Question

1) The stewardship and accountability objectives of financial reporting means that:

Select one:

a. the objective of general purpose financial reports is to provide information that is useful to capital providers.

b. general purpose financial reports support stewardship function in entities where there is no separation of ownership from control.

c. the objective of general purpose financial reports is to provide information to users that is useful for making decisions about allocation of scarce resources.

d. managers use general purpose financial reports to show the shareholders that they are managing resources effectively.

2) Who are not the primary users of financial reports according to the Conceptual Framework?

Select one:

a. government

b. all are primary users.

c. equity investors.

d. lenders.

3) The following item will not be recognised as a liability in the statement of financial position?

Select one:

a. a warranty provision.

b. a payroll deduction payable.

c. a contingent liability.

d. a mortgage.

4) Which of the following statements about generally accepted accounting principles (GAAP) and conceptual framework is correct?

Select one:

a. GAAP is part of the conceptual framework.

b. Australian GAAP only consists of the developed accounting standards.

c. Conceptual framework is part of GAAP.

d. Since 2005, SAC 1 is no longer a part of Australian conceptual framework.

5) Which of the following statements is false?

Select one:

a. Members of the FRC are appointed by the Australian Accounting Standards Board.

b. Listed public companies must comply with Australian Securities Exchange listing rules, for financial reporting purposes.

c. GAAP in Australia includes accounting standards as well as concepts and principles that have developed over time.

d. The Australian Securities and Investments Commission monitors a company's compliance with Corporations Act.

Answer 1

Question 1:

Option C. the objective of general purpose financial reports is to provide information to users that is useful for making decisions about allocation of scarce resources

The general purpose financial reports should provide a True & fair view for using the financial statements.

Question 2:

Option B. all are primary users.

Primary users of the financial statments are:

• Equity Investors
• Lenders
• Government
• Management

Question 3:

Option C. a contingent liability.

A contingent Liability will be disclosed in the financials but not recorded in the financials.

Question 4:

Option A. GAAP is part of the conceptual framework.

Conceptual frameworks can apply to many disciplines, but when specific ally related to financial reporting, a conceptual framework can be seen as a statement of generally accepted accounting principles (GAAP) that form a frame of reference for the evaluation of existing practices and the development of new ones

Question 5:

Option A. Members of the FRC are appointed by the Australian Accounting Standards Board

FRC is Responsible for appointing members of the AASB but not FRC Members are appointed by AASB.