Deck 1: Introduction to Accounting

Question 1

The external user of accounting information is the:

A)Purchasing officer.
B)Director of Research and Development.
C)Inventory clerk.
D)Customer.

Answer 1

D

Question 2

Which of the following is not a role of the Australian Securities and Investments Commission?

A)To uphold the law uniformly,effectively and quickly.
B)To promote confident and informed participation in the financial system by investors and consumers.
C)To be responsible for ensuring that financial institutions can honour their commitments
D)To make information about companies and other bodies available to the public.

Answer 2

C

Question 3

The difference between bookkeepers and accountants is:

A)just in the name because bookkeepers and accountants always do the same job
B)that bookkeepers perform all the steps in the accounting process but accountants only do steps one and two.
C)that accountants perform all the steps in the accounting process but bookkeepers only do steps one and two.
D)that bookkeepers require a higher level of education to perform their duties than accountants.

Answer 3

C

Question 4

Legally enforceable accounting standards that apply to Australian companies are issued by

A)the Financial Reporting Council.
B)the Australian Stock Exchange.
C)the Australian Securities and Investments Commission.
D)the Australian Accounting Standards Board.

Question 5

Which of these is not likely to be the responsibility of a bookkeeper?

A)calculating and paying wages
B)checking a customer's credit rating
C)preparing the bank reconciliations
D)selecting an accounting package to the used by the entity

Question 6

Which of these would not be considered an internal user of accounting information?

A)The chairman of ASIC
B)The human resources manager
C)The Chief Financial Officer
D)The Production supervisor

Question 7

The Corporations Act 2001 is primarily enforced by

A)the Financial Reporting Council.
B)the Australian Securities Exchange.
C)the Australian Securities and Investments Commission.
D)the Australian Accounting Standards Board.

Question 8

The body that oversees the operations of financial institutions such as banks and building societies in Australia is:

A)APRA.
B)ASX.
C)ACCC.
D)ATO.

Question 9

The internal user of accounting information is the:

A)Building maintenance manager.
B)Supplier.
C)Environmental lobby group.
D)Auditor from the Australian Tax Office.

Question 10

The information that would be of most interest to an organisation's production manager is:

A)ability to pay off debts as they fall due
B)continuity of orders for the factory.
C)annual dividends.
D)taxable income.

Question 11

Select the option that does not represent a difference between financial and management reporting.

A)The level of detail in the reports
B)Whether the reports are quantitative only or are both quantitative and qualitative
C)How up-to-date the report is
D)Whether the reports are useful for decision-making

Question 12

The Corporations Act gets its powers from which section of the Australian Constitution?

A)50
B)51
C)52
D)53

Question 13

How many of the following are differences between management and financial accounting?
*Types of reports produced
*Frequency of reports
*The format of reports
*The users of reports

A)One
B)Two
C)Three
D)Four

Question 14

The content of management accounting reports is governed by:

A)the Australian Securities Exchange.
B)the Corporations Act 2001
C)CPA Australia and the Institute of Chartered Accountants of Australia.
D)there are no specific rules governing the content of management accounting reports

Question 15

The steps in the process of accounting take place in the following order:

A)measuring,identifying,decision making,communicating
B)identifying,communicating,measuring,decision making
C)identifying,measuring,communicating,decision making
D)identifying,decision making,measuring,communicating

Question 16

Management accounting reports are prepared:

A)based on GAAP and IASB accounting standards
B)to provide information for a wide range of stakeholders
C)to provide up to date information to managers for decision making
D)based only on historical figures

Question 17

Which of the following countries has not adopted IFRS?

A)Germany
B)Russia
C)Japan
D)USA

Question 18

Which of the following is not a business transaction?

A)incurring interest on a business loan
B)purchasing office supplies
C)receiving fees for services
D)hiring a new employee

Question 19

The number of countries in which financial reports are prepared using global accounting standards is:

A)60
B)80
C)100
D)more than 120

Question 20

The information about a customer that would be of most interest to a supplier is:

A)ability to pay off debts as they fall due.
B)annual dividends.
C)taxable income.
D)compliance with accounting standards.

Question 21

Resources controlled by the entity as a result of past transactions or events and from which future economic benefits are expected to flow to the entity is the definition of:

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

Question 22

Decreases in economic benefits in the form of outflows or depletions of assets or incurrences of liabilities that result in a decrease in equity,other than those relating to distributions to equity participants,is the definition of:

A)liabilities.
B)income.
C)expenses.
D)equity.

Question 23

A disclosing entity is an entity that

A)discloses the basis on which their financial reports are prepared
B)issues securities that are quoted on a stock market or made available to the public via a prospectus
C)is exempt under the Corporations Act 2001 from applying the AASB accounting standards
D)is involved in the accounting standard setting process

Question 24

"A present obligation of the entity arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits" is the definition of:

A)an expense
B)a liability
C)equity
D)revenue

Question 25

The first step in issuing an accounting standard is

A)the issue of an exposure draft inviting comment from interested parties.
B)the convening of an advisory panel by the AASB
C)the identification by interested parties of a relevant issue.
D)the preparation of a key decision questionnaire identifying the principle issues raised.

Question 26

The ICAA and CPA Australia

A)are responsible for developing company regulations.
B)are involved in the enforcement of company regulations through the regulation of their members.
C)play no role in setting company regulation and have nothing to do with enforcing company regulation.
D)have nothing to do with setting company regulations but have a role in enforcing the regulations.

Question 27

AASB accounting standards are legally enforceable in Australia under:

A)the Trade Practices Act 1974
B)the Income Tax Assessment Act 2007
C)The Australian Constitution
D)The Corporations Act 2001

Question 28

The ACCC is responsible for administering the

A)the Corporations Act 2001
B)the Trade Practices Act 1974
C)the Australian Securities and Investments Commission Act 2001
D)the ASX Market and Listing rules

Question 29

The Financial Reporting Council is responsible for

A)developing Australian accounting standards for both the public and private sectors in Australia
B)issuing Australian accounting standards for both the public and private sectors in Australia.
C)overseeing the accounting and auditing standard-setting process for both the public and private sectors in Australia
D)reporting breeches of Australian accounting standards for both the public and private sectors in Australia.

Question 30

Which of the following is an example of a liability?

A)allowance for doubtful debts
B)accumulated depreciation
C)revenue received in advance
D)GST paid

Question 31

Providing accounting reports to external users costs large organisations:

A)nothing,as all charges are reimbursed by the government.
B)very little,as the reports are quite simple to produce.
C)varying amounts depending on the year in question.
D)a significant amount.

Question 32

The fundamental purpose of accounting standards is to improve

A)Accountants ethics.
B)Social accountability.
C)Company profits.
D)Resource allocation.

Question 33

Which statement about the AASB Framework is not true?

A)The Framework applied to all Australian accounting entities
B)It establishes the objectives of financial statements
C)It sets out the qualitative characteristics required of financial information
D)It defines the elements of the financial statements

Question 34

Under the Framework the four principle qualitative characteristics for General Purpose Financial Statements are:

A)relevance,reliability,materiality,conservatism
B)relevance,reliability,comparability,understandability
C)uniformity,consistency,prudence,readability
D)comparability,verifiability,timeliness,understandability

Question 35

Which of these is an asset?

A)Income tax payable
B)Revaluation reserve
C)Interest earned on investments
D)Investments

Question 36

Under the Framework,the qualitative characteristic of relevance is described as:

A)information that is of value to users in decision making.
B)information that is understandable
C)information that can be recorded in accounting reports.
D)information that can be reliably measured.

Question 37

Which of these entities is least likely to have users dependent on General Purpose Financial Statements?

A)A company with a large number of shareholders
B)A company listed on the stock exchange
C)A small company whose shareholders also run the business
D)A government department

Question 38

Special-purpose financial reports provide information for which group(s)?
$\begin{array}{|l|l|l}\hline & \text { Internal Users } & \text { External Users } \\\hline\text { I } & \text { Yes } & \text { Yes } \\\hline \text { II } & \text { Yes } & \text { No } \\\hline \text { III } & \text { No } & \text { Yes } \\\hline \text { IV } & \text { No } & \text { No } \\\hline\end{array}$

A)I
B)II
C)III
D)IV

Question 39

The cost of producing financial information is

A)Always outweighed by the benefits gained
B)Sometimes outweighed by the benefits gained
C)Never outweighed by the benefits gained
D)irrelevant as users will want all the information they can get

Question 40

The Framework describes the qualitative characteristic of relevance as:

A)information that can be classified
B)information that is of value to users in decision making
C)information that can be reliably measured
D)information that is understandable.

Question 41

When making informed investment decisions,investors:

A)are only interested in the company's financial situation
B)are only interested the company's market share
C)are mainly interested in how long the company has been in existence
D)are interested in the company's financial situation and other relevant business factors as well

Question 42

The work of recording financial transactions is normally carried out by a _______________ not an accountant.

Question 43

The two constraints imposed on the preparation of financial information are ____________________ and costs versus benefits.

Question 44

One of ASIC's main roles is to ensure that companies comply with the _________________ Act 2001.

Question 45

Firms of accountants who work for many different clients are known as:

A)financial accountants
B)private accountants
C)public accountants
D)company accountants

Question 46

Entities that issues securities that are quoted on a stock market or made available to the public via a prospectus are known as _____________ entities.

Question 47

Accounting reports prepared for users who have the authority to obtain the information they need are known as ____________________ purpose financial reports.

Question 48

A company's financial statements include the Statement of Comprehensive Income,the Statement of Financial Position and the Statement of __________________________.

Question 49

Which of the following is not likely to be a growth area for the accountants of the future?

A)carbon accounting
B)transaction processing
C)forensic accounting
D)insolvency

Question 50

Subjectivity does not apply to the valuation of:

A)cash
B)inventory
C)property,plant and equipment
D)net accounts receivable

Question 51

The part of the accounting function within an organisation which includes costing,budgeting and planning is known as ____________________ accounting.

Question 52

____________ purpose financial statements meet the information needs of a range of users unable to demand accounting information.

Question 53

The _________________ Reporting Council was established to oversee the AASB.

Question 54

Which of the following has not been a traditional area of employment for accountants?

A)forensic accounting
B)audit and assurance
C)management accounting
D)tax accounting

Question 55

CPA Australia and the _______________ are the two main professional accounting bodies in Australia for which an undergraduate degree is required for initial entry.

Question 56

The type and nature of work done by accountants that will be most valued in the future will be:

A)transaction processing
B)financial report preparation
C)functions that cannot be automated or outsourced
D)auditing

Question 57

More than 120 countries worldwide prepare their financial statements following global accounting standards known as _______________________

Question 58

Which of the following is not a limitation of accounting information?

A)its objective nature
B)its subjective nature.
C)the use of historical data to predict future events.
D)the time delay from when events take place and their reporting.

Question 59

Accounting is the process of identifying,measuring,recording and _______________ economic information for the purposes of decision-making.

Question 60

The normal time delay in Australia in providing the annual report of large companies to external users after the end of the financial year is:

A)two weeks.
B)one month.
C)three months.
D)two months.

Question 61

Corporate ______________ principles include appropriate auditing,board independence,corporate responsibility,financial transparency and information disclosure.

Question 62

The accounting element ____________ is defined as involving an inflow or other enhancement of assets,or decrease of liabilities,that results in an increase in equity other than any relating to contributions by equity participants.

Question 63

_____________________ accountants help to solve crimes such as computer hacking and the theft of large amounts of money through hoax schemes on the internet.