Contemporary Issues in Accounting Practice Exam
Course Introduction
This course explores the evolving landscape of accounting by examining the most pressing and current issues facing the profession today. Topics include ethical concerns, regulatory changes, the impact of technology such as artificial intelligence and blockchain, sustainability reporting, global accounting standards, and the growing importance of non-financial information. Through case studies, discussions, and analysis of real-world scenarios, students will gain a critical understanding of how contemporary challenges influence accounting practices, decision-making, and the broader role of accountants in society.
Recommended Textbook
Accounting Theory 7th Edition by Jayne Godfrey
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14 Chapters
493 Verified Questions
493 Flashcards
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Page 2
Chapter 1: Introduction
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35 Verified Questions
35 Flashcards
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Sample Questions
Q1) Select the pair of periods of accounting theoretical development that are based on a similar approach.
A)The general scientific and the positive periods
B)The normative and positive periods
C)The general scientific and the normative periods
D)None of the above
Answer: A
Q2) Which of these would be an example of normative research (research based upon a normative theory)?
A)A researcher,through observation,documents the breeding cycle of the gnat
B)An economist develops a method of using last month's share market prices to predict unemployment levels
C)In order to ensure consistency in schooling outcomes an education researcher recommends that all final year school students undertake the same six subjects for assessment purposes
D)An accounting researcher predicts that auditors will perform faster audits when the audit materials are presented in graphical rather than tabular form
Answer: C
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Chapter 2: Accounting Theory Construction
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36 Verified Questions
36 Flashcards
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Sample Questions
Q1) Which of these is not a criticism of the historical cost accounting theoretical model?
A)There is no independent,empirical operation to verify the calculated outputs such as 'profit' or 'assets'
B)Poor syntax whereby different types of monetary measures are added together
C)Many hypotheses associated with the model are unable to be tested as per the falsificationist approach
D)All are criticisms
Answer: D
Q2) Mautz and Sharaf,in 1961,attempted to generalise the existing auditing literature and provide a comprehensive theory of auditing.
A)True
B)False
Answer: True
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4
Chapter 3: Role of Theory in Accounting Regulation
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42 Verified Questions
42 Flashcards
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Sample Questions
Q1) Which of these statements in relation to the regulation of auditors is not true?
A)The choice of statutory regulation rather than self-regulation may reflect political differences between countries in the approach to management of capital markets
B)Statutory regulation is consistent with a country having a more centralised,interventionist approach to regulation
C)The worldwide trend in recent years has been towards more self -regulation for auditors.
D)In France and Italy regulation was from earlier times the responsibility of state authorities.
Answer: C
Q2) Under IAS 38 'Intangible Asset,Australian companies are permitted to carry forward existing intangible asset values at 1 January 2005.
A)True
B)False
Answer: False
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Chapter 4: Theory Underpinning Accounting Standards
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36 Verified Questions
36 Flashcards
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Sample Questions
Q1) In relation to IAS 8 the two statements that are correct are:
I When making judgements reference shall be made firstly to the Framework and secondly to standards and interpretations dealing with similar and related issues
II When making judgements reference shall be made firstly to standards and interpretations dealing with similar and related issues and secondly to the Framework
III Material in the Framework is binding on preparers of financial statements
IV Material in the Framework is not binding on preparers of financial statements
A)i)and iii)
B)ii)and iii)
C)ii)and iv)
D)i)and iv)
Q2) Which of these is not one of the benefits of a conceptual framework?
A)Reporting requirements will be more consistent and logical
B)It may allow firms to reduce their reported profit
C)The need for specific accounting standards should be reduced
D)Standard setting boards will be more accountable for their actions
Q3) Discuss the effects on accounting reporting of the movement in the early 1960's from a stewardship objective to a decision-usefulness objective.
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6
Chapter 5: Measurement
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38 Verified Questions
38 Flashcards
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Sample Questions
Q1) The term 'validity' is often used by social sciences in preference to the term 'accuracy'.
A)True
B)False
Q2) The operations that can be performed with reference to particular numbers on the interval scale is/are:
A)Multiplication and division
B)Subtraction
C)Addition
D)B and C only
Q3) Under current international accounting standards,accounting profit determination is based on a principle that includes increases and decreases in the 'fair values' of assets and liabilities.
A)True
B)False
Q4) What is the main problem in determining accuracy in accounting?
A)The measurement is not reliable
B)The measurement does not give precise results
C)The true value of the measurement is not known
D)There is no repetition of operations in the measurement
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Chapter 6: Accounting Measurement Systems
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Sample Questions
Q1) Under the physical capital perspective what capital maintenance adjustment would be needed for the following situation? GHI Company purchased 300 units on 1 March for $25 each.On 31 March,GHI sold all the units for $30 each.On this date the current cost of each unit was $29.
A)$1500
B)$1200
C)$9000
D)$300
Q2) The FASB shows its supports for the financial capital view of current cost accounting in the Statement 33.
A)True
B)False
Q3) One reason for the growth in importance of accounting information is the use of the corporate form for large organisations.
A)True
B)False
Q4) Sterling defines profit as the difference between capital at two points in time.
A)True
B)False
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Chapter 7: Assets
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30 Flashcards
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Sample
Questions
Q1) Arguments in favour of including 'exchangeability' as an essential criterion for the identification of an asset under the IASB (AASB)Framework include which of the following?
A)That assets should be separable from the entity and have a separate disposal value
B)That exchange is only one way to obtain the benefit of an asset
C)That economic value depends upon scarcity and utility,but not on exchangeability
D)None of the above are arguments in favour of including exchangeability as an essential characteristic of an asset.
Q2) "Under the IASB standards all wholly executory contracts are recognised as assets." Explain why you agree or disagree with this statement.
Q3) Explain and discuss some of the issues that arise for auditors from the IASB's move to incorporate more fair value measurements into accounting standards.
Q4) An asset must have future cash generating abilities according to the IASB (AASB)Framework definition.
A)True
B)False
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Page 9
Chapter 8: Liabilities and Owners Equity
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32 Flashcards
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Sample Questions
Q1) The entity view of accounting was formulated in response to the shortcomings of the proprietary view concerning the separate legal status of a company.
A)True
B)False
Q2) The statement that is true in respect of appropriations is:
A)Some appropriations are a ploy by a company to make it appear to shareholders that the amount available for dividends has been reduced.
B)Appropriations affect profit determination
C)Appropriations of retained earnings to specific reserve accounts represent particular assets
D)None of the statements are true.
Q3) The version of the accounting equation that represents the entity theory of accounting is:
A)P = A - L
B)Assets = Equities
C)A = L + P
D)None of the above
Q4) Are preference shares debt or equity and does it matter? Discuss.
Q5) Do frequent flyer points give rise to a liability for an airline? Discuss.
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Chapter 9: Revenue
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Sample Questions
Q1) Explain why the point of sale ' is selected as being generally the most appropriate time to measure and record revenue ' J.Godfrey,et el,'Accounting Theory',7<sup>th</sup> Ed.p.306.
Q2) Which standard provides specific guidance about revenue recognition in relation to the sale of goods and the rendering of service?
A)IAS 18/AASB 118
B)IAS 39/AASB 139
C)IAS 19/AASB 119
D)None of the above
Q3) Revenue recognition policies of US companies have been the subject of the majority of the SEC's requests for restatement of financial statements.
A)True
B)False
Q4) Under the Framework the statement concerning gains that is incorrect is:
A)Income is defined to include both revenue and gains
B)Gains that meet the definition of income always arise outside the course of ordinary operations
C)The definition of income includes unrealised gains
D)None of the statements is incorrect
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Chapter 10: Expenses
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Sample Questions
Q1) Under the FASB's Concept Statement No 6,the statement that is correct is:
A)There is no distinction between expenses and losses
B)Losses are regarded as always arising outside the course of the ordinary activities of the entity
C)The treatment of losses is similar to that of the Framework
D)All of the statements are correct
Q2) The treatment of the relationship of losses to expenses in the IASB Framework differs from the treatment by the FASB.Explain the different treatments and discuss whether it is useful in terms of decision-making to distinguish between expenses and losses in financial reports.
Q3) The Framework links the definition of expenses to their relationship to revenue.
A)True
B)False
Q4) Treating expenses as assets:
A)Overstates profit and understates equity
B)Overstates profits and overstates equity
C)Understates profits and understates equity
D)Understates profits and overstates equity
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Page 12
Chapter 11: Positive Theory of Accounting Policy and Disclosure
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) Distinguish between the ex ante efficient contracting approach and ex post opportunism.
Q2) DeAngelo argues that larger auditors,such as those commonly referred to as the 'Big 4',are of lower quality than other auditors because larger auditors have 'more to lose' by failing to report a discovered breach in a particular client's record.
A)True
B)False
Q3) The more politically sensitive a firm,the more likely it is that the firm will understate its profits to prevent negative wealth transfers
A)True
B)False
Q4) The bonus plan hypothesis and the debt hypothesis are predictions developed under the efficient contracting approach.
A)True
B)False
Q5) Explain and discuss why,under signalling theory,it is predicted that firms will disclose more information than is demanded.
Page 13
Q6) Explain and discuss why the firm can be described as a 'nexus of contracts.
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Chapter 12: Capital Market Research
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36 Flashcards
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Sample Questions
Q1) You have been given the following one period market model for Acme Ltd for the calendar quarter ending June 2010:
<sub>Acme </sub>= 3.0% R<sub>Acme </sub>= 10 %
<sub>Acme </sub>= 0.6 R<sub>m </sub>= 7%
What is the error during this period of time?
A)3%
B)2.8%
C)0%
D)1.8%
Q2) Outline the arguments that have been raised to explain why a firm's size is a factor in the responsiveness of share price and the volume of trade to profit announcements.
Q3) Who first used the variance of abnormal return as an index of information content of profit announcements?
A)Ball
B)Brown
C)Beaver
D)Fama
Q4) Explain what accounting researchers mean by the market 'being efficient'.
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14
Chapter 13: Behavioural Research
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36 Flashcards
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Sample Questions
Q1) Explain and discuss some of the findings concerning behavioural research in the field of auditing.
Q2) In behavioural research a model used in situations where initial predictions need to be adjusted in light of additional information is:
A)The Brunswik lens model
B)Process tracing
C)The probabilistic judgement paradigm
D)None of the above
Q3) Which research question would not be answered using behavioural accounting research?
A)How does the stock market react to the disclosure of upward asset revaluations?
B)How does a bank loan officer decide whether to grant a loan to a client?
C)How does an auditor judge the riskiness of an audit client?
D)What are the most useful accounting disclosures for users of financial reports?
Q4) Accounting is a function of human behaviour and activity.J.Godfrey,et el,'Accounting Theory',7<sup>th</sup> Ed.p.471.Discuss.
Q5) Discuss the limitations of behavioural accounting research.
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Page 15
Chapter 14: Emerging Issues in Accounting and Auditing
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29 Verified Questions
29 Flashcards
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Sample Questions
Q1) SFAS 157 explicitly uses exit price as a definition of fair value but IFRS fair value is neither explicitly an exit nor an entry price.
A)True
B)False
Q2) Which of these is a future direction in accounting and auditing?
A)The convergence of international accounting standards and the FASB standards
B)An improvement in the quality of international auditing standards and their increased acceptance
C)An increase is sustainability accounting and reporting
D)All of the above
Q3) In 2008 the IASB voted to require the 500 largest companies of each member to file their 2009 financial reports using Extensible Business Reporting Language (XBRL).
A)True
B)False
Q4) Explain how the Extensible Business Reporting Language ( XBRL)system works and discuss the effects that its use is likely to have on financial reporting.
Q5) Discuss how social accounting differs from financial accounting.
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