entity' under the Corporations Act must prepare interim financial reports.The content of an interim financial report,under IAS 34/ AASB 134,must include,as a minimum:

A)a condensed statement of financial position,a condensed statement of comprehensive income and selected notes.
B)a condensed statement of financial position,a condensed statement of profit or loss and other comprehensive income,and a condensed statement of changes in equity.
C)a condensed statement of financial position,a condensed statement of profit or loss and other comprehensive income,a condensed statement of changes in equity,a condensed statement of cash flows and selected notes.
D)a condensed statement of financial position,a condensed statement of profit or loss,a condensed statement of cash flows and selected notes.

Question 29

According to AASB 1039,in order to provide clear information to shareholders,the concise financial report must disclose how many of the following?
-Gross profit
-Dividends per share
-Earnings per share
-The capitalisation ratio
-Changes in accounting policies

A)2
B)3
C)4
D)5

Question 30

Which statement is not true?

A)AASB 1039 Concise Financial Reports has an equivalent international standard.
B)Shareholders who receive a concise report can request a full report.
C)The concise report must comply with the accounting standards.
D)Except for concise reports prepared for listed companies each financial statement must be accompanied by some discussion and analysis.

Question 31

How many of these are areas where there are major differences in accounting treatment by sole traders and partnerships and accounting treatment by companies?
-Distributions to owners
-Accumulation of profits
-Accounting for income tax
-Accounting for equity
-Accounting for GST
-Accounting for inventory

A)3
B)4
C)5
D)6

Question 32

It is proposed that how many of the following entities would be classed as belonging to Tier 2 under AASB 1053 Application of Tiers of Australian Accounting Standards,and thus be given relief from some reporting requirements?
-Not-for-profit private sector entities
-Most public sector entities
-Small proprietary companies

A)0
B)1
C)2
D)3

Question 33

What is the correct heading on a statement of profit or loss and other comprehensive income made up for a twelve month period to 30 June 2016?

A)As at 30 June 2016
B)For the year ended 30 June 2016
C)For the period ended 30 June 2016
D)30th June 2016

Question 34

Which statement concerning AASB1053 is true?

A)All entities would be classified as Tier 1,Tier 2 or Tier 3.
B)It is sometimes referred to as the reduced disclosure requirements standard.
C)Entities classed as Tier 3 will have their financial disclosure requirements increased.
D)The standard does not apply to not-for-profit private sector entities and most public sector entities.

Question 35

The overall criteria for financial reporting contained in the Corporations Act is:

A)beyond a reasonable doubt.
B)materiality.
C)probable.
D)true and fair.

Question 36

How many of these statements concerning concise financial reports are true?
-There is a charge to the shareholder for requesting a full financial report but the concise report is free.
-If a shareholder accepts a concise financial report they cannot also request a full report.
-Must be drawn up in accordance with accounting standards.
-The financial statements in the concise report need not comply with all the accounting standards.

A)0
B)1
C)2
D)3

Question 37

Under the Corporations Act it is not true that for the presentation of general purpose financial statements the annual financial report:

A)must include a directors' report.
B)must include a set of financial statements.
C)must include a concise report.
D)must include a directors' declaration.

Question 38

The accounting standard that contains the specific requirements for concise financial reports is:

A)AASB 1001.
B)AASB 1039.
C)IAS 1/AASB 101.
D)IAS 34/AASB 134.

Question 39

Accounting standard AASB 1053 Application of Tiers of Australian Accounting Standards will become mandatory from:

A)2011.
B)2012.
C)2013.
D)2014.

Question 40

Under AASB 1039 and the Corporations Act which of these does not have to be included in a concise financial report?

A)Statement of cash flows
B)Statement of changes in equity
C)Notes to the financial statements
D)Directors' report

Question 41

How many of these are true statements concerning the statement of changes in equity?
-It provides a link between the statement of profit or loss and other comprehensive income and the statement of financial position.
-It provides a link between the statement of profit or loss and other comprehensive income and the statement of cash flows.
-It is only required to be prepared by disclosing entities.

A)0
B)1
C)2
D)3

Question 42

The approach contained in IAS 1/AASB 101,requiring all income and expenses to be included in the determination of profit,is known as:

A)the reporting method approach.
B)the all-inclusive profit approach.
C)the operating approach.
D)the complete profit approach.

Question 43

Under the accounting standards,which of these is included in the calculation of a company's profit or loss (not including other comprehensive income in the definition of profit)?
-Downward revaluations of non-current assets,not requiring adjustment to a revaluation surplus.
-Upward revaluations of non-current assets requiring adjustment to a revaluation surplus.
-Gains or losses on remeasuring investments in equity instruments.
-Adjustments from translation of the financial statements of a foreign operation.

A)1
B)2
C)3
D)4

Question 44

What are the accounting standards that are specific to the nature and disclosure of income?

A)IAS 1/AASB 101/IAS 7/AASB 107
B)IAS 16/AASB 116/IAS 7/AASB 107
C)IAS 7/AASB 107/ IAS 18/AASB 118
D)IAS 1/AASB 101/IAS 18/AASB 118

Question 45

Under the accounting standards,which of these is not included in the calculation of a company's profit or loss (not including other comprehensive income in the definition of profit)?

A)Gain on the sale of fixed assets
B)Dividends received
C)Adjustments from translation of the financial statements of a foreign operation
D)Expense on the impairment of assets held

Question 46

If expenses are classified into the groups,cost of sales,selling expenses,administrative expenses and finance expenses,under IAS 1/AASB 101 they are classified by:

A)nature.
B)function.
C)liquidity.
D)tangibility.

Question 47

Under IAS 1/AASB 101,concerning the statement of changes in equity,it is true that:

A)it is an additional financial report that each entity is required to supply to its external users.
B)it only shows changes in retained earnings not changes in share capital.
C)transfers to reserves from retained profits do not have to be separately disclosed as they do not change total equity.
D)opening and closing total equity must be reconciled showing all the changes for the period but this is not necessary for the components of equity.

Question 48

Which category of revenue listed does not require separate disclosure under IAS 18/ AASB 118?

A)Revenue from the rendering of services
B)Royalties
C)Dividends received
D)Rents received

Question 49

When might borrowing costs not appear in a statement of profit or loss and other comprehensive income?

A)If they result from a negatively geared project.
B)If they are less than five percent of total expenses.
C)If borrowing costs are directly attributable to the acquisition,construction or production of a qualifying asset.
D)If they are not incurred in the ordinary course of business.

Question 50

When might borrowing costs not appear in a statement of comprehensive income?

A)If they result from a negatively geared project.
B)If they are less than five percent of total expenses.
C)If borrowing costs are directly attributable to the acquisition,construction or production of a qualifying asset.
D)If they relate to research expenditure.

Question 51

What is an alternative name for the balance sheet?

A)Statement of financial performance
B)Statement of financial balances
C)Statement of financial situation
D)Statement of financial position

Question 52

How many of these expenses that would normally appear in an internally prepared income statement are required to be separately disclosed in an external income statement prepared to conform to the requirements of the accounting standards?
-Advertising
-Insurance
-Telephone

A)0
B)1
C)2
D)3

Question 53

It is true under IAS 1/AASB 101 that:

A)for the balance sheet all assets and liabilities must be classified as current or non-current (unless a liquidity presentation is more appropriate).
B)there is a prescribed format set out for the balance sheet.
C)movements in reserves must be shown on the face of the balance sheet.
D)the balance sheet must begin with the assets section.

Question 54

Which of these is not an expense item that requires separate disclosure under the accounting standards in the statement of profit or loss and other comprehensive income or in the notes attached to the statement?

A)Rent expense
B)Bad and doubtful debts
C)Impairment expenses of non-current assets
D)Interest paid

Question 55

Under IAS 1/AASB 101 which of these is most likely to be classified as a non-current asset?

A)Deferred tax
B)Inventories
C)Goodwill
D)Long-term borrowings

Question 56

What is the correct heading on a statement of financial position made up to 30 June 2014?

A)As at 30 June 2014
B)For the year ended 30 June 2014
C)For the period ended 30 June 2014
D)30th June 2014

Question 57

The approach contained in IAS 1/AASB 101 to the determination of a company's profit or loss is:

A)the new approach.
B)the inclusive approach.
C)the all-inclusive profit approach.
D)the equity approach.

Question 58

Under IAS 1/AASB 101 the statement of changes in equity must disclose how many of the following?
-Total comprehensive income for the period.
-A reconciliation between carrying amount at the beginning and end of the period for each item of equity.
-Contributions by and distributions to owners,disclosed separately.

A)0
B)1
C)2
D)3

Question 59

What is the correct heading on a statement of financial position made up to 30 June 2016?

A)As at 30 June 2016
B)For the year ended 30 June 2016
C)For the period ended 30 June 2016
D)30^th June 2016

Question 60

Under IAS 1/AASB 101,which format is subscribed for the statement of financial position?

A)No one format is prescribed
B)Assets = equity + liabilities
C)Equity = assets - liabilities
D)Assets - liabilities = equity

Question 61

The term that is currently most commonly preferred for owner's equity in a company balance sheet is:

A)shareholder's equity.
B)shareholder's funds.
C)equity.
D)share capital and reserves.

Question 62

How many of these expenses that would normally appear in an internally prepared profit and loss statement are required to be separately disclosed in an external statement prepared to conform to the requirements of the accounting standards?
-Cleaning
-Repairs and maintenance
-Salaries and wages
-Telephone expense

A)1
B)2
C)3
D)4

Question 63

Under the simplest sample format provided in the Implementation Guidance accompanying IAS 1/AASB 101,the final line in the statement of profit or loss and other comprehensive income is:

A)profit/loss for the period.
B)total comprehensive income for the period.
C)profit/loss and other comprehensive income for the period.
D)profit/loss after tax and comprehensive income.

Question 64

The term that is currently the most commonly preferred for owner's equity in a company balance sheet is:

A)equity.
B)shareholder's funds.
C)share capital and reserves.
D)shareholder's equity.

Question 65

How many of these expenses that would normally appear in an internally prepared income statement are required to be separately disclosed in an external statement prepared to conform to the requirements of the accounting standards?
-Freight outwards
-Printing and stationery expenses
-Utilities expenses

A)0
B)1
C)2
D)3