Provide CPA Australia Financial-Accounting-and-Reporting Practice Test Engine for Preparation [Q41-Q59] – IT Certification Exam Questions & Answers

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Provide CPA Australia Financial-Accounting-and-Reporting Practice Test Engine for Preparation

Detailed New Financial-Accounting-and-Reporting Exam Questions for Concept Clearance

NO.41 In applying accounting standards, an entity develops accounting policies that ensure that the financial statements present

relevant and reliable financial information.

comparable and accurate financial information to all shareholders.

relevant and correct financial information to all interested shareholders.

understandable and clear financial information to all interested shareholders.

NO.42 Which one of the following financial statements helps provide information about factors that might affect an entity’s liquidity or solvency?

statement of cash flows

statement of changes in equity

notes to the financial statements

statement of profit or loss and other comprehensive income

NO.43 Generally accepted accounting practice recognises revenue when

goods are produced.

customers order goods.

cash is received for the goods.

goods are dispatched to the customer.

NO.44 A decrease in assets is most likely to be recognised in the financial report as

a liability.

an expense.

revenue earned.

a change in equity.

NO.45 Which one of the following best describes the objective of the International Financial Reporting Standards (IFRS) Foundation?

to co-ordinate the accounting profession on a global scale by issuing and establishing international standards

to develop an International regulatory framework in the national jurisdictions of countries that produce accountants

to guide investors who compare the financial statements of one entity in one country with those of another entity located elsewhere

to promote the application, convergence and use of International Financial Reporting Standards (IFRS) as a high quality reporting solution

NO.46 Which one of these concepts suggests that stock prices react to new information almost instantly?

market power

efficient market

bargaining power

incentive substitution

NO.47 Which one of the following statements regarding the IASB’s Conceptual Framework for Financial Reporting is correct?

It overrides any local or international accounting standard.

It specifies the concepts that underlie the preparation and presentation of special purpose financial statements.

It specifies the concepts that underlie the preparation and presentation of general purpose financial statements.

It specifies the concepts that underlie the preparation and presentation of only consolidated financial statements.

NO.48 Which one of the following includes social reporting guidelines?

Global Reporting Initiative (GRI)

International Accounting Standards (IAS)

Generally Accepted Accounting Principles (GAAP)

International Financial Reporting Standards (IFRS)

NO.49 Which one of the following statements is correct?

Liabilities are future obligations that will cause outflow of resources embodying economic benefits.

Current and non-current assets are shown as separate classifications in the statement of financial position.

Assets used for long-term operations are shown under working capital in the statement of financial position.

A statement of financial position explains the reasons for movement of assets and liabilities through the accounting period.

NO.50 Which of the following represents a principal-agent relationship?
I.
shareholders-auditors
II.
shareholders-management
III.
security exchange-company
IV.
board of directors-employees

I, II and III only

I, II and IV only

II, III and IV only

I, II, III and IV

NO.51 Financial managers will benefit in a strongly efficient market by

being able to take more risks without shareholders’ consent.

having their shareholders invest more money into expanding the company’s operations.

being able to decide what information needs to be made available to shareholders.

having their shareholders be tolerant of low profits if higher profits are expected in the future.

NO.52 Financial information is reliable if it
I)prefers substance over legal form.
II)is neutral and without any material error.
III)is complete and has been made with prudence.
IV)is understandable to those with no knowledge of accounting.

I, II and III only

I, II and IV only

I, III and IV only

II, III and IV only

NO.53 Which one of the following statements differentiates semi-strong form efficiency from strong form efficiency in the context of the efficient market hypothesis?

Semi-strong form efficiency addresses operational efficiency whereas strong form efficiency aims to address allocative efficiency.

Semi-strong form efficiency reflects all past price movements whereas strong form efficiency reflects future share price movements.

Semi-strong form efficiency does not reflect all publicly available information whereas strong form efficiency does incorporate all publicly available information.

Semi-strong form efficiency does not reflect knowledge whereas strong form efficiency considers knowledge in addition to publicly available information and past price movements.

NO.54 Which one of the following would be included in a statement of financial position?

cost of sales

finance costs

retained earnings

proceeds from long term borrowings

NO.55 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.

I, II and III only

I, II and IV only

I, III and IV only

II, III and IV only

NO.56 PLO Advertising Ltd (PLO) buys a new stretch limousine for $40 000. A number of individuals have expressed an interest in buying the limousine from PLO for $60 000. The board members decide that the limousine is worth between $65 000 and $70 000. What is the fair value of the limousine?

$40 000

$60 000

$65 000

$70 000

NO.57 To be relevant, financial information has to
I)be provided in a timely manner.
II)comply with the going concern assumption.
III)have predictive and/or confirmatory value.
IV)exclude computations that are difficult to understand.

I and II only

I and III only

II and III only

III and IV only

NO.58 In relation to financial statements, the ‘true and fair override’ indicates that

statements need not always be true and accurate.

accounting standards must be complied with under all circumstances.

the true and fair requirement need not be complied with by certain industries.

departure is allowed from accounting standards under specific instances to show a fair presentation.

NO.59 The accounting policies used by companies must result in financial reports that are

easy to read.

independently audited.