Professional Accounting Practices
Mock Exam
Course Introduction
Professional Accounting Practices explores the principles, standards, and procedures that underpin the accounting profession in contemporary business environments. This course covers essential topics such as financial reporting, auditing, regulatory compliance, ethical considerations, and the practical application of accounting frameworks. Students will analyze real-world case studies to develop skills in preparing and interpreting financial statements, understanding internal controls, and evaluating the impact of current accounting issues. Emphasis is placed on practicing integrity, accuracy, and professionalism in all accounting activities to meet the expectations of various stakeholders and regulatory bodies.
Recommended Textbook
Accounting for Corporate Combinations and Associations 7th Australian Edition by Neal Arthur
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11 Chapters
368 Verified Questions
368 Flashcards
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Page 2
Chapter 1: Text Objectives and Introduction to Consolidation
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) All companies must prepare 'separate financial statements'.
A)True
B)False Answer: False
Q2) If a parent entity is a reporting entity the group must also be a reporting entity.
A)True
B)False
Answer: False
Q3) If a company has control over the financial policies of another entity it is deemed to have control over the operating policies.
A)True
B)False
Answer: False
Q4) Accounting Standard AASB127 applies only to the consolidated financial statements of a group.
A)True
B)False Answer: False
Page 3
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Chapter 2: Principles of Consolidation
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42 Verified Questions
42 Flashcards
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Sample Questions
Q1) A gain on bargain purchase will be recognised in the financial statements of the acquiring company in a business combination relating to the acquisition of a controlling interest in a company.
A)True
B)False
Answer: False
Q2) A parent and its subsidiary adopt different bases for measuring property plant and equipment assets.On consolidation the financial statements must reflect:
A) the accounting policy of the group
B) the accounting policy of the subsidiary
C) either the accounting policy of the parent or the subsidiary
D) none of the above
Answer: A
Q3) The purpose of consolidated financial statements is to provide information to shareholders of the parent company
A)True
B)False
Answer: False
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Page 4
Chapter 3: Fair Value Adjustments and Tax Effects
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) If a contingent liability of a subsidiary is recognised in a business combination,on consolidation the group will record:
A) a deferred tax liability
B) a deferred tax asset
C) a reduction in goodwill
D) none of the above
Answer: B
Q2) Management of acquiring companies have incentive to provide for as many future costs as possible in a business combination
A)True
B)False
Answer: True
Q3) Current accounting standards require the use of the acquisition method in accounting for all business combinations
A)True
B)False
Answer: True
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Chapter 4: Intra-Group Transactions
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36 Verified Questions
36 Flashcards
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Sample Questions
Q1) A subsidiary which is 75% owned by its parent company pays a dividend of $100,000.On consolidation the amount to be eliminated is:
A) $75,000
B) $100,000
C) $25,000
D) Not eliminated
Q2) Where a parent entity sells inventories to a subsidiary this is called an 'upstream' sale
A)True
B)False
Q3) Explain why some consolidation adjusting entries are required to be carried forward to future years.
Q4) Tax effect adjustments only apply to consolidation adjusting entries which affect the carrying amount of parent subsidiaries
A)True
B)False
Q5) Discuss the basis of recognition of tax effects relating to accrued revenue and expenses for such intra-group items as management fees and interest
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Chapter 5: Non-Controlling Interest
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37 Verified Questions
37 Flashcards
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Sample Questions
Q1) Discuss the effect of intra group transactions on the calculation of the NCI share of subsidiary profits and retained earnings
Q2) Company A owns 40% of Company B and this ownership is deemed to represent control.The non controlling interest in B is:
A) 40%
B) 60%
C) 100%
D) No non controlling interest
Q3) In preparing a consolidated financial report,the parent entity consolidates:
A) The financial statements of all entities over which it has the power to exercise control.
B) The financial statements of only those entities over which it has the power to control and in which it holds more than 50% of the voting shares.
C) The financial statements of only those entities in which it holds more than 50% of the ordinary share capital; as a result of which it necessarily has the power to exercise control.
D) None of the above.
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Chapter 6: Partly-Owned Subsidiaries: Indirect
Non-Controlling Interest
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27 Verified Questions
27 Flashcards
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Sample Questions
Q1) The calculation of notional profits of entities with cross holdings is required to:
A) determine the parent ownership interest in the subsidiaries
B) determine the NCI ownership interest in the subsidiaries
C) determine both the parent and NCI ownership interests in the subsidiaries
D) none of the above
Q2) Explain why indirect ownership interests are not relevant to determining control in a tiered corporate group.
Q3) Discuss the disadvantages of the sequential consolidation method.
Q4) Direct plus indirect ownership interests must always sum to 100% for a group
A)True
B)False
Q5) In a multiple consolidation the ownership interests of subsidiaries is determined using:
A) direct ownership interests
B) indirect ownership interests
C) both direct and indirect ownership interests
D) none of the above
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Q6) Discuss the current position of the Corporations Act in respect to reciprocal ownership interests.
Chapter 7: Consolidated Cash Flow Statements
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25 Verified Questions
25 Flashcards
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Sample Questions
Q1) The carrying amount of property plant and equipment is $1,000 at the start of the year and $1,400 at the end of the year.During the year the following occurred: Sale of equipment - carrying amount $40
Acquisition of equipment - financed by share issue $200
Depreciation expense for year $120.
Investing cash flow is:
A) ($400)
B) ($200)
C) ($160)
D) ($360)
Q2) The time to maturity is relevant in the classification of cash equivalents
A)True
B)False
Q3) The following items must be separately disclosed in a statement of cash flows:
A) interest paid and received
B) dividends paid and received
C) Both A and B
D) No separate disclosure required
Q4) Discuss the basis of classifying cash flows arising from interest paid.
Q5) Why is cash flow from operating activities seen as a performance measure?
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Chapter 8: Accounting for Joint Arrangements
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44 Verified Questions
44 Flashcards
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Sample Questions
Q1) The equity accounting method must be applied by all applicable reporting entities
A)True
B)False
Q2) A gain on bargain purchase of an equity investment will be excluded from the investor's share of profit or loss of the associate.
A)True
B)False
Q3) Goodwill arising on an equity investment is not required to be separately tested for impairment.
A)True
B)False
Q4) Investor Ltd holds 25% of the voting shares of Investee Ltd.Another company holds the remaining 75%:
A) Investee Ltd is an associate of Investor Ltd
B) Investee Ltd is not an associate of Investor Ltd
C) It is probable that Investee Ltd is not an associate of Investor Ltd
D) none of the above
Q5) Discuss the basis of the equity carrying amount of the investment
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Chapter 9: Accounting for Associates and Joint Ventures: the Equity Method
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37 Verified Questions
37 Flashcards
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Sample Questions
Q1) The concept of joint control:
A) includes unilateral control
B) includes significant influence
C) excludes unilateral control and significant influence
D) none of the above
Q2) Supplementary disclosure requirements for joint ventures in the financial statements of venturers include:
A) significant joint venture interests
B) contingent liabilities arising from joint ventures
C) capital commitments arising from joint ventures
D) all of the above
Q3) The main advantage of the one line method of disclosing interests in jointly controlled operations and jointly controlled assets is disclosure of these interests.
A)True
B)False
Q4) Discuss the issue of entitlement of venturers to share in profits of a jointly controlled entity.
Q5) What factors are relevant to the choice of accounting methods for venturers in jointly controlled entities?
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Chapter 10: Translation and Consolidation of Foreign Currency Financial Statements
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31 Verified Questions
31 Flashcards
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Sample Questions
Q1) The translation gain or loss on a foreign operation using the current rate method represents the effect of exchange rate movements on net assets.
A)True
B)False
Q2) The transaction involving the purchase of the merchandise inventory from Malaysian Industries Berhad is:
A) A foreign currency transaction from the viewpoints of both Johnson Ltd and Malaysian Industries Berhad.
B) A foreign currency transaction from the viewpoint of Johnson Ltd, but not a foreign currency transaction from the viewpoint of Malaysian Industries Berhad.
C) Not a foreign currency transaction from the viewpoint of Johnson Ltd, but a foreign currency transaction from the viewpoint of Malaysian Industries Berhad.
D) Not a foreign currency transaction from the viewpoints of both Johnson Ltd and Malaysian Industries Berhad.
Q3) Discuss the objectives of translation of financial statements of foreign operations.
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Page 12
Chapter 11: Segment Reporting by Diversified Entities
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27 Verified Questions
27 Flashcards
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Sample Questions
Q1) Outline the requirements to report information on geographical segments under current accounting standards
Q2) In reporting segment information an entity must provide a reconciliation of:
A) reportable segment sales revenue to total revenue
B) reportable segment profit or loss before tax to total profit or loss before tax
C) reportable segment assets and liabilities to total assets and liabilities
D) all of the above
Q3) An immaterial segment is never disclosed despite the 75% rule.
A)True
B)False
Q4) Amount of impairment losses and reversal of impairment losses for operating segments is required under Accounting Standard AASB136 Impairment of Assets.
A)True
B)False
Q5) The major argument against supplying segment information is that it provides users with potentially competitively damaging information.
A)True
B)False
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