Deck 6: Products of the Financial Reporting Process

Question 1

Pro forma reports:

A)Usually show a lower profit figure than those prepares in accordance with accounting standards.
B)Are simply IFRS compliant reports.
C)Are GAAP compliant reports.
D)Usually show a higher profit figure than those prepares in accordance with accounting standards.

Answer 1

D

Question 2

Annual reports contain many financial graphics,it has been noted that:

A)They are frequently distorted to improve perceptions of performance.
B)They are mostly unhelpful in summarising data.
C)They are irrelevant to most users.
D)All of the above.

Answer 2

A

Question 3

Intangible assets are defined as:

A)Identifiable non-monetary assets without physical substance.
B)One-sided financial assets.
C)Unidentifiable assets without physical.
D)All of the above.

Answer 3

A

Question 4

AASB 134 Interim Reporting mandates:

A)That interim financial reports should be prepared at least once per year.
B)The minimum contents of interim financial reports.
C)Who must prepare interim financial reports.
D)All of the above.

Question 5

Approximately what percentage of the real value of companies is thought to be the result of intangible assets?

A)50%.
B)10%.
C)30%.
D)70%.

Question 6

Which of the following is an argument for more flexible reporting periods?

A)It makes dividend calculation easier.
B)It makes it less attractive for entities to manipulate profits.
C)It enhances comparability.
D)It is widely supported.

Question 7

What is the key element of the IASB definition of the reporting entity?

A)The existence of investors and creditors who cannot directly obtain information.
B)The existence of a broad range of users who want information.
C)The legal requirements of the country in which the entity resides.
D)The existence of scarce resources.

Question 8

Income smoothing:

A)Is only possible when sufficient profits are regularly made.
B)Aims to produce a steady growth in the profit stream.
C)Transfers wealth from new shareholders to management.
D)All of the above.

Question 9

Earnings Management:

A)is always bad for shareholders.
B)is always illegal.
C)depends on timing difference between cash and accrual accounting.
D)None of the above.

Question 10

Which of the following has NOT been identified as a reason that management might voluntarily disclose information in annual reports?

A)To win reporting awards.
B)To mislead competitors.
C)To manage powerful stakeholders.
D)To forestall regulation.

Question 11

Which of the following intellectual capital could be included in the Statement of Financial Position?

A)Development of software by the company for external use.
B)Training of programmers employed by a company.
C)Development of software by the company for internal use.
D)None of the above.

Question 12

The annual report:

A)Is thought to have little influence on stakeholder perceptions.
B)May have significant additional voluntary disclosure in the financial statements.
C)Is used for impression management.
D)Is not thought to be an important information avenue for organisations.

Question 13

Which of the following is NOT an argument for a standardised annual reporting period?

A)Most businesses operate on a natural 12 month cycle.
B)It allows investors to compare entities more easily.
C)It is necessary to calculate an annual dividend.
D)Various laws require regular information be produced by the entity.

Question 14

Extensible business reporting language (XBRL)is expected to:

A)Facilitate better corporate analysis.
B)Benefit all businesses,large to small.
C)Ease the burden of reporting to governments.
D)All of the above.

Question 15

Which of the following is specifically prohibited from recognition as an intangible asset according to AASB138?

A)Training.
B)Internally generated brands.
C)Research.
D)All of the above.

Question 16

The kinds of information likely to be included in the annual report includes:

A)Occupational health and safety disclosures.
B)Corporate governance.
C)Environmental performance.
D)All of the above.

Question 17

Legitimacy theory suggests that corporate social disclosure will be used to:

A)Disclose all firm activities,good or bad.
B)Signal deeply held ethical values of the entity.
C)Manage the concerns of key stakeholders.
D)The minimal degree possible.

Question 18

Corporate social responsibility:

A)Still means organisations should pursue profit.
B)Is concerned about the environmental impact of organisations.
C)Suggests that companies can build shareholder value by engaging other stakeholders.
D)All of the above.

Question 19

What is NOT one of the key elements of control?

A)Influence over returns.
B)Ownership.
C)Variable returns.
D)None of the above,i.e.they are all elements of control.

Question 20

Manipulation of reported earnings:

A)Affects wealth transfers between the company and others.
B)Can be both legal and illegal.
C)Includes income smoothing.
D)All of the above.