Chapter 1: Accounting regulation and the Conceptual Framework
Multiple choice questions
1. The Corporations Act requires the preparation of a financial report and directors' report each financial year by all:
a. small proprietary companies.
b. non-disclosing entities.
*c. public companies.
d. private companies.
General Feedback:
Learning objective 1.1 understand the major sources of regulation of financial reporting in Australia.
2. The New Zealand External Reporting Board (XRB) accounting framework classify Tier 1 not-for-profit public benefit entities (PBEs) as:
a. entities allowed by law to use cash accounting.
b. non-large.
c. expenses <= $2m.
*d. publicly accountable, or large.
General Feedback:
Learning objective 1.3: Identify the roles of the key bodies involved in the financial reporting framework in New Zealand.
3. Which of the following statements is false?
*a. The IFRS Advisory Council is directly accountable to the Monitoring Board.
b. Australia adopted international accounting standards issued on or after 1 January 2005.
c. The IASB and IFRS Interpretations Committee are appointed and overseen by a geographically and professionally diverse group called the IFRS Foundation Trustees.
d. The IASB is an independent standard-setting board that develops and approves International Financial Reporting Standards.
General Feedback:
Learning objective 1.4: explain the structure, role and processes of the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee (IFRIC).
4. Which of the following is not a chapter in the IASB's Conceptual Framework?
a. Measurement.
b. Qualitative characteristics of useful financial reporting.
c. The objective of general purpose financial reporting.
*d. The issues with financial reporting.
General Feedback:
Learning objective 1.5: explain the key components of the Conceptual Framework.
5. Which of the following statements about the Conceptual Framework is true?
a. The Conceptual Framework deals with the objective of special purpose financial statements.
b. The Conceptual Framework for Financial Reporting provides guidelines intended to meet the information needs of a range of users who are able to command that reports be prepared to their own particular needs.
*c. The Conceptual Framework deals with the objective of general purpose financial statements.
d. the Conceptual Framework for Financial Reporting, SAC 1, and SAC 2 provides guidelines on the preparation of financial statements for a specific group of users.
General Feedback:
Learning objective 1.5: explain the key components of the Conceptual Framework.
6. The two fundamental qualitative characteristics of useful information are:
a. materiality and timeliness.
b. understandability and verifiability.
c. faithful representation and comparability.
*d. relevance and faithful representation.
General Feedback:
Learning objective 1.6: explain the qualitative characteristics that make information in financial statements useful.
7. For information to be considered material:
a. it must be complete.
b. it must not include any bias.
*c. its omission or misstatement could influence users' decision-making.
d. it has a predictive or confirmatory value.
General Feedback:
Learning objective 1.6: explain the qualitative characteristics that make information in financial statements useful.
8. Costs of providing useful information include:
a. collection and processing costs.
b. dissemination costs.
c. verification costs.
*d. All of these options are costs of providing useful information.
General Feedback:
Learning objective 1.6: explain the qualitative characteristics that make information in financial statements useful.
9. If different independent observers could reach the same general conclusions that the information represents, then the quality of the information has achieved:
a. neutrality.
Multiple choice questions
1. The Corporations Act requires the preparation of a financial report and directors' report each financial year by all:
a. small proprietary companies.
b. non-disclosing entities.
*c. public companies.
d. private companies.
General Feedback:
Learning objective 1.1 understand the major sources of regulation of financial reporting in Australia.
2. The New Zealand External Reporting Board (XRB) accounting framework classify Tier 1 not-for-profit public benefit entities (PBEs) as:
a. entities allowed by law to use cash accounting.
b. non-large.
c. expenses <= $2m.
*d. publicly accountable, or large.
General Feedback:
Learning objective 1.3: Identify the roles of the key bodies involved in the financial reporting framework in New Zealand.
3. Which of the following statements is false?
*a. The IFRS Advisory Council is directly accountable to the Monitoring Board.
b. Australia adopted international accounting standards issued on or after 1 January 2005.
c. The IASB and IFRS Interpretations Committee are appointed and overseen by a geographically and professionally diverse group called the IFRS Foundation Trustees.
d. The IASB is an independent standard-setting board that develops and approves International Financial Reporting Standards.
General Feedback:
Learning objective 1.4: explain the structure, role and processes of the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee (IFRIC).
4. Which of the following is not a chapter in the IASB's Conceptual Framework?
a. Measurement.
b. Qualitative characteristics of useful financial reporting.
c. The objective of general purpose financial reporting.
*d. The issues with financial reporting.
General Feedback:
Learning objective 1.5: explain the key components of the Conceptual Framework.
5. Which of the following statements about the Conceptual Framework is true?
a. The Conceptual Framework deals with the objective of special purpose financial statements.
b. The Conceptual Framework for Financial Reporting provides guidelines intended to meet the information needs of a range of users who are able to command that reports be prepared to their own particular needs.
*c. The Conceptual Framework deals with the objective of general purpose financial statements.
d. the Conceptual Framework for Financial Reporting, SAC 1, and SAC 2 provides guidelines on the preparation of financial statements for a specific group of users.
General Feedback:
Learning objective 1.5: explain the key components of the Conceptual Framework.
6. The two fundamental qualitative characteristics of useful information are:
a. materiality and timeliness.
b. understandability and verifiability.
c. faithful representation and comparability.
*d. relevance and faithful representation.
General Feedback:
Learning objective 1.6: explain the qualitative characteristics that make information in financial statements useful.
7. For information to be considered material:
a. it must be complete.
b. it must not include any bias.
*c. its omission or misstatement could influence users' decision-making.
d. it has a predictive or confirmatory value.
General Feedback:
Learning objective 1.6: explain the qualitative characteristics that make information in financial statements useful.
8. Costs of providing useful information include:
a. collection and processing costs.
b. dissemination costs.
c. verification costs.
*d. All of these options are costs of providing useful information.
General Feedback:
Learning objective 1.6: explain the qualitative characteristics that make information in financial statements useful.
9. If different independent observers could reach the same general conclusions that the information represents, then the quality of the information has achieved:
a. neutrality.