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CPA Australia CPA Financial Accounting and Reporting Sample Questions:

1. In relation to financial statements, the 'true and fair override' indicates that

A) accounting standards must be complied with under all circumstances.
B) statements need not always be true and accurate.
C) departure is allowed from accounting standards under specific instances to show a fair presentation.
D) the true and fair requirement need not be complied with by certain industries.

2. Which one of the following is not an advantage of accounting regulation?

A) It provides the required accounting information to all necessary shareholders.
B) It provides quality of information in and across financial statements.
C) It instils public confidence in the accounting system employed in commerce and industry.
D) It provides flexibility in the way accounting information is presented to users.

3. Which of the following represents a principal-agent relationship?
I.
shareholders-auditors
II.
shareholders-management
III.
security exchange-company
IV.
board of directors-employees

A) II, III and IV only
B) I, II and III only
C) I, II, III and IV
D) I, II and IV only

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

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

5. The objective of the International Accounting Standards Board (IASB) is to

A) enforce International Financial Reporting Standards.
B) provide strategic advice to the International Financial Reporting Standards Advisory Council.
C) oversee the standard setting process and International Financial Reporting Standards Advisory Council.
D) set International Financial Reporting Standards.

Solutions: