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CPA Australia CPA Financial Accounting and Reporting Sample Questions:

1. Which one of the following methods is not used for 'creative accounting'?

A) aggressive debt management
B) off balance sheet financing
C) profit smoothing
D) window dressing

2. You assumed the role as the Chairperson of the Board of Directors of Daylight Ltd. As you start to write your first directors' report, which one of the following areas are you not required to include in your report?

A) Details regarding any significant changes to Daylight's state of affairs for the year that just ended.
B) Review of operations of Daylight during the year just ended and any likely developments in the future that may impact Daylight.
C) Details of any dividends paid or proposed.
D) Details regarding accounting policies pursued by Daylight in preparation of its financial statements.

3. Which accounting theory is best described by the statement 'An approach to accounting is one where a theory is thought of as a body of knowledge that explains and attempts to predict actual accounting practice'?

A) general accounting theory
B) historical cost accounting theory
C) positive accounting theory
D) normative accounting theory

4. A multinational company is converting the methodology of reporting by its subsidiaries in various countries to make it uniform with the requirements of the International Financial Reporting Standards (IFRS). While changing the reporting methodologies, accountants have to apply certain judgments.
Which one of the following is not a valid motivation for decision making on reporting methodologies?

A) to comply with the information demands of government bodies in home country
B) to be consistent with the methodologies followed in the home country of the company
C) to present the company's financial performance in the most favourable way
D) to present the financial statements in a manner that is understood by most users

5. A company sold some old operating equipment from its factory. After depreciation was accounted for, a small gain on sale was recorded. According to the revised IAS 1 Presentation of Financial Statements, this transaction will be shown as a separate item 'gain on sale of equipment'. This item will be shown in the statement of

A) financial position.
B) comprehensive income.
C) changes in equity.
D) cash flow.

Solutions: