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CPA Australia CPA Financial Accounting and Reporting Sample Questions:

1. Which of the following statements are correct in the context of accounting concepts and principles?
I)The going concern assumption requires that assets be carried at their cost values.
II)Prudence allows the creation of contingency reserves and more generous provisions.
III)Financial information is considered complete even if it excludes non-material information.
IV)Understandability does not require complex information to be excluded from financial reports.

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

2. Which one of the following is not a principal motivation for creative accounting?

A) bonus-related pay
B) public good
C) benefits from shares and share options
D) personal incentives

3. PLO Advertising Ltd (PLO) buys a new stretch limousine for $40 000. A number of individuals have expressed an interest in buying the limousine from PLO for $60 000. The board members decide that the limousine is worth between $65 000 and $70 000. What is the fair value of the limousine?

A) $70 000
B) $60 000
C) $65 000
D) $40 000

4. Published financial statements are regulated by

A) rules to ensure the provision of consistent financial information to investors.
B) accounting and legal rules to ensure the provision of relevant and reliable financial information to shareholders.
C) shareholders who specify the framework for the provision of consistent and comparable financial information for decision-making.
D) International Financial Reporting Standards to ensure the provision of useful financial information to shareholders.

5. The Framework for the Preparation and Presentation of Financial Statements which assists the development of the International Financial Reporting Standards (IFRS) was originally approved by the

A) IFRS Interpretations Committee (IFRIC).
B) International Accounting Standards Board (IASB).
C) International Accounting Standards Committee (IASC).
D) International Federation of Accountants (IFAC).

Solutions: