Chapter 01 - Multiple choice quiz

A company comes into existence when it is registered with the:

A.	Attorney-General's Department;

B.	Australian Securities and Investments Commission;

C.	Australian Accounting Standards Board;

D.	Financial Reporting Council.

In Australia the law governing corporations is administered by the:

A.	Corporate Law Economic Reform Program;

B.	Australian Accounting Research Foundation;

C.	Australian Securities and Investments Commission;

D.	International Accounting Standards Board.

A small proprietary company must satisfy at least two of the following tests. It must have gross revenue of less than $10 million and:

A.	gross assets of less than $10 million;

B.	gross assets of less than $20 million;

C.	fewer than 100 employees at the end of the financial year;

D.	fewer than 50 employees at the end of the financial year.

Which of the following statements is NOT true in relation to public companies:

A.	A public company is required to have issued share capital

B.	A public company can have only one member

C.	A public company is any company that is not a proprietary company

D.	A public company must appoint a secretary

A disclosing entity is:

A.	a company that is not a reporting entity;

B.	an entity which has shares or other securities listed on the ASX;

C.	an entity which has no obligation to present financial statements that comply with accounting standards;

D.	an entity which has no obligation to present half-yearly financial statements.

Replaceable rules deal with:

I	Member's meetings
II	Powers and remuneration of directors
III	Dividend policy
IV	Inspection of company's books by members
V	Appointment and termination of auditors

A.	I, II and IV

B.	I, II, III and IV

C.	II, III and V

D.	I, II, IV and V

The replaceable rules that apply to a company have effect as a contract between:

A.	the company and each member

B.	the company and each director and company secretary

C.	a member and each other member

D.	all of the above

The following items are included in the share capital of a company:

A.	advances from financial institutions;

B.	debts owed to creditors;

C.	ordinary shares and preference shares;

D.	debentures.

The main role of a debenture trustee is to protect the interests of:

A.	shareholders;

B.	debenture holders;

C.	directors;

D.	owners of the company issuing the debentures.

10.

Which of the following is NOT specifically excluded from the definition of a debenture under s 9 of the Corporations Act?

A.	Bill of exchange

B.	Unsecured notes

C.	Money borrowed from a related corporation

D.	Promissory notes with a face value of at least $50,000

11.

Which of the following statements is correct in relation to disclosure documents:

A.	A profile statement is the most complete disclosure document on the issue of securities.

B.	When raising funds from the public, companies must supply either a prospectus or a short-form prospectus to prospective investors.

C.	An offer information statement may only be issued where a company has previously lodged a prospectus with ASIC

D.	Where a company offers to issue securities which will raise $10 million or less, an offer information statement may be issued in place of a prospectus or short form prospectus

12.

The Corporate Law Reform Program (CLERP) was introduced to (amongst other things):

A.	achieve easier access to capital for small business

B.	to reduce exposure and limit liability for directors

C.	to clarify the reporting entity concept

D.	oversee the implementation of harmonised accounting standards

13.

Which of the following statement is NOT correct in relation to the Financial Reporting Council (FRC)?

A.	Membership of the FRC is determined by the Federal Treasurer

B.	The main role of the FRC is to act as an overseer and advisory body to ASIC

C.	The FRC was established in 2000, as a result of the CLERP Act 1999

D.	The FRC does not have the power to veto accounting standards

14.

Which of the following statements is correct in relation to the Urgent Issues Group (UIG):

A.	The UIG is now defunct. As a result previously issued interpretations are no longer enforceable.

B.	Has been replaced by the International Financial Reporting Interpretations Committee (IFRIC)

C.	Prior to ceasing to exist, the UIG provided consensus views on a range of topics peculiar to the Australian political, legal and economic system

D.	Prior to ceasing to exist, the UIG was a sub-committee of IFRIC.

15.

The International Financial Reporting Interpretations Committee is a sub-committee of the:

A.	Standing Interpretations Committee;

B.	Australian Accounting Standards Board;

C.	International Accounting Standards Board;

D.	Financial Reporting Committee.

16.

The role of the Australian Securities and Investments Commission is to:

I Regulate advertising, selling and disclosure of financial services to consumers.
II Protect markets and consumers from manipulation and unfair practices.
III Act as a corporate watchdog.
IV Issue accounting standards.
V Enforce compliance with accounting standards.

A.	I, II, IV and V;

B.	II, III, IV, V;

C.	I, II, III, V;

D.	I, III, IV, V.

17.

The body which is responsible for resolving disputes between ASK and companies concerning accounting treatments in their financial reports is:

A.	Financial Reporting Council (FRC)

B.	Financial Reporting Panel (FRP)

C.	Urgent Issues Group (UIG)

D.	International Financial Reporting Interpretations Committee (IFRIC)

18.

The Australian Securities Exchange enforces it regulations through Listing Rules. If a company does not comply with the Listing Rules it will:

A.	be delisted;

B.	be deregistered;

be fined;

D.	be liquidated.

19.

A general purpose financial report means:

A.	any financial report prepared by the company;

B.	a financial report intended to meet the information needs of preparers;

C.	a financial report intended to meet the information needs of users who are able to command the preparation of reports to satisfy all of their information needs;

D.	a financial report intended to meet the information needs of users who are unable to command the preparation of special purpose reports.

20.

The SAC 1 definition of a reporting entity requires:

A.	the existence of external users

B.	the existence of dependant users

C.	a reasonable expectation of external users

D.	a reasonable expectation of dependant users

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