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NEW QUESTION 27
Which one of the following statements is correct in relation to presenting the financial position of an entity?
- A. Solvency is the availability of cash over the long-term, while liquidity is the availability of funds over the short-term to meet financial commitments as they fall due.
- B. Liquidity represents cash holdings, while solvency is long-term profitability.
- C. Liquidity is the ability to repay long-term financial commitments, whereas solvency is the ability to repay short-term commitments.
- D. Solvency is the availability of total assets over a long-term, while liquidity is the availability of total assets over the short-term to meet financial commitments as they fall due.
.
Answer: A
NEW QUESTION 28
Variations in the regulatory regime over financial reporting in different countries is attributable to a range of differences including
- A. company structures, ownership, local culture and the level of development of the country.
- B. the needs of investors, creditors, employees, lending institutions and taxation authorities.
- C. the extent to which the country has adopted international financial reporting standards and the requirements of local securities exchange.
- D. consumer laws, taxation requirements and the extent to which the country has adopted international financial reporting standards.
Answer: A
NEW QUESTION 29
Which one of the following is not a principal motivation for creative accounting?
- A. public good
- B. bonus-related pay
- C. personal incentives
- D. benefits from shares and share options
Answer: A
NEW QUESTION 30
The concept of transparency in corporate governance means that listed companies should disclose
- A. material information that affects decisions.
- B. confidential issues relating to competitors.
- C. their future strategy.
- D. only mandatory information by management.
Answer: A
NEW QUESTION 31
As per the International Accounting Standards Board conceptual framework, which of the following holds the primary responsibility for preparing and presenting financial statements?
I)owners
II)auditors
III)directors
- A. I only
- B. I and II only
- C. II and III only
- D. III only
Answer: D
NEW QUESTION 32
Which one of the following reports sets out how directors have run a company and if they implemented proper procedures to deal with matters like accountability, audits, directors' roles and responsibilities, internal controls and relations with shareholders?
- A. chairman's statement
- B. corporate social responsibility report
- C. corporate governance statement
- D. director's report
Answer: C
NEW QUESTION 33
Which one of the following would be recognised in the statement of profit or loss and other comprehensive income?
- A. retained earnings
- B. inventory
- C. employee wages
- D. prepayment of expenses
Answer: C
NEW QUESTION 34
Which one of the following statements is correct about using judgement in the financial reporting process?
- A. A true and fair view cannot be assured if individual judgement is allowed.
- B. Judgement can be allowed in the statement of comprehensive income but not in the statement of financial position.
- C. Accountants should not be allowed to use their own judgement.
- D. Use of individual judgement is required to choose between alternative methods available within accounting standards.
Answer: D
NEW QUESTION 35
A decision has been made to change the value of a major non-current asset, upon which depreciation is based, from original cost to a revalued amount. This results in a change in
- A. measurement basis and does not need to be disclosed.
- B. accounting estimate and must be disclosed.
- C. measurement basis and must be disclosed.
- D. accounting estimate and does not need to be disclosed.
Answer: C
NEW QUESTION 36
Which one of the following statements is correct?
- A. Assets used for long-term operations are shown under working capital in the statement of financial position.
- B. A statement of financial position explains the reasons for movement of assets and liabilities through the accounting period.
- C. Current and non-current assets are shown as separate classifications in the statement of financial position.
- D. Liabilities are future obligations that will cause outflow of resources embodying economic benefits.
Answer: C
NEW QUESTION 37
A multinational company is converting the methodology of reporting by its subsidiaries in various countries to make it uniform with the requirements of the International Financial Reporting Standards (IFRS). While changing the reporting methodologies, accountants have to apply certain judgments.
Which one of the following is not a valid motivation for decision making on reporting methodologies?
- A. to present the company's financial performance in the most favourable way
- B. to present the financial statements in a manner that is understood by most users
- C. to comply with the information demands of government bodies in home country
- D. to be consistent with the methodologies followed in the home country of the company
Answer: A
NEW QUESTION 38
Which form of capital market efficiency exists when share prices on the stock market reflect all information whether public or not?
- A. semi-strong form efficiency
- B. information processing efficiency
- C. allocative efficiency
- D. strong form efficiency
Answer: D
NEW QUESTION 39
What is the difference between positive and normative accounting theories?
- A. Normative accounting theory predicts what is expected to occur rather than explaining what should occur.
- B. Normative accounting theory explains what should occur instead of predicting what is expected to occur.
- C. Positive accounting theory explains what should occur.
- D. Normative accounting theory specifies the prediction rules for items.
Answer: B
NEW QUESTION 40
Which one of the following includes social reporting guidelines?
- A. Generally Accepted Accounting Principles (GAAP)
- B. International Financial Reporting Standards (IFRS)
- C. International Accounting Standards (IAS)
- D. Global Reporting Initiative (GRI)
Answer: D
NEW QUESTION 41
Which one of the following countries has the view that Generally Accepted Accounting Principles (GAAP) refers to accounting practices which are regarded as permissible by the accounting profession?
- A. United States of America
- B. Canada
- C. Australia
- D. United Kingdom
Answer: D
NEW QUESTION 42
The Framework for the Preparation and Presentation of Financial Statements which assists the development of the International Financial Reporting Standards (IFRS) was originally approved by the
- A. International Federation of Accountants (IFAC).
- B. IFRS Interpretations Committee (IFRIC).
- C. International Accounting Standards Board (IASB).
- D. International Accounting Standards Committee (IASC).
Answer: D
NEW QUESTION 43
A company purchased a machine 10 years ago for $143 890. It is expected that the machine will generate future revenues of $108 495. The machine could be scrapped for $81 232. An equivalent machine in the same condition would cost $94 950 to buy now. What is the deprival value of the asset?
- A. $35 395
- B. $94 950
- C. $81 232
- D. $108 495
Answer: B
NEW QUESTION 44
The accounting policies used by companies must result in financial reports that are
- A. signed by the CEO or equivalent.
- B. easy to read.
- C. independently audited.
- D. comparable with previous years' reports.
Answer: D
NEW QUESTION 45
A statement of generally accepted theoretical principles which form the frame of reference for financial reporting refers to the
- A. Regulatory Framework.
- B. International Financial Reporting Standards.
- C. Conceptual Framework.
- D. Generally Accepted Accounting Principles.
Answer: C
NEW QUESTION 46
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