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Study Resources (Accounting)

TRUE/FALSE 1.Mutual agency refers to the fact that each member of the partnership form of business entity can bind the other(s) in contract within the scope of normal operations. 2.There are several advantages to forming a partnership, including the ease with which it can be formed and the limited rules and regulations.
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11.WhichofthefollowingisNOTaconclusionofcapitalmarketsresearch? a.Accountingearningsarepoormeasuresofrelevanteventsthatareincorporatedintoshareprice b.Investorsreactmorequicklytobadnewsthantogood c.Accountinginformationisnotusedbyinvestors d.Forecastsoffutureperformancearecoretovaluation 12.WhichofthefollowingisNOTafindingorassumptionofcapitalmarketsresearch? a.Capitalprovidersconsiderauditorsincreaseaccountinginformationcredibility b.Thequalificationofafinancialreportwillhaveasignificantimpactonshareprice c.Theworkoffinancialintermediariesimpactsonshareprices d.Analysts'earningsforecastsaremoreaccuratethantime-seriesmodelsofearnings 13.Voluntarydisclosuretheorypredicts: a.Increaseddisclosurelowersinformationasymmetry,thusincreasingthecostofcapital. b.Disclosurewillbebiasedbutonaveragecredible c.Shareholderswillalwayswantincreasedandmoreaccurateinformation d.Noneoftheabove 14.Valuerelevancestudiesattempttoassess theroleofwhichqualitativecharacteristicoftheConceptualFramework? a.Relevance b.Faithfulrepresentation c.Relevanceandfaithfulrepresentation d.Noneoftheabove 15.WhichofthefollowingisNOToneofthethreeassumptionsunderlyingvaluerelevanceliterature? a.Accountingearningsarenothighlyassociatedwithequitymarketvaluechanges b.Equityusersarethedominantusersoffinancialreports c.Sharepricesadequatelyrepresentinvestors'useofinformationinvaluingequitysecurities d.Share-price-basedtestscanmeasurerelevanceandreliabilityasdefinedbyaccountingbodies. 16.Valuerelevancestudieshaveshownthat a.Reportedearningsaregoodmeasuresofvalue-relevantevents b.Anyrelationshipbetweenaccountingearningsandsharereturnsisweak. c.Lossesarestronglyassociatedwithafirmsabilitytogeneratefuturecashflows d.Noneoftheabove 17.Valuerelevanceresearchsuggestswhichmeasurementmodelbestlinkssharepriceandaccountinginformation? a.Accrualaccounting b.Fairvalueaccounting c.Historiccostaccounting d.Cashaccounting 18.Accountingstudiestestingmarketefficiencyhaveconclusivelyfoundthat a.Marketsarehighlyefficient b.Marketsaremoreefficientintheshortterm c.Marketsareefficientinthelongterm d.Thereisnotconclusiveevidenceaboutmarketefficiency 19.Whichofthefollowingisnotananomalythathasbeennotedtotheefficientmarketshypothesis a.Marketpricesappeartoreacttomorethanjustaccountinginformation b.Returnsoffirmsfollowedbyanalystsaresuperiortothosethatarenot c.Investorinterestvariesaccordingtothemarkettheshareistradedin d.Thereturnsofsmalllistedfirmsappeartobesmallerthanthoseoflargerfirms 20.WhichofthefollowingisNOTanassumptionbehaviouralfinance? a.Peoplemakesystematicerrorsintheirthinking b.Peopleanchoronlongtermexperienceandunderappreciaterecentexperience cbc.Peopleareoverconfident d.Peopleavoidrealisingpaperlossesbutseektorealisepapergains .
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11.Whichtwoeconomicconceptsarefundamentaltotherelevanceoffairvaluestoaccounting? i.TheEfficientMarketsHypothesis ii.SupplyandDemand iii.EconomicRationalism iv.MarginalUtility a.i.&ii. b.ii.&iv. c.i.&iii. d.iii.&iv. 12.WhichofthefollowingwouldNOTindicatethatmarketisinactive? a.Littleinformationispubliclyavailable b.Pricequotationsdon'treflectcurrentinformation c.Thebid-askspreadisnarrow d.Indicesaredemonstrablyuncorrelatedwithrecentindicationsoffairvaluation 13.Whenfairvaluingamotorvehiclewhichofthefollowingisleastlikelytobeimportant? a.Age b.Makeandmodel c.Colour d.Kilometrestravelled 14.Whenvaluingnon-financialassetswhichusefortheassetshouldbeconsidered a.Theasset'shighestandbestuse b.Theasset'scurrentuse c.Theasset'sexpecteduse d.Noneoftheabove 15.WhenfairvaluingaliabilitywhichfactorshouldNOTbeconsidered? a.Non-performancerisk b.Thefairvalueofthecorrespondingasset c.Expectationsofthemarketaboutfulfillingtheobligation d.Noneoftheabove,i.e.theyareallfactorstoconsider 16.Whichofthefollowingisnotanacceptablevaluationtechnique a.Theincomeapproach b.Thecostapproach c.Theexpertevaluationapproach d.Noneoftheabove,i.e.theyareallacceptablevaluationtechniques 17.Whichofthefollowingwouldmostlikelybevaluedusingalevel2valuation? a.Gold b.Abuilding c.Shares d.Abusinessunit 18.Whichofthefollowinginformationmustbeprovidedinthefinancialreportaboutlevel3fairvaluations a.Adescriptionofthevaluationtechniqueused b.Iftheassetisnotbeingusedforitshighestandbestusewhythisisthecase c.Quantitativeinformationontheinputsusedinthemodel d.Alloftheabove 19.WhichofthefollowingisNOTatransactioncostthatshouldbeconsideredinthecalculationoffairvalue? a.Transportcosts b.Agent'ssellingfees c.Costsassociatedwithmarketingtheitem d.Noneoftheabove,i.e.theyarealltransactioncosts 20.Wherethereisadifferencebetweenfairvalueatinitialrecognitionandcost,assumingnootherstandardprohibitsit,theentityshould a.Ignorethedifferenceasthereshouldbenodayonegainorloss b.Amortisethedifferenceovertheusefullifeoftheitem c.Immediatelyadjustthevalueandrecogniseprofitorloss d.Paymoreorlessfortheitemtomakethefiguresequal .
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Multiple Choice Questions 1.Which of the following problems has contributed to the growth in corporate governance over the past decades? a.Managersusingtheresourcesofthecompanytobenefitthemselves b.Corporationstakingactionsshareholdersconsiderundesirable c.Corporationsmisleadingshareholderstoavoidconsequences d.Alloftheabove 2.Which of the following examples is NOT advantageofgoodcorporategovernance? a.Expandingthecompany’sshareholderbase b.Reducingperceivedriskstoinvestors c.Increasingthecostofcapital d.Increasedmarketconfidence 3.Corporategovernanceis: a.Acoherentsystemofconceptsthatunderliefinancialreporting b.Atermreferringtomanagement’schoosingtovoluntarilydisclose non-compulsoryinformationinannualreports c.Thesystembywhichcorporationsaredirectedandcontrolled. d.Asetofbroadprinciplesthatprovidethebasisforguidingactionsordecisions 4.According to the ‘Anglo-Saxon’ model whose interest should be the focus of corporate governance? a.Employees b.Shareholders c.Community d.Environment 5.WhichofthesecostsisNOTassociatedwithanagencyrelationshipbetween managers and shareholders? a.MonitoringCost b.TaxationLoss c.BondingCost d.ResidualLoss 6.The OECD Principles of Corporate Governance link manages’ remuneration.
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SHORT ANSWER 1.What is the role of accounting information in business? 2.Distinguish managerial accounting from financial accounting. Your answer should include a brief discussion of differences in the types of information provided to users as well as differences in the identity of users of financial and managerial accounting information. .
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MULTIPLE CHOICE 1.Accounting information: A.is helpful for financing decisions but not for marketing decisions. B.is useful for profit-making entities but is not needed for not-for-profit entities. C.must follow accounting principles provided by management. D.is useful for all economic organisations. 2.The primary purpose of accounting is to: A.help people make decisions about economic activities. B.provide information that management can.
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11.WhichofthefollowingstatementsismostcorrectregardingEnvironmental,SocialandGovernanceReports? a.Theyarebecomingmandatoryinanincreasingnumberofcountries b.Theyarenotcurrentlyrequiredinanycountry c.TheyarerequiredaspartoftheIASB’saccountingstandards d.Norwayisleadingthewaywithregardstorequiringreporting 12.WhichofthefollowingisNOTconsideredastakeholderwithpotentialinterestsincorporatesustainability? a.Banks b.Government c.Media d.Noneoftheabove,ie.Theyareallpotentialinterestedincorporatesustainability. 13.Stakeholderpowerisgeneralconsideredtorelatetowhichofthefollowingfactors? a.Theamountofimpacttheorganisationhasonthem b.Howvocaltheyarepreparedtobe c.Thedegreeofcontroltheyhaveoverresourcesrequiredbytheorganisation d.Noneoftheabove 14.Ethicalinvestmentfundsmightbeconcernedabouthowindividualcompaniesaddressclimatechangebecause a.Theydon’twanttoinvestmoneyoncompaniesthatwastemoney b.Theybelievecompaniesthataddressenvironmentalriskswillperformbetterinthelongrun c.Theybelievecarbonemissionsproxyforeconomicperformance d.Noneoftheabove 15.AnEMSisa: a.EmissionsMeasurementScheme b.EcologicalMaintainedSource c.EnvironmentalManagementSystem d.EthicalMissionStatement 16.ISO14001EnvironmentalManagementrequirescertifyingcompaniestoassessenvironmentalperformanceagainst a.Internallydevelopedpolicies,objectivesandtargets b.Industrybenchmarks c.Governmentsetstandards d.Internationallyestablishedvalues 17.TheKyotoProtocol: a.Setsstandardsoncorporatereportingofcarbonemissions b.Commitscountriestoachievingspecificgreenhousegasemissionsreductions c.Forbidstradingingreenhousegases d.Alloftheabove 18.Anemissionstradingscheme: a.Canalsobereferredtoasa‘capandtrade’scheme b.Allowsthetradeofexcessemissionspermits c.Usuallyinvolvessubstantialfinesforexcessivepolluters d.Alloftheabove 19.Asof2012,theIASBprojectonAccountingforCarbonEmissions a.IscompletewiththereleaseofIFRS4 b.IscurrentlyanExposureDraft(ED133/A) c.Iscurrentlypaused d.Doesnotexist 20.Climatechangehastheabilitytoimpactontraditionalfinancialaccountinginwhatway? a.Liabilityvaluation b.AssetImpairment c.Riskdisclosure d.Alloftheabove .
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11.Accounting Standards set by the Australian Accounting Standards Board (AASB) apply to both the private and public sectors in Australia. 12.Due process is primarily concerned with producing Accounting Standards that meet managers’ objectives. 13.The Corporations Act 2001 requires that financial statements include a directors’ report, a directors’ statement and an auditor’s report. 14.The.
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Multiple Choice Questions 1.Theories in accounting can help us to understand the decisions of: a.Financialinformationpreparers b.Financialinformationusers c.Financialinformationregulators d.Alloftheabove 2.Accounting theory helps us understand accounting better as: a.Afundamentalpartofthenaturaluniverse b.Ahumanendeavour c.Arandomprocess d.Arepresentationoftruth 3.A normative theory a.Iscompletelydivorcedfromreality b.Describes,explainsorpredictsactivities c.Isbasedonwhatshouldbethecasegivenacertainobjective d.Onlyfocusesonnormalactivities 4.A positive theory a.Iscompletelydivorcedfromreality b.Describes,explainsorpredictsactivities c.Isbasedonwhatshouldbethecasegivenacertainobjective d.Onlyfocusesonrewardingactivities 5.Which of these is NOT an assumption on which positive accounting theory is based? a.Peoplearerational b.Peoplearewealthmaximisers c.Peopleprefertoactaltruistically d.Noneoftheabove,i.e.theyareallassumptionsofpositiveaccountingtheory? 6.According to agency theory the following are examples of bonding costs: a.Auditingthefinancialreports b.Puttinginplaceoperatingrules c.Linkingremunerationtoperformance d.Alloftheabove 7.Which of.
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41.Which of the following accounts is a liability? A.Interest Expense B.Interest Payable C.Interest Revenue D.Interest Receivable 42.Liabilities are: A.resources under an organisation’s legal control. B.obligations owed by an organisation to its suppliers of goods and services on credit creditors. C.the amount of investment made by owners in a business. D.the profits earned by a corporation. 43.Which of the following accounts.
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21.The separation of ownership and control is normally a characteristic of: A.companies. B.partnerships. C.sole traders. D.partnerships and companies. 22.The factors that should be considered before forming the partnership and company forms of entity would include: A.income taxation implications. B.the liability of the equity participants for the debts of the business. C.the scale/magnitude of the operations involved and the.
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11.WhichofthefollowinghasASICidentifiedasapracticethatindicatesriskofcorporateinsolvency? a.Disorganisedinternalaccountingprocedures b.Judgementdebts c.Lossofkeymanagementpersonnel d.Alloftheabove 12.WhichofthefollowinghasASICNOTidentifiedasapracticethatindicatesriskofcorporateinsolvency? a.Absenceofcorporateplans b.Enteringintoinstalmentarrangementstopaydebts c.Decreasedmonitoringbyfinancier d.Noneoftheabove,i.e.theyhaveallbeenidentifiedbyASIC 13.Corporategovernancehasbeensuggestedtobeattheheartofcorporatefailure.Ithasbeensuggestedthatcompaniesarelesslikelytogetinfinancialtroubleiftheirboards: a.Letmanagementrunthecompanywithminimaloversight b.Areactiveintheirroles c.Alsomanagethecompany d.Havegoodpoliticalconnections 14.BusinessWeekconsiderswhichofthefollowingtobegoodgovernancewhenratingboards? a.Directorsshoulddobusinesswiththecompany b.Directorsshouldownsharesinthecompany c.Directorsshouldalwaysmeetwithmanagementpresent d.Noneoftheabove 15.ThecorporatecollapseinAustraliathathappenedinthe1980’swerethoughttobearesultof: a.Poorcorporategovernance b.Inadequateaccountingdisclosures c.Economicdownturn d.Auditfailures 16.Followinganumberofcorporatefailuresin2001legislativechangesinAustralia: a.Prohibitedauditfirmsfromprovidingotherservicestoclients b.Requiredtherotationofauditfirmsevery5years c.Requireddisclosureofthenatureandvalueofnon-auditservicesprovidedbyauditorstobedisclosed d.ForcedtheAustraliangovernmenttoenacttheSarbanes-OxleyAct 17.AcommonfactoridentifiedasanissueinboththeHIHandEnroncollapseswas: a.Deficienciesintheauditprocess b.Overrelianceoncomplexfinancialinstruments c.Lackofboardindependence d.Noneoftheabove 18.IthasbeennotedthatremunerationpackagesforCEOsinfailedcompanies: a.Tendtoincludemoreoptions b.Haveasubstantiallylowerproportionof‘atrisk’components c.Aregenerallymuchhigher d.Aregenerallymuchlower 19.Abubbleinwhichclassofassetshasgenerallybeenclaimedasthetriggerfortheglobalfinancialcrisis? a.Shares b.Preciousmetals c.Consumables d.Housing 20.WhichofthefollowingmechanismstransferredthefinancialcrisisfromtheUStotherestoftheworld? a.Exposureoftheworld’sfinancialsystemtosub-primedebt b.DeclineinUSdemandforimports c.Contagionofconcernsaboutthehousingmarketinothercountries d.Alloftheabove .
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Multiple Choice Questions 1.What is the key element of the IASB definition of the reporting entity? a.Theexistenceofabroadrangeofuserswhowantinformation b.Thelegalrequirementsofthecountryinwhichtheentityresides c.Theexistenceofinvestorsandcreditorswhocannotdirectlyobtaininformation d.Theexistenceofscarceresources 2.What is NOT one of the key elements of control? a.Ownership b.Variablereturns c.Influenceoverreturns d.Noneoftheabove,i.e.theyareallelementsofcontrol 3.Which of the following is NOT an argument for a standardised annual reporting period? a.Itallowsinvestorstocompareentitiesmoreeasily b.Itisnecessarytocalculateanannualdividend c.Mostbusinessesoperateonanatural12monthcycle d.Variouslawsrequireregularinformationbeproducedbytheentity 4.Which of the following is an argument for more flexible reporting periods? a.Itmakesitlessattractiveforentitiestomanipulateprofits b.Itenhancescomparability c.Itmakesdividendcalculationeasier d.Itiswidelysupported 5.AASB 134 Interim.
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11.Which of the following is NOT a requirement of the Sarbanes-Oxley Act: a.Noloansbycompanytodirectors b.Theuseofchecklists c.Auditpartnerrotationevery5years d.Thedisclosureofwhetherthereisacodeofethicsforseniorfinancialofficers 12.Anadvantageofaprinciples-basedapproachtocorporategovernanceisthat: a.Itplacesahigherlevelofdutyondirectorstodeterminewhichcorporategovernancepracticesarerequired b.Itrequiresacorporationtoprepareanannualreportandprovidethemtoshareholders c.Itbansloanstodirectors d.Alloftheoptionsarecorrect 13.Which of the following is NOT a significant influence on actual corporate governance practice? a.Thenatureoftherequirements b.Theenvironmentinwhichtheentityoperates c.Thecommitmentofmanagement d.Noneoftheabove,theyareallsignificant 14.WhichofthefollowingwereexamplesofriskmanagementdeficienciesthatleadtotheGFC: i.riskbeingmonitoredattheindividuallevelratherthantheentitylevel. ii.informationaboutrisksnotreachingtheboard. iii.theorganisationalcultureof‘pursuinggrowthinprofits’ iv.remunerationpackagesforhighriskactivities v.alertingshareholderstoapotentialinvestmentwithahighreturn a.i,ii,iii,v b.ii,iii,iv,v c.i,ii,iii,iv d.i,ii.,iii.,iv.,v. 15.What element of executive remuneration has been argued to have contributed to the global financial crisis? a.Shareoptions b.Bonusesonthebasisofshort-termprofits c.Bonusesonnon-financialkeyperformanceindicators d.Highfixedsalarycomponents 16.TheDodd-FrankWallStreetReformandConsumerProtectionactincludesprovisionsthatrequire: a.Executivecompensationtobesubmittedforshareholderapprovalviaanon-bindingvote b.Increaseddisclosureaboutthenatureofcompensationpackagesandpaymentsrelatedtofinancialperformance c.Thatcompensationcanberescindedifitwaspaidbasedoninaccuratefinancialstatements d.Alloftheabove 17.Whatisoneofthewaysthataccountingisusedtodirectandcontrolthemanagerofa corporation? a.Linkingofamangersperformancetoabonusthatdependsonaccountingprofit b.Makingdecisionsbasedontheaccountinginformationregardlessofmanagerialinput. c.Threateningtotellshareholdersamangersincomeifamanagermakesa‘poorfinancial’decision. d.Usingincomesmoothingtoassureamanagerthattheycaninvestinalowriskinvestment. 18.Inwhatwayscanaccountingcausefinancialreportingproblems? i.disclosurecanleadtoconstrainingofthebehaviourofamanager ii.accountinginformationmayleadamanagertomakingadifferentapproachtoacompany’soriginalfinancialapproach iii.thereisadriveordesiretomeetsharemarketexpectationsbasedontheseaccountingresults iv.themanipulationofearningstomeetmarketexpectations a.i,ii b.iii,iv c.i,ii,iii d.iv,iii,ii,i 19.When it comes to corporate governance many commentators have.
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11.According to institutional theory which of the following statements is NOT true about corporate social and environmental disclosure a.Itwillbeheavilyinfluencedbyregulation b.Wellorganisedexternalstakeholderswillleadtoincreaseddisclosure c.Withinindustriesthenatureofthedisclosureislikelytodivergeovertime d.Noneoftheabove,i.e.theyarealltrue. 12.Legitimacy theory argues that disclosure practice. a.Organisationscanonlycontinuetoexistiftheydemonstratevaluesconsistentwithsocietyatlarge. b.Organisationsshouldfocusonwealthmaximisationfortheirowners c.Thebusinessofbusinessisbusiness d.Consumersareonlyinterestedinminimisingcoststothemselves. 13.Which of the following is NOT one of the four ways an organisation can obtain or maintain organisational legitimacy according to Lindblom? disclosure practice. a.Changeperceptionsofsociety,withoutchangingitsownbehaviour b.Manipulateperceptionsbydeflectingattentionfromsocietalconcerns c.Changeitsbehaviour d.Noneoftheabove,i.e.theyareallwaysanorganisationcanobtainormaintainlegitimacy 14.Stakeholder theory accounting disclosure practice. a.Iscompletelydifferenttolegitimacytheory b.Focusesongovernmentpower c.Hasbothanormativeandpositiveversion d.Alloftheabove 15.Which of the following.
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Multiple Choice Questions 1.Measurement in an accounting context involves a.Determiningthequantitiesofassetsheldbyanentity b.Estimatingtheamountstobederivedfromassets c.Apportioningcostsbetweenitems d.Alloftheabove 2.Which of the following is NOT a benefit of measurement in accounting? a.Dissimilaritemscanbeeasilycombinedintomeaningfultotals b.Itmakesinformationmoredecisionuseful c.Itallowsuserstoassesstheperformanceoftheentity d.Itallowsuserstocompareentities 3.Which of the following is NOT a limitation of measurement in accounting? a.Thereislittleagreementonwhatmeasurementmethodsshouldbeused b.Measurementcanbequitesubjective c.Itisimpossibletocompareentitiesoveraperiodoftime d.Therearesomeaccountingitemsthatarenoteasilymeasured 4.Thestatementinrelationtocurrent trends in accounting that is NOT correctis: a.Thereisamovementtowardsa‘fairvalue’approach b.Thereisamovementtowardsamoretraditionalapproach c.Theconceptsofcapitalandprofithavechangedandevolvedovertime. d.Moreemphasisisnowbeingplacedontherelevanceofinformationratherthanitsreliability’ 5.Whichoftheseis NOT acriticismofhistoricalcostaccounting? a.Itisnotobjectiveandisopentomanipulation b.Ithasbeenusedbybusinessovermanycenturies c.Historicalcostoverstatesprofitintimesofrisingprices d.Costinformationisnotalwaysavailable 6.Thestatementthatistruewithrespecttocurrentcostaccountingis: a.Gainsarerecordedonlywhentheassetsaredisposedof b.Holdinggainsarenotincludedincurrentoperatingprofits c.Currentoperatingprofitistheexcessofthecurrentvalueoftheoutputsoldoverthecurrentcostoftherelatedinputs d.Noneoftheaboveistrue 7.Whichoftheseisadefenceofcurrentcostaccounting? a.Itisthemostobjectiveoftheproposedaccountingmethods b.Relevantcurrenteventsoftheaccountingperiodshouldbeaccountedfortomaintaintheusefulnessofaccountinginformationfordecision-making c.Itspecificallyrecognisesfuturetechnologicalchangesinprofitdetermination d.Alloftheabovearedefences 8.Which of the following is NOT anargumentinfavour of exit price accounting? a.Valuingallelementsinthefinancialstatementsattheirmoneyequivalentsprovidesonerulethatcanbeappliedconsistently. b.Thefinancialstatementsareallocation-free c.Ratherthanmeasuringpasteventsthemethodmeasuresthosethatmighthappenifafirmdoessomethingotherthanwhatwasplanned d.Exitpriceaccountinginvolvesreferencestoreal-worldexamplesthereforeitismoregroundedinrealitythanhistoricalcostaccounting 9.Deprival value.
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PROBLEM 1.Doug Murphy, a newly hired accountant, wanted to impress his boss, so he stayed late one night to analyse the office supplies expense. He determined the cost by month, for the past 12 months, of each of the following: computer paper, copy paper, fax paper, pencils and pens, note pads,.
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PROBLEMS 1.Explain what is meant by the term limited liability as it relates to the shareholders of a corporation; and explain why shareholders are able to gain the benefit of limited liability whereas sole traders cannot. 2.Describe three advantages of a company over a partnership and a sole trader. 3.R2 and E2 have.
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11.Match the type of accounting information to the term that best describes it. Information prepared for                     Information prepared for external decision makers                      internal decision makers A.Financial accounting                             Financial accounting B.Financial accounting                             Managerial accounting C.Managerial accounting                           Financial accounting D.Managerial accounting                           Managerial accounting 12.Information contained in external financial reports can be useful to a firm’s: Suppliers              Employees A.No                      No B.No                      Yes C.Yes                     No D.Yes                    .
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Multiple Choice Questions 1.Fairvalueaccounting: a.Isanewconcept b.Iscurrentlyrareinaccountingstandards c.Appearsinmanyaccountingstandards d.Issimplyarefinementtothedefinitionofhistoriccost 2.AASB13FairValueAccountinghasaneffectivedateof: a.July2005 b.July2011 c.January2013 d.January2015 3.Traditionallywhatmeasurementtechniquehasbeenmostcommonlyused a.Modifiedhistoricalcost b.Fairvalue c.Replacementcost d.Salesvalue 4.Whichpartoftheassetdefinitionsupportstheuseoffairvalueaccounting? a.Control b.Relevanceandreliability c.Futureeconomicbenefit d.Pasttransaction 5.WhichofthefollowingisNOTpartoftheolddefinitionoffairvalue? a.Theamountanassetcouldbeexchangedfor b.Theamountaliabilitycouldbesettledfor c.Anarms-lengthtransaction d.Atmeasurementdate 6.WhichofthefollowinghasNOTbeenidentifiedasaproblemwiththeolddefinitionoffairvalue a.Thewordexchangeisunclear b.Thewordsettleispotentiallymisleading c.Thewordwillingisnotalwaysideal d.Noneoftheabove,i.e.theyareallcriticisms 7.WhichofthefollowingisNOToneofthereasonsgivenforissuingIFRS13? a.Toreplacetheuseofhistoricalcost b.Toenhancedisclosure c.Toclarifythedefinitionoffairvalue d.Toprovideasinglesourceofguidanceontheuseoffairvalue 8.IFRS13isconsidered a.Toclarifyourcurrentuseoffairvalue b.Tobearevolutionarystandard c.Tobeanevolutionarystandard d.Tobearegressionfrompreviouspractice 9.WhichofthefollowingisnotpartofthedefinitionoffairvalueunderAAASB13? a.Pricereceivedtosellanasset b.Pricepaidtosellaliability c.Knowledgeableandwillingparties d.Atmeasurementdate 10.Whydoesthenewdefinitionfocusonanexitpricewhenvaluingandassetorliability? a.Itfocusesonthecurrentvalue b.Itisspecifictotheitembeingconsidered c.Itintroducestheconceptofanexternalpartyintothetransaction d.Alloftheabove .
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11.Bigbathaccountingisgenerallyusedtodropearningswhen a.Thereisachangeinmanagementteam b.Whenoperationsarerestructured c.Whentheeconomyispoor d.Alloftheabove 12.WhichofthefollowingearningmanagementreasonswouldNOTbeviewedasapositiveforshareholders? a.Toaccuratelyconveyprivateinformation b.Toincreaseshorttermprofits c.Tomeetanalysts'expectations d.Toavoidviolatingdebtcovenants 13.Whydoesincomesmoothinggenerallyleadtoahighersharevalue? a.Itreducestheperceivedriskofthecompany b.Itleadstohigherperceivedincome c.Itisperceivedasincreasingthechanceofinsolvency d.Noneoftheabove 14.WhichofthefollowingisNOTthoughttoreflectearningsquality? a.Trendinprofitresults b.Totalincometaxexpensefortheperiod c.Operating/non-operatingmix d.Earningsbase 15.Researchintoincomesmoothinghasconcludedthat a.Smoothedincomeindicateshighearningsquality b.Smoothedincomeindicateslowearningsquality c.Thefindingsaremixedwithregardstoearningsquality d.Thereisnorelationshipbetweenincomesmoothingandearningsquality 16.Whichofthefollowingcomponentsofmanagerialcompensationarethoughttomostencourageearningsmanagement a.Theirbasesalary b.Theircashbonuses c.Sharesorshareoptions d.Variousperquisites 17.Whichofthefollowingismostlikelytobetrue a.AnexistingCEOfacingremovalislikelytomanageearningsdownwards b.AnincomingCEOfollowingaforceddeparturewillfinditeasiertomanageearningsupwards c.AnincomingCEOwouldprefertomanageearningsdownwardintheirfirstyear d.Noneoftheabove 18.Researchersexaminingsharepricereactionstoevidenceoffraudulentreportinghaveconcludedthat: a.Marketsarehighlyefficient b.Marketsinterpretthediscoveryasgoodnews c.Marketsaregenerallysurprisedbytheinformation d.Sharepricesaregenerallyunaffected 19.ResearchintoIPOsandearningsmanagementhaveindicated: a.Investorsexpectupwardsearningmanagement b.Firmsdonotengageinupwardsearningsmanagement c.Themarketdoesdiscoverupwardsearningmanagement d.Noneoftheabove 20.Whichofthefollowingboardcharacteristicsarelikelytoreduceearningsmanagement a.Amixofmonitoringandexpertiseskills b.Moreindependentdirectors c.Theexistenceofanauditcommittee d.Alloftheabove .
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Multiple Choice Questions 1.Earningsareimportantbecause: a.Increasedearningssignalanincreaseinequityvalue b.Earningsareusedtoassessmanagementperformance c.Earningsassistinpredictingfuturecashflows d.Alloftheabove 2.WhichofthefollowingisNOTlikelytobeinterestedinearningsinformation a.Shareholders b.Lenders c.Customers d.Noneoftheabove,i.e.theyareallinterestedinearningsinformation 3.Earningsmanagement a.Isillegal b.Isconsideredtoalwaysbeharmfultoshareholders c.Hasarangeofmeanings d.Noneoftheabove 4.Withregardstoinventorywhichofthefollowingwouldbeclassedasconservativeaccounting? a.Beingslowtowritedownslow-movinginventory b.Stillrecordingobsoleteinventoryasanasset c.Consistentlyandquicklyapplyingthelowerofcostandnetrealisablevaluerule d.Overstatinginventorybyincludingnon-existentinventoryinaccounts. 5.Whichofthefollowingwouldbeconsideredfraudulentaccounting? a.Recognisingrevenuewhenservicesareprepaidbutonlypartiallyperformed b.Capitalisingadvertisingcosts c.Liberalcredittermsandestimationofprovisionfordoubtfuldebts d.Restatingusefullifeandresidualvalueofnon-currentassetsupwards 6.WhichofthefollowingmethodsisNOTcommonlyusedtomanipulateearnings: a.Accountingpolicychoice b.Acceleratingexpenses c.Incorrectclassificationofcurrentliabilitiesasnon-current d.Aggressiveaccountingforaccruals 7.Anentitycanchangeitsaccountingpolicy: a.Provideditcanarguethatthenewmethodprovidesbetterinformationforusers b.Onlywiththeapprovalofitsauditors c.Neveroncethedecisionismade d.Asoftenasitlikes 8.WhichofthefollowingisNOTanaccrualaccountingtechniquethatcouldbeusedtomanageearnings? a.Under-provisioningforbaddebts b.Delayingassetimpairments c.Adjustingclosinginventoryvaluations d.Noneoftheabove,theycouldallbeusedtomanageearnings 9.WhichofthefollowingtechniquesisNOTgenerallyusefultosmoothincome a.Varyingtheprovisionforwarranties b.Hedgingoffinancialinstruments c.Usingfairvalueaccounting d.Noneoftheabove,theycouldallbeusedtosmoothincome 10.WhichofthefollowingisNOTanexampleofrealactivitiesmanagementthatcouldbeusedtomanageearnings? a.Reducingdiscretionaryspending b.Adjustingloanlossprovisions c.Acceleratingsales d.Delayingresearchanddevelopment .
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Multiple Choice Questions 1.Capitalmarketsresearchfocusesontherelationshipbetween: a.Accountinginformationandcapitalmarkets b.Capitalmarketsandtheeconomy c.Accountinginformationandstandardssetting d.Standardssettingandaccountinginformation 2.Oneofthecriticismsofcapitalmarketsresearchis a.Itfocusestoomuchonsocialpreferences b.ItismainlyfocussedonUSdata c.Itisonlynormativeresearch d.Itismainlyqualitative 3.WhichofthefollowingisNOToneofthethreekeyassumptionsunderlyingcapitalmarketsresearch: a.Accountinginformationcanbeusedtoformexpectationsaboutprofitability b.Expectationsaboutprofitabilityinformexpectationsaboutdividends c.Expectationsaboutdividendsdeterminemarketpriceforshares d.Noneoftheabove,i.e.theyareALLassumptionsunderlyingcapitalmarketsresearch. 4.Whichofthefollowingfactorsarecommonlyconsideredbycapitalmarketsresearch? i.Accountingearnings ii.Unexpectedearnings iii.Assetpricing iv.Marketefficiency a.Noneofthem b.i.andiv.only c.i.,ii.andiv.only d.Allofthem 5.Totestwhetheraccountinginformationandcapitalmarketsresearchersexamine: a.Thestatementsofshareholdersabouttheirdecisionstosellshares b.Therelationshipbetweenunexpectedearningsandsharereturns c.Therelationshipbetweenexpectedearningsandsharereturns d.Therelationshipbetweenshareholderexpectationsandshareprice 6.Thekindofstudyusedtoexaminehowquicklyaccountingmeasurescapturechangesintheinformationthatisreflectedinsharepricesoveragivenperiodis: a.Aneventsstudy b.Anassociationstudy c.Aqualitativestudy d.Anormativestudy 7.Informationperspectivestudieshaveshownusthatwhencomparedtosophisticatedinvestors,unsophisticatedinvestors: a.Overreacttogoodnewsandunderreacttobadnews b.Overreacttonews,bothgoodandbad c.Underreacttogoodnewandoverreacttobadnews d.Arelittledifferenttotheirreactions. 8.Ithasbeenfoundthatpricesoftenleadearnings.Whyisthisthoughttobethecase: a.Accountingconservatism'garbles'earningsignalsaboutfirmvalue b.Accountingstatementsarepooratincorporatinginformationabouthumancapitalandotherintangibles c.Accountingrecognitioncriteriaarelessstringentforlossesthanforgains d.Alloftheabove 9.Whatphenomenonhasbeensuggestedasoneofthemostpuzzlinganomaliesinaccountingresearchandcallsintoquestiontheefficientmarketshypothesis? a.Incomesmoothing b.Post-earningsannouncementdrift c.Signallingtheory d.Bigbathwrite-offs 10.Whichofthefollowinghasbeenfoundtosuggestthattheusersoffinancialstatementsareeitherunwillingorunabletounraveltheeffectsofearningsmanagement? a.Managersusingdiscretionaryaccountingtoincreasetheircompensation b.Managersusingincomesmoothingtoincreaseshareprice c.Managementengagingin'bigbath'accounting. d.Alloftheabove .
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TRUE/FALSE 1.An objective of accounting is to provide information to predict and evaluate the going concern of an entity. 2.Accounting information is always quantitative and objective. 3.Stewardship is the term used to refer to management’s role in protecting an entity’s economic resources from theft, fraud and wastage. 4.Management is an external user of accounting.
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Multiple Choice Questions 1.Thedefinitionofcorporatefailureis: a.Whenacompanybecomesbankruptorinsolvent b.Theappointmentofareceiveroradministrator c.Unclearandill-defined d.Whenacompanydelistsandliquidates 2.CompaniesinAustraliamayonlyentervoluntaryadministrationunderwhatcircumstances? a.Theircreditorsagreeinanon-bindingvote b.Theyareabletopayalltheirdebtsinfull c.Thecourtordersit d.Atleast75%oftheshareholdersagreetoit 3.Thoughtherearemanypotentialcausesofcorporatefailurewhathasbeensuggestedasthecommonunderlyingproblem? a.Changesintechnology b.Economicrecession c.Managementinadequacies d.Changesinimportprotections 4.Whichofthefollowinghasbeenidentifiedasamajorcauseofcorporatefailure? a.Overexpansion b.DominantCEO c.Failureofinternalcontrols d.Alloftheabove 5.Poorfiguresinwhichfinancialstatementisusuallythetriggerofcorporatefailure? a.StatementofComprehensiveIncome–Fallingrevenues b.StatementofFinancialPosition–Increasingliabilities c.StatementofCashFlows–Pooroperatingcashflows d.StatementofChangesinEquity–Increasingretainedlosses 6.WhichofthefollowingisNOTanindirectcostofcorporatefailure? a.Lossofcorporatereputation b.Lossofkeyemployees c.Additionalinterestondebtthatcannotbepaidoff d.Noneoftheabove,i.e.theyareallindirectcostsofcorporatefailure 7.Whichofthefollowingstatementsismostcorrectwhenitcomestopredictingcorporatedistress: a.TheAltmanZ-Scorehasbeenshowntobe90%accurate b.Therearemanymodelsinuse c.Todatetherehasbeennosuccessinpredictingcorporatefailure d.Themajorityofinputsinthemajorityofcorporatedistressmodelsarequalitative 8.IntheAltman’sZ-scoreonefinancialaccountingmeasureappearsin4ofthe5ratiosused,whatisit? a.SalesRevenue b.OperatingCashFlow c.TotalAssets d.NumberofIndependentDirectors 9.OnetestofAltman’sZ-scoreinAustraliafoundthatitssuccessatpredictingfinancialdistresswas: a.Useless,beingnobetterthanguessing b.BelowAltman’soriginalstudy c.AboveAltman’soriginalstudy d.Excellent,almostperfectatpredicting1yearbeforefailure 10.Researchindicatesthatlendersmakingpredictionsofcorporatefailurerelied: a.Almostexclusivelyonaccrualinformation b.Moreonaccrualinformationthancashflowinformation c.Moreoncashflowinformationthanaccrualinformation d.Almostexclusivelyoncashflowinformation .
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Multiple Choice Questions 1.Themarketvalueofacompanyoften: a.Exceedsitsbookvaluebecausecertainassetsarenotrecognisedunderaccountingrules b.Appearstoberandomdistributedwithregardstobookvalue c.Islessthanitsbookvaluebecausecertainassetsarenotrecognisedunderaccountingrules d.Noneoftheabove 2.Historicallyinternallygeneratedintangibleassetshavenotbeenrecognisedinthefinancialstatementsforwhatreason? a.Thedifficultyinmeasuringtheassociatedcosts b.Failuretomeettheoldassetdefinition c.Theperceivedlackofusefulnessinassessingfutureearningscapacity. d.Theydidnotexistasaconceptuntilrecently 3.WhichofthefollowingisNOTpartoftheConceptualFrameworkdefinitionofanasset? a.Control b.Seperability c.Futureeconomicbenefit d.Noneoftheabove,i.e.theyareallpartofthedefinition 4.Whichofthefollowingattributesareimportantindeterminingwhetheranassetexists? a.Tangibility b.Ownership c.Existenceofamarketfortheasset d.Noneoftheabove 5.WhichofthefollowingisNOTacriticismthathasbeenlevelledatthecurrentdefinitionofanassetundertheConceptualFramework? a.Itistoocomplextooperationalise b.Itistoovaguetobeusedtosolveproblems c.Itexcludestoomanypotentialassets d.Noneoftheabove,i.e.theyhaveallbeenidentifiedasproblems 6.WhichofthefollowingisNOTafeatureofintangiblesthatdifferentiatesthemfromotherassets? a.Theyarelargelyknowledgebasedassets b.Manyarenotseparableitems c.Theyoftendonothavewell-definedpropertyrights d.Noneoftheabove,i.e.theyareallfeaturesofintangibleassets 7.WhichofthefollowinginNOTpartoftheAASB138definitionofanintangibleasset? a.Non-monetary b.Unidentifiable c.Controlled d.Noneoftheabove,i.e.theyareallpartofthedefinition 8.WhichofthefollowinginternallygeneratedintangibleassetscanberecognisedinaccordancewithAASB138? a.Mastheads b.Customerlists c.Registeredbrandnames d.Noneoftheabove 9.Differentialtreatmentofpurchasedversusinternallygeneratedintangibleassetsissaidtonotmakeeconomicsensebecause: a.Itviolatestheefficientmarkethypothesis b.Itisn’teconomicallyrational c.Itcreatesinformationasymmetry d.Alloftheabove 10.Internallygeneratedgoodwillisnotaccountedforbecauseitisdifficultto: a.Identify b.Measure c.Isolate d.Alloftheabove .
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1.TheBrundtlandreportdefinedsustainabledevelopmentas“developmentthat…”: a.allowsallpeopletomeettheirneedstoanequaldegree. b.meetstheneedsofthefuturewithoutcompromisingtheabilityofcurrentgenerationstomeettheirownneeds. c.meetstheneedsofthepresentwithoutcompromisingtheabilityoffuturegenerationstomeettheirownneeds. d.continuesatthecurrentpace,neitherincreasingnordecreasingintotheforeseeablefuture. 2.WhichofthefollowingstatementsaboutIntragenerationalEquityisNOTtrue: a.Itmeansthatfuturegenerationsshouldnothavealowerqualityoflife. b.Itisconcernedwithpovertyandaccesstofood,waterandshelter. c.Itisanimportantcomponentofeco-justice. d.Noneoftheabove,i.e.theyarealltrue. 3.WhichofthefollowingtermsiscommonlyusedtomeanSustainabilityReporting? a.CorporateSocialReporting b.Environmental,SocialandGovernanceReporting c.TripleBottomLineReporting d.Alloftheabove 4.Thethreepartsofthetriplebottomlineare: a.Financial,EconomicandGovernment b.Economic,EnvironmentalandSocial c.Economic,StakeholderandEmployee d.Financial,CustomerandGovernment 5.TheInternationalIntegratedReportingCommitteewasformedbywhichtwobodies? a.NGOandGRI b.UNHCRandIASB c.GRIandA4S d.IASBandFASB 6.Accordingtotheresearchundertakentodate,whatistherelationshipbetweenenvironmentalperformanceanddisclosureofcorporations? a.Poorperformershavepoordisclosure,butnorelationshiphasbeenfoundforgoodperformers b.Goodperformershavegooddisclosure,butnorelationshiphasbeenfoundforpoorperformers c.Poorperformershavegooddisclosure,butnorelationshiphasbeenfoundforgoodperformers d.Researchhasnotdrawnanyclearconclusions 7.TheUN’sPrinciplesofResponsibleInvestmenthavemainbeenadoptedbywhichtypesoforganisations? a.MiningCompanies b.InstitutionalInvestors c.Governments d.Builders 8.WhichofthefollowingisNOTauseforsustainabilityreportsprepareundertheGRIframework? a.Demonstratingorganisationalcommitmenttosustainabledevelopment b.Comparingorganisationalperformanceovertime c.Measuringorganisationalperformancewithrespecttolaws d.Noneoftheabove,i.e.theyareallusesforsustainabilityreportsunderGRI 9.WhichofthefollowingisanEnvironmentalPerformanceIndicatorundertheGRIframework? a.Ratesofinjury b.Impactsoftransport c.Anti-corruptionpolicies d.Noneoftheabove 10.WhichofthefollowingisNOTaLabourPracticesandDecentWorkperformanceindicatorunderGRI? a.Workforcebygender b.Assessmentofproductlifecyclestagesforhealthandsafetyrisks c.Educationandtrainingprogramsinplace d.Noneoftheabove,i.e.theyareallLabourPracticesandDecentWorkperformanceindicators. .
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TRUE/FALSE 1.The wealth of an entity is determined by what it controls and what it owes. 2.Choosing a measurement system affects profit but does not affect wealth. 3.Profit represents an increase in wealth. 4.From the Hicksian economic viewpoint, profit is the amount which an individual can consume over a period and still be as.
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CASE 1.In October 2002, Duke Power, the regulated electricity utility of the United States (US) corporation Duke Energy, agreed to pay $25 million to its customers to settle allegations by regulators in North and South Carolina that it had underreported net earnings by about $123 million between 1998 and 2002. The.
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11.Howispurchasedgoodwillvalued? a.Atfairvalue b.Asthebalancingitembetweenthefairvalueofassetsandtheircarryingamount c.Asthebalancingitembetweenpurchaseconsiderationandthefairvalueofidentifiablenetassetsacquired d.Athistoriccost 12.Ithasbeenarguedthatwhenitcomestointangibleassetscapitalmarketswouldbebetterservedby: a.Requiringallintangibles,internallygeneratedorpurchased,tobeexpensed b.Onlyallowingpurchasedintangiblestobecapitalised c.Givingdiscretiontomanagementonwhentocapitaliseintangibleassets d.Requiringallintangibles,internallygeneratedorpurchased,tobecapitalised 13.Levhassuggestedthatbynotincludinginternallygeneratedintangibleassetscompanies’bookvaluesmaybeunderstatedbyasmuchas: a.100% b.75% c.50% d.25% 14.WhichofthefollowingisNOTpartofthedefinitionofaheritageasset? a.Intangible b.Ofhistoric,artistic,scientificetc.value c.Heldandmaintainedforitscontributiontoknowledgeandculture d.Noneoftheabove,i.e.theyareallpartofthedefinition 15.WhichofthefollowingisNOTanexampleofaheritageasset? a.Stonehenge b.Aboriginaloralhistory c.TheGreatBarrierReef d.Noneoftheabove,i.e.theyareallheritageassets 16.WhichpartoftheConceptualFrameworkdefinitionofanassetmakesrecognitionofHeritageAssetsdifficult? a.Futureeconomicbenefit b.Control c.Pasttransactionorevent d.Bothfutureeconomicbenefitandcontrol 17.WhichpartoftheConceptualFrameworkdefinitionofaliabilitymakesitunlikelythatHeritageAssetsshouldberecognisedasliabilities? a.Futureeconomicsacrifice b.Presentobligation c.Pasttransactionorevent d.Measurability 18.WhichoffollowingmethodshaveNOTbeenproposedtomeasurethevalueofHeritageAssets? a.Valuationatnominalamounts b.Travelcostmethod c.Contingentvaluation d.Noneoftheabove,i.e.theyareallproposedmeasurementapproaches 19.OneimportantquestionregardingtherecognitionofHeritageAssetsiswhethertheyfallwithinSAC2.Whichofthefollowingquestionswouldaddressthisconcern? a.Aretheentitiesholdingtheassetsreportingentities? b.Dotheassetsmeettheformaldefinitionofanasset? c.Arethereidentifiableuserswhorequirefinancialinformationabouttheassets? d.Canthevalueoftheassetsbeaccuratelymeasured? 20.WhichobjectiveoffinancialaccountingmostcloselyalignswiththeconceptofHeritageAssets? a.Stewardship b.Corporategovernance c.Decisionusefulness d.Financialvaluation .
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21.Arguments in favour of triple bottom line reporting include: A.enhanced all-round company credibility from greater transparency. B.that it facilitates the implementation of an environmental strategy. C.enhanced communication with stakeholders. D.all of the above. 22.The Global Reporting Initiative: A.refers to an institution based in Sweden. B.is the most widely cited benchmark for the determination of the content of.
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MULTIPLE CHOICE 1.Which of the following is not true of sole traders? A.They are one-owner businesses. B.They are not normally reporting entities. C.They are separate legal entities. D.They usually have limited funds at their disposal. 2.Which of the following is not true for a partnership? A.Suppliers can supply goods on credit to a partnership. B.Customers can purchase goods.
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11.Political costs create incentives for managers to select accounting policies that increase reported profits. 12.Triple bottom line reporting confirms the maximisation of profit as the major objective of listed companies. 13.A triple bottom line report refers to the publication of economic, environmental and corporate governance information in an integrated report. 14.Because triple bottom.
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31.The fundamental element equity does not require recognition criteria, because it represents the residual interest in assets, after deducting liabilities. 32.In accordance with the IASB Conceptual Framework, income includes both revenue and gains. 33.The external auditor is responsible for preparing the general-purpose financial reports of a company. 34.The responsibilities of the Australian Financial.
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31.Which one of the following groups is not generally regarded as an external user of the accounting information of an enterprise? A.Employees B.Customers C.Management D.Lenders 32.FeelGood Limited has been set up specifically for the building of an inner-city women’s refuge. When the building has been erected and becomes operational (estimated time four months), the company.
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11.Intangible assets are defined as a.One-sidedfinancialassets b.Unidentifiableassetswithoutphysical c.Identifiablenon-monetaryassetswithoutphysicalsubstance d.Alloftheabove 12.Which of the following is specifically prohibited from recognition as an intangible asset according to AASB138? a.Internallygeneratedbrands b.Research c.Training d.Alloftheabove 13.Which of the following intellectual capital could be included in the Statement of Financial Position? a.Trainingofprogrammersemployedbyacompany b.Developmentofsoftwarebythecompanyforinternaluse c.Developmentofsoftwarebythecompanyforexternaluse d.Noneoftheabove 14.The annual report a.Mayhavesignificantadditionalvoluntarydisclosureinthefinancialstatements b.Isusedforimpressionmanagement c.Isthoughttohavelittleinfluenceonstakeholderperceptions d.Isnotthoughttobeanimportantinformationavenuefororganisations 15.The kinds of information likely to be included in the annual report includes a.Corporategovernance b.Environmentalperformance c.Occupationalhealthandsafetydisclosures d.Alloftheabove 16.Annual reports contain.
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MULTIPLE CHOICE 1.According to Josephson (1992), characteristics of an ethical person include: A.honesty, caring and listening to clients’ orders. B.promise-keeping, not listening to client’s orders and respectfulness. C.loyalty, fairness and caring. D.honesty, coolness and being smart. 2.According to Josephson (1992), people do not behave in an ethical manner because of: A.faulty reasoning and loyalty. B.self-righteousness and greed. C.self-deception and.
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11.WhichofthefollowingisNOTconsideredachallengeforinternationalbusinessoperationswhenfacedwithaccountingdiversity? a.Itiscostlytorestatefinancialstatements b.Itreducesaccesstointernationalinvestments c.Nationalaccountingregimesareinferiortointernationalaccounting d.Noneoftheabove,i.e.theyareallachallenge 12.TheinternationalAccountingStandardsBoard’sobjectiveforInternationalAccountingStandardswouldbebestdescribedas a.Adoption b.Harmonisation c.Convergence d.Adaption 13.WhichofthefollowingisNOTanadvantagetoIFRSadoption? a.Itisacosteffectivewaytohaveacomprehensivesetofstandards b.Itmakesfinancialstatementsmorecomparable c.Itmakesaccountingstandarddevelopmentmoreflexible d.Noneoftheabove,i.e.theyarealladvantages 14.WhichofthefollowingelementsorstandardshasbeenraisedasasignificantproblemwiththeadoptionofIFRSincertaincountries? a.Consolidationrequirements b.Fairvalueaccounting c.Profitfocus d.Alloftheabove 15.InAustraliaIFRSsarerequiredtobeusedby: a.Allreportingentities b.Alllistedentities c.Consolidatedentitiesonly d.MultinationalEntities 16.China’sacceptanceofinternationalaccountingstandardswouldbebestdescribedas: a.Adoption b.Harmonisation c.Convergence d.Indifference 17.TheSECallowsnon-UScompanieslistedonaUSstockexchangetoreportusing: a.Theirhomecountry’sstandards b.InternationalAccountingStandards,withareconciliationtoUS-GAAP c.InternationalAccountingStandards d.Noneoftheabove,theymustuseUS-GAAPonly 18.Asof2012whichUS–IFRSconvergenceprojectsareapriority? a.Leases b.AccountingforIncomeTaxes c.Emissionstradingschemes d.Alloftheabove 19.Multinationalentities a.Arelargelyunaffectedbythecultureofindividualcountries b.Operateindependentlyofanynationallegalframework c.UseIFRSexclusively d.Noneoftheabove 20.Transferpricinghasbeenidentifiedasamajorproblemformulti-nationalentities.Thisrefersto: a.Settingupparententitiesintaxhavens b.Thepricingofgoodsandservicesexchangedwithinacorporategroup c.Payinglocalworkerslessthanexpatriateemployees d.Manufacturingcheaplyinthethirdworldtosellathighprofitinthefirstworld .
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CASE 1.In October 2002, Duke Power, the regulated electricity utility of the United States (US) corporation Duke Energy, agreed to pay $25 million to its customers to settle allegations by regulators in North and South Carolina that it had underreported net earnings by about $123 million between 1998 and 2002. The.
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MULTIPLE CHOICE 1.Which of the following statements is true of profit and wealth? A.Profit is money and wealth is savings. B.Profit is a non-static measure and wealth is a static measure. C.Profit and wealth are non-circular. D.Profit and wealth are not related. 2.Which of the following statements is incorrect? A.Profit is a non-static measure and wealth is.
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1.TowhatdoesInternationalAccountingrefer? a.Descriptionsofaccountingpracticesindifferentcountries b.Comparisonofaccountingpracticesbetweencountries c.Accountingforinternationaltransactions d.Alloftheabove 2.WhichofthefollowingisNOTalevelthatcanbeusedtodefineinternationalaccounting? a.Supranational b.Company c.Comparative d.Noneoftheabove,i.e.theyarealllevelsofinternationalaccounting. 3.Withharmonisationofaccountingpracticesglobally a.Internationalaccountingdifferenceshaveallbutdisappeared b.Environmentalandculturalfactorsstillleadtodiversityinpractice c.Financialreportingisbecomingsimpler d.Alloftheabove 4.Whichofthefollowingislikelytoinfluenceaccountingsystemsatanationallevel? a.Taxsystem b.Politicalsystem c.Capitalmarketstructures d.Alloftheabove 5.Incountrieswherefinanceismainlyprovidedbybankswewouldexpect: a.Morelenientbankruptcylaws b.Greateremphasisonthebalancesheet c.Morepublicdisclosure d.Alloftheabove 6.Theaccountingregulationisheavilyinfluencedbythelegalsysteminwhichisoperates.InAustralialawsarebasedonwhichlegalsystem? a.CivilLaw b.CommonLaw c.CodifiedRomanLaw d.CaseLaw 7.TheworkofHofstedehasbeenveryimportanttothestudyofinternationalaccounting,whichofthefollowingwasNOToneofhisculturalcharacteristicsusedtodescribeculturesaroundtheworld? a.MasculinityversusFemininity b.Organisedversuslaid-back c.IndividualismversusCollectivism d.Noneoftheabove,i.e.theyareallculturalcharacteristics 8.GrayadaptedHofstede’scategoriesforaccounting,whichofthefollowingisnotoneofhisfouraccountingvalues? a.UniformityversusFlexibility b.SecrecyversusTransparency c.ConservatismversusOptimism d.Short-termversusLong-termOrientation 9.OneofGray’saccountingvaluesisProfessionalismversusStatutoryControl.WhichcountrywouldyouexpecttobeclosesttotheStatutoryControlendofthespectrum? a.Australia b.France c.UK d.USA 10.OnesignificantbarriertotheadoptionofinternationalaccountingstandardsinIslamiccountrieshasbeen: a.Theprohibitiononcharginginterest b.Refusaltocompartmentalisereligiousandsecularlife c.Therequirementtopayzakat(areligiouslevy) d.Alloftheabove .
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SHORT ANSWER 1.What is a conceptual framework from the perspective of financial reporting? 2.Describe four objectives of a conceptual framework. 3.Outline the nature and purpose of general-purpose financial reports (GPFR). 4.Under what circumstances does an entity represent a ‘reporting entity’ for the purposes of the Australian conceptual framework? 5.Describe the purpose of the external auditor.
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21.General-purpose financial reports provide the information that is required for both internal and external user group needs. 22.Accrual accounting refers to the method of measuring profit on the basis of cash flow, rather than when revenues and expenses occur. 23.The going concern assumption assumes that an entity will continue to operate successfully.
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11.Information produced using historical cost as the measurement base is considered a.Lessrelevant b.Lessfaithfullyrepresented c.Morecomparable d.Alloftheabove 12.Information produced using fair value as the measurement base is considered a.Morerelevant b.Morefaithfullyrepresented c.LessNeutral d.Alloftheabove 13.Information produced using current cost as the measurement base is considered a.Lessrelevant b.Lessunderstandable c.Morecomparablebetweendifferentcompanies d.Alloftheabove 14.Information produced using deprival value as the measurement base is considered a.Lessrelevant b.Lessfaithfullyrepresented c.Lessunderstandable d.Alloftheabove 15.An argument against fair value measurement in accounting is: a.Marketpricesaretooobjective b.Itdoesnotallowenoughprofessionaljudgement c.Itcanleadtovolatilityinearnings d.Itreflectsthevalueoftheitemtoday 16.Which measurement.
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TRUE/FALSE 1.Deontologists judge the moral correctness of actions by only looking at the consequences of such actions. 2.For accountants to use judgement in providing advice would be unethical. 3.It is ethical for an accountant to minimise the amount of tax his client is required to pay. 4.Effective corporate governance may reduce agency costs. 5.Corporate governance.
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