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NEW QUESTION 36
Which one of the following is an advantage of current purchasing power accounting?
- A. It provides a clear use of indices which approximates the measurement of value.
- B. It enables raw data to be just easily verifiable but not auditable.
- C. It provides a stable monetary unit that values profit and capital.
- D. It supposes that value of net assets clearly reflects general goods and services are bought once assets were released.
Answer: C
NEW QUESTION 37
Which one of the following is not a principal motivation for creative accounting?
- A. public good
- B. personal incentives
- C. benefits from shares and share options
- D. bonus-related pay
Answer: A
NEW QUESTION 38
Which one of the following shows whether the financial statements of a company show a true and fair presentation of the financial performance of the company?
- A. Statement of cash flows
- B. Corporate Governance Statement
- C. Auditor's Report
- D. Director's Report
Answer: C
NEW QUESTION 39
Liquidity of a company is based on its ability to
- A. pay dividends to shareholders.
- B. meet short term commitments.
- C. buy back shares.
- D. meet long term commitments.
Answer: B
NEW QUESTION 40
The concept of transparency in corporate governance means that listed companies should disclose
- A. their future strategy.
- B. confidential issues relating to competitors.
- C. material information that affects decisions.
- D. only mandatory information by management.
Answer: C
NEW QUESTION 41
Investors use the audited financial statements of a company to
I)evaluate the company's current return on assets
II)predict the company's market conditions for future years.
III)predict the company's market conditions for future years.
IV)make a judgement on the liquidity and solvency of the company.
- A. I and III only
- B. III and IV only
- C. I and IV only
- D. II and III only
Answer: C
NEW QUESTION 42
Which one of the following would be included in a statement of financial position?
- A. finance costs
- B. retained earnings
- C. cost of sales
- D. proceeds from long term borrowings
Answer: B
NEW QUESTION 43
Current cost accounting reflects an approach to capital maintenance based on maintaining which one of the following?
- A. cost of assets in the business
- B. financial capability of the business
- C. operating capability of the business
- D. profitability of the business
Answer: C
NEW QUESTION 44
Which of the following are the stated objectives of the International Accounting Standards Board (IASB)?
I)Enforce accounting standards.
II)Develop accounting standards.
III)Work for convergence of accounting standards.
- A. I and II only
- B. III only
- C. I only
- D. II and III only
Answer: D
NEW QUESTION 45
Which one of the following describes the key advantage of the manual system of accounting?
- A. A thorough understanding of the business can be gained through it.
- B. Processing is maintained at a reasonable speed even while dealing with large volumes of data.
- C. The quality of output is not necessarily an issue.
- D. Corrections are easily managed as updating or recreating the whole document is not difficult.
Answer: A
NEW QUESTION 46
Which one of the following financial statements helps provide information about factors that might affect an entity's liquidity or solvency?
- A. statement of profit or loss and other comprehensive income
- B. notes to the financial statements
- C. statement of changes in equity
- D. statement of cash flows
Answer: D
NEW QUESTION 47
Which one of these is a key principle of good corporate governance?
- A. effective communication with shareholders
- B. effective management of the employees of the company
- C. non-disclosure of directors' agency relationship with the company
- D. restriction of shareholders' rights in decision-making
Answer: A
NEW QUESTION 48
In relation to financial statements, the 'true and fair override' indicates that
- A. departure is allowed from accounting standards under specific instances to show a fair presentation.
- B. the true and fair requirement need not be complied with by certain industries.
- C. statements need not always be true and accurate.
- D. accounting standards must be complied with under all circumstances.
Answer: A
NEW QUESTION 49
The ability of a company to pay its bills when and as they fall due is a measure of
- A. economic value.
- B. solvency.
- C. the true and fair view of the financial report.
- D. compliance with the conceptual framework.
Answer: B
NEW QUESTION 50
A company's financial report is compliant with International Financial Reporting Standards. Where in the report would an investor find the amount of money received by the company for investment activities?
- A. statement of financial position
- B. statement of comprehensive income
- C. statement of changes in equity
- D. statement of cash flows
Answer: D
NEW QUESTION 51
Which one of the following includes social reporting guidelines?
- A. International Accounting Standards (IAS)
- B. Global Reporting Initiative (GRI)
- C. Generally Accepted Accounting Principles (GAAP)
- D. International Financial Reporting Standards (IFRS)
Answer: B
NEW QUESTION 52
According to IASB's Conceptual Framework, an expense is a decrease in economic benefits in the form of
I.
outflows.
II.
decreases of assets.
III.
incurrences of liabilities.
IV.
contributions to equity holders.
- A. II, III and IV only
- B. I, II and III only
- C. I, III and IV only
- D. I, II and IV only
Answer: B
NEW QUESTION 53
Which one of these concepts suggests that stock prices react to new information almost instantly?
- A. incentive substitution
- B. market power
- C. efficient market
- D. bargaining power
Answer: C
NEW QUESTION 54
The IASB evaluates the merits of adding a potential item to its agenda mainly by reference to the needs of
- A. investors.
- B. suppliers.
- C. regulatory authorities.
- D. tax agencies.
Answer: A
NEW QUESTION 55
In individual countries, Generally Accepted Accounting Principles (GAAP) is primarily a combination of
- A. national company law, national accounting standards and local stock exchange requirements.
- B. national company law and local stock exchange requirements.
- C. national company law and national accounting standards.
- D. company law, accounting standards, local stock exchange requirements and international accounting standards.
Answer: A
NEW QUESTION 56
Restrictions on the scope of a specific accounting standard are stated in
- A. various Statements of Accounting Concepts (SACs) issued by the AASB.
- B. the explanatory materials provided by the AASB.
- C. the IASB's Conceptual Framework.
- D. that specific standard.
Answer: D
NEW QUESTION 57
An element is recognised in the statement of financial position or statement of comprehensive income if
I.
the value of the item can be measured reliably.
II.
the value of the item can be measured accurately.
III.
it is certain that there will be future economic benefits associated with the item.
IV.
it is probable that there will be future economic benefits associated with the item.
Which of the above options are correct?
- A. I and III only
- B. III and IV only
- C. I and IV only
- D. II and III only
Answer: C
NEW QUESTION 58
When business managers seek detailed information about the profitability or efficiency of different parts of their operations, they would find the most useful information in
- A. financial statements as specified by IAS 1 Presentation of Financial Statements.
- B. the company's accounting policies.
- C. various management accounting reports.
- D. the annual financial report.
Answer: C
NEW QUESTION 59
Financial managers will benefit in a strongly efficient market by
- A. having their shareholders invest more money into expanding the company's operations.
- B. having their shareholders be tolerant of low profits if higher profits are expected in the future.
- C. being able to take more risks without shareholders' consent.
- D. being able to decide what information needs to be made available to shareholders.
Answer: B
NEW QUESTION 60
Which one of the following statements is correct about using judgement in the financial reporting process?
- A. Accountants should not be allowed to use their own judgement.
- B. Use of individual judgement is required to choose between alternative methods available within accounting standards.
- C. Judgement can be allowed in the statement of comprehensive income but not in the statement of financial position.
- D. A true and fair view cannot be assured if individual judgement is allowed.
Answer: B
NEW QUESTION 61
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