Financial Reporting
Question Bank
Course Introduction
Financial Reporting is a course designed to provide students with a comprehensive understanding of the principles and practices involved in preparing and interpreting financial statements. The course covers key topics such as the accounting cycle, measurement and disclosure of assets, liabilities, and equity, revenue recognition, and the analysis of financial statements according to generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS). Through practical exercises and case studies, students gain the skills necessary to evaluate financial information, ensure compliance with regulatory standards, and communicate financial results to stakeholders and decision-makers.
Recommended Textbook
Accounting Business Reporting for Decision Making 4th Edition by Jacqueline Birt
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14 Chapters
873 Verified Questions
873 Flashcards
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Page 2
Chapter 1: Introduction to Accounting
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Sample Questions
Q1) ____________ purpose financial statements meet the information needs of a range of users unable to demand accounting information.
Answer: General
Q2) The internal user of accounting information is the:
A)Building maintenance manager.
B)Supplier.
C)Environmental lobby group.
D)Auditor from the Australian Tax Office.
Answer: A
Q3) Which of the following is \(\bold{not}\) likely to be a growth area for the accountants of the future?
A)carbon accounting
B)transaction processing
C)forensic accounting
D)insolvency
Answer: B
Q4) The part of the accounting function within an organisation which includes costing,budgeting and planning is known as ____________________ accounting.
Answer: management
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Chapter 2: Business Sustainability
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Sample Questions
Q1) __________ trading is the trading of shares based on confidential information that is not known to the public at large.
Answer: Insider
Q2) There are three main components to the GRI reporting framework.Which of the following is not one of the components?
A)financial reporting protocols
B)the technical protocol
C)sector supplements giving extra relevant information on various industries.
D)the sustainability reporting guidelines
Answer: A
Q3) Individuals or groups that have an interest in the affairs of an entity are known as ________________________.
Answer: stakeholders
Q4) Not disclosing information acquired in the course of your work,to third parties without specific authority is known as maintaining ______________.
Answer: confidentiality
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Chapter 3: Business Structures
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Sample Questions
Q1) The full implementation of differential reporting will come into effect on
A)1 January 2012
B)1 July 2012
C)1 January 2013
D)1 July 2013
Answer: D
Q2) A single form used by entities registered for GST to report their business tax obligations to the Australian Tax Office is the ______________ _____________ statement.
Answer: business activity
Q3) Retained earnings at the end of the period is equal to:
A)assets plus liabilities.
B)profit earned for the period plus retained earnings at the start of the period.
C)retained earnings at the beginning of the period plus profit earned for the period minus dividends.
D)retained earnings at the beginning of the period plus profit earned for the period minus liabilities.
Answer: C
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5
Chapter 4: Business Transactions
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Sample Questions
Q1) Accounts for Printers Pty Ltd are as follows:
\(\begin{array}{llcc}
\text { Cash } & \$2000 \\
\text {Creditors } &10000\\
\text { Accounts Receivable } &11700\\
\text { Office equipment } &4500\\
\text { Loan payable } &14000\\
\text { Motor vehicle} &32000\\ \end{array}\)
Equity is:
A)$54 200
B)$2000
C)$50 200
D)$26 200
Q2) The double entry accounting method requires each transaction to have at least ___________ effects on the accounting equation.
Q3) Cheque butts,invoices,purchase orders,credit card slips and cash register tapes are examples of _____________ _____________ which provide written evidence to verify a business transaction.
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Chapter 5: Balance Sheet
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Sample Questions
Q1) Which of the following would \(\bold{not}\) be included in the asset class cash and cash equivalents?
A)cash at bank
B)cash on hand
C)accounts receivable
D)short term deposits
Q2) The equity shown in a business's balance sheet is.
A)exactly equal to the market value of all the businesses assets less its outstanding debts
B)exactly equal to the total of the assets minus the total liabilities
C)exactly equal to the historical cost of all the business assets less its outstanding debts
D)exactly equal to the total of the assets plus the total liabilities
Q3) A ______________ financial liability is a financial liability whose value depends on the value on an underlying asset,reference rate or index.
Q4) Under the accounting standards agricultural assets are recorded at their net ____________ value.
Q5) The __________-______-first-out method of inventory valuation is not permitted to be used in Austral
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Chapter 6: Income Statement and Statement of Changes in Equity
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Sample Questions
Q1) Which of these is not an example of an accounting estimate?
A)Useful life of a depreciable asset
B)Impairment of asset
C)Long service leave provided
D)Accounts payable
Q2) Which of the following could be found in a statement of changes in equity?
A)The statement shows all changes in equity arising from equity contributions and dividends paid
B)The statement shows all changes in equity arising from shares purchased
C)The statement shows all changes in equity arising separately from non-owner changes in equity (e.g.profit).
D)All options could be found in a statement of changes in equity
Q3) Which of the following must exist before income can be recognised?
A)the increase in future economic benefits related to an increase in an asset or a decrease in a liability must have arisen.
B)the increase in future economic benefits must be able to be measured reliably
C)all option must exist
D)income recognition must occur at the same time as the recognition of increases in assets or reductions in liabilities.
Page 8
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Chapter 7: Statement of Cash Flows
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Sample Questions
Q1) If credit sales are $800 000 and debtors have increased by $60 000 over the period cash inflows from debtors on the statement of cash flows will be __________.
Q2) Which of these is an early warning sign indicating problems with cash flows?
A)Cash from operating activities is higher than profit
B)Dividends paid are greater than cash flow from operations
C)A large amount has been spent on the acquisition of fixed assets
D)Proceeds from financing activities are used to finance investment activities
Q3) Which of the following statements is true?
A)For an entity to survive,the net cash flow from operating activities should be positive.
B)For an entity to survive,the net cash flow from investing activities should be positive.
C)For an entity to survive,the net cash flow from financing activities should be positive.
D)For an entity to survive,the net cash flow from operating activities should be negative.
Q4) ___________________ activities include the cash effects of income and expense transactions.
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9
Chapter 8: Analysis and Interpretation of Financial Statements
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Sample Questions
Q1) For a retail firm the quick asset ratio will always be:
A)higher than the current ratio
B)lower than the current ratio
C)the same as the current ratio
D)sometimes higher and sometimes lower than the current ratio
Q2) The gross profit margin ratio is calculated by dividing
A)profit by sales revenue
B)profit by shareholder's equity.
C)gross profit by sales revenue.
D)sales revenue by cost of sales.
Q3) Which of the following statements relating to Net Tangible Asset Backing per share (NTAB)is correct?
A)the share price will normally be higher than the NTAB per share
B)an excess of share price over NTAB per share
C)if the share price is lower than the NTAB per share, the entity is a prime candidate for a takeover
D)all the options are true
Q4) _________________ analysis is an analytical tool that involves expressing the reported financial numbers in relative terms
Page 10
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Chapter 9: Budgeting
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Sample Questions
Q1) The sales or fees budget is commonly used to set the expected level of ______________ for the budget period.
Q2) Tan Dan Ltd is planning to purchase a fixed asset costing $150 000 in total.The planned delivery date is 1 December 2013 with settlement on that date.A deposit of $20 000 is to be paid on 1 July 2012.The amount that will appear in the cash budget for December 2013 is:
A)$150 000 outflow
B)$20 000 outflow
C)$130 000 outflow
D)$20 000 inflow
Q3) A budget:
A)can sometimes produce negative consequences for the organisation rather than improving efficiency.
B)will always improve the efficiency of an organisation
C)must always be met
D)must be prepared by all entities
Q4) Performance ____________________ involves setting business targets in other than just financial terms.
Q5) Budgets are used to operationalise an entity's _______________ plan.
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Chapter 10: Cost-Volume-Profit Analysis
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Sample Questions
Q1) If resources are limited the greatest profit can be earned by:
A)maximising production of the product with the highest contribution margin per unit of the limiting factor.
B)minimising production of the product with the highest contribution margin per unit of the limiting factor.
C)maximising production of the product with the lowest contribution margin per unit of the limiting factor.
D)none of the options is true
Q2) Which of the following statements regarding CVP analysis is \(\bold{not}\) true?
A)cost behaviour can be classified as fixed or variable
B)only fixed costs are assumed to behave in a linear manner across the relevant range
C)unit price and cost data remain constant over the time period and the relevant range
D)cost behaviour is linear
Q3) If the contribution margin ratio is 25%,fixed costs are $50 000,and sales revenue is $240 000 then profit is ____________________.
Q4) The range over which an entity expects to operate in known as the ______________ range.
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Chapter 11: Costing and Pricing in an Entity
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Sample Questions
Q1) An indirect cost is linked to individual cost objects by identification of an appropriate cost ___________.
Q2) Which of the following statements regarding variances is true?
A)All the statements are true
B)Variance calculations need to be made when budgeted costs are used to allocate indirect costs.
C)Variances arise when an entity over estimates the expenditure level of indirect costs assigned to the cost pool or the expected usage of the cost driver.
D)Variances arise when an entity underestimates the expenditure level of indirect costs assigned to the cost pool or the expected usage of the cost driver.
Q3) Predetermined indirect cost rates are necessary because
A)indirect costs cannot be traced directly to cost objects.
B)product costs need to be calculated promptly for decision-making purposes.
C)indirect costs are not incurred evenly throughout the accounting period.
D)all of the options are correct
Q4) Peak- ________ pricing is the practice of charging different prices at different times to reduce capacity restraints.
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13
Chapter 12: Capital Investment
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Sample Questions
Q1) If the interest rate is 4% receiving $100 in 2 years is equivalent to receiving what amount today?
A)$92
B)$92.45
C)$91.55
D)$71.42
Q2) If two investments are equally profitable:
A)most entities would not be concerned about which investment was chosen
B)most entities would chose the investment where the outlaid cash was recouped over a longer period of time
C)most entities would choose the investment where the outlaid cash was recouped earlier
D)most entities would chose both investments
Q3) An advantage of the net present value method is that
A)it is simple to calculate.
B)the time value of money is irrelevant.
C)it has an explicit decision rule.
D)it leaves inflation out of the calculation.
Q4) ___________ cost is the cost of forgoing benefits that would otherwise be available.
14
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Chapter 13: Financing the Business
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Sample Questions
Q1) The issuer of a discount security receives (more/less)_______________ than the face value of the security.
Q2) Spontaneous sources of funds:
A)are generally free of charge to the borrowing firm.
B)generally include commercial bills and bank loans
C)are generally funds with maturities greater than one year
D)all of the options are true
Q3) Which of the following businesses would be most likely to have the greatest proportion of working capital held as inventory?
A)an accountant
B)a supermarket
C)a medical practice
D)an auto electrician
Q4) Which of these is a spontaneous source of finance?
A)lease agreements
B)pay-as-you-go tax instalments
C)bank overdraft
D)all of the options are sources of spontaneous funding
Q5) There are two types of floor-plan lenders: captives and _________________.
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Chapter 14: Performance Measurement
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Sample Questions
Q1) The methods used to inventory and audit greenhouse gas emissions are
Q2) Economic value added is:
A)a long-term performance indicator
B)a short-term performance indicator
C)a medium-term performance indicator
D)not a performance indicator
Q3) The return on assets for a firm with a profit margin of 4.5%,compared to a firm with a profit margin of 3.5%,will:
A)always be higher
B)always be lower
C)always be the same
D)could be higher or lower
Q4) A responsibility centre which is responsible for both cost inputs and revenue is known as a:
A)cost centre.
B)revenue centre.
C)profit centre.
D)investment centre.
Q5) If return on sales is 16% and investment turnover is 1.5 times,return on investment is
16
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