Accounting and Accountability Exam Questions
Course Introduction
This course explores the principles and practices of accounting with a focus on the role of accountability within organizations. Students will examine how financial and non-financial information is used to ensure transparency, ethical behavior, and responsible decision-making. Topics include the conceptual frameworks of accounting, the preparation and interpretation of financial statements, regulatory frameworks, and the broader social, ethical, and environmental responsibilities of accountants. Through case studies and real-world examples, students will develop a critical understanding of how accounting practices contribute to organizational accountability and sustainable business practices.
Recommended Textbook
Australian Financial Accounting 7th Edition by Craig Deegan
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Page 2
Chapter 1: An Overview of the Australian External Reporting Environment
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Q1) The objective of the International Financial Reporting Interpretations Committee (IFRIC)is to:
A) achieve consistent interpretations of IFRS by IFRS-adopters internationally.
B) address accounting issues that are likely to receive divergent or unacceptable treatment in the absence of authoritative guidance, with a view to reaching consensus on the appropriate accounting treatment.
C) address issues of reasonably widespread importance, and not issues of concern only to a small set of enterprises.
D) All the given answers are correct.
Answer: D
Q2) 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'.
A)True
B)False
Answer: False
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Chapter 2: The Conceptual Framework of Accounting and Its Relevance
to Financial Reporting
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Q1) Which of the following accounting policies is an example of costs versus benefits constraint being exercised in the disclosure of financial information?
A) Inventory is valued at lower of cost or market.
B) Property, plant and equipment are appraised and revalued every three years.
C) Biological assets are stated at fair value unless the fair value cannot be measured reliably.
D) Research and development costs are expensed as incurred.
Answer: B
Q2) The trade-off between relevance and faithful representation requires exercise of judgment constrained by timeliness and costs versus benefits.
A)True
B)False
Answer: True
Q3) Which of the following transactions does not meet the definition of an asset?
A) deposit for purchase of equipment
B) commitment to purchase equipment
C) finance leased equipment
D) purchase of equipment on credit.
Answer: B
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Chapter 3: Theories of Accounting
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Q1) Stakeholders are:
A) anyone with a direct financial interest in the firm.
B) special interest groups concerned with the environmental actions of the firm.
C) employees.
D) All of the people included in the given answers.
Answer: D
Q2) In the decade leading up to the 1970s the notable theories being developed were predominantly normative in nature.
A)True
B)False
Answer: True
Q3) Examples of behaviours that create agency costs of debt include situations where the borrowing entity:
A) goes through a broker to raise debt funds.
B) pays minimal dividends.
C) invests in high-risk projects.
D) puts the borrowed money in the bank.
Answer: C
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Page 5
Chapter 4: An Overview of Accounting for Assets
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Q1) The cost of an asset will typically include the purchase price and:
A) other expenditures on material and services to generate the asset.
B) depreciation costs of other assets used to generate the asset.
C) salaries and wages of the Chief Executive Officer.
D) other expenditures on material and services to generate the asset and depreciation costs of other assets used to generate the asset.
Q2) It is expected that the service potential of a non-current asset will decline over time.The appropriate accounting treatment is to:
A) amortise the asset over its useful life.
B) disclose the effect in the notes to the statement of financial position if it is material in nature.
C) write-off the asset.
D) accrue the difference as a payable in adjusting entries at the end of the period.
Q3) Which of the following assets are recognised at fair value?
A) biological assets
B) revalued property, plant equipment
C) assets under a finance lease
D) biological assets and revalued property, plant equipment
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6
Chapter 5: Depreciation of Property, plant and Equipment
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Q1) The depreciable amount is the historical cost of the non-current asset,or revalued amount substituted for historical cost in the financial report,less the net amount expected to be recovered on disposal of the asset at the end of its useful life.
A)True
B)False
Q2) On 1 January,Broncos Ltd paid $20 million for a tract of land with a building.The building was in a bad condition and had to be refurbished for another $2 000 000.The adjacent vacant land is valued at $15 000 000.It is expected that the building will be in use for at 20 years.What is the depreciation expense for the first year?
A) $100 000
B) $250 000
C) $350 000
D) $1 100 000
Q3) Depreciation represents a decline in the market value of an asset over its life.
A)True
B)False
Q4) How are gains or losses on sale of depreciable assets accounted for in accordance with AASB 118 Revenue?
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Page 7
Chapter 6: Revaluations and Impairment Testing of
Non-Current Assets
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Q1) AASB 116 requires entities to review at least at the end of each annual reporting period to assess if the fair value of the non-current assets has changed.
A)True
B)False
Q2) Recoverable amount is the amount expected to be recovered through the ongoing use and subsequent disposal of an asset.
A)True
B)False
Q3) Once an entity elects to value a class of assets using fair value it can switch back to cost basis measurement as long as there is justifiable reason.
A)True
B)False
Q4) Which of the following statement is true of accumulated depreciation?
A) It is the difference between acquisition costs and residual value.
B) It is the difference between acquisition costs and revalued amount.
C) It is initially derecognised on first time revaluations.
D) It is restated proportionately to the carrying amount and the revalued amount of the asset.
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Chapter 7: Inventory
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Q1) Perpetual inventory system is also known as the physical inventory method.
A)True
B)False
Q2) The cost of sub-contracted work is not included in costs of conversion for the purposes of calculating the cost of inventory.
A)True
B)False
Q3) Upward revaluation of inventory is permitted for as long as all assets in same inventory class are revalued.
A)True
B)False
Q4) AASB 102 requires,among others,disclosure of which of the following pieces of information?
A) accounting policy adopted for measuring inventories
B) carrying amount of inventories for each classification of inventory appropriate to the entity
C) amount of any write-down during the period
D) all of the given answers
Q5) Discuss when a standard cost may be used to arrive at the cost of inventory.
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Chapter 8: Accounting for Intangibles
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Q1) Explain why intangible assets are required to be reported as a separate class of asset in the statement of financial position.
Q2) Intangible assets that are amortised are no longer subjected to impairment testing.
A)True
B)False
Q3) Research of market potential prior to the launch of a product is permissible to be capitalised as an intangible asset.
A)True
B)False
Q4) Where a revaluation occurs,it is to be to the fair value of the asset.
A)True
B)False
Q5) Examples of elements of a business that commonly make up goodwill are:
A) patents and licences.
B) trademarks and brand names.
C) research and development.
D) established reputation and loyal customers.
Q6) Explain the difference between an 'infinite life' and an 'indefinite life'.
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Chapter 9: Accounting for Heritage Assets and Biological Assets
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Q1) Net present value (NPV)method has been considered as an alternative valuation technique to historical cost for biological assets.The NPV method may be described as:
A) an accounting method for projecting the revenues and expenses associated with an asset or entity.
B) an economic concept based on the notion that an asset's value can be determined from its future cash flows.
C) an accounting concept based on the statement of cash flows to determine the present value of investments.
D) a finance technique for testing the efficiency of the market by comparing share prices to the discounted cash inflows associated with the asset.
Q2) The arguments against recognising heritage assets in a financial sense include:
A) Heritage assets include economic benefits.
B) Benefits can be quantified in monetary terms.
C) Determination of control is problematic.
D) There is no demand for financial information on heritage assets.
Q3) Outline the different ways an entity engaged in agricultural activity could recognise revenue.
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Page 11
Chapter 10: An Overview of Accounting for Liabilities
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Q1) Where the change in the carrying amount of a liability is due to the impacts of using present values,the change shall be recognised as a(n):
A) gain on sale of liability.
B) revaluation reserve adjustment.
C) adjustment to opening retained earnings.
D) borrowing cost.
Q2) An entity shall classify a liability as current when it holds the liability primarily for the purpose of trading.
A)True
B)False
Q3) When determining whether a liability exists,the intentions or actions of management need to be taken into account.
A)True
B)False
Q4) Discuss the necessary conditions prescribed in AASB 137 Provisions,Contingent Liabilities and Contingent Assets to recognise provisions.Illustrate how these conditions are satisfied in a product warranty example.
Q5) Discuss the substance-over-firm approach in AASB 132 Financial Instruments.
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Chapter 11: Accounting for Leases
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Q1) Johnson Ltd enters into a lease agreement with Peterson Ltd under the following conditions: \[\begin{array} { | l | r | l | }
\hline \text { Duration of lease } & 10 \text { years } & \\
\hline \text { Life of leased asset } & 12 \text { years } & \\
\hline \text { Unguaranteed residual } & \$ 8,000 & \\
\hline \text { Lease payment } & \$ 6,500 & \text { at lease inception } \\
\hline \text { Annual lease payments (in arrears) } & \$ 7,000 & \text { per year (10 payments) } \\
\hline
\end{array}\] The lease may be cancelled only with the permission of the lessor.If the rate of interest implicit in the lease is 10%,what is the fair value of the asset at the inception of the lease,and is the lease a finance or operating lease?
A) $56 745, finance lease
B) $52 596, operating lease
C) $56 745, operating lease
D) $52 596, finance lease
Q2) Describe 'lease incentives' and discuss the suggested approach to 'lease incentives' in Interpretation 115.
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Chapter 12: Accounting for Employee Benefits
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Q1) Any employee benefit that is incurred by the employer during the period and that contributes to the generation of items expected to provide future economic benefits for the employer may be capitalised as an asset.
A)True
B)False
Q2) Entity A contributes to a defined benefit superannuation plan for its employees.It calculates the following:
\[\begin{array} { | l | l | }
\hline \text { Present value of the obligation } & 12286 \\
\hline \text { Fair value of plan assets } & \underline {11500} \\
\hline & \underline { 786 } \\
\hline
\end{array}\]
The $786 represents:
A) the expense to be recognised in the statement of comprehensive income.
B) the asset to be recognised in the statement of financial position.
C) the liability to be recognised in the statement of financial position.
D) the revenue to be recognised in the statement of comprehensive income.
Q3) Discuss the causes of actuarial gains and losses for a defined benefit fund.
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Page 14
Chapter 13: Share Capital and Reserves
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Q1) If a partly paid share issue is oversubscribed and the shares are allocated on a pro rata basis,the excess application monies must be refunded to all subscribers.
A)True
B)False
Q2) Reserves recorded in the equity section of the statement of financial position:
A) represent an amount of cash put aside for future projects.
B) are created from excess profits that are not available for distribution as dividends. C) may be established by transferring amounts from retained profits.
D) will not have an impact on the total equity reported in the equity section of the statement of financial position when created.
Q3) The forfeited shares account is used to make up any shortfall:
A) to the forfeiting shareholder.
B) the forfeited share reserve.
C) on the issue of the shares.
D) on the cash at bank account .
Q4) It used to be normal practice to issue shares at below par value.
A)True
B)False
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Page 15
Chapter 14: Accounting for Financial Instruments
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Q1) Derivative instruments generally result in a transfer of the underlying primary financial instrument on maturity of the contract.
A)True
B)False
Q2) For a designated cash flow hedge,AASB 139 Financial Instruments: Recognition and Measurement requires the gain or loss on the hedging instrument to be transferred initially to equity and subsequently to profit or loss to offset the gains or losses on the hedged item.
A)True
B)False
Q3) Once a financial instrument has been classified as a liability in the statement of financial position,under AASB 132 the reporting entity is not permitted to reclassify it unless a specific transaction or other specific action by the holder or issuer of the instrument alters the substance of the financial instrument.
A)True
B)False
Q4) Discuss the economic effect of issuing a compound instrument.
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Chapter 15: Revenue Recognition Issues
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Q1) A group of contracts shall be treated as:
A) a single contract if negotiated as a package.
B) a single contract only when the contracts are performed concurrently.
C) individual construction contracts.
D) all of the given answers.
Q2) Describe the output and input measures of performance that an entity is required to use when measuring the progress to date on a construction contract.
Q3) Bellarine Ltd is publisher of Mode magazine and its customers usually sign a three-year subscription with an advance payment of $500.Mode magazine has 12 issues in a year.What is the appropriate accounting treatment for this sale on the date of signing that is in accordance with IASB (2011)Revenue?
A) Recognise revenue in full as this is an immaterial amount.
B) Recognise the sale as a provision.
C) Recognise the sale as unearned revenue.
D) Disclose the sale in the notes as a contingent item.
Q4) Gains that result from revaluation of long-term assets are included in income.
A)True
B)False
Q5) In accordance with IASB (2011)discuss the five steps to recognising revenue.
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Chapter 16: The Statement of Comprehensive Income and Statement of Changes in Equity
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Q1) All adjustments to equity other than those related to transactions with owners in their capacity as owners are disclosed in the statement of comprehensive income (AASB 101).
A)True
B)False
Q2) Discovery of an error from a prior period corrected retrospectively is an example of an item reportable under other comprehensive income.
A)True
B)False
Q3) AASB 101 permits entities to present the components of other comprehensive income either before tax effects (gross presentation)or after their related tax effects (net presentation).
A)True
B)False
Q4) In establishing the classification of items in the income statement,the size of an item is an appropriate basis for establishing a separate classification (by nature or function)for it.
A)True
B)False
Page 18
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Chapter 17: Accounting for Share-Based Payments
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Q1) Why are equity instruments in a share-based payment transactions modified? What is the accounting treatment for such modifications that is consistent with AASB 2?
Q2) AASB 2 requires some share-based payments to be recognised in an entity's financial statements.
A)True
B)False
Q3) Discuss the hierarchy to follow in determining which fair values to use in a share-based payment transaction that is consistent with AASB 2.
Q4) A share-based payment is a transaction that entitles another party to receive a cash payment with the amount paid dependent on the price of the entity's shares or other equity instruments.
A)True
B)False
Q5) AASB 2 requires all share-based payment transactions to be expensed on grant date and the credit is equity.
A)True
B)False
Q6) Briefly describe the keys points of AASB 2.
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Chapter 18: Accounting for Income Taxes
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Q1) It is possible for a firm to legally make a large accounting profit but pay little or no tax based on its taxable income.
A)True
B)False
Q2) A deductible temporary difference is one that will result in:
A) a decrease in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
B) an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
C) a decrease in income tax recoverable in future reporting periods when the carrying amount of the asset or liability is recovered or settled, and an increase in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
D) a decrease in income tax payable in future reporting periods when the carrying amount of the asset or liability is recovered or settled.
Q3) Discuss the assumptions made when recognising a deferred tax asset or a deferred tax liability.
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Chapter 19: The Statement of Cash Flows
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Q1) Both IASB and FASB propose that financial statements should be presented in a more aggregated manner.
A)True
B)False
Q2) Discuss the differences between the direct and indirect methods when reporting cash flows from operating activities.
Q3) While the statement of cash flows is presently required along with the accrual statements,taking a balanced view,it would be sufficient to meet the accountability needs of general purpose financial statement users on its own.
A)True
B)False
Q4) Identify and discuss the three classifications of the statement of cash flows.
Q5) All cash flows from investing and financing activities are required to be reported on a gross basis.
A)True
B)False
Q6) Explain why AASB 107 requires disclosures to be made about non-cash financing and investing activities.
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Chapter 20: Accounting for the Extractive Industries
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Q1) AASB 6 requires the separate disclosure of:
A) amounts recognised in its financial report arising from the exploration for and evaluation of mineral resources.
B) its accounting policies for exploration and evaluation expenditures including the recognition of exploration and evaluation assets.
C) amounts of assets, liabilities, income and expense, and operating and investing cash flows arising from the exploration for and evaluation of mineral resources.
D) all of the given answers.
Q2) AASB 6 stipulates that exploration and evaluation assets shall be measured at cost at recognition.
A)True
B)False
Q3) AASB 6 only allows a choice between capitalisation or expensing of exploration and evaluation costs when the rights to tenure of the area of interest are current and these expenditures are expected to be recouped through successful development or sale.
A)True
B)False
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22
Chapter 21: Accounting for General Insurance Contracts
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Q1) Government charges should be included as part of the premium revenue if:
A) they are levied on the insurer and incorporated into the insurance premium.
B) they are imposed on the insured party by the government.
C) the insurer is acting simply as a collector of levies and charges imposed by the government.
D) they are levied on the insurer and incorporated into the insurance premium and the insurer is acting simply as a collector of levies and charges imposed by the government.
Q2) Unclosed business is defined as business written close to the reporting date for which the date of attachment of the risk is before the end of the reporting date.
A)True
B)False
Q3) General insurance is an important part of the economy as it:
A) enables entities to reduce their risk exposure.
B) benefits society by safeguarding individuals' homes.
C) encourages investment in particular activities.
D) All of the given answers are correct.
Q4) Explain the accounting treatment for revenues associated with unclosed business.How are they measured?
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Page 23
Chapter 22: Accounting for Superannuation Plans
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Q1) When a superannuation fund has inventories recognised as an asset,this should be valued at lower of cost or net realisable value.
A)True
B)False
Q2) A contributory superannuation plan is one in which:
A) the employer contributes periodic payments to the trust fund.
B) the employees contribute periodic payments to the trust fund.
C) the government contributes a percentage of the employees' contribution.
D) the benefits accumulate at a compound rate.
Q3) Discuss what is referred to as accrued benefits to members of a (a)defined benefit plan and (b)defined contribution plan.
Q4) AAS 25 requires that all the assets of superannuation plans be measured at:
A) historical cost, depreciated where appropriate.
B) replacement cost net of accumulated depreciation where appropriate.
C) net market value.
D) net realisable value if they are investments. Operating assets are to be valued at historical cost and depreciated where appropriate.
Q5) Discuss the options available for defined benefit superannuation plans.
Q6) Discuss the disclosure requirements for defined benefit plans.
Page 24
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Chapter 23: Events Occurring After the End of the Reporting Period
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Q1) Which of the following events would be an example of an event that casts doubts on the going concern status of the business?
A) several major customers find an alternative supplier
B) resignation of an employee
C) forward payment to a major supplier
D) directors decide on no final dividend
Q2) Wattle Ltd is in the process of completing its financial reports for the period ended 30 June 2014 when its accountant completes the collection of information about the realisable value of inventory as at reporting date.A number of items are reflected at a cost greater than net realisable value with a material effect on the accounts.What treatment does AASB 110 require for this event?
A) It should be disclosed in the Directors' Declaration.
B) The effect on the accounts should be disclosed in the notes to the financial statements.
C) No disclosure is required.
D) The financial statements should be adjusted to reflect the impact of the event.
Q3) What is an 'adjusting event' in accordance with AASB 110?
Provide examples.
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Chapter 24: Segment Reporting
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Q1) Discuss the entity-wide disclosures in AASB 8 that need to been made about major customers.
Q2) In accordance with AASB 8 Operating Segments,which of the following statements is incorrect?
A) If the total external revenue reported by operating segments constitutes less than 75 per cent of the entity's revenue, additional operating segments shall be identified as reportable segments until at least 75 per cent of the entity's revenue is included in reportable segments.
B) Operating segments that are not reportable are combined and disclosed as part of 'all other segments'.
C) If management judges that an operating segment identified as a reportable segment in the immediately preceding period is of continuing significance, information about that segment shall continue to be reported separately in the current period even if it no longer meets the criteria for a reportable segment.
D) Identification of operating segments in AASB 8 Operating Segments adopts a 'rules-based' approach, while its predecessor AASB 114 Segment Reporting adopted a 'principles-based' approach.
Q3) Explain the reconciliation information AASB 8 requires for segment reporting.
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Chapter 25: Related Party Disclosures
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Q1) A close family member of someone who is key management personnel is considered to be a related party.
A)True
B)False
Q2) A related party relationship can affect the profit and loss of an entity.
A)True
B)False
Q3) Some business leaders argue that related-party transactions have benefits for the reporting entity.The benefits are said to include:
A) lower legal costs associated with contracts.
B) increased profits for the related entity.
C) reduced competition among suppliers.
D) better, more reliable service and better prices.
Q4) Discuss the performance conditions utilised in the compensation plans for key management personnel.
Q5) Discuss the disclosure requirements instituted in CLERP 9 bill in relation to director and executive remuneration.
Q6) What additional disclosures are required of disclosing entities with regards to related-party transactions?
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Chapter 26: Earnings Per Share
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Q1) AASB 133 Earnings per Share does not require entities to restate diluted earnings per share of any prior period presented for changes in the assumptions used in earnings per share calculations or for the conversion of potential ordinary shares into ordinary shares.
A)True
B)False
Q2) According to AASB 133 for shares to be considered as being issued for no consideration,the price paid for the shares would need to be:
A) greater than the market price.
B) greater than the issued price.
C) less than the market price.
D) less than the issued price.
Q3) AASB 133 requires disclosure of diluted EPS even when these numbers are equal.
A)True B)False
Q4) If a bonus or rights issue is made at the prevailing market price of the shares then there is no bonus element in the issue.
A)True
B)False
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Chapter 27: Accounting for Group Structures
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Q1) Briefly outline the steps taken in order that the financial information about the group is presented as that of a single economic entity.
Q2) Discuss how the subsidiary's post-acquisition earnings are accounted for on consolidation.
Q3) Post-acquisition earnings of the subsidiary are included in the economic entity's earnings.
A)True
B)False
Q4) A subsidiary is an entity that is controlled by a parent entity.
A)True
B)False
Q5) Which consolidation concept mainly underlies the approach adopted in AASB 10?
A) proprietary concept
B) accrual concept
C) entity concept
D) parent-entity concept
Q6) AASB 3 requires entities to account for business combinations using the acquisition method.Describe the steps required to implement the acquisition method.
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Chapter 28: Further Consolidation Issues I: Accounting for Intragroup Transactions
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Q1) The value of inventory on hand for the economic group at the end of the period will always equal the sum of the inventory on hand at the end of the period for each of the entities in the group.
A)True
B)False
Q2) Intragroup transactions that are to be eliminated in the consolidated accounts include:
A) inter-entity loans.
B) inter-entity sales of non-current assets.
C) the payment of management fees to a member of the group.
D) all of the given answers.
Q3) Dividends may be identified as being paid out of pre-acquisition or post-acquisition profits by a subsidiary company.Where dividends are paid out of post-acquisition profits the investment in the subsidiary should be decreased by the amount of the dividend.
A)True
B)False
Q4) Explain the accounting treatment for impairment to the subsidiary investment when dividends have been paid out of pre-acquisition profits.
Page 30
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Chapter 29: Further Consolidation Issues II: Accounting for
Non-Controlling Interests
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Q1) In calculating the proportion of a subsidiary's profit that is attributable to owners who are not part of the group,all adjustments to the group's profit should be treated as affecting the calculation for the outside owners.
A)True
B)False
Q2) Describe the two options in measuring the non-controlling interest.
Q3) Discuss the three elements considered when calculating non-controlling interests.
Q4) In preparing consolidated financial statements non-controlling interests are allocated on a 'line-by-line' basis.
A)True
B)False
Q5) Non-controlling interests are allocated on a 'line-by-line' basis throughout the statement of comprehensive income.
A)True
B)False
Q6) Describe the three steps involved in preparing consolidated financial statements.
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Chapter 30: Further Consolidation Issues IV: Accounting for
Changes in the Degree of Ownership of a Subsidiary
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Q1) When the parent sells some of its shares in the subsidiary,what are the implications,in consolidated accounting,for: (a)the comprehensive income statement; (b)the statement of financial position; and (c)the opening retained earnings balances?
Q2) Two common approaches to accounting for acquisition of additional shares in a subsidiary include:
A) the combined tranche method and the single-date method.
B) the step-by-step method and the combined tranche method.
C) the step-by-step method and the single-date method.
D) the step-by-step method and the equity method.
Q3) AASB 10 Consolidated Financial Statements prescribes that changes in the parent's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
A)True
B)False
Q4) Discuss the accounting treatment for the current year's profit and loss earned by the subsidiary from the start of the financial period to the date the parent loses control of this subsidiary.
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Chapter 31: Accounting for Equity Investments,including
Investments in Associates and Joint Arrangements
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Q1) Briefly summarise the key disclosure requirements for joint arrangements according to AASB 11.
Q2) The requirements of AASB 128 relating to the equity method of accounting for investments in associates include:
A) adjustments for impairment losses recognised by the associate.
B) the notional adjustment of the carrying amounts of the identifiable assets, liabilities and contingent liabilities of the associate to fair value.
C) the calculation of a notional goodwill or excess on acquisition that is not required to be separately disclosed.
D) all of the given answers.
Q3) In accordance with AASB 137 Provisions,Contingent Liabilities and Contingent Assets,the investor shall disclose the contingent liabilities of its associates. A)True B)False
Q4) Explain the term 'significant influence',and how it is determined,including several factors that need to be considered when making such determination
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Chapter 32: Accounting for Foreign Currency Transactions
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Q1) Exchange differences recognised as borrowing costs and included in the cost of an asset,are not recognised:
A) until the asset is ready for its intended use or sale, provided the capitalisation of costs does not mean that the cost of the asset exceeds recoverable amount.
B) until such time as they are deemed to be income and expenses by a resolution of the board of management.
C) until such time as income is derived, at which time they are passed directly to profit or loss.
D) until after the asset is ready for its intended use or sale, provided the capitalisation of costs does not mean that the cost of the asset exceeds recoverable amount.
Q2) The purpose of 'hedge accounting' is to recognise the offsetting effects on profit or loss of changes in the nominal values of the financial instrument and the hedging instrument.
A)True
B)False
Q3) Discuss the situations in which the discontinuation of fair-value hedge accounting is to be done as provided for in AASB 139.
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Chapter 33: Translating the Financial Statements of Foreign Operations
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Q1) AASB 121 requires foreign currency transactions to be recorded on initial recognition in the local currency,by applying to the foreign currency amount the spot exchange rate between the local currency and the foreign currency at the date of the transaction. A)True
B)False
Q2) The former AASB 1012 treatment is consistent with the requirements of AASB 121. A)True
B)False
Q3) In translating the accounts of a foreign operation from functional to presentation currency,resulting exchange differences is recognised in other comprehensive income. A)True B)False
Q4) The primary economic environment in which an entity operates is normally the one in which it primarily generates and expends cash. A)True B)False
Q5) Distinguish monetary items from non-monetary items.Provide two examples of each.
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Chapter 34: Accounting for Corporate Social Responsibility
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Q1) Environment Australia has identified a number of possible benefits for entities choosing to report environmental information,including:
A) gaining the confidence of investors, insurers and financial institutions.
B) creating market opportunities.
C) gaining external recognition/awards.
D) all of the given answers.
Q2) AccountAbility's work is the AA1000 series of standard which is based on the following principle:
A) responsiveness.
B) inclusivity.
C) materiality.
D) all of the given answers.
Q3) Which of the following is not considered a social benefit?
A) education
B) safe products
C) social concern
D) clean water
Q4) Discuss initiatives taken by the mining industry to improve their corporate social-responsibility reporting.
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