CPA Financial Accounting and Reporting Revision

An entity wishes to increase its return on investment (ROI). Which of the following courses of action will help to achieve this in the short term?

• A Increase sales
• Issue ordinary shares
• Revalue land and buildings
• Increase the level of dividends paid to equity shareholders

1.1 Which of the following are correct? I. The term 'reporting entity' may be used to describe a group of companies. II. The principal function of financial statements is to provide information to parties external to a business. III. The main purpose of financial reporting is to provide information aimed at running a business more efficiently.

• A I and II only
• B     I and III only
• C    II and III only
• D    I, II and III

1.2     Which of the following groups of users of accounts is interested primarily in the liquidity of a company?

• A Suppliers
• B     The government
• C    The management
• D    The tax authorities

1.3 Consider the following two statements: I. The IASB operates a rules-based system of setting accounting standards. II. The US FASB operates a principles-based system of setting accounting standards. Which of these statements are correct?

• A I only
• B     II only
• C    Both I and II
• D    Neither I nor II

1.4 Which bodies does the IFRS Foundation oversee?

• A IASB and the Monitoring Board
• B     IASB and IFRS Interpretations Committee only
• C    IFRS Interpretations Committee and IFRS Advisory Council
• D    IFRS Advisory Council, IASB and IFRS Interpretations Committee

1.5. Which of the following is not a role of the IFRS Advisory Council?

• A To consult on all major IASB projects
• B     To issue International Financial Reporting Standards
• C    To advise on the prioritisation of the work of the IASB
• D    To comment on the implications of the work of the IASB on users of financial statements

1.6 Consider the following two statements: I. The Australian Accounting Standards Board (AASB) has adopted the content of IFRS with some minor changes. II. Both Australian companies' legislation and IFRS allow an entity to depart from the requirements of an IFRS in exceptional circumstances. Which of these statements are correct?

• A I only
• B     II only
• C    Both I and II
• D    Neither I nor II

1.7 According to the Conceptual Framework for Financial Reporting, information about an entity's financial performance helps users to understand: I. the entity's needs for additional finance. II. the entity's financing and investing activities. III. the efficiency and effectiveness of management. IV. the return that the entity has produced on its economic resources.

• A IV only
• B     III and IV only
• C    I and III only
• D    I and II only

1.8 Which of the following is not a chapter in the IASB's Conceptual Framework?

• A Financial statements and the reporting entity
• B     Concepts and conventions
• C    The elements of financial statements
• D    Recognition and derecognition

1.9 Consider the following statements: I. The IASB's Conceptual Framework underpins the preparation of financial statements; when an IFRS conflicts with the framework, the framework guidance should be followed. II. One of the purposes of the IASB's Conceptual Framework is to assist the IASB to develop IFRS that are based on consistent concepts. Which of the statements is correct?

• A I only
• B     II only
• C    Both I and II
• D    Neither I nor II