(Test Bank) Financial Accounting

Deegan, 9

Business

Test Bank

9th Edition

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Test Bank for Financial Accounting, The downloadable file consists of 700 pages, and the total size of the file is 4.93 MB. Purchase now only for highly discounted price.

Author(s): Deegan

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© McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank Chapter 01 Testbank 1. Directors could elect not to comply with an accounting standard on the grounds that applying the particular accounting standard would cause the accounts not to present a 'true and fair view'. True False 2. The role of the Financial Reporting Council is to provide broad oversight of the process for setting standards in Australia, including the authority to direct the AASB to develop, amend or revoke a particular standard. True False 3. To stay up -to-date, financial accountants must continually kee p abreast of ongoing changes and this is why professional accounting bodies require their members to undergo continuing professional development/education. True False 4. AASB 1053 introduced a two -tier reporting system for entities producing general pu rpose financial statements. True False 5. An auditor’s opinion is an assurance of the future viability of the entity, or of the efficiency or effectiveness with which management has conducted the affairs of the entity. True False 6. Articles in the financial press suggest that professional money managers, security analysts and other investors impose costs on firms when their managers appear to delay bad news disclosures. True False 7. One of the reasons why regulators require reporting entities to comply with accounting standards is that this is perceived to increase the ‘comparability’ of the information being produced by different reporting entities. True False 8. What are two of the key ways in which management accounting differs from fina ncial accounting? A. Management accounting provides special -purpose information to people external to the firm and it is highly regulated. © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank 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 foc uses on providing information for internal users and it is largely unregulated. 9. One among the duties of accountability is to provide a reckoning or account of those actions to the ____________. A. stakeholders B. chief executive officer C. chief financial officer D. chief executive officer and chief financial officer 10. AASB are initials that stand for: A. Australian Accounting Standards Board B. Auditing & Assurance Standards Board C. Australian Accounting Standards Bureau D. Accounting & Auditing Supervision Board 11. The broad role of ‘accounting’, and of a corporate report (and corporate reporting) is to inform relevant ___________about the extent to which the actions for which an organisation is deemed to be responsible (which in itself is a controversial issue as people can have very different views about the responsibilit ies of organisations) have actually been fulfilled. A. stakeholders B. directors C. managers D. compliance officers 12. To which body does the Australian Accounting Standards Board report? A. The Urgent Issues Group B. The Financial Accounting Standards Board C. The Financial Reporting Council D. The Auditing and Assurance Standards Board 13. The Financial Reporting Council appoints the 12 part -time AASB members from a variety of backgrounds, including: A. the private sector, government, academia, Big 4 accounting firms and independent consultancy B. the private sector, government, academia , Big 4 accounting firms and employee lobby groups C. the private sector, government, academia, accounting firms and environmental lobby groups © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank D. the private sector, government, academia, Big 4 accounting firms and the education sector 14. A financial statement designed to meet the needs of a specific group or to satisfy a specific purpose is known as a __________. A. general purpose financial statement B. special purpose financial statement C. demand financial statement D. true and fair financial statement 15. A financial statement that complies with the requirements of the Conceptual Framework and accounting standards, and that meets the information needs common to users who are unable to prepare financial statements tailored specific ally to satisfy all of their information needs, is known as a __________. A. general purpose financial statement B. special purpose financial statement C. demand financial statement D. true and fair financial statement 16. The ______ sets uniform trading rules, ethical standards and listing requirements in Australia. A. Australian National Exchange B. Australian Securities Exchange C. Australian Stock Exchange D. Australian Trading Exchange 17. ______ is the framework of rules, relationships, systems an d processes within and by which authority is exercised and controlled in corporations. It encompasses the mechanisms by which companies, and those in control, are held to account. A. Corporate governance B. Corporate social responsibility C. Corporate repo rting D. Corporate law 18. Which among the following is not a principle of corporate governance? A. To lay solid foundations for management and oversight B. To structure the board to be effective and add value C. To promote a culture of acting lawfully, unethically and irresponsibly D. To safeguard the integrity of corporate reports 19. Which of the following most accurately describes the process of issuing an IASB standard? © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank A. An advisory committee may be established to give advice on the project. This may be followed by the development and publication of discussion documents. After receiving public feedback, an exposure draft may be issued for further comment. A final IFRS is then issued based on previous feedback along with Basis for Conclusion. B. Discussion documents are developed and published for public comment, then an advisory committee must be established to give advice on the project. After receiving public feedback, an exposure draft may be issued for further comment. A final IFRS is then issued based on previous feedback along with Basis for Conclusion. C. An advisory commi ttee 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 receiving public feedback, a final IFRS is then issued along with Basis for Conclu sion. D. An advisory committee must be established to give advice on the project; this will be followed by the development and publication of discussion documents. After receiving public feedback, an exposure draft is required to be issued for further comm ent. A final IFRS is then issued based on previous feedback, along with the Basis for Conclusion. 20. Pursuant to sections 298 –300A of the Corporations Act , the Directors' Report must include: A. a copy of the independent audit report B. details of all r elated -party transactions C. details of directors' emoluments D. details of compliance with the ASX Corporate Governance Principles and Recommendations 21. AASB 1053 introduced a ____ -tier reporting system for entities producing general purpose financial statements. A. three B. one C. two D. four 22. ____________means accountability to those existing and potential resource providers and others external to the entity who make economic decisions but are not in a position to demand reports tailored to meet their particular information needs. A. Private accountability B. Public accountability C. Potential accountability D. Tailored accountability 23. The f unctioning of the Auditing and Assurance Standards Board is overseen by: A. the Australian Prudential Regulation Authority B. the Australian Accounting Standards Board C. the Financial Reporting Council D. the International Accounting Standards Board © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank 24. The __________opinion helps to establish the credibility and reliability of the financial information. A. lender’s B. consumer’s C. investor’s D. auditor’s 25. One of the benefits of international ___ __________is that it helps to improve the quality of financial reporting in Australia so that it meets best international practice. A. law B. standardisation C. governance D. reporting 26. Which of the following statements is generally supported by the e xtensive review of existing research according to AASB (2016)? A. IFRS adoption has benefitted the Australian economy. B. IFRS adoption has not benefitted the Australian economy. C. IFRS adoption has led to financial reports becoming longer and harder to r ead. D. None of the given options are correct. 27. The publication of an exposure draft , or an International Financial Reporting Standard (including an International Accounting Standard or an Interpretation of the Interpretations Committee) requires app roval by: A. the chairman of the IASB B. a simple majority of the IASB's 14 members C. 9 of the IASB's 14 members D. 12 of the IASB's 14 members 28. The Corporations Act requires which of the following statements to be included in a Directors' Declaratio n? A. Whether in their opinion the financial statements comply with accounting standards and the Corporations Act. B. Whether in their opinion the financial statements give a true and fair view of the financial position and financial performance of the entity. C. Whether or not in their opinion, when the declaration was made, there were reasonable grounds to believe th at the company would be able to pay its debts as they become due. D. All the options listed here are correct. 29. ________ tend to understate the value of an entity’s net assets; they have a bias towards understating the carrying amount of assets and ove rstating the carrying amount of liabilities. © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank A. Conservative accounting policies B. Commercial accounting policies C. Modern accounting policies D. New age accounting policies 30. The financial statements shall present a measure of___________ that has be en determined by applying accounting standards. A. social responsibilities B. number of employees C. profits D. securities 31. Differential reporting is based on: A. small and large proprietary companies having the same requirements to comply with accoun ting standards in the preparation of financial reports B. the burden of additional reporting for some organisations in situations where there were questionable benefits to report preparers C. the difference between the ability of shareholders in 'small' an d those in 'large' companies to request information to satisfy their specific needs D. None of the options listed here is correct 32. The IASB has: A. the power to enforce standards in Australia B. the power to enforce standards in any country adopting I FRSs C. limited powers of enforcement in IFRS -adopting countries D. no powers of enforcement 33. Define general purpose financial statements as per accounting standard AASB 101 Preparation and Presentation of Financial Statements . ______________________________________________________________________________ 34. Do accounting standards change across time? ______________________________________________________________________________ 35. Discuss why professional accounting bodies typically require their members to undergo continuing professional development/education as part of their membership requirements. ______________________________________________________________________________ 36. What benefits can we expect from intern ational standardisation? ______________________________________________________________________________ © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank 37. What is meant by conservative accounting policies? ______________________________________________________________________________ 38. Explain br iefly why accounting cannot be considered culture -free. ______________________________________________________________________________ 39. Discuss the ‘free -market’ perspective on accounting regulation. ___________________________________________________ ___________________________ 40. What are the motivations for providing the alternative measures of performance? ______________________________________________________________________________ © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank Chapter 01 Testbank Key 1. Directors could elect not to comply with an accounting standard on the grounds that applying the particular accounting standard would cause the acco unts not to present a 'true and fair view'. Ans: False AACSB: Analytic Blooms: Analysis Difficulty: Hard Learning Objective: 1.03 Understand the role of the Australian Securities and Investments Commission with respect to general purpose financial reportin g within Australia, and be aware of the requirements within the Corporations Act that require the preparation of a Directors' Declaration, Directors' Report, and a Declaration by the Chief Executive Officer and Chief Financ ial Officer Topic: Australian Sec urities and Investments Commission 2. The role of the Financial Reporting Council is to provide broad oversight of the process for setting standards in Australia, including the authority to direct the AASB to develop, amend or revoke a particular standard. Ans: False AACSB: Reflective think ing Blooms: Comprehension Difficulty: Medium Learning Objective: 1.05 Understand the role of the Financial Reporting Council with respect to general purpose financial rep orting within Australia Topic: Financial Reporting Council 3. To stay up -to-date, f inancial accountants must continually keep abreast of ongoing changes and this is why professional accounting bodies require their members to undergo continuing professional development/education. Ans: True AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.08 Understand that accounting standards change across time, meaning that profits calculated in past yea rs may not be directly comparable with current profit calculations Topic: Accounting standards change across time 4. AASB 1053 introduced a two -tier reporting system for entities producing general purpose financial statements. Ans: True AACSB: Communication Blooms: Knowledge Difficulty: Easy Learning Objective: 1.09 Be able to explain the idea of ‘differential repo rting’ Topic: Differential reporting © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank 5. An auditor’s opinion is an assurance of the future viability of the entity, or of the efficiency or effectiveness with which management has conducted the affairs of the entity. Ans: False AACSB: Reflective thinkin g Blooms: Comprehension Difficulty: Easy Learning Objective: 1.10 Understand the role of the auditor, and the auditor’s report, with respect to general purpose financ ial reporting Topic: The use and role of audit reports 6. Articles in the financial pre ss suggest that professional money managers, security analysts and other investors impose costs on firms when their managers appear to delay bad news disclosures. Ans: True AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objectiv e: 1.13 Understand that the practice of general purpose financial reporting is quite heavily regulated within Australia, and be aware of some of the arguments for and against the regulation of financial accounting Topic: All of this regulation —is it really necessary? 7. One of the reasons why regulators require reporting entities to comply with accounting standards is that this is perceived to increase the ‘comparability’ of the information being produced by different reporting entities. Ans: True AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.14 Understand that organisations will often include and highlight measures of financial performance wit hin their annual reports that do not comply with accounting standards Topic: The reporting of alternative measures of ‘profits’ 8. What are two of the key ways in which management accounting differs from financial accounting? A. Management accounting provides special -purpose information to people external to the firm and i t 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. Ans: D AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.01 Understand the meaning of ‘financial accounting’ and its relationship to the broader areas of ‘accou nting’ and ‘accountability’ Topic: Accounting, accountability and the role of financial accounting © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank 9. One among the duties of accountability is to provide a reckoning or account of those actions to the ____________. A. stakeholders B. chief executive officer C. chief financial officer D. chief executive officer and c hief financial officer Ans: A AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.01 Understand the meaning of ‘financial accounting’ and its relationship to the broader areas of ‘accou nting’ and ‘accountability’ Topic: Accounting, accountability and the role of financial accounting 10. AASB are initials that stand for: A. Australian Accounting Standards Board B. Auditing & Assurance Standards Board C. Australian Accounting Standards Bureau D. Accounting & Auditing Supervision Board Ans: A AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.04 Understand the role of the Australian Accounting Standards Board with res pect to general purpose financial reporting within Australia Topic: Australian Accounting Standards Board 11. The broad role of ‘accounting’, and of a corporate report (and corporate reporting) is to inform relevant ___________about the extent to which the actions for which an organisation is deemed to be responsible (which in itself is a controversial issue as people can have very different views about the responsibilities of organisations) have actually been fulfilled. A. stakeholders B. directors C. m anagers D. compliance officers Ans: A AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.01 Understand the meaning of ‘financial accounting’ and its relationship to the broader areas of ‘accou nting’ and ‘accountability’ Topic: Accounting, accountability and the role of financial accounting 12. To which body does the Australian Accounting Standards Board report? A. The Urgent Issues Group B. The Financial Accounting Standards Board © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank C. The Financial Reporting Council D. The Auditing and Assurance Standards Board Ans: C AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.04 Understand the role of the Austra lian Accounting Standards Board with respect to general purpose financial reporting within Australia Topic: Australian Accounting Standards Board 13. The Financial Reporting Council appoints the 12 part -time AASB members from a variety of backgrounds, i ncluding: A. the private sector, government, academia, Big 4 accounting firms and independent consultancy B. the private sector, government, academia, Big 4 accounting firms and employee lobby groups C. the private sector, government, academia, accounting firms and environmental lobby groups D. the private sector, government, academia, Big 4 accounting firms and the education sector Ans: A AACSB: Analytic Blooms: Analysis Difficulty: Medium Learning Objective: 1.05 Understand the role of the Financial Repor ting Council with respect to general purpose financial reporting within Australia Topic: Financial Reporting Council 14. A financial statement designed to meet the needs of a specific group or to satisfy a specific purpose is known as a __________. A. general purpose financial statement B. special purpose financial statement C. demand financial statement D. true and fair financial statement Ans: B AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.02 Be able to explai n who is likely to be a user of general purpose financial statements Topic: Users’ demand for general purpose financial statements 15. A financial statement that complies with the requirements of the Conceptual Framework and accounting standards, and th at meets the information needs common to users who are unable to prepare financial statements tailored specifically to satisfy all of their information needs, is known as a __________. A. general purpose financial statement B. special purpose financial sta tement C. demand financial statement D. true and fair financial statement Ans: A © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.02 Be able to explain who is likely to be a user of general purpose financial statement s Topic: Users’ demand for general purpose financial statements 16. The ______ sets uniform trading rules, ethical standards and listing requirements in Australia. A. Australian National Exchange B. Australian Securities Exchange C. Australian Stock Exchange D. Australian Trading Exchange Ans: B AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.06 Understand the role of the Australian Securities Exchange with respect to general purpose financial reporting within Australia Topic: Australian Securities Exchange 17. ______ is the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations. It encompasses the mechanisms by which companies, and those in control, are held to account. A. Corpora te governance B. Corporate social responsibility C. Corporate reporting D. Corporate law Ans: A AACSB: Reflective thinking Blooms: Comprehension Difficulty: Medium Learning Objective: 1.06 Understand the role of the Australian Securities Exchange with resp ect to general purpose financial reporting within Australia Topic: Australian Securities Exchange 18. Which among the following is not a principle of corporate governance? A. To lay solid foundations for management and oversight B. To structure the boar d to be effective and add value C. To promote a culture of acting lawfully, unethically and irresponsibly D. To safeguard the integrity of corporate reports Ans: C AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.06 U nderstand the role of the Australian Securities Exchange with respect to general purpose financial reporting within Australia Topic: Australian Securities Exchange © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank 19. Which of the following most accurately describes the process of issuing an IASB stand ard? A. An advisory committee may be established to give advice on the project. This may be followed by the development and publication of discussion documents. After receiving public feedback, an exposure draft may be issued for further comment. A final I FRS is then issued based on previous feedback along with Basis for Conclusion. B. Discussion documents are developed and published for public comment, then an advisory committee must be established to give advice on the project. After receiving public feed back, an exposure draft may be issued for further comment. A final IFRS is then issued based on previous feedback along with Basis for Conclusion. C. An advisory committee may be established to give advice on the project and develop an exposure draft, whic h will be followed by the development and publication of discussion documents. After receiving public 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 the development 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 previous feedback, along with the Basis for Conclusion. Ans: A AACSB: Reflective thinking Blooms: Comprehension Difficulty: Hard Learning Objective: 1.07 Be able to explain the general functions of the International Acco unting Standards Board and its relevance to Australian general purpose financial reporting Topic: The International Accounting Standards Board 20. Pursuant to sections 298 –300A of the Corporations Act , the Directors' Report must include: A. a copy of th e independent audit report B. details of all related -party transactions C. details of directors' emoluments D. details of compliance with the ASX Corporate Governance Principles and Recommendations Ans: C AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.03 Understand the role of the Australian Securities and Investments Commission with respect to general purpose financial reporting within Australia, and be aware of the requirements within the Corporations Act that requ ire the preparation of a Directors' Declaration, Directors' Report, and a Declaration by the Chief Executive Officer and Chief Financ ial Officer Topic: Australian Securities and Investments Commission 21. AASB 1053 introduced a ____ -tier reporting syste m for entities producing general purpose financial statements. A. three B. one C. two D. four Ans: C © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.09 Be able to explain the idea of ‘differential reporting’ Topic: D ifferential reporting 22. ____________means accountability to those existing and potential resource providers and others external to the entity who make economic decisions but are not in a position to demand reports tailored to meet their particular inf ormation needs. A. Private accountability B. Public accountability C. Potential accountability D. Tailored accountability Ans: B AACSB: Reflective thinking Blooms: Comprehension Difficulty: Medium Learning Objective: 1.09 Be able to explain the idea of ‘differential reporting’ Topic: Differential reporting 23. The functioning of the Auditing and Assurance Standards Board is overseen by: A. the Australian Prudential Regulation Authority B. the Australian Accounting Standards Board C. the Financial Reporting Council D. the International Accounting Standards Board Ans: C AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learn ing Objective: 1.05 Understand the role of the Financial Reporting Council with respect to general purpose financial reportin g within Australia Topic: Financial Reporting Council 24. The __________opinion helps to establish the credibility and reliabili ty of the financial information. A. lender’s B. consumer’s C. investor’s D. auditor’s Ans: D AACSB: Reflective thinking Blooms: Comprehension Difficulty: Medium Learning Objective: 1.10 Understand the role of the auditor, and the auditor’s report, with res pect to general purpose financial reporting Topic: The use and role of audit reports © McGraw -Hill Australia Deegan, Financial Accounting 9e Chapter 01 Testbank 25. One of the benefits of international _____________is that it helps to improve the quality of financial reporting in Australia so that it meets best international pr actice. A. law B. standardisation C. governance D. reporting Ans: B AACSB: Reflective thinking Blooms: Comprehension Difficulty: Medium Learning Objective: 1.11 Be aware of some of the perceived benefits pertaining to the international standardisation of f inancial reporting as espoused by the International Accounting Standards Board Topic: What benefits can we expect from all of this international standardisation? 26. Which of the following statements is generally supported by the extensive review of exi sting research according to AASB (2016)? A. IFRS adoption has benefitted the Australian economy. B. IFRS adoption has not benefitted the Australian economy. C. IFRS adoption has led to financial reports becoming longer and harder to read. D. None of the gi ven options are correct. Ans: A AACSB: Reflective thinking Blooms: Comprehension Difficulty: Medium Learning Objective: 1.11 Be aware of some of the perceived benefits pertaining to the international standardisation of financ ial reporting as espoused by the International Accounting Standards Board Topic: What benefits can we expect from all of this inter national standardisation? 27. The publication of an exposure draft , or an International Financial Reporting Standard (including an International Accounting Standard or an Interpretation of the Interpretations Committee) requires approval by: A. the cha irman of the IASB B. a simple majority of the IASB's 14 members C. 9 of the IASB's 14 members D. 12 of the IASB's 14 members Ans: C AACSB: Reflective thinking Blooms: Comprehension Difficulty: Easy Learning Objective: 1.07 Be able to explain the general fu nctions of the International Accounting Standards Board and its relevance to Australian general purpose financial reporting Topic: The International Accounting Standards Board 28. The Corporations Act requires which of the following statements to be inc luded in a Directors' Declaration? A. Whether in their opinion the financial statements comply with accounting standards and the Corporations Act.