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CPA Australia CPA Financial Accounting and Reporting Exam Sample Questions (Q24-Q29):

NEW QUESTION # 24
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. II and IV only
C. I and III only
D. III and IV only

Answer: D

NEW QUESTION # 25
Financial markets have achieved operational efficiency when

A. the costs of financial transactions are kept as low as possible.
B. past records are used to predict the future prices of goods.
C. the price of stocks and shares are available accurately and quickly.
D. the cost of transactions is a reflection of the actual cost incurred.

Answer: A

NEW QUESTION # 26
Which one of the following statements regarding the IASB's Conceptual Framework for Financial Reporting is correct?

A. It specifies the concepts that underlie the preparation and presentation of special purpose financial statements.
B. It specifies the concepts that underlie the preparation and presentation of general purpose financial statements.
C. It overrides any local or international accounting standard.
D. It specifies the concepts that underlie the preparation and presentation of only consolidated financial statements.

Answer: B

NEW QUESTION # 27
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. the auditor's report is influenced by the directors.
B. the declaration of dividends assures high earnings per share.
C. the auditor's report refers to the company's prior year financials.
D. a declaration of dividend is the ultimate measure of a company's profitability.

Answer: C

NEW QUESTION # 28
Which one of the following practices is not considered creative accounting?

A. trading in derivatives
B. window dressing
C. profit smoothing
D. aggressive earnings management

Answer: A

NEW QUESTION # 29
......

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