Question 1

In all cases prior period errors must be corrected retrospectively.

Accepted Answer

Prior period errors are generally corrected retrospectively in the financial statements, but some exceptions allow for alternative treatments depending on the nature of the error and the specific accounting framework being applied (e.g., IFRS or GAAP).

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

Accepted Answer

Under AASB 110, post reporting date events are classified into two types: those relating to adjusting events and those relating to non-adjusting events. Adjusting events provide evidence of conditions that existed at the end of the reporting period, while non-adjusting events are indicative of conditions that arose after the reporting period.

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.

Accepted Answer

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

Accepted Answer

Before listing on the ASX, Penguin Ltd, as a reporting entity, was required to prepare full year financial reports. After listing on the ASX on 1 April 20X2, it is required to prepare both full year and half yearly financial reports to comply with ASX listing rules and the Corporations Act 2001.

Question 5

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

Accepted Answer

AASB 101, paragraph 32, states that assets and liabilities should not be offset unless required or permitted by an Australian Accounting Standard. Similarly, paragraph 90 prohibits the offsetting of income and expenses, except in specific circumstances outlined in other standards or Interpretations.

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

Accepted Answer

The 5% guideline is a quantitative measure, but materiality also depends on qualitative factors. An item less than 5% of a base amount could still be material if it has significant qualitative implications.

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

Accepted Answer

The Directors' Declaration must state that the financial statements comply with AASBs and give a true and fair view, but it does not need to declare compliance with the conceptual framework.

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

Accepted Answer

When financial information about a transaction is included only in the notes to the financial statements, it means that the information was disclosed but not recognized in the main financial statements. Recognition involves recording the transaction within the financial statements themselves (e.g., on the balance sheet or income statement), whereas disclosure involves providing additional detail or information in the notes accompanying the financial statements.

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

Accepted Answer

Non-reporting entities like CC Ltd must prepare financial reports in accordance with specific accounting standards, including AASB 101, 107, 108, 1031, and 1048, as per the Corporations Act requirements.

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

Accepted Answer

Assets should be recognized in the financial statements for the period in which they were owned, even if they were discovered after the year-end. Since the equipment was owned by Zoo Ltd for about five years, including the year ended 31 March 20X4, it should be recognized in the financial statements for the year ended 31 March 20X4.

Question 11

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

Accepted Answer

Changes in accounting policy are generally applied retrospectively, but there are exceptions where either retrospective application is not required or it is impracticable to determine the effects of the change for some or all prior periods.

Question 12

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

Accepted Answer

The answer of Under the Corporations Act the notes to...

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

Accepted Answer

Proprietary companies in Australia are required to lodge their financial reports with ASIC by 31 October following the end of the financial year if they meet certain criteria, such as having a certain level of revenue, assets, or number of employees. Carrigan Pty Ltd, with its reported figures, would likely meet these criteria, necessitating the lodging of its financial report by 31 October 20X1. The fact that it is not a disclosing entity does not exempt it from this requirement if it meets the size thresholds.

Question 14

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

Accepted Answer

Companies often make their annual financial reports available online or upon request, and they are not always required to send a physical copy to every shareholder unless specifically requested or mandated by their internal policies or regulations governing them.

Question 15

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

Accepted Answer

According to accounting standards, disclosing entities are required to 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

Accepted Answer

According to the Corporations Act 2001, all proprietary companies must prepare an annual financial report 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

Accepted Answer

The statement that comparative amounts in a financial report must always be the same as in the prior period financial report is not correct. While it is common to compare current period amounts to prior periods, there may be legitimate reasons for changes in comparative amounts, such as changes in accounting policies or adjustments for errors discovered in subsequent reporting periods.

Question 18

The annual report includes:
$\quad$Directors' Report $\quad$Auditors' Report $\quad$Prospectus
A)$\quad$$\quad$Yes$\quad$ $\quad$$\quad$$\quad$$\quad$Yes $\quad$$\quad$$\quad$$\quad$$\quad$No
B)$\quad$$\quad$No $\quad$$\quad$$\quad$$\quad$$\quad$ Yes $\quad$$\quad$$\quad$$\quad$$\quad$No
C)$\quad$$\quad$Yes $\quad$$\quad$$\quad$$\quad$$\quad$No $\quad$$\quad$$\quad$$\quad$$\quad$Yes
D)$\quad$$\quad$No$\quad$$\quad$$\quad$$\quad$$\quad$ Yes$\quad$$\quad$$\quad$$\quad$$\quad$  Yes

Accepted Answer

The annual report includes Directors' Report and Auditors' Report but not Prospectus.

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.

Accepted Answer

AASB 101 requires a statement of compliance, details of the entity's legal form and domicile, and auditors' remuneration in the notes, but not a statement about lodging with ASIC.

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

Accepted Answer

The answer of Under the Corporations Act the financial statements...

Quiz 10: Reports and Disclosures I: Overview

In all cases prior period errors must be corrected retrospectively.

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

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.

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

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

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

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:

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:

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

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

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

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

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

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

The annual report includes: $\quad$ Directors' Report $\quad$ Auditors' Report $\quad$ Prospectus

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

Under the Corporations Act the financial statements include:

Quiz 10: Reports and Disclosures I: Overview

In all cases prior period errors must be corrected retrospectively.

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

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.

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

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

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

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:

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:

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

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

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

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

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

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

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

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

Under the Corporations Act the financial statements include:

The annual report includes: $\quad$ Directors' Report $\quad$ Auditors' Report $\quad$ Prospectus