CPA Australia Financial-Accounting-and-Reporting

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CPA Australia CPA Financial Accounting and Reporting Sample Questions:

1. In applying accounting standards, an entity develops accounting policies that ensure that the financial statements present

A) relevant and correct financial information to all interested shareholders.
B) comparable and accurate financial information to all shareholders.
C) understandable and clear financial information to all interested shareholders.
D) relevant and reliable financial information.

2. When business managers seek detailed information about the profitability or efficiency of different parts of their operations, they would find the most useful information in

A) the annual financial report.
B) financial statements as specified by IAS 1 Presentation of Financial Statements.
C) various management accounting reports.
D) the company's accounting policies.

3. According to the Australian Accounting Standards Board, which one of the following is a benefit of adopting International Financial Reporting Standards (IFRSs)?

A) to make it easier for tax authorities to calculate taxes on investors' overseas income
B) to increase foreign investors' understanding of local financial reports
C) to become a resource for developing nations who can easily adopt IFRSs as a full set of standards
D) to enable the national government to control activities of foreign multinationals

4. Which one of the following examples would not represent an agency cost?

A) the cost of employing an internal auditor
B) the cost of preparing a cost-benefit report for a new project
C) the cost of preparing a financial report for shareholders
D) the cost of engaging an external auditor

5. A rules-based approach to standard setting

A) prescribes standards that attempt to cover all eventualities a business may face.
B) provides a broad framework for standard setting.
C) ensures there are no conflicts within accounting standards as each issue is handled just once.
D) helps a standard-setting body to prioritise matters.

Solutions: