Question 1

The main role of the Financial Reporting Council (FRC)is to develop a new conceptual framework for financial reporting.

Accepted Answer

The main role of the Financial Reporting Council (FRC) is to regulate auditors, accountants, and actuaries, and to set the UK’s Corporate Governance and Stewardship Codes. While it does influence financial reporting standards, the development of a new conceptual framework for financial reporting is more directly a task for accounting standards boards like the International Accounting Standards Board (IASB).

Question 2

The Statements of Accounting Concepts within the Conceptual Framework are developed by the International Accounting Standards Board.

Accepted Answer

True

Question 3

The Australian Securities and Investment Commission (ASIC)has the responsibility,among other things,to monitor and regulate various investment products and superannuation.

Accepted Answer

This statement is true. The ASIC is responsible for regulating various investment products and superannuation in Australia.

Question 4

Disclosing entities generally,are entities that have:
 securities (including debentures)quoted on the ASX; issued securities (including debentures)pursuant to a prospectus or a takeover scheme; and borrowing corporations.

Accepted Answer

Disclosing entities are typically those with securities quoted on a stock exchange or that have issued securities under a prospectus, but not all borrowing corporations are considered disclosing entities unless they meet specific criteria.

Question 5

The Corporations Act is very specific about what must,and must not,be included in the Directors' Report that is attached to a company's financial statements.

Accepted Answer

The answer of The Corporations Act is very specific about...

Question 6

Directors could elect not to comply with an accounting standard on the grounds that applying the particular accounting standard would cause the accounts not to present a 'true and fair view'.

Accepted Answer

The answer of Directors could elect not to comply with...

Question 7

The main role of the Financial Reporting Panel (FRP)is to resolve disputes between ASIC and companies concerning accounting treatments in their financial reports.

Accepted Answer

The Financial Reporting Panel (FRP) does have a role in resolving disputes between ASIC and companies concerning accounting treatments in their financial reports.

Question 8

Accounting cannot be considered to be 'culture free' because the value systems of accountants may be expected to be related to and derived from the values of the society with special reference to work related values and,as such,impacts on accounting systems.

Accepted Answer

Accounting is not culture free as the value systems of accountants are influenced by the societal values, especially work-related values, which impact on accounting systems.

Question 9

There has been a trend by governments and government departments towards adopting specialised public-sector related standards.

Accepted Answer

The answer of There has been a trend by governments...

Question 10

Financial accounting can be considered a process involving the collection and processing of financial information to assist the decision-making needs of parties internal to an organisation.

Accepted Answer

Financial accounting primarily focuses on the collection and processing of financial information to meet the needs of external parties, such as investors, creditors, and regulators, rather than internal decision-making needs, which are addressed by managerial accounting.

Question 11

What are two key ways management accounting is different from financial accounting?
A) Management accounting provides special-purpose information to people external to the firm and it is highly regulated.
B) Management accounting provides information for the day-to-day running of an organisation and it is governed by the requirements of ASIC.
C) Management accounting is focused on providing information to shareholders who wish to have input into the management of the organisation and it is regulated by generally accepted accounting principles.
D) Management accounting focuses on providing information for internal users and it is largely unregulated.

Accepted Answer

Management accounting is primarily concerned with providing information to internal users (such as managers and employees) to facilitate decision-making and improve organizational performance. Financial accounting, on the other hand, is primarily concerned with providing information to external users (such as investors, creditors, and regulators) for decision-making and accountability purposes. Management accounting is largely unregulated, whereas financial accounting is governed by generally accepted accounting principles (GAAP) and other regulatory requirements.

Question 12

The Corporations Act requires which of the following to be included in a Directors' Declaration?
I.State whether in their opinion the financial statements comply with accounting standards and the Corporations Act.
II.State whether in their opinion the financial statements give a true and fair view of the financial position and financial performance of the entity.
III.State whether or not in their opinion,when the declaration was made,there were reasonable grounds to believe that the company would be able to pay its debts as they become due.
IV.State details of directors' emoluments.
V.State principal activities of the entity.
A) All of the given answers are correct.
B) I, II and III only
C) I, II, III and IV only
D) IV and V only

Accepted Answer

The Directors' Declaration must include statements regarding compliance with accounting standards and the Corporations Act, whether the financial statements give a true and fair view, and whether there were reasonable grounds to believe the company could pay its debts. However, details of directors' emoluments and the entity's principal activities are not required in the declaration.

Question 13

The financial statements and supporting notes included in an annual report presented to shareholders at a company's annual general meeting is an example of general-purpose financial statements.

Accepted Answer

General-purpose financial statements are intended to provide information that is useful to a wide range of users, including shareholders, creditors, and other stakeholders. The financial statements and notes included in an annual report are designed to meet this objective and are therefore considered general-purpose financial statements.

Question 14

Pursuant to Corporate Law Economic Reform Program (CLERP)issued in October 2003,which of the following is/are required to provide a written declaration to the board of directors that the annual financial statements are in accordance with the Corporations Act and Australian Accounting Standards and that the financial statements present a true and fair view of the entity's financial position and performance?
A) any independent director
B) chief executive officer
C) chief financial officer
D) chief executive officer and chief financial officer

Accepted Answer

According to CLERP, both the chief executive officer and chief financial officer are required to provide written declarations to the board of directors stating that the annual financial statements are in accordance with the Corporations Act and Australian Accounting Standards and that the financial statements present a true and fair view of the entity's financial position and performance.

Question 15

The regulation of accounting can be argued to be necessary to protect the information rights of parties not involved in the day-to-day operations of the organisation.

Accepted Answer

Accounting regulation ensures that financial information is accurate and transparent, which protects the interests of investors, creditors, and other stakeholders who rely on such information to make decisions about the organization. It also promotes ethical behavior and standardizes reporting practices, making it easier for users to compare financial information across companies.

Question 16

Corporate governance is the framework of rules,relationships,systems and processes within and by which authority is exercised and controlled in corporations.

Accepted Answer

Corporate governance refers to the structures, policies, and procedures that are put in place to ensure that a company is directed and controlled in a responsible and effective manner. It encompasses a wide range of issues, including the rights and responsibilities of shareholders, the role of the board of directors, the accountability of management, and the disclosure and transparency of financial information. The aim of corporate governance is to promote integrity, fairness, and transparency in business practices, and to safeguard the interests of all stakeholders, including shareholders, employees, customers, and the wider community.

Question 17

The role of the Financial Reporting Council is to provide broad oversight of the process for setting standards in Australia,including the authority to direct the AASB to develop,amend or revoke a particular standard.

Accepted Answer

The answer of The role of the Financial Reporting Council...

Question 18

The Australian Accounting Standards Board (AASB)issues only one set of accounting standards which have general applicability to the private,public and not-for-profit sectors.

Accepted Answer

The AASB issues one set of accounting standards which are applicable to all sectors - private, public, and not-for-profit.

Question 19

The main role of the International Financial Reporting Interpretations Committee (IFRIC)is to review accounting issues that are likely to receive divergent or unacceptable treatment in the absence of authoritative guidance.

Accepted Answer

The statement accurately reflects the role of IFRIC as described in its mandate.

Question 20

AASB are initials that stand for:
A) Australian Accounting Standards Board
B) Accounting & Auditing Standards Bureau
C) Australian Accounting Standards Bureau
D) Accounting & Auditing Supervision Board

Accepted Answer

AASB stands for Australian Accounting Standards Board, which is the primary standard-setting body for accounting and financial reporting in Australia. The other options do not accurately reflect the name or function of the AASB.

Quiz 1: An Overview of the Australian External Reporting Environment