[Dec 29, 2023] Ultimate Financial-Accounting-and-Reporting Guide to Prepare Free Latest CPA Australia Practice Tests Dumps
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NEW QUESTION # 10
Which form of capital market efficiency exists when share prices on the stock market reflect all information whether public or not?
- A. information processing efficiency
- B. allocative efficiency
- C. semi-strong form efficiency
- D. strong form efficiency
Answer: D
NEW QUESTION # 11
Which one of the following contributes to an efficient capital market?
- A. having stock markets in every country
- B. stock markets being managed by directors of companies that are listed on the stock market
- C. stock markets ensuring that companies do not overcharge for their products
- D. information about the stock market can be obtained cheaply
Answer: D
NEW QUESTION # 12
Financial managers will benefit in a strongly efficient market by
- A. having their shareholders invest more money into expanding the company's operations.
- B. being able to decide what information needs to be made available to shareholders.
- C. being able to take more risks without shareholders' consent.
- D. having their shareholders be tolerant of low profits if higher profits are expected in the future.
Answer: D
NEW QUESTION # 13
In applying accounting standards, an entity develops accounting policies that ensure that the financial statements present
- A. relevant and correct financial information to all interested shareholders.
- B. relevant and reliable financial information.
- C. understandable and clear financial information to all interested shareholders.
- D. comparable and accurate financial information to all shareholders.
Answer: B
NEW QUESTION # 14
In a stock market that displays strong efficiency, share prices reflect all available
- A. information about future expansion plans.
- B. public information.
- C. information about past changes in share prices.
- D. public and inside information.
Answer: D
NEW QUESTION # 15
Generally accepted accounting practice recognises revenue when
- A. customers order goods.
- B. goods are dispatched to the customer.
- C. goods are produced.
- D. cash is received for the goods.
Answer: B
NEW QUESTION # 16
Which of the following statements are correct in the context of accounting concepts and principles?
I)The going concern assumption requires that assets be carried at their cost values.
II)Prudence allows the creation of contingency reserves and more generous provisions.
III)Financial information is considered complete even if it excludes non-material information.
IV)Understandability does not require complex information to be excluded from financial reports.
- A. III and IV only
- B. II and IV only
- C. I and III only
- D. II and III only
Answer: A
NEW QUESTION # 17
Which one of the following examples would not represent an agency cost?
- A. the cost of engaging an external auditor
- B. the cost of preparing a financial report for shareholders
- C. the cost of employing an internal auditor
- D. the cost of preparing a cost-benefit report for a new project
Answer: D
NEW QUESTION # 18
A company purchased a machine 10 years ago for $143 890. It is expected that the machine will generate future revenues of $108 495. The machine could be scrapped for $81 232. An equivalent machine in the same condition would cost $94 950 to buy now. What is the deprival value of the asset?
- A. $81 232
- B. $108 495
- C. $94 950
- D. $35 395
Answer: C
NEW QUESTION # 19
Which one of the following is an accurate definition of fair value of an asset?
- A. The price for which an asset could be sold net of disposal costs.
- B. The cost of replacing an asset with an identical item.
- C. The price for which an asset could be sold in an orderly transaction between market participants at the measurement date.
- D. The amount yet to be written off over the remainder of the asset's useful life.
Answer: C
NEW QUESTION # 20
Which one of the following would be included in a statement of financial position?
- A. finance costs
- B. cost of sales
- C. proceeds from long term borrowings
- D. retained earnings
Answer: D
NEW QUESTION # 21
XYZ Ltd is listed on the Australian Securities Exchange (ASX). Which one of the following reports is the company required to prepare as a part of its annual financial report?
- A. chairman's statement
- B. management commentary
- C. sustainability report
- D. corporate governance statement
Answer: D
NEW QUESTION # 22
A statement of generally accepted theoretical principles which form the frame of reference for financial reporting refers to the
- A. International Financial Reporting Standards.
- B. Generally Accepted Accounting Principles.
- C. Conceptual Framework.
- D. Regulatory Framework.
Answer: C
NEW QUESTION # 23
Which one of the following is the correct treatment of sales?
- A. Cash and credit sales are recorded in the receivables ledger prior to posting to the general ledger.
- B. Credit sales are recorded in the receivables ledger prior to posting to the general ledger.
- C. Cash sales are recorded in the receivables ledger prior to posting to the general ledger.
- D. Credit sales are not recorded in the receivables ledger prior to posting to the general ledger.
Answer: B
NEW QUESTION # 24
Which one of the following statements is not correct in respect of manual accounting systems?
- A. They are bulky to store compared to computer systems.
- B. It is easy to make corrections.
- C. Productivity in manual systems is lower than computer systems.
- D. Risk of error is greater and the quality of outputs is inferior.
Answer: B
NEW QUESTION # 25
Which accounting theory is best described by the statement 'An approach to accounting is one where a theory is thought of as a body of knowledge that explains and attempts to predict actual accounting practice'?
- A. historical cost accounting theory
- B. positive accounting theory
- C. normative accounting theory
- D. general accounting theory
Answer: B
NEW QUESTION # 26
Which one of the following bases of measurement is used to implement an approach to capital maintenance based on maintaining the operating capability of a business?
- A. current value
- B. fair value
- C. deprival value
- D. current purchasing power
Answer: C
NEW QUESTION # 27
Liquidity of a company is based on its ability to
- A. meet long term commitments.
- B. pay dividends to shareholders.
- C. meet short term commitments.
- D. buy back shares.
Answer: C
NEW QUESTION # 28
A decrease in assets is most likely to be recognised in the financial report as
- A. revenue earned.
- B. a change in equity.
- C. a liability.
- D. an expense.
Answer: D
NEW QUESTION # 29
The International Accounting Standards Board's Conceptual Framework for Financial Reporting for the preparation and presentation of financial statements is concerned with the information needs of most users, but not for each possible user.
Which one of the following stakeholders would not be one of the users that the Conceptual Framework is concerned about?
- A. a company's executive management
- B. members of the public who have small investment holdings in the company
- C. potential investors in the company
- D. governments and regulatory bodies
Answer: A
NEW QUESTION # 30
PLO Advertising Ltd (PLO) buys a new stretch limousine for $40 000. A number of individuals have expressed an interest in buying the limousine from PLO for $60 000. The board members decide that the limousine is worth between $65 000 and $70 000. What is the fair value of the limousine?
- A. $40 000
- B. $70 000
- C. $65 000
- D. $60 000
Answer: D
NEW QUESTION # 31
In an efficient market, normally if interest rates rise, share prices will
- A. rise due to the overall positive sentiment.
- B. fall in anticipation of a reversal in the interest rate cycle.
- C. rise since banks invest their increased profits.
- D. fall since investors expect a higher return.
Answer: D
NEW QUESTION # 32
According to the Australian Accounting Standards Board, which one of the following is a benefit of adopting International Financial Reporting Standards (IFRSs)?
- A. to become a resource for developing nations who can easily adopt IFRSs as a full set of standards
- B. to enable the national government to control activities of foreign multinationals
- C. to increase foreign investors' understanding of local financial reports
- D. to make it easier for tax authorities to calculate taxes on investors' overseas income
Answer: C
NEW QUESTION # 33
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