Contemporary Issues in Accounting Exam Solutions
Course Introduction
This course explores current topics and emerging trends affecting the accounting profession, including the impact of globalization, advancements in accounting information systems, ethical challenges, regulatory updates, sustainability reporting, and the evolving role of accountants in decision-making. Through the analysis of real-world case studies, students will critically examine how contemporary issues influence accounting practices, financial reporting, corporate governance, and stakeholder expectations. The course also emphasizes the importance of adaptability and professional judgment in responding to ongoing changes in the accounting landscape.
Recommended Textbook
Contemporary Issues in Accounting 2nd Edition by Michaela Rankin
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12 Chapters
226 Verified Questions
226 Flashcards
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Page 2
Chapter 1: Contemporary Issues in Accounting
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Sample Questions
Q1) Which of the following statements is correct?
A)a theory does not have to be correct to be useful.
B)if there is a theory about something,it must be correct.
C)it is impossible to assess the appropriateness of a particular theory.
D)a theory can only be useful if it is correct.
Answer: A
Q2) Is it possible to have different theories on the same topic?
A)yes,but there is usually only one explanation and/or solution.
B)no,it is impossible to have alternative theories on a topic.
C)yes,there are often many alternative theories on a topic because there are usually many possible explanations and/or solutions.
D)no,there can only ever be one explanation or solution.
Answer: C
Q3) Research in accounting would not consider the following question:
A)What measures should be used.
B)What measurements are being used.
C)What impact do changes in specific accounting policies have on share prices.
D)Should accountability or decision usefulness be the key goal of accounting.
Answer: D
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Page 3
Chapter 2: The Conceptual Framework for Financial Reporting
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Sample Questions
Q1) Which of these is not a criticism of Conceptual Framework and Proposed Framework projects?
A)It is too descriptive.
B)The measurement of the elements of financial reporting is too highly specified.
C)It is ambiguous and open to interpretation.
D)Faithful representation and relevance conflict with each other.
Answer: B
Q2) Which of the below responses is incorrect. An understanding of the application of the concepts in the Conceptual Framework is required to:
A)understand accounting requirements.
B)account for transactions and events where no there is no specific accounting standard.
C)exercise professional judgement.
D)select an exact basis of measurement.
Answer: D
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Chapter 3: Standard Setting
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Sample Questions
Q1) Which of the following is NOT a disadvantage of regulation?
A)It can restrict communication.
B)It can be difficult to reverse.
C)It leads to standardisation.
D)It can be difficult to determine the optimal regulations.
Answer: C
Q2) Which of the following is NOT a function of the AASB? standard setting.
A)Participate in the development of international accounting standards.
B)Making accounting standards.
C)Promoting international accounting standards.
D)Enforcing compliance with accounting standards.
Answer: D
Q3) One of the advantages of principles-based standard is:
A)They do not improve representational faithfulness of financial statements.
B)They allow for no professional judgement.
C)They are generally simpler.
D)None of the above.
Answer: C
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5
Chapter 4: Measurement
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Sample Questions
Q1) Under the Conceptual Framework the preferred measurement model is:
A)Present Value.
B)Historical Cost.
C)Current Cost.
D)None of the above.
Q2) Intangible assets have been identified as one of the hardest area to value because:
A)It is difficult to measure an asset with no physical substance.
B)They are one of the most important assets on the balance sheet.
C)There are too many markets to choose from.
D)All of the above.
Q3) Which of these is NOT a criticism of historical cost accounting?
A)Historical cost overstates profit in times of rising prices.
B)It is not objective and is open to manipulation.
C)It has been used by business over many centuries.
D)Cost information is not always available.
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Chapter 5: Theories in Accounting
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Sample Questions
Q1) Stakeholder theory:
A)Has both a normative and positive version.
B)Is completely different to legitimacy theory.
C)Focuses on government power.
D)All of the above.
Q2) Agency theory concentrates on:
A)two agency relationships.
B)multiple agency relationships.
C)one agency relationship.
D)three agency relationships.
Q3) Agency theory would hold that managers on compensation contracts which have bonuses tied to a current measure of performance would prefer to:
A)Smooth income using either expensing or capitalising.
B)Be indifferent to expensing or capitalising transactions.
C)Expense transactions rather than capitalise them.
D)Capitalise transactions rather than expense them.
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Chapter 6: Products of the Financial Reporting Process
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Sample Questions
Q1) What is NOT one of the key elements of control?
A)Influence over returns.
B)Ownership.
C)Variable returns.
D)None of the above,i.e.they are all elements of control.
Q2) The annual report:
A)Is thought to have little influence on stakeholder perceptions.
B)May have significant additional voluntary disclosure in the financial statements.
C)Is used for impression management.
D)Is not thought to be an important information avenue for organisations.
Q3) Which of the following is specifically prohibited from recognition as an intangible asset according to AASB138?
A)Training.
B)Internally generated brands.
C)Research.
D)All of the above.
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8
Chapter 7: Corporate Governance
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Sample Questions
Q1) According to the 'Anglo-Saxon' model whose interest should be the focus of corporate governance?
A)Community.
B)Employees.
C)Shareholders.
D)Environment.
Q2) Which of the following is NOT an example of good corporate governance in relation to shareholders?
A)Provide shareholders with all information made available to directors.
B)Treat all shareholders equally.
C)Have rules that allow shareholders to call extraordinary meetings.
D)All of the above.
Q3) Which of these costs is NOT associated with an agency relationship between managers and shareholders?
A)Bonding Cost.
B)Monitoring Cost.
C)Taxation Loss.
D)Residual Loss.
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9
Chapter 8: Capital Markets Research and Accounting
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Sample Questions
Q1) Which of the following is NOT one of the three assumptions underlying value relevance literature?
A)Share prices adequately represent investors' use of information in valuing equity securities.
B)Accounting earnings are not highly associated with equity market value changes.
C)Equity users are the dominant users of financial reports.
D)Share-price-based tests can measure relevance and reliability as defined by accounting bodies.
Q2) Which of the following is NOT a finding or assumption of capital markets research?
A)The work of financial intermediaries impacts on share prices.
B)Capital providers consider auditors increase accounting information credibility.
C)The qualification of a financial report will have a significant impact on share price.
D)Analysts' earnings forecasts are more accurate than time-series models of earnings.
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Chapter 9: Earnings Management
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Sample Questions
Q1) Which of the following is NOT likely to be interested in earnings information?
A)Customers.
B)Shareholders.
C)Lenders.
D)None of the above,i.e.they are all interested in earnings information.
Q2) Which of the following is NOT thought to reflect earnings quality?
A)Operating/non-operating mix.
B)Trend in profit results.
C)Total income tax expense for the period.
D)Earnings base.
Q3) Which of the following components of managerial compensation are thought to most encourage earnings management?
A)Shares or share options.
B)Their base salary.
C)Their cash bonuses.
D)Various perquisites.
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11
Chapter 10: Fair Value Accounting
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Q1) Which of the following is not part of the definition of fair value under AAASB 13?
A)Knowledgeable and willing parties.
B)Price received to sell an asset.
C)Price paid to sell a liability.
D)At measurement date.
Q2) When fair valuing a motor vehicle which of the following is least likely to be important?
A)Colour.
B)Age.
C)Make and model.
D)Kilometres travelled.
Q3) Which of the following would most likely be valued using a level 2 valuation?
A)Shares.
B)Gold.
C)A building.
D)A business unit.
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Chapter 11: Sustainability and Environmental Accounting
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Sample Questions
Q1) The Brundtland report defined sustainable development as "development that ":
A)meets the needs of the future without compromising the ability of current generations to meet their own needs.
B)meets the needs of the present without compromising the ability of future generations to meet their own needs.
C)allows all people to meet their needs to an equal degree.
D)continues at the current pace,neither increasing nor decreasing into the foreseeable future.
Q2) The three parts of the triple bottom line are:
A)Economic,Environmental and Social.
B)Economic,Stakeholder and Employee.
C)Financial,Economic and Government.
D)Financial,Customer and Government.
Q3) The UN's Principles of Responsible Investment have main been adopted by which types of organisations?
A)Institutional Investors.
B)Governments.
C)Mining Companies.
D)Builders.
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Page 13
Chapter 12: International Accounting
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Sample Questions
Q1) Which of the following is NOT an advantage to IFRS adoption?
A)It makes financial statements more comparable.
B)It makes accounting standard development more flexible.
C)It is a cost effective way to have a comprehensive set of standards.
D)None of the above,i.e.they are all advantages.
Q2) In countries where finance is mainly provided by banks we would expect:
A)Greater emphasis on the balance sheet.
B)More public disclosure.
C)More lenient bankruptcy laws.
D)All of the above.
Q3) The international Accounting Standards Board's objective for International Accounting Standards would be best described as:
A)Harmonisation.
B)Convergence.
C)Adoption.
D)Adaption.
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