Deck 1: The Nature and Environment of Companies

Question 1

The main benefits to accrue from the adoption of international accounting standards include:

A)increasing comparability of financial reports
B)removing barriers to international capital flows
C)improving the quality of financial reporting in Australia to best international practice
D)all of the above

Answer 1

D

Question 2

Describe the concept of sustainability and explain its relevance to modern corporations.

Answer 2

Given the potential impact of corporate activities on society,many modern corporations voluntarily report on a broader range of non- financial matters in addition to financial reporting.For example,many organisations around the world voluntarily prepare social responsibility or sustainability reports.Sustainability seeks to ensure that economic development respects social and environmental imperatives,i.e.management of the impact of businesses on communities (social)and the environment,while providing adequate financial returns to investors.The routine reporting of non- financial information,such as core values in,and progress towards,attainment of human rights,labour,environment and anti- corruption initiatives (such as the 10 principles of the United Nations Global Compact),reflect the expanding scope of the accountability of companies in a multi- stakeholder setting.

Question 3

The countries that are currently working towards convergence with IFRS include:

A)the United States
B)Australia
C)Japan
D)both A and C

Answer 3

D

Question 4

A share in the profits of an entity distributed in proportion to the shareholders' shareholdings is referred to as:

A)equity
B)interest
C)dividends
D)drawings

Question 5

With the separation of ownership from control arises the potential of a conflict of interest between:

A)managers and auditors
B)owners and managers
C)owners and shareholders
D)creditors and managers

Question 6

The practice of people acting in their own self- interest is referred to as:

A)economic rationality
B)ethical rationality
C)economic interest
D)none of the above

Question 7

A financial report intended to meet the information needs of users unable to command reports tailored to their specific needs is known as a:

A)specific purpose financial report
B)general purpose financial report
C)single purpose financial report
D)multi- purpose financial report

Question 8

The organisation in Australia charged with enforcing and administering the Corporations Act is:

A)AASB
B)FRC
C)ASX
D)ASIC

Question 9

One advantage of the company form of organisation is that:

A)it allows specialist managers to administer the day- to- day operations of the company
B)it is subject to very few financial reporting regulations
C)shareholders have unlimited liability
D)company directors have limited liability

Question 10

The modern form of company emerged in Britain in the middle of which century?

A)19th
B)20th
C)17th
D)18th

Question 11

Any party with an interest in,or affected by the actions of,an organisation is referred to as a:

A)creditholder
B)stakeholder
C)shareholder
D)debtholder

Question 12

Which of the following statements is correct?

A)companies can hold shares in other companies
B)the major shareholders in companies are company directors
C)companies cannot hold shares in other companies
D)the major shareholders in companies are individual investors

Question 13

The concept of limited liability limits:

A)the liability of investors to the extent of their investment
B)the liability of directors to the extent of their investment
C)the liability of director to the extent of their contribution to the company's losses
D)the liability of investors to the extent of their contribution to the company's losses

Question 14

Which of the following is NOT one of the major accounting professional bodies in Australia?

A)AICPA
B)IPA
C)ICAA
D)CPA Australia

Question 15

CLERP refers to the:

A)Company Law Economic Reform Program
B)Company Law Ethical Reasoning Program
C)Company Legislation Economic Relationship Process
D)Corporate Legislation Economic Reform Program

Question 16

One of the major goals of developing economies is to:

A)discourage investment by international companies
B)discourage investment by multinational companies
C)encourage investment by company directors
D)encourage investment by international or multinational companies

Question 17

The organisation in Australia that is responsible for developing,issuing and maintaining accounting standards and pronouncements in Australia is the:

A)AARF
B)AASB
C)FRC
D)FASB

Question 18

The nine areas of economic reform covered by CLERP include:

A)cross- border insolvency
B)shareholder protection
C)directors' duties
D)all of the above

Question 19

Companies in Australia are legally incorporated under which statute?

A)Corporations Act
B)Sarbanes Oxley Act
C)Income Tax Assessment Act
D)none of the above

Question 20

The entity that facilitates the trade in financial securities such as stocks,stock options and bonds is known as the:

A)debt exchange
B)Financial Reporting Council
C)Australian Accounting Standards Board
D)stock exchange

Question 21

Discuss the importance of company accounting according to the financial perspective of companies.

Question 22

Explain the importance of companies from a political perspective.

Question 23

Explain some of the major arguments for the regulation of modern companies.

Question 24

Describe some of the accountability issues existing in modern corporations.

Question 25

Describe the major characteristics of modern corporations.

Question 26

Explain the economic perspective of companies.

Question 27

Explain the major reasons for the development of modern corporations.