Question

QUESTION 1

1. In accordance with the IASB Conceptual Framework, which of the following is consistent with the definition of expenses?

   		Decreases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to distributions to holders of equity claims.
   		Decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to control of equity claims.
   		Decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims.
   		All of the given answers are correct.

2 points   

QUESTION 2

1. For Australian corporate entities, which of the following is usually deemed to be the date on which the financial statements are authorised for issue?

   		The date of preparation of financial statements
   		The balance sheet date
   		The date the Directors' Declaration is signed
   		The date of the auditors' report

2 points   

QUESTION 3

1. Changes in accounting estimates include:

   		changes in expected warranty costs on goods sold under guarantee
   		changes in the expected pattern of consumption of economic benefits of depreciable assets
   		changes in the provision for inventory obsolescence
   		All of the given answers are correct.

2 points   

QUESTION 4

1. With regard to related parties and other organisations within a group (economic entity), __________ means the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

   		control
   		significant influence
   		authority and responsibility
   		disclosure requirement

2 points   

QUESTION 5

1. Patents, goodwill, brand names and trademarks are examples of __________.

   		tangible assets
   		intangible assets
   		current assets
   		agricultural assets

2 points   

QUESTION 6

1. According to paragraph 79 of AASB 101, an entity shall disclose the following, either in the statement of financial position or the statement of changes in equity, or in the notes for each class of share capital, except for:

   		the number of shares authorised
   		the number of shares issued and fully paid, and issued but not fully paid
   		par value per share, or that the shares have no par value
   		shares in the entity held by the entity or its competitors

2 points   

QUESTION 7

1. Companies have argued that the recognition of a profit or loss on the translation of _________________ monetary items at the end of each reporting period is inappropriate, since the exchange rate constantly fluctuates and there is significant doubt about whether the unrealised profit or loss will ever be realised.

   		non-current
   		current
   		long-term
   		None of the given answers are correct.

2 points   

QUESTION 8

1. The price that would be received to sell an asset or paid to transfer a liability in an orderly sale between market participants at the measurement date is termed ________.

   		tangible value
   		intangible value
   		book value
   		fair value

2 points   

QUESTION 9

1. Which of the following standards is referred to in relation to the disclosure of interest in other entities (in relation to subsidiaries and other entities)?

   		AASB 10
   		AASB 3
   		AASB 12
   		None of the given answers are correct

2 points   

QUESTION 10

1. The amount of tax assessed by the ATO based on the entity's operations for the period will be reflected in which account?

   		Income tax expense
   		Deferred tax asset
   		Deferred tax liability
   		Income tax payable

Answer 1

Question 1.

Answer - Decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims.

Explanation

The definitions are quoted below:
Asset. A present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits.
Liability. A present obligation of the entity to transfer an economic resource as a result of past events.
Equity. The residual interest in the assets of the entity after deducting all its liabilities.
Income. Increases in assets or decreases in liabilities that result in increases in equity, other than those relating to contributions from holders of equity claims.
Expenses. Decreases in assets or increases in liabilities that result in decreases in equity, other than those relating to distributions to holders of equity claims.

Question 2.

Answer : The date the Directors' Declaration is signed

Explanation:

As per AASB 110 the date,the director's declaration is signed is deemed to be issued of financial statements.

Question 3.

1. Answer: All of the given answers are correct.

Explanation:

All of the following are situations where there is likely to be a change in accounting estimate:

• Allowance for doubtful accounts

• Reserve for obsolete inventory

• Changes in the useful life of depreciable assets

• Changes in the salvage values of depreciable assets

• Changes in the amount of expected warranty obligations

Question 4.

Answer: Control

Explanation:

As per IAS 27 "Consolidated and Separate Financial Statements" Consolidation is based on the concept of 'control' and changes in ownership interests while control is maintained are accounted for as transactions between owners as owners in equity.