Deck 11: Reports and Disclosures I: Overview

Question 1

In all cases prior period errors must be corrected retrospectively.

Answer 1

False

Question 2

Under AASB 110 there are two types of post reporting date events, described as:

A)type I and type II post reporting date events
B)those relating to the company and those not relating to the company
C)those relating to adjusting events and those relating to non adjusting events
D)complete and incomplete post reporting date events

Answer 2

C

Question 3

Under the Corporations Act, the general qualitative standard for financial reports is that of presenting fairly the matters required to be included in the financial report.

Answer 3

False

Question 4

Penguin Ltd was incorporated as a public company on 1 July 20X0 with 10 shareholders.Each shareholder contributed 10% of the initial capital.In August 20X1, Penguin Ltd's directors decided to raise some more equity capital and list Penguin Ltd's shares on the Australian Securities Exchange (ASX).The capital was raised and the shares were listed on the ASX on 1 April 20X2.The directors of Penguin Ltd have always considered the company to be a reporting entity.Which statement about Penguin Ltd's financial reporting obligations before and after 1 April 20X2 is correct?

A)Penguin Ltd must now prepare full year and half yearly financial reports, whereas before 1 April 20X2 it only had to prepare full year financial reports
B)Penguin Ltd must now prepare full year and half yearly financial reports, and this was the requirement before 1 April 20X2
C)Penguin Ltd must prepare only half yearly financial reports, whereas before 1 April 20X2 it had to prepare both full year and half yearly financial reports
D)Penguin Ltd must only prepare full year financial reports, and this was the requirement before 1 April 20X2

Question 5

AASB 101 contains a general prohibition on the offsetting of (i) assets and liabilities and (ii) income (revenues and gains) and expenses.

Question 6

In deciding whether an item is material, a young accountant determines that an item is less than 5% of the appropriate base amount.This means that the item:

A)is material
B)is not material
C)is in the no presumption range
D)could be material depending on qualitative factors

Question 7

A Directors' Declaration must include declarations about whether the financial statements and the notes:

A) $\begin{array}{llcc} \text { Comply with } & \text { Give a true and fair } &\text {Comply with the conceptual framework }\\ \text { AASBs} & \text {view}& \text {(the Framework for the Preparation and} \\ \text { } & \text { } &\text { Presentation of Financial Statements and} \\ \text { } & \text { } & \text { SACs 1 and 2)}\\ \text { Yes } & \text {No}&\text {No}\\\end{array}$

B) $\begin{array}{ccc}\text { Yes} & \text {No } & \text { No }\\\end{array}$


C) $\begin{array}{ccc}\text {No } & \text { Yes } & \text { No }\\\end{array}$


D) $\begin{array}{llcc} \text { Yes } &&& \text { Yes} &&&&& \text { No} \\\end{array}$

Question 8

Financial information about a transaction was included only in the notes to the financial statements.This information was:

A)recognised and disclosed by Frank Ltd
B)only recognised by Frank Ltd
C)only disclosed by Frank Ltd
D)recognised, realised and disclosed by Frank Ltd

Question 9

CC Ltd is an unlisted public company and it is a non disclosing entity.CC Ltd is not a reporting entity.Under the Corporations Act, CC Ltd must prepare an annual financial report in accordance with:

A)AASB 101 only
B)all accounting standards
C)AASB 101, 107, 108, 1031 and 1048 only
D)AASB 101, 107 and 108 only

Question 10

Zoo Ltd, a disclosing entity, has a financial year end of 31 March.On 10 April 20X4, the auditors discovered some equipment in a remote warehouse that had not been recognised in Zoo Ltd's financial statements.This equipment had been Zoo Ltd's property for about five years.
These assets should:

A)be recognised in the financial statements for the financial year ended 31 March 20X4
B)not be recognised in the financial statements
C)be recognised in the financial statements for the financial year ended 31 March 20X5
D)be recognised in the half year financial statements for the half year ended 30 September 20X4

Question 11

In all cases changes in accounting policy (other than those related to accounting estimates) must be applied retrospectively.

Question 12

Under the Corporations Act the notes to the financial statements are an integral component of the financial statements.

Question 13

Carrigan Pty Ltd was incorporated as a proprietary company on 29 April 20X0.The following information relates to Carrigan's financial year ended 30 June 20X1:
$\begin{array}{llcc} \text { Total gross operating revenue} &\$19500000 \\ \text { Total full time employees at 30 June \( 20 \mathrm{X} 1 \) } &52\\ \text {Total gross assets at 30 June \( 20 \mathrm{X} 1 \) } &\$13500000\\\end{array}$

Carrigan Pty Ltd is not a disclosing entity.When (if at all) must Carrigan Pty Ltd lodge its 20X1 financial report with the ASIC?

A)on or before 28 September 20X1
B)on or before 31 October 20X1
C)on or before 30 September 20X1
D)Carrigan Pty Ltd does not have to lodge financial reports because it is not required to prepare financial reports

Question 14

A company must always send to every shareholder a copy of its annual financial report.

Question 15

Disclosing entities must prepare both annual and half year financial reports.

Question 16

Small Pty Ltd is a small proprietary company.When would Small Pty Ltd have to prepare an annual financial report?

A)If requested by one of its shareholders to do so
B)If requested by the ICAA or CPA Australia to do so
C)If requested by the AASB to do so
D)If requested by ASIC to do so

Question 17

Which of the following is not a correct statement of the nature of the comparative amounts included in a financial report:

A)they must be adjusted for errors discovered in subsequent reporting periods
B)they are adjusted for subsequent changes in accounting policies
C)they must always be the same as in the prior period financial report
D)they are not adjusted to reflect subsequent changes in accounting estimates

Question 18

The annual report includes:
Directors' Report Auditors' Report Prospectus

A)Yes Yes No
B)No Yes No
C)Yes No Yes
D)No Yes Yes

Question 19

Which of the following items is not required to be included in the notes to the financial statements by AASB 101:

A)a statement of compliance with AASB and IASB accounting standards
B)details of the entity's legal form and domicile
C)details of the auditors' remuneration
D)a statement that the financial report has been lodged with ASIC but that ASIC takes no responsibility for the content of the report.

Question 20

Under the Corporations Act the financial statements include:

A) $\begin{array}{ccc}\text { Directors' Report } & \text { Cash Flow Statement } & \text { Notes to the } \\&&\text { financial statements} \\\text { Yes } & \text { Yes } & \text { No }\end{array}$
B) $\begin{array}{ccc}\text {No } & \text { Yes } & \text { No }\\\end{array}$

C) $\begin{array}{ccc}\text {Yes } & \text {No } & \text {Yes }\\\end{array}$


D) $\begin{array}{ccc}\text {No } & \text { Yes } & \text { Yes }\\\end{array}$

Question 21

Under AASB 101 the financial statements include:

A) $\begin{array}{llcc} \text {Directors' Report } & \text { Cash Flow Statement } & \text {Notes to the } \\ \text { } & \text { } & \text { financial statements } \\ \text { } &\\ \text {Yes } & \text { Yes } & \text { No } \\\end{array}$

B) $\begin{array}{llcc} \text { No } &&&&& \text { Yes} &&&&& \text { No} \\\end{array}$


C) $\begin{array}{llcc} \text { Yes} &&&&& \text { No } &&&&& \text { Yes } \\\end{array}$



D) $\begin{array}{llcc} \text { No} &&&&& \text {Yes } &&&&& \text { Yes } \\\end{array}$

Question 22

The following is a listing of possible sets of financial statements:
I.Consolidated financial statements of parent entities (those with subsidiaries) - uses consolidation.
II.Separate financial statements of parent entities (single entity financial statements that report on the parent entity alone).
III.Financial statements of entities that are not parents that apply equity accounting to investments in associates and jointly-controlled entities (single entity financial statements).
IV.Separate financial statements of entities that are not parents that have investments in associates and jointly-controlled entities (single entity financial statements) - equity accounting not applied.
V.Financial statements of an entity that is not a parent and does not have investments in jointly controlled entities.Neither equity accounting nor consolidation applied.
Which of the following most accurately reflects the requirements of IFRSs for financial statements that must be presented by a parent entity:

A)All of I to V
B)I only
C)I and III
D)I and II

Question 23

The following is a listing of possible sets of financial statements:
I.Consolidated financial statements of parent entities (those with subsidiaries) - uses consolidation.
II.Separate financial statements of parent entities (single entity financial statements that report on the parent entity alone).
III.Financial statements of entities that are not parents that apply equity accounting to investments in associates and jointly-controlled entities (single entity financial statements).
IV.Separate financial statements of entities that are not parents that have investments in associates and jointly-controlled entities (single entity financial statements) - equity accounting not applied.
V.Financial statements of an entity that is not a parent and does not have investments in jointly controlled entities.Neither equity accounting nor consolidation applied.
Which of the following sets of financial statement report on the entity using the same reporting rules?

A)I, III and V
B)II, IV and V
C)I and II
D)All of I to V

Question 24

It is important that disclosure be made of the accounting policies adopted in preparing a financial report:

A)because they have to be disclosed under AASB 108
B)because they can have a significant effect on the items recognised, how they are measured and the disclosure made about them
C)only to the extent that they are material in understanding the financial report
D)even if they are not material, they are necessary to explain the events and transactions of the entity

Question 25

The following is a listing of possible sets of financial statements:
I.Consolidated financial statements of parent entities (those with subsidiaries) - uses consolidation.
II.Separate financial statements of parent entities (single entity financial statements that report on the parent entity alone).
III.Financial statements of entities that are not parents that apply equity accounting to investments in associates and jointly-controlled entities (single entity financial statements).
IV.Separate financial statements of entities that are not parents that have investments in associates and jointly-controlled entities (single entity financial statements) - equity accounting not applied.
V.Financial statements of an entity that is not a parent and does not have investments in jointly controlled entities.Neither equity accounting nor consolidation applied.
Which of the following best reflects the sets of financial statements to be included in the financial report of a public company that does not have investments in associates or jointly controlled entities?

A)II plus either I or III
B)I and II, or I
C)I only
D)Only I or II

Question 26

The following is a listing of possible sets of financial statements:
I.Consolidated financial statements of parent entities (those with subsidiaries) - uses consolidation.
II.Separate financial statements of parent entities (single entity financial statements that report on the parent entity alone).
III.Financial statements of entities that are not parents that apply equity accounting to investments in associates and jointly-controlled entities (single entity financial statements).
IV.Separate financial statements of entities that are not parents that have investments in associates and jointly-controlled entities (single entity financial statements) - equity accounting not applied.
V.Financial statements of an entity that is not a parent and does not have investments in jointly controlled entities.Neither equity accounting nor consolidation applied.
Which of the following best reflects the sets of financial statements that under the Corporations Act must be included in the financial report of a small proprietary company:

A)II plus either I or III
B)I and II, or III and IV, or V
C)Only I or III
D)none of I to V

Question 27

Under the Corporations Act, various types of financial reports are possible:
Iannual financial report
IIconcise annual financial report
IIIhalf year financial report
Which of the following statements best describes the obligations to present financial reports of a disclosing entity:

A)neither I, II nor III is required if it is also a proprietary company
B)it must prepare both I and III and can prepare II
C)it must send both I and II to shareholders
D)need only prepare I

Question 28

If for a class a non-current asset an entity changes from using the sum-of-the-years-digits method to the straight-line method to allocate the depreciable amount, then:

A)the change is applied retrospectively because it is a change in accounting policy
B)the change is applied retrospectively because it must be a correction of a prior period error
C)it is applied prospectively as it is a change in an accounting estimate
D)is not permitted because it will conflict with the method applied in calculating the comparative amounts