questions

• conceptual framework (1)

  A) different decision

  B) primary

  C) decisions

  D) reporting

  
• conceptual framework (2)

  A) public companes

  B) reporting

  C) not required

  D) accounting standards

  
• Why is an Annual Report so detailed, lengthy and broad? Explain.

  A) qualitative

  B) quantitative

  C) maximise

  D) decisions

  E) main way

  
• Explain how the four main financial statements link together.

  A) change in wealth

  B) profit/loss

  C) equity

  D) cash

  E) received and spent

  
• recog criteria

  A) uncertain

  B) faithful representation

  C) relevance

  D) proability

  E) note disclosure

  
• accounting equation

  A) revenue

  B) expenses

  C) equity

  D) dividends

  E) retained earnings

  
• BDA

  A) remains collectible

  
• how does cost of sales expense decrease equity?

  • it reduces the amount of gross profit made on the sale
• why do we record inventory at the lower of cost or NRV

  • supports faithful rep - doesn't overstate the value of inventory
  • supports relevance - more relevant for users to see inventory valued at the true value rather than an amount that cannot be recoverable
• periodic vs perpetual method

  • periodic: no continuous record of inventory transactions. Ledger is used at end of each period. Cannot determine losses/gains
  • perpetual: continuous record of inventory transactions. Ledger is used for each transaction. Can determine losses/gains
• cost vs revaluation model

  A) not allowed

  B) impairment

  C) recoverable

  D) carrying

  E) materially

  F) fair

  G) equity

  H) expensed

  I) each

  
• revaluation model eg(1)

  A) vehicle account

  B) accumulated depreciation account

  C) cash

  D) loss

  
• liability vs provision vs contingent liability

  A) liability

  B) uncertain

  C) timing

  D) amount

  E) possible obligation

  F) does or does not

  G) probability

  
• why doesn't equity need recognition criteria

  • it is just the difference between A and L
  • A and L have already passed recog criteria
• conceptual framework and accounting standards

  A) general

  B) specific

  C) foundation

  
• statement of changes in equity

  • shows changes in owners' wealth during period
  • links income stat. and balance sheet
  • "starting capital" , "add capital contributions", "add profit", "less drawings", "less net loss"
• balance sheet

  • shows financial position through its assets and how those assets were financed
  • assets -> wealth of entity
  • liabilities -> level of debt
  • OE -> owners' share of the business
• realised vs unrealised gains/losses

  • realised
• explain whether firm A should record a provision for warranties

  A) timing or amount

  B) present obligation

  C) probably

  D) outflow

  E) settle

  F) reliable estimate

  G) past experience

  
• how does sick leave satisfy the framework

  A) pay

  B) cash

  C) hours worked

  D) measurable

  E) probably

  F) estimate

  
• relationship b/w IS, statement of comprehensive income and SOCIE

  A) equity

  B) excluding owners

  C) owners equity

  
• example of item included in statement of comprehensive income

  • revaluation surplus adjustments
• retained earnings account

  • it is an equity account
  • it is the after-tax profit / loss
  • the retained earnings can be retained, transferred to reserves or used for dividends
• what is the cost flow assumption

  A) specific identification

  B) interchangable

  
• what costs aren't included in inventory cost price

  • ongoing costs
  • eg: maintenance, insurance for months
• liquidity

  • ability of a firm to meet short term debts as they fall due
  • also considers ability to convert assets into cash in the short term
  • cash is critical to business survival, as cash is always used to settle obligations
• solvency

  • ability of a firm to pay back its long term debts
  • thus, the ability to survive in the long term
• profitability

  • evaluates profit / operating success of a firm over a period
  • gives insight to management effectiveness
• if a NCA is donated, will a loss on disposal be recorded?

  A) loss

  B) proceeds

  
• why does COS expense exist

  • to determine gross profit when compared to selling price
  • represents the cost incurred in selling actual inventory
• cost flow assumptions

  • when an entity has inventory, it must assign costs to the inventory
  • eg: specific identification, FIFO, weighted average