Balance Sheet and Accounting Standards

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ANSWER SHEET
STUDENT’S SURNAME........................................... OTHER NAMES.......………......................................... STUDENT NUMBER....……….................................. TUTORIAL DAY & TIME........………...................

TUTOR’S FULL NAME.........................................

Test 1 – Version 2
Session 2, 2012
Course Code:

ACCG 224

Course Name:

INTERMEDIATE FINANCIAL ACCOUNTING

Time allowed:

55 minutes plus 5 minutes reading time

Total No. of questions: Three Questions
Instructions
1. You must answer ALL questions in the test booklet. No separate booklet will be provided to answer the questions.
2. This is a closed-book test. You are not allowed to refer to any text material for the test.
3. Show all workings. Handwriting must be legible.
4. Non-programmable and non-text retrieval calculators may be used, but dictionaries are not to be used.
Question No.

Marks

1

/15

2

/15

3

/10

Total

/40

Question 1 – Multiple Choice (15 marks)
(Please circle the correct answer)
1. The main functions of the Financial Reporting Council include: I.
II.
III.
IV.
V.
a.
b.*
c.
d.

overseeing the process for the setting of accounting standards of the AASB. determining the AASB’s broad strategic direction.
monitoring and reviewing the level of funding for the AASB.
directing the AASB in relation to the development or making of a particular standard.
the power to veto a standard recommended by the AASB.
I, II, III and V only
I, II, and III only
I, II, IV and V only
II, III, IV and V only

2. The role of the Australian Securities and Investments Commission is to: I.
II.
III.
IV.
a.
b.
c.*
d.

3.

I, II, III and IV
I, III and IV only
I, II and IV only
II, and III only

Regulatory capture is said to occur in which of the following situations? a.
b.
c.
d.*

4.

Enforce and administer the Corporations Act.
Inform the public about Australian companies, financial markets and financial professionals who deal and advise in financial instruments.
Issue accounting standards.
Improve the performance of the financial system.

When the regulated entities ensure non-performance by the regulating body When the regulated entities co-opt the regulators into a mutually shared perspective
When the regulated entities control the regulations and the regulatory body All of the above

Which of these theories could explain a move towards government control of accounting standards setting in Australia?
a.
b.
c.
d.*

5.

Public interest theory
Regulatory capture theory
Private interest theory
All of the above

The primary reasons for developing a conceptual framework is: a.*
b.
c.
d.

To enable regulators to develop accounting standards that are consistent and logical
To provide guidance to accountants in areas where no standard exists To reduce the number of accounting standards needed
To assist auditors

2

6.

According to the AASBs Conceptual Framework an asset is:
a.
b.
c*.
d.

7.

A company incurs significant costs in relation to a speculative project that intends to turn rocks into gold. In accordance with the AASBs Conceptual Framework the costs of this project are an:
a.*
b.
c.
d.

8.

d.

it is not necessary to restate the prior period comparatives; the error may be amended prospectively;
it may be deferred and recognised in the subsequent period;
a retrospective correction must be made.

When changing an accounting policy which of the following has to be applied retrospectively?
a.*
b.
c.
d.

11.

Relevance, reliability, materiality, consistency, verifiability, understandability Understandability, timeliness, relevance, readability, timeliness, reliability Relevance, faithful representation, comparability, understandability, verifiability, timeliness

Uniformity, relevance, reliability, consistency, faithful representation

Where a fundamental error occurs in the...
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