Financial Statements and Accounting Standards

Topics: Financial statements, Balance sheet, Corporation Pages: 8 (1210 words) Published: September 3, 2013
1. The existence of a limited liability company means the:
I. company’s members are liable for only a limited amount of business debts II. company has a legal existence distinct from its owners
III. company may raise large amounts of funds by issuing shares.

| I only|

| I and II only|

| II and III only|

| I, II and III|

2. The two main types of companies permitted to be registered under the Corporations Act are:

| a private company, and a proprietary company|

| a public company, and a trade union|

| a proprietary company, and a public company|

| a proprietary company, and a partnership|

3. A proprietary company must have at least one shareholder and cannot have more than:

| 100 shareholders|

| 50 shareholders|

| 20 shareholders|

| 10 shareholders|
4.| The share capital of a company may consist of:
| ordinary shares either fully paid or partly paid issued by the company| | mortgages issued by the company|
| secured and unsecured notes issued by the company|
| debentures issued by the company|
| |
5. The main role of the trustee for debenture holders is to protect the interests of: | shareholders|
| debenture holders|
| directors|
| auditors|
| |
6. The main functions of the Financial Reporting Council include: I. overseeing the process for the setting of accounting standards of the AASB II. determining the AASB’s broad strategic direction

III. monitoring and reviewing the level of funding for the AASB IV. directing the AASB in relation to the development or making of a particular standard V. 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|
|
|

7. The functions of the Australian Accounting Standards Board include: I. development of a conceptual framework for the purpose of evaluating proposed accounting standards II. making accounting standards for the purpose of the Corporations Act III. formulating accounting standards for non-companies, the public sector and the not-for-profit sector.

| I only|

| II and III only|

| I and III only|

| I, II and III|

8. According to s. 224 (a) of the ASIC Act (2001), accounting standards should result in financial information, which has which of the following characteristics? I. allows user to make decisions about allocating scarce resources II. assists directors in discharging their obligations in relation to financial reporting III. is able to be prepared on a timely basis

IV. is readily understandable
V. facilitates comparability
VI. is relevant and reliable.

| I, IV and VI only|

| I, III, IV and VI|

| I, II, IV, V and VI|

| all of the above|

9. Compared to IFRS standards, Australian accounting standards require:

| less disclosure in notes to the financial statements.|

| identical disclosures in notes to the financial statements.|

| additional disclosure in the notes to the financial statements.|

| different disclosures in the notes to the financial statements.|

10. The role of the Australian Securities and Investments Commission is to: I. enforce and administer the Corporations Act
II. inform the public about Australian companies, financial markets and financial professionals who deal and advise in financial instruments III. issue accounting standards
IV. improve the performance of the financial system.
| I, II, III and IV|

| I, III and IV only|

| I, II and IV only|

| II, and III only|

11. A key role of the Australian Securities and Investments Commission (ASIC) is to ensure that all company financial statements lodged with it:

| present a true and fair view.|

| are approved by the Financial Reporting Panel.|

| comply with accounting standards|

| comply with the...
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