9e | Test Bank - Australian Reporting Overview

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Chapter 01 Testbank

1. 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'.

True   False

2. 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.

True   False

3. To stay up-to-date, financial accountants must continually keep abreast of ongoing changes and this is why professional accounting bodies require their members to undergo continuing professional development/education.

True   False

4. AASB 1053 introduced a two-tier reporting system for entities producing general purpose financial statements.

True   False

5. An auditor’s opinion is an assurance of the future viability of the entity, or of the efficiency or effectiveness with which management has conducted the affairs of the entity.

True   False

6. Articles in the financial press suggest that professional money managers, security analysts and other investors impose costs on firms when their managers appear to delay bad news disclosures.

True   False

7. One of the reasons why regulators require reporting entities to comply with accounting standards is that this is perceived to increase the ‘comparability’ of the information being produced by different reporting entities.

True   False

8. What are two of the key ways in which management accounting differs 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.

9. One among the duties of accountability is to provide a reckoning or account of those actions to the ____________.

A. stakeholders

B. chief executive officer

C. chief financial officer

D. chief executive officer and chief financial officer

10. AASB are initials that stand for:

A. Australian Accounting Standards Board

B. Auditing & Assurance Standards Board

C. Australian Accounting Standards Bureau

D. Accounting & Auditing Supervision Board

11. The broad role of ‘accounting’, and of a corporate report (and corporate reporting) is to inform relevant ___________about the extent to which the actions for which an organisation is deemed to be responsible (which in itself is a controversial issue as people can have very different views about the responsibilities of organisations) have actually been fulfilled.

A. stakeholders

B. directors

C. managers

D. compliance officers

12. To which body does the Australian Accounting Standards Board report?

A. The Urgent Issues Group

B. The Financial Accounting Standards Board

C. The Financial Reporting Council

D. The Auditing and Assurance Standards Board

13. The Financial Reporting Council appoints the 12 part-time AASB members from a variety of backgrounds, including:

A. the private sector, government, academia, Big 4 accounting firms and independent consultancy

B. the private sector, government, academia, Big 4 accounting firms and employee lobby groups

C. the private sector, government, academia, accounting firms and environmental lobby groups

D. the private sector, government, academia, Big 4 accounting firms and the education sector

14. A financial statement designed to meet the needs of a specific group or to satisfy a specific purpose is known as a __________.

A. general purpose financial statement

B. special purpose financial statement

C. demand financial statement

D. true and fair financial statement

15. A financial statement that complies with the requirements of the Conceptual Framework and accounting standards, and that meets the information needs common to users who are unable to prepare financial statements tailored specifically to satisfy all of their information needs, is known as a __________.

A. general purpose financial statement

B. special purpose financial statement

C. demand financial statement

D. true and fair financial statement

16. The ______ sets uniform trading rules, ethical standards and listing requirements in Australia.

A. Australian National Exchange

B. Australian Securities Exchange

C. Australian Stock Exchange

D. Australian Trading Exchange

17. ______ is the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations. It encompasses the mechanisms by which companies, and those in control, are held to account.

A. Corporate governance

B. Corporate social responsibility

C. Corporate reporting

D. Corporate law

18. Which among the following is not a principle of corporate governance?

A. To lay solid foundations for management and oversight

B. To structure the board to be effective and add value

C. To promote a culture of acting lawfully, unethically and irresponsibly

D. To safeguard the integrity of corporate reports

19. Which of the following most accurately describes the process of issuing an IASB standard?

A. An advisory committee may be established to give advice on the project. This may be followed by the development and publication of discussion documents. After receiving public feedback, an exposure draft may be issued for further comment. A final IFRS is then issued based on previous feedback along with Basis for Conclusion.

B. Discussion documents are developed and published for public comment, then an advisory committee must be established to give advice on the project. After receiving public feedback, an exposure draft may be issued for further comment. A final IFRS is then issued based on previous feedback along with Basis for Conclusion.

C. An advisory committee may be established to give advice on the project and develop an exposure draft, which will be followed by the development and publication of discussion documents. After receiving public feedback, a final IFRS is then issued along with Basis for Conclusion.

D. An advisory committee must be established to give advice on the project; this will be followed by the development and publication of discussion documents. After receiving public feedback, an exposure draft is required to be issued for further comment. A final IFRS is then issued based on previous feedback, along with the Basis for Conclusion.

20. Pursuant to sections 298–300A of the Corporations Act, the Directors' Report must include:

A. a copy of the independent audit report

B. details of all related-party transactions

C. details of directors' emoluments

D. details of compliance with the ASX Corporate Governance Principles and Recommendations

21. AASB 1053 introduced a ____-tier reporting system for entities producing general purpose financial statements.

A. three

B. one

C. two

D. four

22. ____________means accountability to those existing and potential resource providers and others external to the entity who make economic decisions but are not in a position to demand reports tailored to meet their particular information needs.

A. Private accountability

B. Public accountability

C. Potential accountability

D. Tailored accountability

23. The functioning of the Auditing and Assurance Standards Board is overseen by:

A. the Australian Prudential Regulation Authority

B. the Australian Accounting Standards Board

C. the Financial Reporting Council

D. the International Accounting Standards Board

24. The __________opinion helps to establish the credibility and reliability of the financial information.

A. lender’s

B. consumer’s

C. investor’s

D. auditor’s

25. One of the benefits of international _____________is that it helps to improve the quality of financial reporting in Australia so that it meets best international practice.

A. law

B. standardisation

C. governance

D. reporting

26. Which of the following statements is generally supported by the extensive review of existing research according to AASB (2016)?

A. IFRS adoption has benefitted the Australian economy.

B. IFRS adoption has not benefitted the Australian economy.

C. IFRS adoption has led to financial reports becoming longer and harder to read.

D. None of the given options are correct.

27. The publication of an exposure draft , or an International Financial Reporting Standard (including an International Accounting Standard or an Interpretation of the Interpretations Committee) requires approval by:

A. the chairman of the IASB

B. a simple majority of the IASB's 14 members

C. 9 of the IASB's 14 members

D. 12 of the IASB's 14 members

28. The Corporations Act requires which of the following statements to be included in a Directors' Declaration?

A. Whether in their opinion the financial statements comply with accounting standards and the Corporations Act.

B. Whether in their opinion the financial statements give a true and fair view of the financial position and financial performance of the entity.

C. 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.

D. All the options listed here are correct.

29. ________ tend to understate the value of an entity’s net assets; they have a bias towards understating the carrying amount of assets and overstating the carrying amount of liabilities.

A. Conservative accounting policies

B. Commercial accounting policies

C. Modern accounting policies

D. New age accounting policies

30. The financial statements shall present a measure of___________ that has been determined by applying accounting standards.

A. social responsibilities

B. number of employees

C. profits

D. securities

31. Differential reporting is based on:

A. small and large proprietary companies having the same requirements to comply with accounting standards in the preparation of financial reports

B. the burden of additional reporting for some organisations in situations where there were questionable benefits to report preparers

C. the difference between the ability of shareholders in 'small' and those in 'large' companies to request information to satisfy their specific needs

D. None of the options listed here is correct

32. The IASB has:

A. the power to enforce standards in Australia

B. the power to enforce standards in any country adopting IFRSs

C. limited powers of enforcement in IFRS-adopting countries

D. no powers of enforcement

33. Define general purpose financial statements as per accounting standard AASB 101 Preparation and Presentation of Financial Statements.

______________________________________________________________________________

34. Do accounting standards change across time?

______________________________________________________________________________

35. Discuss why professional accounting bodies typically require their members to undergo continuing professional development/education as part of their membership requirements.

______________________________________________________________________________

36. What benefits can we expect from international standardisation?

______________________________________________________________________________

37. What is meant by conservative accounting policies?

______________________________________________________________________________

38. Explain briefly why accounting cannot be considered culture-free.

______________________________________________________________________________

39. Discuss the ‘free-market’ perspective on accounting regulation.

______________________________________________________________________________

40. What are the motivations for providing the alternative measures of performance?

______________________________________________________________________________

Chapter 01 Testbank