46 Free Test Bank for Australian Financial Accounting 7th Edition by Deegan

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A company may be exempted from the requirements of s. 296 of The Corporations Act if:

•  A. It is a small proprietary company within the definition of the Act.
•  B.A special meeting of 75 per cent of the shareholders convened under s. 293 agrees to the preparation of
•  financial reports that do not comply with those accounting standards.
•  C.The report is prepared in response to a shareholder direction under s. 293 and the direction specifies that
•  the report does not have to comply with those accounting standards.
•  D.It is a small proprietary company within the definition of the Act, the report is prepared in response to a shareholder direction under s. 293 and the direction specifies that the report does not have to comply with those accounting standards.

What option(s) does a company have when directors are of the view that compliance with accounting standards does not generate a ‘true and fair view' financial statements?

•  A. Directors may elect not to comply with the standard.
•  B. Directors may exercise the ‘true and fair view override'.
•  C. Directors may disclose the standard in question, the nature of conflict and adjustments made.
•  D. All of the given answers are correct.

Section 296 of the Corporations Act requires (all or in part):

•  A. the AASB to follow the broad strategic direction determined by the FRC.
•  B.the directors to make a declaration stating whether, in their opinion, the financial statements comply with accounting standards.
•  C.the AASB to develop a conceptual framework, not having the force of an accounting standard, for the
•  purpose of evaluating accounting standards and international standards.
•  D.a company's directors to ensure that the company's financial statements for a financial year comply with accounting standards.

A criticism of the way the membership of the Financial Reporting Council has been structured is that:

•  A.Groups that are primarily interested in the financial performance of entities are represented while lobby groups with other interests are not.
•  B. It has increased the breadth of representation too widely.
•  C. The Treasurer does not have sufficient input into the selection process.
•  D. It is dominated by professional accountants.

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 thedevelopment and publication of Discussion Documents. After receiving public feedback, an ExposureDraft may then be issued for further comment. A final IFRS is then issued based on previous feedbackalong with Basis for Conclusion.
•  B.Discussion Documents are developed and published for public comment, then an advisory committeemust be established to give advice on the project. After receiving public feedback, an Exposure Draftmay then be issued for further comment. A final IFRS is then issued based on previous feedback alongwith 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 receivingpublic 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 thedevelopment 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 previousfeedback along with Basis for Conclusion.

Standards with the prefix IFRS/IAS:

•  A.will require material to be added by the AASB to that which describes the scope and applicability of the standards in the Australian context.
•  B. will be adopted in Australia without modification.
•  C. are being implemented in Australia to simplify reporting for all entities and to reduce reporting costs.
•  D.will not require Australian businesses to make any major alterations to their current accounting practices.

Which of the following statement was not identified as a benefit of international harmonisation?

•  A. It was likely to increase the comparability of financial reports prepared in different countries.
•  B. It was likely to improve the quality of financial reporting in Australia to best international practice.
•  C. It was likely to reduce the reporting costs for Australia's not-for-profit entities and local governments.
•  D.It was likely to allow more meaningful comparisons of the financial performance and financial position of Australian and foreign public sector reporting entities.

What are two key ways management accounting is different 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.

The Australian Accounting Standards Board reports to which body?

•  A. the Urgent Issues Group
•  B. the Financial Accounting Standards Board
•  C. the Financial Reporting Council
•  D. the Australian Accounting Standards Review Board

AASB are initials that stand for:

•  A. Australian Accounting Standards Board
•  B. Accounting & Auditing Standards Bureau
•  C. Australian Accounting Standards Bureau
•  D. Accounting & Auditing Supervision Board

An argument to support the requirement that all companies over a certain size should adhere to accounting standards is:

•  A.Larger companies have greater political and economic importance and this increases the demand for financial information about the entity by external users.
•  B.Larger companies can afford to pay for complex accounting systems and the experts necessary to design and maintain them.
•  C. The Conceptual Framework and accounting standards are designed for larger enterprises.
•  D.The Australian Securities and Investment Commission should only be responsible for large enterprises.

Pursuant to Corporate Law Economic Reform Program (CLERP) issued in October 2003, which of the following is/are required to provide a written declaration to the board of directors that the annual financial statements are in accordance with the Corporations Act and Australian Accounting Standards and that the financial statements present a true and fair view of the entity's financial position and performance?

•  A. any independent director
•  B. chief executive officer
•  C. chief financial officer
•  D. chief executive officer and chief financial officer

Until recently, accounting standards issued by the IASB (formerly IASC) were:

•  A. the most well developed set of accounting standards and used widely around the world.
•  B.deemed to be ‘best practice' and always used as a guide when another country was developing its own standards.
•  C. not that important as they were only designed for European economies.
•  D.frequently adopted directly by developing countries that did not have their own standard-setting processes.