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CPA Australia CPA Financial Accounting and Reporting Sample Questions:

1. A rules-based approach to standard setting

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

2. Liquidity of a company is based on its ability to

A) meet short term commitments.
B) pay dividends to shareholders.
C) meet long term commitments.
D) buy back shares.

3. Which one of the following is not a function of the trustees of the International Financial Reporting Standards Foundation (IFRS Foundation)?

A) appointing the members of the International Accounting Standards Board (IASB)
B) promoting the application of International Financial Reporting Standards (IFRSs)
C) providing suggestions on technical matters relating to accounting standards
D) ensuring the financing of the International Accounting Standards Board (IASB)

4. 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) II and III only
B) I and III only
C) III and IV only
D) II and IV only

5. A decision has been made to change the value of a major non-current asset, upon which depreciation is based, from original cost to a revalued amount. This results in a change in

A) measurement basis and must be disclosed.
B) measurement basis and does not need to be disclosed.
C) accounting estimate and does not need to be disclosed.
D) accounting estimate and must be disclosed.

Solutions: