Question 1

Which of the following is NOT included in the corporate governance statement required under stock exchange regulations?

Accepted Answer

The audit report is not included in the corporate governance statement required under stock exchange regulations as it is a separate document issued by the auditor to provide an opinion on the financial statements of the company. The other options (A, C, and D) are typically included in the corporate governance statement as they relate to the composition and functioning of the board and its committees, as well as the ethical standards they adhere to.

Question 2

Which of the following is/are included in the corporate governance statement required under stock exchange regulations?

Accepted Answer

The corporate governance statement required under stock exchange regulations typically includes the following: 
(i) the company's governance structure and the roles and responsibilities of the board of directors and its committees; 
(ii) the company's code of conduct, ethical standards, and policies for risk management, internal control, and compliance; 
(iii) the company's approach to remuneration of directors and senior executives, including the use of performance-based incentives and any special arrangements or benefits. Therefore, options (i), (ii), and (iii) are all included in the corporate governance statement.

Question 3

Which of the following opinions is NOT included in the directors' statement accompanying the financial statements?

Accepted Answer

The directors' statement accompanying the financial statements typically includes opinions on the company's ability to pay its debts when they fall due, whether the financial statements give a true and fair view of the company's financial performance, and whether the financial statements comply with the requirements of relevant laws and regulations. However, the statement may not necessarily include an opinion on whether the cash budget fairly indicates the anticipated cash flows from operations.

Question 4

Identify the accounting concept or principle that relates to the statement in the following question: The financial statements need to contain information that is useful to decision-makers.

Accepted Answer

The answer of Identify the accounting concept or principle that...

Question 5

The agency charged with the administration and enforcement of the Corporations Act 2001 is the:

Accepted Answer

The Australian Securities and Investments Commission (ASIC) is the agency charged with the administration and enforcement of the Corporations Act 2001. The other options listed (Australian Accounting Standards Board, Australian Securities Exchange, and Australian Accounting Research Foundation) have different roles and responsibilities within the Australian financial system.

Question 6

The practice by Woolworths Ltd of presenting their financial statements in millions of dollars is an application of the concept of:

Accepted Answer

Presenting financial statements in millions of dollars is an application of the concept of materiality, which means that only items that may affect the decisions of users need to be disclosed or reported. By presenting the financial statements in millions, Woolworths is effectively communicating the significant amounts on their financial statements, while also making it easier for users to read and compare the numbers. Relevance is the concept that financial information should be useful in making decisions, understandability means that the information should be presented in a clear and concise manner, and disclosure refers to the act of providing financial information to users. While these concepts are important in financial reporting, they are not directly related to the way in which financial information is presented.

Question 7

Which of the following is not a key point of the Framework?

Accepted Answer

The Framework states that reliability is a primary qualitative characteristic and that prudence should be used where there is uncertainty, but it does not state that prudence should always take precedence over reliability. Option A is true, as relevance and faithful representation are the primary qualitative characteristics. Option B is partially true, as consistency is important but should not outweigh relevance or faithful representation. Option D is also true, as information may no longer be relevant if reported too late.

Question 8

In reporting on its liability for long service leave to employees,a company is obliged to trade off:

Accepted Answer

When reporting on its liability for long service leave to employees, a company should give importance to both relevance and faithful representation. Relevant information is essential for the users to understand the financial position of the company. The information must also be represented faithfully so that it is reliable and shows a true picture of the company's situation. Other options such as consistency, disclosure, and comparability may not be as crucial in this particular situation.

Question 9

Assets are usually reported in the balance sheet at:

Accepted Answer

Assets are usually reported in the balance sheet at historical cost, which is the original cost of acquiring the asset, including any related expenses. This method provides a reliable and objective measure of the value of the asset, as it is based on actual transactions and not subject to fluctuations in the market or changes in management estimates. While assets may appreciate or depreciate over time, their historical cost is typically used for accounting purposes.

Question 10

Which of the following is NOT true? The external auditor's report provides the auditor's opinion that:

Accepted Answer

The external auditor's report does not provide an opinion on the accuracy of the financial statements. The auditor's opinion only states whether the financial statements give a true and fair view, are in accordance with the Corporations Act 2001, and are in accordance with applicable accounting standards. Accuracy is the responsibility of management and the audit does not guarantee complete accuracy.

Question 11

Which of the following statements about comparability is true?

Accepted Answer

Comparability in accounting refers to the ability to compare financial statements of different accounting periods and entities to understand trends and performance. It does not mandate the use of the same accounting methods within all parts of a company, for all assets, or to align with industry practices, as flexibility in accounting methods is allowed provided they are consistently applied and disclosed.

Question 12

Which accounting concept is involved in the requirement that financial statements contain information that is useful to those who are making decisions?

Accepted Answer

The concept of relevance involves providing useful information to decision-makers. This means that financial statements should include information that is important, timely, and has predictive or confirmatory value.

Question 13

Identify the accounting concept or principle that relates to the statement in the following question: If a particular item is,by reason of its nature or its size,significant to a proper understanding of the situation,it should be separately stated.

Accepted Answer

Materiality is an accounting concept that requires significant items to be separately stated in financial statements because they are important to an accurate understanding of the financial situation. This ensures that users of financial statements are not misled by insignificant or immaterial amounts.

Question 14

Identify the accounting concept or principle that relates to the statement in the following question: Information should have predictive value and/or feedback value.

Accepted Answer

The accounting concept that relates to the statement "information should have predictive value and/or feedback value" is relevance. Relevance means that the information provided is capable of making a difference in decision-making. Information that has predictive value helps users to make future decisions while information that has feedback value helps users to evaluate past decisions. Therefore, the information should be relevant to the decision-making process.

Question 15

The agency empowered to prepare and issue accounting standards for the purposes of the Corporations Act 2001 is the:

Accepted Answer

The agency empowered to prepare and issue accounting standards for the purposes of the Corporations Act 2001 is the Australian Accounting Standards Board. The other options, such as the Australian Accounting Research Foundation, Australian Securities Exchange, and Australian Securities and Investments Commission, are not responsible for issuing accounting standards.

Question 16

Use of the same accounting methods over time facilitates:

Accepted Answer

The use of consistent accounting methods over time facilitates comparability. Comparability enables users to compare financial information from different periods and make meaningful conclusions about a company's financial performance and position.

Question 17

Which of the following items is/are generally NOT included in a directors' report to shareholders?

Accepted Answer

Budgeted net profit for following year is generally not included in a directors' report to shareholders as it is considered confidential and the company may not be able to accurately predict the exact amount. The other options, such as names of directors, principal activities of the company, and significant changes in the company's state of affairs are typically included in a directors' report.

Question 18

The preparation of financial statements in a similar form to those of other companies facilitates:

Accepted Answer

The preparation of financial statements in a similar form to those of other companies facilitates comparability. This allows users to easily compare financial information between different companies and make informed decisions.

Question 19

Which of the following statements about accounting regulation is NOT true?

Accepted Answer

The Australian Accounting Standards Board is responsible for developing and issuing accounting standards in Australia, but it does not oversee the operation of the Financial Reporting Council. The other statements are true.

Question 20

The decision by a motor repair company to expense small tools immediately on acquisition rather than depreciate them over their useful lives is an application of the concept of:

Accepted Answer

The decision to expense small tools immediately is based on the materiality concept, which states that accounting for an item should be based on its relative importance or size. Since small tools have a low cost and short useful life, it would not make sense to depreciate them over their useful life. Therefore, expensing them immediately is more material and practical.

Quiz 6: Financial Reporting Principles, accounting Standards and Auditing