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CPA Australia CPA Financial Accounting and Reporting Sample Questions:

1. Which one of these is a disadvantage of a conceptual framework?

A) It mandates the formats of various financial statements.
B) A single framework is not suitable for all users of financial statements.
C) It replaces the established principles.
D) It increases the chances of political interference in the development of accounting standards.

2. A company sold some old operating equipment from its factory. After depreciation was accounted for, a small gain on sale was recorded. According to the revised IAS 1 Presentation of Financial Statements, this transaction will be shown as a separate item 'gain on sale of equipment'. This item will be shown in the statement of

A) financial position.
B) changes in equity.
C) cash flow.
D) comprehensive income.

3. Which one of the following situations would result in either a new liability being recognised or an existing liability being increased?

A) At the end of the reporting period, there are unpaid wages.
B) A company recognises the depreciation expense for the current period.
C) A company pays only half of an overdue invoice.
D) A company establishes an asset revaluation reserve.

4. The Framework for the Preparation and Presentation of Financial Statements which assists the development of the International Financial Reporting Standards (IFRS) was originally approved by the

A) International Accounting Standards Board (IASB).
B) International Accounting Standards Committee (IASC).
C) International Federation of Accountants (IFAC).
D) IFRS Interpretations Committee (IFRIC).

5. The concept of transparency in corporate governance means that listed companies should disclose

A) material information that affects decisions.
B) confidential issues relating to competitors.
C) only mandatory information by management.
D) their future strategy.

Solutions: