Chapter 11 - Multiple choice quiz

A financial report is a set of documents that comprises:

I.    A balance sheet and income statement
II. A cash flow statement.
III.   A statement of changes in equity.
IV.    Notes.
V. Directors' declaration.

A.	I, II, and IV;

B.	I, III and IV;

C.	I, II, III and IV;

D.	I, II, III IV and V.

When the presentation or reclassification of items in the financial report is amended the following information must also be amended:

A.	the impact of the reclassification on the profit or loss of the period;

B.	the nature, amount and reason for the reclassification;

C.	the effect of the reclassification on the total assets;

D.	the impact of the reclassification on the cash flows of the entity.

AASB 101 requires that the financial report:

A.	need not provide comparative information;

B.	may be presented in a language other than English;

C.	must be presented in the English language;

D.	may not cover a period shorter or longer than twelve months.

AASB 101 requires that a financial report:

A.	does not need to include the reporting period or date;

B.	must include the name of the entity;

C.	may not apply rounding;

D.	must cover the affairs of no more than one entity.

The following items are disclosed on the face of a balance sheet as line items:

A.	finance costs;

B.	cost of goods sold;

C.	extraordinary items;

D.	investment property.

The following items are not permitted to be disclosed as separate line items on the face of the balance sheet;

A.	biological assets;

B.	minority interest;

C.	deferred tax liabilities;

D.	share of profit of associates.

The term 'other financial assets' is used for the presentation of items that do not fit easily into the categories of:

A.	goodwill and accumulated amortisation;

B.	prepayments and other deferred assets;

C.	cash, receivables, or investments in associates;

D.	loan, advances and other borrowings.

AASB 101 requires that all assets and liabilities be presented either as current or non-current unless:

A.	a functional presentation better presents the entity's position;

B.	a liquidity presentation is more appropriate;

C.	it is more suitable to present the items according to their age;

D.	the physical state of the assets better indicates the financial position of the entity.

The preferred presentation format for the balance sheet as shown in AASB 101 is:

A.	Assets + Liabilities = Equity;

B.	Equity + Liabilities = Equity;

C.	Liabilities – Assets = Equity;

D.	Assets – Liabilities = Equity

10.

Which of the following items, if it exists, is not required to be presented as a line item on the face of an income statement?

A.	income tax payable;

revenue;

C.	share of the profit or loss of associates;

D.	profit or loss attributable to minority interests.

11.

The following is an exception to the all-inclusive profit concept:

A.	the amount of any deferred tax assets;

B.	extraordinary gains or losses;

C.	adjustments from translation of financial statements of a foreign operation;

D.	finance costs.

12.

Each of the following is an exception to the all-inclusive profit concept except:

A.	depreciation and amortisation of assets;

B.	write-down of inventory;

C.	impairment losses;

D.	corrections of errors.

13.

Which of the following expenses is required to be disclosed separately on the face of an income statement?

A.	cost of goods sold;

B.	finance costs;

C.	amortisation;

D.	employee benefits.

14.

The term 'finance costs' is synonymous with:

A.	advances from lenders;

B.	loans payable;

C.	non-current liabilities;

D.	interest expense.

15.

Finance costs are an example of:

A.	an extraordinary item;

B.	a distribution to equity holders;

C.	an ordinary item;

D.	a repayment of borrowings.

16.

If borrowing costs are directly attributable to the construction of a qualifying asset they may be:

A.	capitalised as part of the cost of the qualifying asset;

B.	treated as a finance cost and included in current period profit or loss;

C.	recognised directly in retained earnings;

D.	deferred as a liability in the balance sheet.

17.

A qualifying asset is defined by AASB 123 as an asset that:

A.	is usually constructed and ready for use within a very short time;

B.	is purchased from an entity which is external to the reporting entity;

C.	necessarily takes a substantial period of time to get ready for its intended use;

D.	is purchased from an entity within the group.

18.

Details of appropriation items normally appear on the face of the:

A.	balance sheet;

B.	income statement;

C.	statement of changes in equity;

D.	cash flow statement.

19.

Which of the following is the normal order of presentation of the Notes to the financial statements?

I.	A statements that the financial report is a general purpose or special purpose report.
II.	Other disclosures such as contingencies and commitments.
III.	A summary of significant accounting policies applied.
IV.	A statement of compliance with Australian accounting standards and IFRS.
V.	Supporting information for items presented on the face of each financial statement.

A.	I, IV, III, V, II;

B.	IV, I, II, III, V;

C.	I, IV, II, III, V;

D.	IV, I, V, III, II.

20.

A reporting entity must disclose somewhere in the financial report, the following information:

I.	The domicile and legal form of the entity.
II.	The name and location of the stock exchange on which the entity's securities are traded.
III.	The address of the registered office.
IV.	The country of incorporation.

A.	I, II, III and IV;

B.	II, II and IV only;

C.	I, II and IV only;

D.	I, III and IV only.

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