[UPDATED 2023] Free CPA Australia Financial-Accounting-and-Reporting Exam Questions Self-Assess Preparation
Financial-Accounting-and-Reporting Free Sample Questions to Practice One Year Update
The CPA Financial Accounting and Reporting exam covers various topics related to financial accounting, including financial reporting, financial statements, accounting standards, and business combinations, among others. Financial-Accounting-and-Reporting exam also tests a candidate's ability to apply financial accounting and reporting principles to real-world situations. Candidates need to have an in-depth understanding of the accounting standards and regulations in Australia to pass Financial-Accounting-and-Reporting exam.
NEW QUESTION # 49
A company sold some old operating equipment from its factory. After depreciation was accounted for, a small gain on sale was recorded. According to the revised IAS 1 Presentation of Financial Statements, this transaction will be shown as a separate item 'gain on sale of equipment'. This item will be shown in the statement of
- A. changes in equity.
- B. comprehensive income.
- C. financial position.
- D. cash flow.
Answer: B
NEW QUESTION # 50
Which one of these is a key principle of good corporate governance?
- A. restriction of shareholders' rights in decision-making
- B. effective management of the employees of the company
- C. non-disclosure of directors' agency relationship with the company
- D. effective communication with shareholders
Answer: D
NEW QUESTION # 51
Which one of the following bases of measurement is used to implement an approach to capital maintenance based on maintaining the operating capability of a business?
- A. deprival value
- B. current value
- C. fair value
- D. current purchasing power
Answer: A
NEW QUESTION # 52
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 instils public confidence in the accounting system employed in commerce and industry.
- C. It provides flexibility in the way accounting information is presented to users.
- D. It provides quality of information in and across financial statements.
Answer: C
NEW QUESTION # 53
Which one of the following statements is correct?
- A. Accounting standards prescribe the possible accounting treatments.
- B. Australian accounting standards are based on the US GAAP.
- C. Accounting standards are developed and maintained using a consultative process with the OECD.
- D. Accounting standards provide the basic knowledge upon which the conceptual framework is developed.
Answer: A
NEW QUESTION # 54
A statement of comprehensive income reports on
- A. solvency.
- B. financial performance.
- C. changes in financial position.
- D. financial position.
Answer: B
NEW QUESTION # 55
Which one of the following would be included in the statement of financial position?
- A. depreciation
- B. distribution costs
- C. gains on property valuations
- D. deferred tax
Answer: D
NEW QUESTION # 56
X was influenced by G Co's audit report and dividend declaration, and decided to invest in the securities of the company. What should X be cautious about before investing in the shares of the company?
X should be aware that
- A. a declaration of dividend is the ultimate measure of a company's profitability.
- B. the auditor's report refers to the company's prior year financials.
- C. the auditor's report is influenced by the directors.
- D. the declaration of dividends assures high earnings per share.
Answer: B
NEW QUESTION # 57
Which of the following are the stated objectives of the International Accounting Standards Board (IASB)?
I)Enforce accounting standards.
II)Develop accounting standards.
III)Work for convergence of accounting standards.
- A. I and II only
- B. III only
- C. I only
- D. II and III only
Answer: D
NEW QUESTION # 58
The two fundamental qualitative characteristics of the financial information are
- A. relevance and comparability.
- B. relevance and faithful representation.
- C. verifiability and relevance.
- D. faithful representation and comparability.
Answer: B
NEW QUESTION # 59
Which one of the following is an accurate definition of fair value of an asset?
- A. The price for which an asset could be sold net of disposal costs.
- B. The amount yet to be written off over the remainder of the asset's useful life.
- C. The cost of replacing an asset with an identical item.
- D. The price for which an asset could be sold in an orderly transaction between market participants at the measurement date.
Answer: D
NEW QUESTION # 60
Which one of the following practices is not considered creative accounting?
- A. trading in derivatives
- B. aggressive earnings management
- C. profit smoothing
- D. window dressing
Answer: A
NEW QUESTION # 61
The chairperson of XYZ Company is concerned about the readability of the annual financial report that is about to be published on its website. XYZ Company is obliged to comply with International Financial Reporting Standards, and the report contains all of the required financial statements, the auditor's report, corporate governance statements, declarations of accounting policy, explanatory notes and a section that addresses the company's corporate social responsibility program.
The chairperson is wondering whether the report can be condensed. The issue that is concerning the chairperson is known as
- A. the cost of compliance.
- B. information overload.
- C. the costs of social responsibility reporting.
- D. the agency costs of monitoring.
Answer: B
NEW QUESTION # 62
Financial information is reliable if it
I)prefers substance over legal form.
II)is neutral and without any material error.
III)is complete and has been made with prudence.
IV)is understandable to those with no knowledge of accounting.
- A. I, II and IV only
- B. I, III and IV only
- C. II, III and IV only
- D. I, II and III only
Answer: D
NEW QUESTION # 63
Financial managers will benefit in a strongly efficient market by
- A. having their shareholders invest more money into expanding the company's operations.
- B. having their shareholders be tolerant of low profits if higher profits are expected in the future.
- C. being able to decide what information needs to be made available to shareholders.
- D. being able to take more risks without shareholders' consent.
Answer: B
NEW QUESTION # 64
In the context of a regulatory framework, a principles-based system
- A. is a rule-driven approach.
- B. attempts to cover specific eventualities.
- C. removes any element of judgement by providing clear requirements.
- D. provides a theoretical basis with broad terms of reference.
Answer: D
NEW QUESTION # 65
As per the International Accounting Standards Board conceptual framework, which of the following holds the primary responsibility for preparing and presenting financial statements?
I)owners
II)auditors
III)directors
- A. I and II only
- B. II and III only
- C. III only
- D. I only
Answer: C
NEW QUESTION # 66
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