[Aug-2021] Financial-Accounting-and-Reporting Pre-Exam Practice Tests | Exam Questions and Answers for CPA Foundation Program Study Guide
CPA Financial Accounting and Reporting Exam Certification Sample Questions
NEW QUESTION 25
Which one of the following is an objective of the International Federation of Accountants (IFAC)?
- A. to provide advice on accounting standards to the OECD
- B. to establish high quality professional standards in accountancy
- C. to provide direction to the Financial Accounting Standards Board (FASB)
- D. to issue new international financial reporting standards (IFRS)
Answer: B
NEW QUESTION 26
JK Ltd intentionally over-valued its closing inventories to increase profitability for the year 20X8. This would help them to better price a planned share issue in 20X9. By doing this they have breached the concept of
- A. substance over form.
- B. completeness.
- C. understandability.
- D. neutrality.
Answer: D
NEW QUESTION 27
LMN Ltd recently changed the measurement base for their assets. They should I)treat this like a change in an estimate.
II)treat this like a change in the accounting policy.
III)disclose this in the notes to financial statements.
- A. I and III only
- B. III only
- C. I only
- D. II and III only
Answer: D
NEW QUESTION 28
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. I only
- C. III only
- D. II and III only
Answer: C
NEW QUESTION 29
Which one of the following is not a principal motivation for creative accounting?
- A. public good
- B. personal incentives
- C. benefits from shares and share options
- D. bonus-related pay
Answer: A
NEW QUESTION 30
Which one of the following bodies makes accounting standards in Australia?
- A. ASIC
- B. AASB
- C. FRC
- D. IASB
Answer: B
NEW QUESTION 31
Liquidity of a company is based on its ability to
- A. pay dividends to shareholders.
- B. meet short term commitments.
- C. buy back shares.
- D. meet long term commitments.
Answer: B
NEW QUESTION 32
Which one of the following contributes to an efficient capital market?
- A. having stock markets in every country
- B. stock markets ensuring that companies do not overcharge for their products
- C. stock markets being managed by directors of companies that are listed on the stock market
- D. information about the stock market can be obtained cheaply
Answer: D
NEW QUESTION 33
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 purchasing power
- C. fair value
- D. current value
Answer: A
NEW QUESTION 34
The IASB evaluates the merits of adding a potential item to its agenda mainly by reference to the needs of
- A. investors.
- B. suppliers.
- C. regulatory authorities.
- D. tax agencies.
Answer: A
NEW QUESTION 35
Which one of these is a disadvantage of a conceptual framework?
- A. It increases the chances of political interference in the development of accounting standards.
- B. It mandates the formats of various financial statements.
- C. It replaces the established principles.
- D. A single framework is not suitable for all users of financial statements.
Answer: D
NEW QUESTION 36
The body that is part of the international standard-setting framework reporting to the International Financial Reporting Standards Foundation (IFRS Foundation) is the
- A. International Accounting Standards Board.
- B. International Accounting Board.
- C. International Accounting Standards Committee.
- D. Centre on Transnational Corporations.
Answer: A
NEW QUESTION 37
Published financial statements are regulated by
- A. International Financial Reporting Standards to ensure the provision of useful financial information to shareholders.
- B. shareholders who specify the framework for the provision of consistent and comparable financial information for decision-making.
- C. accounting and legal rules to ensure the provision of relevant and reliable financial information to shareholders.
- D. rules to ensure the provision of consistent financial information to investors.
Answer: C
NEW QUESTION 38
In applying accounting standards, an entity develops accounting policies that ensure that the financial statements present
- A. comparable and accurate financial information to all shareholders.
- B. relevant and reliable financial information.
- C. relevant and correct financial information to all interested shareholders.
- D. understandable and clear financial information to all interested shareholders.
Answer: B
NEW QUESTION 39
Which one of the following is a benefit of developing financial reporting standards using a conceptual framework?
- A. The interpretation of financial reporting standards by anybody would be easy.
- B. The interpretation of non-financial information is made easier.
- C. The financial statements based on these standards would be error-free.
- D. A financial reporting environment based on standardised principles would be created.
Answer: D
NEW QUESTION 40
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. $40 000
- B. $70 000
- C. $60 000
- D. $65 000
Answer: C
NEW QUESTION 41
Historical cost accounting provides financial information that is
- A. relevant for decision making.
- B. relevant but may not be reliable for decision making.
- C. relevant and reliable for decision making.
- D. reliable but may not be relevant for decision making.
Answer: D
NEW QUESTION 42
Which one of the following statements is correct in relation to presenting the financial position of an entity?
- A. Liquidity is the ability to repay long-term financial commitments, whereas solvency is the ability to repay short-term commitments.
- B. Solvency is the availability of total assets over a long-term, while liquidity is the availability of total assets over the short-term to meet financial commitments as they fall due.
. - C. Solvency is the availability of cash over the long-term, while liquidity is the availability of funds over the short-term to meet financial commitments as they fall due.
- D. Liquidity represents cash holdings, while solvency is long-term profitability.
Answer: C
NEW QUESTION 43
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CPA Australia Exam Practice Test To Gain Brilliante Result: https://www.actualtests4sure.com/Financial-Accounting-and-Reporting-test-questions.html
Tested Material Used To Financial-Accounting-and-Reporting: https://drive.google.com/open?id=1lUocYYxTMta_4KeE3UlcKBHqmi6yG-3r
