Accounting Principles
Final Test Solutions
Course Introduction
This course offers an in-depth introduction to the fundamental concepts and principles of accounting, emphasizing the role of accounting in business decision-making. Students will learn to prepare, interpret, and analyze financial statements in accordance with established accounting standards. Topics include the accounting cycle, recording and reporting of business transactions, and the application of double-entry bookkeeping. The course also explores ethical considerations in accounting and provides a solid foundation for further study in financial and managerial accounting.
Recommended Textbook
Issues in Financial Accounting 15th Australia Edition by Scott Henderson
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29 Chapters
707 Verified Questions
707 Flashcards
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Chapter 1: Institutional Arrangements for Setting Accounting Standards in Australia
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Sample Questions
Q1) It is incorrect that under the Corporations Act 2001:
A) the accounting standards are deemed to be part of the Corporations Act
B) financial reports must comply with the accounting standards
C) the accounting standards need not be complied with if, in the opinion of the board of directors, this would not result in a true and fair view
D) if the financial statements and notes prepared in compliance with accounting standards would not give a true and fair view, then additional information necessary to give a true and fair view must be included in the notes to the statements
Answer: C
Q2) The body that oversees the operation of the Auditing and Assurance Standards Board is:
A) The Financial Reporting Council (FRC)
B) ASIC
C) AASB
D) ASX
Answer: A
Q3) Explain how accounting standards are currently enforced in Australia.
Answer: Not Answer
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Chapter 2: A Conceptual Framework: Scope, reporting
Entity and the Objective of Financial Report
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Sample Questions
Q1) The correct order for the seven levels of the accounting standard-setting part of the conceptual framework is:
A) standard-setting policy, display, border of discipline, subject, objective, fundamentals, operational
B) fundamentals, border of discipline, operational, subject, objective, display, standard-setting policy
C) border of discipline, subject, objective, fundamentals, operational, display, standard-setting policy
D) subject, objective, fundamentals, border of discipline, operational, display, standard-setting policy
Answer: C
Q2) The approach taken in the Australian conceptual framework is:
A) hypothetical
B) notional
C) descriptive
D) prescriptive
Answer: D
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Chapter 3: A Conceptual Framework: the Fundamentals of
General Purpose Financial Reporting
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Sample Questions
Q1) Is taxation an expense under the Framework? Discuss.
Answer: Taxation is not considered an expense under the Framework. Expenses are typically defined as the costs incurred in the process of generating revenue, such as salaries, rent, utilities, and supplies. Taxation, on the other hand, is a mandatory payment to the government based on income, property, or goods and services. While taxation does reduce the amount of profit or income available to a business or individual, it is not considered an expense in the traditional accounting sense. Instead, taxation is typically accounted for separately on financial statements and is often categorized as a liability. Therefore, while taxation does impact the financial position of an entity, it is not classified as an expense under the Framework.
Q2) Which of these is not an essential characteristic of a liability under the Framework?
A) Future sacrifice of economic benefits
B) Control
C) Existence of a present obligation to another entity
D) A past transaction or other past event
Answer: B
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Chapter 4: A Conceptual Framework: Recognition and
Measurement of the Elements of Financial Statements
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Sample Questions
Q1) Measuring and reporting assets using historical cost is most relevant in satisfying:
A) the stewardship objective of financial reporting
B) the decision usefulness objective of financial reporting
C) the objectives of relevance and reliability in financial reporting
D) both A and B
Q2) There is wide agreement that the soundest measure,conceptually,of value-in-use is:
A) historical cost less accumulated depreciation
B) the estimated net market value if the asset was sold in the ordinary course of business
C) deprival value
D) the discounted value of the asset's future cash flows
Q3) Assume that assets are held for use and not offered for sale and that PV = present value,MV = net market value and RC = current replacement cost.If PV > MV > RC,the deprival value of the asset is:
A) current replacement cost
B) present value
C) net market value
D) cannot be determined
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Chapter 5: The Choice of Accounting Methods
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Sample Questions
Q1) The choice of accounting methods and/or their use to achieve a particular outcome in the financial reports is known as:
A) environmental accounting
B) creative accounting
C) imaginative accounting
D) bottom of the harbour accounting
Q2) An example of legal form not reflecting economic substance is:
A) a legal document describing an accounts receivable as a debtor
B) a legal document describing a loan as an advance
C) a legal document describing a transaction as a lease when in fact it is a credit sale
D) all are examples of legal form not reflecting economic substance
Q3) Recent research on the manipulation of profit numbers by managers with a view to influencing share price has shown:
A) no evidence of manipulation
B) firms reporting continuous growth are priced at a discount to other firms
C) reporting of small losses is rare and reporting of small profits fairly common
D) none of the above
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Chapter 6: The Balance Sheet: an Overview
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Sample Questions
Q1) Which of these is not included in the SAC2 description of information to be disclosed about the financial position of the reporting entity? Information about its:
A) capacity for adaptation
B) operating capability
C) control over resources
D) financial structure
Q2) The tangibility of an asset refers to:
A) whether it is monetary or non-monetary
B) whether it has physical substance
C) whether the asset will be converted into cash within 12 months
D) whether it can be converted into cash at short notice
Q3) Entities are required to disclose comparative information the previous period.Discuss how the correction of prior period errors may impact on the presentation of the financial statements.
Q4) Identify and discuss the requirements concerning the classification of assets contained in AASB 101.
Q5) Identify and discuss the requirements concerning the classification of liabilities contained in AASB 101.
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Chapter 7: Accounting for Current Assets
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Sample Questions
Q1) Under the LIFO method,in periods of rising prices:
A) profit cannot be manipulated by changes in purchasing patterns
B) profits could be increased by increasing unit purchases to a higher level than unit sales
C) profits could be increased by reducing unit purchases to a lower level than unit sales
D) profits could be decreased by reducing unit purchases to a lower level than unit sales
Q2) The item that is not part of manufacturing inventory is:
A) supplies inventory
B) raw materials
C) work-in-process
D) none of the above, i.e., all are part of manufacturing inventory
Q3) Discuss the disclosures relating to inventory required by AASB 102.Include a discussion on the disclosures required by not-for-profit entities.
Q4) Explain the effects on the financial reports of the FIFO cost flow assumption in a period of rising prices and discuss the arguments that have been raised for and against the use of this assumption to value inventory.
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Chapter 8: Accounting for Property, plant and Equipment
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Sample Questions
Q1) An asset should be depreciated over its:
A) technical life
B) economic life
C) legal life
D) physical life
Q2) On 1 January 20X0 an asset that had a useful life of five years and a cost of $100 000,had a carrying value of $60 000.(The asset had been depreciated for two years at $20 000 per annum).On 1 January 20X0 it was decided to revalue the asset upwards to $90 000 with no change in its useful life.A year after the revaluation on 1 January 20X1 the asset was sold for $80 000.Under the provisions of AASB 116,the gain or loss on disposal is:
A) $10 000 gain
B) $20 000 gain
C) $10 000 loss
D) $30 000 gain
Q3) Which factors should be taken into account when selecting a depreciation method?
A) The profit or loss for the year
B) Whether the asset has been re-valued
C) The amount that can be claimed as a tax deduction
D) None of the above
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Page 10
Chapter 9: Accounting for Company Income Tax
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Sample Questions
Q1) A temporary difference arises due to:
A) the timing difference between the end of the financial year and when the income tax payable is paid
B) a difference between the amounts of the accounting expenses and the tax deductions of a company which will be reversed in future periods
C) a difference between the amounts of the accounting expenses and the tax deductions of a company which will never be reversed
D) a difference in the amount of the deferred tax assets and the deferred tax liabilities
Q2) AASB 112 requires that:
A) current and deferred tax expense are reported as one figure 'income tax expense'
B) current and deferred tax expense are disclosed separately
C) deferred tax expense is not identifiable in the financial reports
D) current tax expense is not identifiable in the financial reports
Q3) Compare and contrast the Tax Payable and Tax Allocation - Balance Sheet
Approach methods of accounting for income tax.Which method is required under Australian Accounting Standards? Outline the main arguments for and against each of these methods.
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Chapter 10: Accounting for Investments
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Sample Questions
Q1) When deciding on the broad accounting treatment for investments in the shares of other companies that are held as non-current assets,the holdings are normally classified into which of the following broad groups?
A) Stock exchange listed holdings, family company holdings
B) Liquid holdings, non-liquid holdings
C) Small holdings, holdings that give significant influence, holdings that give control
D) Small holdings, large holdings
Q2) Which of these is not a feature of the pure equity accounting method?
A) A proportionate share of dividends paid by the investee is debited to the bank account and credited to the investment account
B) A proportionate change in after-tax profits of the investee is debited to the investment account and credited to share of net profit of associate
C) A proportionate change in asset revaluations by the investee is debited to the investment account and credited to a revaluation reserve
D) Any difference between the acquisition price and the amount at which the investment is initially recorded in the investor's accounts is recorded as goodwill
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Chapter 11: Accounting for Intangible Assets
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Sample Questions
Q1) The recommended treatment under AASB 138 and Interpretation 132 of i.planning costs and ii.graphics and content costs,incurred internally by a company to develop its website is:
A) write-off both as expenses
B) i. expense: ii. recognise as an intangible asset if all the requirements of AASB 138 are met
C) recognise both as intangible assets if all the requirements of AASB 138 are met for both
D) it depends on the reasons the website was developed, e.g., was it primarily to promote and advertise the company's products?
Q2) The difference between goodwill and identifiable intangible assets is:
A) goodwill does not decline in value
B) goodwill cannot be separately identified
C) the cost of goodwill fails to meet the asset recognition criteria
D) all are differences between goodwill and identifiable intangible assets
Q3) Compare the costs likely to be recorded for internally developed patents with those associated with a patent purchased in an arm's length transaction.
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Chapter 12: Accounting for Leases
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Sample Questions
Q1) How is a finance lease distinguished from an operating lease? Give an explanation of the meaning and significance of any technical terms used in your answer.
Q2) A 'sale-and-leaseback' transaction:
A) can be classified as neither a finance lease nor an operating lease
B) is always classified as a finance lease
C) can be classified as either a finance lease or an operating lease
D) is always classified as an operating lease
Q3) The rental method of accounting for leases is best described as:
A) a method of accounting under which the lessee recognises assets and liabilities only from accruals or prepayments of lease rentals
B) a method of accounting under which the lessor recognises assets and liabilities only from accruals or prepayments of lease rentals
C) the method of accounting which is used to account for finance leases
D) a method of accounting under which the asset is measured as the present value of the rental payments and is shown as 'lease receivables'
Q4) Discuss the implications of the proposal that operating/finance lease distinction be dropped.
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Page 14
Chapter 13: Accounting for Employee Benefits
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Q1) Sick leave entitlements should be reflected as a liability in accordance with AASB 119 when:
A) it is non-accumulating sick leave
B) it is accumulating sick leave which is vesting
C) it is accumulating sick leave which is non-vesting
D) never
Q2) In Australia,the attractiveness of salary packaging is being reduced by which of the following factors?
A) Fringe benefits tax which taxes the employer on non-cash benefits paid to the employee
B) The decreasing difference between personal tax rates and the company tax rate
C) Non-cash salary being taxable in the hands of the employee
D) All of the above
Q3) Discuss the rationale for AASB 119 recognising long service leave as a liability during the preconditional period.How would you account for the possibility that an employee may not remain in your employ long enough to collect long service leave.
Q4) Discuss the measurement issues associated with accounting for short-term and long-term employee benefits.
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Page 15
Chapter 14: Accounting for Financial Instruments
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Sample Questions
Q1) A 'hedging' financial instrument can:
A) protect against losses from adverse movements in foreign exchange rates
B) eliminate any possible gain from changes in the Australian dollar/US dollar exchange rate
C) offset the risk of loss from adverse commodity price changes
D) do all of the above
Q2) A buyer of a futures contract:
A) may let the contract expire with no action required
B) has an obligation to buy the underlying asset
C) has a right, but not an obligation, to buy the underlying asset
D) must pay the futures price when the contract is made
Q3) SPI 200 futures contracts:
A) cease trading on the third Thursday of the contract month
B) are settled on the third Thursday of the contract month
C) may only be used by traders
D) all of the above
Q4) Discuss the disclosure requirements in AASB 7 Financial Instruments Disclosure and AASB 132 Financial Instruments Presentation.
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Page 16
Chapter 15: Equity
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Sample Questions
Q1) Notia Ltd,under an equity-based remuneration plan,grants 5 senior executives the option of buying shares at $4 per share.At the date of granting the option the shares have a market value of $5.00 each.One executive exercises the right to buy 2000 shares on l January 2010.In principle,the basic accounting entry for this transaction would be:
A) debit bank $10 000, credit share capital $10 000
B) debit remuneration expense $2000, debit bank $8000, credit share capital $10 000
C) debit bank $8000, debit general reserve $2000, credit share capital $10 000
D) none of the above
Q2) The three broad components of equity for a company are:
A) public equity, contributed equity, government equity
B) ordinary shares, preference shares, options
C) share capital, retained earnings, reserves
D) ordinary shares, preference shares, reserves
Q3) Asset revaluation reserves arise from:
A) application of the Corporations Act and the accounting standards
B) transfers from retained earnings
C) transfers from cash at bank
D) none of the above
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Chapter 16: The Income Statement
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Sample Questions
Q1) Which statement is not correct?
A) Revenue is a subset of income
B) Under AASB 118, revenue is defined as a gross flow which means that amounts collected on behalf of third parties, such as goods and services taxes, are excluded from revenue
C) AASB 118 applies to revenue arising from disposal of assets other than goods, contributions of assets and forgiveness of liabilities
D) None of the above, i.e., all are correct statements
Q2) The Australian Accounting Standards Board changed the name 'statement of financial performance' to 'statement of profit and loss and other comprehensive income':
A) to be consistent with the Corporations Act
B) to be consistent with international accounting standards
C) to be consistent with US accounting standards
D) because of the development of accounting standards that are applicable to both the private and public sectors
Q3) Define income and explain how it differs from revenue.
Q4) AASB 101 allows preparers two options in the classification of items for the statement of comprehensive income statements.Discuss.
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Chapter 17: The Cash Flow Statement
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Sample Questions
Q1) Under AASB 107,it is not true that:
A) operating activities generally relate to transactions that are included in the income statement
B) cash flows are classified into operating, investing and financing groupings
C) each item in the externally presented income report that results in a cash flow is required to be disclosed separately in the cash flow statement
D) none of the above is untrue
Q2) Under AASB 107,which of the following must be included in notes attached to the cash flow statement?
A) Assets acquired by issuing shares
B) A reconciliation of cash flows from operating activities with net profit
C) Proceeds from the sale of an investment
D) Both A and B
Q3) Income tax paid,proceeds from long-term borrowing and loans made to directors would be presented in a statement of cash flows,as:
A) financing outflow: financing inflow; financing outflow
B) operating outflow: investing inflow; investing outflow
C) operating outflow: financing inflow; investing outflow
D) none of the above
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Page 19
Chapter 18: Financial Reporting: Segment Reporting, value
Added Statements, highlights Statements and
Financial Information
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Sample Questions
Q1) Many companies,especially larger companies,now include a highlights statement in their annual reports.What are the main items likely to be included in such a statement? What are the perceived benefits of giving this information? Also explain any possible disadvantages of publishing a highlights statement.
Q2) A company reports the following in relation to its latest financial year:
\[\begin{array} { l r }
\text { Current assets } & \$ 175 \\
\text { Non-current assets } & 300 \\
\text { Current liabilities } & 50 \\
\text { Non-current liabilities } & 250
\end{array}\] Writing a cheque for $25 to pay off some long-term debentures payable means that the current ratio will be:
A) 7.0 times
B) 3.0 times
C) unchanged
D) 5.5 times
Q3) Discuss the benefits of the 'management approach' adopted by AASB 8.
Page 20
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Chapter 19: Further Financial Reporting Issues
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Sample Questions
Q1) A business shows the following figures for the current financial year (all amounts in $millions):
\[\begin{array} { l r }
\text { Total sales } & \$ 38.0 \\
\text { Operating profit } & \$ 12.0 \\
\text { (a) Bad debts expense } & \$ 1.0 \\
\text { (b) Interest expense } & \$ 2.0 \\
\text { (c) Auditor's remuneration } & \$ 0.5 \\
\text { (d) Repairs and maintenance expense } & \$ 2.5
\end{array}\] The items that are most likely to be considered as material are:
A) (b) and (d)
B) (a), (b) and (d)
C) (b), (c) and (d)
D) (a) and (b)
Q2) Why have accountants always put so much emphasis on the concept of materiality? How does this concept affect accountants,if at all,in their day-to-day work and in the preparation of periodical financial reports?
Q3) Discuss the concept of the reporting entity and the rationale for the revisions to the International Financial Reporting Standards for small and medium sized entities.
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Page 21
Chapter 20: Accounting for the Extractive Industries
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Q1) Bigspill Gas & Oil Ltd began operations on 1 July 20X1.During the year ended 30 June 20X2,Bigspill explored five different areas of interest and spent $200 000 in each area.The exploration results indicated that three areas were likely to be productive and Bigspill acquired leases over the three areas at costs of $400 000,$720 000 and $480 000 respectively.Under the full-cost method of accounting for exploration and evaluation costs in the extractive industries,Bigspill would include which of the following amounts in its statement of financial position as at 30 June 20X2 for Exploration and Evaluation Costs?
A) $2 200 000
B) $1 600 000
C) $ Nil
D) $2 600 000
Q2) Which of the following methods of accounting for exploration and evaluation costs in the extractive industries is most consistent with the provisions of Statement of Accounting Concepts and the Framework?
A) The expense-and-reinstate method
B) The successful-efforts method
C) The expense (costs written-off) method
D) The full-cost method
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Page 22
Chapter 21: Accounting for Real Estate Development and Construction Contracts
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Q1) In what circumstances should borrowing costs incurred in relation to real estate developments not be included as part of the cost of a development? Explain the reason(s)for not including borrowing costs for each of the circumstances you have listed.
Q2) Sustainability Ltd is a property development company.It commenced a new project at the beginning of the year and had spent $5 million on the project by the end of the year.This was the only project on hand during this period and all borrowings were specifically for this project.The interest cost on borrowings was at an annual rate of 15%.Total interest costs incurred for the year were $850 000.Sustainability Ltd should include as part of the costs of the project,borrowing costs of:
A) $375 000
B) $425 000
C) $850 000
D) $ Nil
Q3) 'To recognise assets and liabilities when a firm construction contract is signed would be inconsistent with the requirements of AASB 111'.Discuss this statement in reference to the framework.
Q4) Compare and contrast the two types of contract distinguished by AASB 111,and provide an example of each.
Page 23
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Chapter 22: Accounting for Agricultural Activity
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Q1) Alton Downs Ltd has an orchard of citrus trees with an estimated net realisable value at 1 January 20X1 of $1 600 000.During the year ended 31 December 20X1 fruit with an estimated fair value of $300 000 was picked.The fruit was still on hand at the end of the year.Estimated sales commission on this fruit was .Costs of picking,sorting,packing and storage totalled $125 000.The fruit was sold in 20X2 (after the 20X1 financial statements were prepared)for $430 000.On 31 December 20X1 the orange orchard had an estimated net realisable value of $1 550 000.The fruit on hand at 31 December 20X2 should be valued at:
\[\$ 25000\]
A) $300 000
B) $275 000
C) $125 000
D) $475 000
Q2) In what ways is agricultural activity different from other forms of assets? In what ways are they similar to other forms of assets? How do these differences,and similarities,affect accounting for agricultural activity?
Q3) Describe the sustained-yield method and the standard method of measuring forestry assets.
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24
Chapter 23: Accounting for Superannuation Plans
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Q1) Discuss the differences between the requirements of ED179 and AAS 25.
Q2) The general purpose financial statements of a superannuation plan should answer the following question(s):
A) Is the plan solvent?
B) Will the plan remain solvent?
C) Are the trustees diligently performing their duties?
D) All of the above
Q3) Australian Accounting Standard AAS 25 'Financial Reporting by Superannuation Plans' requires that,wherever possible,the amount recorded for accrued liabilities of a defined benefit superannuation plan:
A) include allocated and unallocated contributions
B) be measured in present value terms using a published discount rate
C) equal the assets of the plan less the sum of tax and sundry liabilities
D) be measured in present value terms using an appropriate, risk-adjusted discount rate
Q4) Discuss the roles of APRA,Asic and the ATO in the regulation of the superannuation industry.
Q5) Explain the essential features of a defined benefit,externally managed,non-contributory superannuation plan whose benefits are not vested.
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Chapter 24: Accounting for Financial Institutions
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Q1) Explain what is meant by reinsurance.In your answer,discuss inwards and outwards reinsurance.
Q2) A general insurer invests the cash received from premiums because of the time between the collection of premiums and the payment of claims.Their primary objective in managing this investment portfolio is:
A) liquidity - the insurer needs readily available cash to pay claims
B) solvency - the insurer is legally obliged to maintain minimum solvency levels
C) profitability - the insurer must maximise its profit to be a commercial success
D) all of the above
Q3) The main expense item for a bank is usually:
A) bad and doubtful debts
B) losses on foreign exchange dealings
C) staff salaries, wages and on-costs
D) interest paid on borrowings
Q4) The three broad categories of insurance do not include:
A) life insurance
B) fixed fee service contracts
C) fixed insurance services
D) general insurance
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Chapter 25: Financial Reporting in the Public Sector
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Q1) The Australian federal government should report regularly about the results of its operations and its financial position because:
A) electors can then assess the quality of management of the resources controlled by government
B) it is required under the Corporations Law
C) the Senate (the upper house of the federal parliament) demands it
D) it is required under the Australian Constitution
Q2) Characterisitic(s)of a GTE may include:
A) they are sometimes in competition with private enterprise
B) they pay dividends to government
C) they are in the business of selling goods and services to the public
D) all of the above
Q3) When the legislation that creates a public sector entity also specifies particular accounting methods to be used or disclosures to be made,these requirements:
A) are in addition to those required by AASB's
B) allow the government entity to select the method that best reflects the economic circumstances
C) are superceded by the requirements of AASB standards
D) may be disregarded if the requirements of AASB 101 are met
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Page 27
Chapter 26: International Accounting Standards, harmonisation and Convergence
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Q1) Australia initially adopted the 'internationalisation' approach to setting accounting standards.This approach involves:
A) adopting accounting standards developed and adopted in other countries
B) developing local accounting standards based on an examination of accounting standards and practices developed outside Australia
C) the adoption by Australia and other countries of a single set of accounting standards for all countries
D) all of the above
Q2) Which of these statements is not correct concerning the adoption by Australia of international accounting standards?
A) Where words need to be changed in AASB adaptations of international standards to accommodate Australian legislation, these are identified by the use of 'Aus' paragraphs
B) Australian standards, where there is no international equivalent, have been withdrawn
C) The AASB is committed to ensuring that AASB equivalents will be issued for all international accounting standards
D) None of the above, i.e., all are correct statements
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Chapter 27: Foreign Currency Translation
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Source URL: https://quizplus.com/quiz/71414
Sample Questions
Q1) There are four methods suggested for translating foreign currency financial statements.Identify these four methods and explain the translation methods used under each.
Q2) An Australian company sells goods worth $AU 2000 to a UK company and the goods are invoiced and accepted in Australian dollars.At the date of sale,the exchange rate is $AU 1.00 = £ STG 0.40.At the date the goods are paid for,the exchange rate is $AU 1.00 = £ STG 0.39.The Australian company should make the following entry to record the payment received:
A) Dr Cash at Bank \(\quad \$ 2020\)
Cr Exchange Gain\(\quad \$ 20\)
Cr Accounts Receivable\(\quad \$ 2000\)
B) \(\begin{array} { l l l }
\text { Dr Cash at Bank } & \$ 2000 \\
\text { Cr Accounts Receivable }& \$ 2000\\ \end{array}\)
C)\(\begin{array} { l r } \text { C) Dr Cash at Bank } & \$ 1980 \\ \text { Dr Exchange Loss } & \$ 20\\\text {Cr Accounts Receivable}&\$2000 \end{array}\)
D) None of the above
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Chapter 28: Accounting for Corporate Social Responsibilities
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21 Verified Questions
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Source URL: https://quizplus.com/quiz/71413
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Q1) Discuss the basic characteristics of the Carbon Pricing Mechanism (CPM).In your answer,explain the cap and trade scheme.
Q2) Describe two possible approaches to the reporting of socially responsible activities by businesses.Explain the difficulties or weaknesses in these approaches.Then suggest ways in which these difficulties or weaknesses might be overcome or reduced in each case.
Q3) The 'social performance' aspect of sustainability (or triple-bottom line)reporting is most likely to include details of:
A) total wages and salaries paid
B) investments in employee health and safety
C) steps taken to reduce greenhouse gas emissions
D) all of the above
Q4) The extent to which mandatory reporting of corporate environmental and social activities is useful can be questioned because:
A) it is too difficult to measure the costs of such activities
B) it may become merely a public relations or similar self-justifying exercise
C) it is a waste of time forcing companies to report
D) all of the above
Page 30
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Chapter 29: Ethics in Accounting
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Sample Questions
Q1) In research on ethical issues faced by accountants in Australia,it was found that the three most common ethical issues faced were:
A) overcharging, professional competence, conflicts of interest
B) confidentiality, honesty, admitting to mistakes
C) conflicts of interest, client proposals to manipulate financial statements and client proposals for tax evasion
D) using inside information for personal gain, client proposals for tax evasion, whistle blowing
Q2) Briefly describe three classes of deontological theories that have been used to examine ethical behaviour.
Q3) 'Society-imposed costs' of unethical behaviour include:
A) destruction of professional reputation
B) penalties imposed through legal proceedings
C) penalties imposed by disciplinary proceedings by a relevant professional body
D) all of the above
Q4) Should accountants act ethically? Explain the reasons for your answer to this question.
Q5) Briefly describe the classes of teleological theories that have been used to examine ethical behaviour.
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