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Understanding Australian Accounting Standards 1st Edition by Janice Loftus - Test Bank
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, Testbankto accompany
Understanding Australian
Accounting Standards
By Janice Loftus, Ruth Picker, Ken Leo,
Victoria Wise and Kerry Clark
Prepared by
Yeny Lukito
John Wiley & Sons Australia, Ltd 2013
,Test Bank to accompany Understanding Australian Accounting Standards
Chapter 1: Accounting Regulation and the Conceptual Framework
Learning Objectives:
Learning Objective 1.1 Identify the key sources of regulation of financial reporting in Australia
and explain how they relate to each other, and assess whether an entity
is required to prepare financial statements that comply with Australian
Accounting Standards.
Learning Objective 1.2 Identify the role played by the following bodies in accounting regulation
in Australia: the Financial Reporting Council (FRC), the Australian
Accounting Standards Board (AASB), the Australian Securities and
Investments Commission (ASIC), the Financial Reporting Panel (FRP),
the Australian Prudential Regulatory Authority (APRA), and the
Australian Securities Exchanges Group (ASX).
Learning Objective 1.3 Explain the structure, role and processes of the International Accounting
Standards Board (IASB) and the IFRS Interpretations Committee
(IFRIC).
Learning Objective 1.4 Explain the key components of the Conceptual Framework.
Learning Objective 1.5 Explain the qualitative characteristics that make information in financial
statements useful.
Learning Objective 1.6 Discuss the assumption underlying the preparation of financial
statements.
Learning Objective 1.7 Define the basic elements in financial statements – assets, liabilities,
equity, income and expenses.
Learning Objective 1.8 Explain the principles for recognising the elements of financial
statements.
Learning Objective 1.9 Distinguish between alternatives bases for measuring the elements of
financial statements.
Learning Objective 1.10 Outline concepts of capital maintenance.
© John Wiley & Sons Australia, Ltd 2013 1.1
, Chapter 1: Accounting Regulation and the Conceptual Framework
Chapter 1
Accounting Regulation and the Conceptual Framework
Testbank - Multiple choice
1. The Corporations Act requires the following entities to prepare a financial report, except for:
Learning Objective 1.1 Identify the key sources of regulation of financial reporting in Australia and explain
how they relate to each other, and assess whether an entity is required to prepare financial statements that
comply with Australian Accounting Standards.
a. public companies.
*b. small proprietary companies.
c. large proprietary companies.
d. registered schemes.
2. Which of the following entities is a large proprietary company?
Learning Objective 1.1 Identify the key sources of regulation of financial reporting in Australia and explain
how they relate to each other, and assess whether an entity is required to prepare financial statements that
comply with Australian Accounting Standards.
a. A company that earns $30 million of annual revenue, controls $10 million of assets, and has 25
employees.
b. A company that earns $20 million of annual revenue, controls $8 million of assets, and has 40
employees.
c. A company that earns $15 million of annual revenue, controls $15 million of assets, and has 30
employees.
*d. A company that earns $22 million of annual revenue, controls $14 million of assets, and has 55
employees.
3. YinYang Ltd. is a company listed on the ASX, with a total number of 250 non-employee shareholders
owning the company’s shares and 60 employees working at the company. Which of the following
statements about Yinyang Ltd. is incorrect?
Learning Objective 1.1 Identify the key sources of regulation of financial reporting in Australia and explain
how they relate to each other, and assess whether an entity is required to prepare financial statements that
comply with Australian Accounting Standards.
*a. Yinyang Ltd. is proprietary company.
b. Yinyang Ltd. is a disclosing entity.
c. Yinyang Ltd is a public company.
d. Yinyang Ltd. is required to prepare a financial report.
4. Section 297 of the Corporations Act states that financial statements must provide a true and fair view of
an entity’s financial position and performance. However, when compliance with the accounting
standards results in financial statements which would not produce a true and fair view, the Corporations
Act requires the entity to:
Learning Objective 1.1 Identify the key sources of regulation of financial reporting in Australia and explain
how they relate to each other, and assess whether an entity is required to prepare financial statements that
comply with Australian Accounting Standards.
a. not comply with the accounting standards.
b. not comply with the accounting standards and write a letter to the shareholders explaining the
non-compliance.
© John Wiley & Sons Australia, Ltd 2013 1.2
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