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(i) Manipulate profits – boosting them to increase share prices, or “smoothing” profits to show similar amounts year on year. (ii) Manipulate ratios – key ratios that investors use can be manipulated to show a better position A. Statement (i) is true and (ii) is false B. Statement (i) is false and (ii).
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  25. When applying a revaluation measurement model to assets, the model: a. applies to the entire class of non-current assets; b. may only be applied to current assets; c. is applied permanently and may not be changed; d. is applied to individual assets within a class of non-current assets. 26. Depreciation is a process that.
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a. revenue in the profit and loss statement b. expenses in the profit and loss statement c. opening balance of retained earnings d. other comprehensive income. 12. A non-current Property, plant and equipment asset is depreciated using the straight-line method. The asset was revalued upwards after four years of use. There is no change.
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  16. When translating into the presentation currency the translation difference is recognised: a. in profit or loss b. as a separate component of equity c. in retained earnings d. as an asset or liability, depending on whether it is a debit or credit balance. 17. Aussie Ltd has an investment in Yankee Inc.  The shares.
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  21. AASB 102 Inventories applies to the accounting for: a. work in progress under construction contracts; b. financial instruments; c. biological assets; d. materials consumed in the manufacture of knitting machines for sale. 22. When an entity’s operating cycle is not clearly identifiable it is assumed to be: a. three months; b. six months; c. nine months; d. 12.
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16. B. Scott Ltd reported the following cash flow information for year 2010: Cash used in operating activities (4,000) Cash used in investing activities (36,000) Cash generated from finance activities 32,000 Net cash outflow (8,000) Which of the following balance sheet extracts for B. Scott Ltd is correct? A. 2009 2010 Cash 16,000 24,000 B. 2009 2010 Cash 16,000 48,000 C..
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  26. Under the periodic inventory approach the cost of goods sold during a period is determined as follows: a. beginning inventory + net purchases – ending inventory; b. beginning inventory – net purchases – ending inventory; c. opening inventory + net purchases + closing inventory; d. opening inventory – net purchases + closing inventory. 27..
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1. Property, plant and equipment are assets that: a. are expected to be used up within the current financial period b. are held for resale within the current period c. are physical in nature d. have a remaining productive life of less than one financial year. 2. Property, plant and equipment includes items that are: a..
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11. Which of the following z-scores would suggest a company was likely to fail? A. 1.86 B. 2.99 C. 1.72 D. 1.90 12. Which of the following z-scores would suggest a company was not likely to fail? A. 1.86 B. 2.99 C. 1.72 D. 1.90 13. Which of the following is not included in the calculation of a Z-Score? A. Working.
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16. P. Rudd company received and paid an electricity bill for £300. How would this transaction be recorded? A. Debit cash and credit retained earnings B. Debit electricity and credit retained earnings C. Debit electricity and credit cash D. Debit cash and credit electricity 17. A prepayment is considered to be: A. An asset which will.
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  6. Stock take discrepancies between a count sheet and recorded quantities in the ledger may arise due to: I Theft of stock during the year II Stock purchased under FOB destination terms being in transit at period end III A consignee including consignment stock in their physical count. IV Sales returns not being processed.
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  The following information relates to questions 6-8 Adam Limited and Davies Limited enter into a finance lease agreement with the following terms: ??lease term is 3 years ??estimated economic life of the leased asset is 6 years ??3 × annual rental payments of $23 000 each payment is one year in arrears ??residual value at.
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1. Which of the following assets is regarded as meeting the identifiability criteria for recognition as an identifiable intangible asset that can be recorded as acquired in a business combination? a. customer base b. royalty agreements c. ongoing recruitment programs d. strong and favourable employee relations. 2. For an asset to be classified as an.
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1. According to AASB 121 The Effects of Changes in Foreign Exchange Rates, the following statement, ‘the currency that affects the economic wealth of the entity’, provides a definition of? a. functional currency; b. local currency; c. presentation currency; d. foreign currency. 2. According to AASB 121 The Effects of Changes in Foreign Exchange Rates,.
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  6. When translating into the functional currency foreign currency denominated non-monetary items measured using historical cost must be translated using the: a. rate current at end of reporting period; b. average rate for the reporting period; c. exchange rate at the date of the transaction; d. rate prevailing at the end of the last.
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  21. The minimum lease payment is defined as including all of the following components except: a. bargain purchase option b. contingent rentals c. a guaranteed residual value d. the lease payments occurring over the lease term 22. Which of the following is an appropriate journal entry for the initial recognition by a lessee of a.
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1. Which of the following types of employee benefits are required to be measured at their nominal value? a. long service leave b. defined benefit post-employment benefits c. accumulating non-vesting sick leave d. defined contribution employment benefits 2. Employee benefits can arise from which of the following? I workplace agreements between an entity and its employees II.
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16. Which of the following statements is correct? A. In a group or consolidated statement of financial position the share capital of the parent company and its subsidiaries are shown B. In a group or consolidated statement of financial position the retained earnings of the parent company and its subsidiaries are shown C..
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6. The cash flow statement reports inflows and outflows of cash under which three headings? A. Operating activities, investing activities and expense activities B. Operating activities, investing activities and equity activities C. Operating activities, investing activities and finance activities D. Operating activities, investing activities and debt activities 7. The redemption of a loan would appear.
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6. Which of the following is not a measure to improve auditor independence? A. Audit fees set by an independent body B. Prohibit senior audit rotation, to enable auditors to work more closely with management C. Prohibit auditors from undertaking non-audit services for their clients D. Auditors appointed by independent body 7. Which of the.
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  16. The offer to pay termination benefits can no longer be withdrawn when the entity has communicated to affected employees a plan of termination that meets which of the following criteria? a. actions required to complete the plan indicate that significant changes to the plan are unlikely b. the plan identifies the.
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  11. If foreign currency denominated non-monetary items are measured using the fair value method, they must be translated into the functional currency using the: a. exchange rate at the date when the value was determined; b. exchange rate current at end of reporting period; c. closing exchange rate for the financial year; d. exchange.
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a. liquidation value b. accrual c. revaluation d. realisable value. 7. Under the cost model, after initial recognition of a Property, plant and equipment asset the item must be carried at its: a. residual value b. cost less accumulated depreciation and less accumulated impairment losses c. initial cost d. net present value. 8. Wilson Limited applied the straight-line method.
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  11. The key difference between defined benefit and defined contributions post-employment plans is that: a. the employee bears the risk in a defined benefit plan, whereas the employer bears the risk in a defined contribution plan b. the fund bears the risk in a defined benefit plan, whereas the employee bears the.
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  Company P Company C   £000 £000 Non-Current Assets 400 150 Investment in Company S at Cost 200 - Current Assets 50 30 Total Assets 650 180 Current liabilities 20 25 Ordinary Share Capital 300 100 Retained Earnings 330 55   650 180 At the time of the acquisition, the net asset value of C was £100,000. This was made up entirely of £100,000 share capital. If company P owns 100% of Company C, then the consolidated Statement of.
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  6. AASB 119 requires short-term employee benefits to be measured at: a. future value b. nominal value c. present value d. fair value 7. An entity is required to recognise a liability for short-term compensated absences that are: a. accumulating and vesting b. non-accumulating and vesting c. non-accumulating and non-vesting d. all of the above 8. Pirate Ltd employs 5.
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  11. Nelson Ltd manufactures specialised machinery for both sale and lease. On 1 July 2013, Nelson leased a machine to Poggi Ltd. The machine cost Nelson Ltd $195 000 to manufacture, and its fair value at the inception of the lease was $212 515. The interest rate implicit in the lease is 10%,.
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2. Creative accounting is not only concerned with maximizing profit and may include income smoothing which may require understating profits 3. Depreciation and inventories of unsold goods are areas of financial accounting where the accounting rules allow little flexibility, and there is little scope for personal judgment or manipulation 4. It is.
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1. All of the following are common classifications for the disclosure of inventories in a set of financial statements: a. I; b. II; c. III; d. IV. 2. Commodity broker traders are able to measure their inventories at: a. replacement cost b. nominal cost c. fair value less costs of disposal d. current cost 3. AASB 102 prohibits which of.
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  21. An enterprise bargaining agreement results from an entity entering into an agreement with: a. its employees b. the government c. the relevant industry body d. the relevant employee union 22. Employee benefits can be allocated to assets: a. only if it relates to the cost of an internally generated intangible b. where the entity is certain.
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  16. Ming Limited had the following items of inventory at reporting date: Item Quantity Cost/unit $ NRV/unit The adjustment necessary at reporting date is: a. DR Inventory $ 50; b. DR Inventory $100; c. CR Inventory $ 50; d. CR Inventory $0. 17. If the selling price of inventory that has been written down to net realisable.
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  11. The measurement rule for inventories, mandated by AASB 102 Inventories, is: a. lower of fair value and selling price; b. lower of cost and net realisable value; c. higher of initial cost and realisable value; d. higher of completion costs and replacement costs. 12. ‘Net realisable value’ of inventory is defined as the net.
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  6. Under AASB 138 Intangibles, goodwill may only be recognised as an asset if it: a. arises as a result of creating new assets within the normal business operations b. does not exceed its internally recorded cost c. is internally generated d. is acquired as part of a business combination. 7. The measurement of fair.
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16. Which of the following statements is correct? A. Companies are required to publish their carbon footprint in their annual report B. Companies are free to publish whatever environmental information they like in their annual reports C. Companies are required to publish their recycling policies in their annual report D. Companies are required to.
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21. From the following information, calculate the cash flow from operating activities: Net Income 80,000 Depreciation 15,000 Increase in accounts receivable 5,000 Decrease in accounts payable 5,000 Increase in inventory 5,000 A. £80,000 net cash inflow B. £70,000 net cash inflow C. £75,000 net cash inflow D. £110,000 net cash inflow 22. From the following information, calculate the cash flow.
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  26. Which of the following obligations do NOT arise from past services provided by an employee? a. short-term compensated absences b. termination benefits c. other long-term employee benefits d. post-employment benefits 27. An entity is able to record a provision for termination benefits when it: a. has a detailed formal plan b. has a definite intention of.
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  16. Timely Limited accepts a lease incentive to enter into a 4-year operating lease for equipment. The incentive is cash amounting to $10 000 that will be paid on the date the lease agreement is signed. On inception of the lease, the lessor will record:   a. DR Cash $10 000       CR Incentive to lessee   $10 000   b. DR Incentive to.
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