Question 1

Which one of the following statements regarding the IASB's Conceptual Framework for Financial Reporting is correct?

Options :

A : It overrides any local or international accounting standard.

B : It specifies the concepts that underlie the preparation and presentation of special purpose financial statements.

C : It specifies the concepts that underlie the preparation and presentation of general purpose financial statements.

D : It specifies the concepts that underlie the preparation and presentation of only consolidated financial statements.

Answer: C

Question 2

You assumed the role as the Chairperson of the Board of Directors of Daylight Ltd. As you start to write your first directors' report, which one of the following areas are you not required to include in your report?

Options :

A : Details of any dividends paid or proposed.

B : Details regarding any significant changes to Daylight's state of affairs for the year that just ended.

C : Details regarding accounting policies pursued by Daylight in preparation of its financial statements.

D : Review of operations of Daylight during the year just ended and any likely developments in the future that may impact Daylight.

Answer: C

Question 3

Which one of the following statements is correct in relation to presenting the financial position of an entity?

Options :

A : Liquidity represents cash holdings, while solvency is long-term profitability.

B : Liquidity is the ability to repay long-term financial commitments, whereas solvency is the ability to repay short-term commitments.

C : Solvency is the availability of cash over the long-term, while liquidity is the availability of funds over the short-term to meet financial commitments as they fall due.

D : Solvency is the availability of total assets over a long-term, while liquidity is the availability of total assets over the short-term to meet financial commitments as they fall due.

Answer: C

Question 4

Venturer Ltd has received fees from venture capital activities and has engaged you as the accountant to prepare the financial report for 31 December 20X0. Unable to find a specific reference to venture capital fees in either the conceptual framework or the accounting standards, you establish the appropriate accounting treatment by

Options :

A : consulting with the International Accounting Standards Board.

B : referring to the fundamental accounting assumptions and conventions.

C : using your professional judgment and referring to generally accepted accounting principles and practice.

D : using your professional judgment and referring to the conceptual framework's definitions and recognition criteria.

Answer: D

Question 5

Restrictions on the scope of a specific accounting standard are stated in

Options :

A : that specific standard.

B : the IASB's Conceptual Framework.

C : the explanatory materials provided by the AASB.

D : various Statements of Accounting Concepts (SACs) issued by the AASB.

Answer: A

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