Question 1

The regulation of accounting can be argued to be necessary to protect the information rights of parties not involved in the day-to-day operations of the organisation.

Accepted Answer

Accounting regulation ensures that financial information is accurately reported to stakeholders such as investors, creditors, and the public. Without regulation, there is a risk that financial statements could be misleading, resulting in financial loss for those relying on the information. Therefore, regulation protects the information rights of parties not involved in the day-to-day operations of the organisation.

Question 2

The main role of the IFRS Interpretations committee is to resolve disputes between FSA and companies concerning accounting treatments in their financial reports.

Accepted Answer

The main role of the IFRS Interpretations committee is to provide guidance and clarification on the application of IFRS standards, not to resolve disputes between the FSA and companies. Disputes are usually resolved through national courts or regulatory bodies.

Question 3

Disclosing entities generally,are entities that have:
 securities (including debentures)quoted on a recognized securities exchange; issued securities (including debentures)pursuant to a prospectus or a takeover scheme; and borrowing corporations.

Accepted Answer

False

Question 4

Legislation is very specific about what must,and must not,be included in the Directors' Report that is attached to a company's financial statements.

Accepted Answer

The answer of Legislation is very specific about what must,and...

Question 5

The Statements of Accounting Concepts within the Conceptual Framework are developed by the International Accounting Standards Board.

Accepted Answer

The answer of The Statements of Accounting Concepts within the...

Question 6

The Financial Services Authority in the UK (FSA)has the responsibility,among other things,to monitor and regulate various investment products and superannuation in the UK.

Accepted Answer

The Financial Services Authority in the UK has the responsibility to monitor and regulate various investment products and superannuation in the UK.

Question 7

There has been a trend by governments and government departments towards adopting specialised public-sector related standards.

Accepted Answer

The answer of There has been a trend by governments...

Question 8

The Companies Act requires which of the following to be included in a Directors' Responsibilities statement?
I.State whether in their opinion the financial statements comply with accounting standards and the Corporations Act.
II.State whether in their opinion the financial statements give a true and fair view of the financial position and financial performance of the entity.
III.State whether or not in their opinion,when the declaration was made,there were reasonable grounds to believe that the company would be able to pay its debts as they become due.
IV.State details of directors' emoluments.
V.State principal activities of the entity.
A)All of the given answers are correct.
B)I, II and III only
C)I, II, III and IV only
D)IV and V only

Accepted Answer

The Companies Act requires directors to include statements regarding compliance with accounting standards and the Corporations Act, the true and fair view of financial statements, and the ability of the company to pay its debts. Details of directors' emoluments and the principal activities of the entity are not required in the Directors' Responsibilities statement. Therefore, only options I, II, and III are required to be included.

Question 9

Which of the following bodies was set up to enhance the public accountability of the IFRS Foundation whilst not impairing the independence of the standard-setting process?
A)the IFRS Advisory Council
B)the IFRS Foundation Support Operations
C)the IASB
D)the Monitoring Board of Public and Capital Market Authorities

Accepted Answer

The Monitoring Board of Public and Capital Market Authorities was specifically set up to enhance the public accountability of the IFRS Foundation while preserving the independence of the standard-setting process. The other options, such as the IFRS Advisory Council and the IFRS Foundation Support Operations, have roles in supporting the IFRS Foundation, but they do not have the same explicit focus on accountability and independence.

Question 10

The role of the Financial Reporting Council is to provide broad oversight of the process for setting International standards,including the authority to direct the IASB to develop,amend or revoke a particular standard.

Accepted Answer

The Financial Reporting Council (FRC) does not have the authority to direct the International Accounting Standards Board (IASB) to develop, amend, or revoke standards. The IASB is an independent body responsible for setting International Financial Reporting Standards (IFRS).

Question 11

The main role of the International Financial Reporting Interpretations Committee (IFRIC)is to review accounting issues that are likely to receive divergent or unacceptable treatment in the absence of authoritative guidance.

Accepted Answer

The main role of IFRIC is to provide authoritative guidance on the application of IFRS standards to prevent divergent or unacceptable accounting treatments.

Question 12

What are two key ways management accounting is different from financial accounting?
A)Management accounting provides special-purpose information to people external to the firm and it is highly regulated.
B)Management accounting provides information for the day-to-day running of an organisation and it is governed by the requirements of FSA.
C)Management accounting is focused on providing information to shareholders who wish to have input into the management of the organisation and it is regulated by generally accepted accounting principles.
D)Management accounting focuses on providing information for internal users and it is largely unregulated.

Accepted Answer

Management accounting provides information for internal users such as managers and employees, while financial accounting provides information for external stakeholders such as investors, creditors, and regulatory agencies. Additionally, management accounting is largely unregulated and can be customized to meet the specific needs of the organization.

Question 13

Directors could elect not to comply with an accounting standard on the grounds that applying the particular accounting standard would cause the financial statements not to present a 'true and fair view'.

Accepted Answer

This statement is true. According to the International Financial Reporting Standards (IFRS), if compliance with a specific accounting standard would result in financial statements that do not present a 'true and fair view', directors may elect to depart from that standard. However, they must disclose the departure and explain the reasons for it in the notes to the financial statements.

Question 14

The financial statements and supporting notes included in an annual report presented to shareholders at a company's annual general meeting is an example of general-purpose financial statements.

Accepted Answer

The financial statements included in an annual report are intended to provide financial information to a wide range of users, including current and potential shareholders, creditors, and other external parties. These general-purpose financial statements typically include a balance sheet, income statement, statement of cash flows, and notes to the financial statements, and are required by accounting standards and regulations.

Question 15

The International Accounting Standards Board (IASB)issues only one set of accounting standards which have general applicability to the private,public and not-for-profit sectors.

Accepted Answer

The IASB issues International Financial Reporting Standards (IFRS) primarily for the private sector, while public and not-for-profit sectors often follow different standards or guidelines.

Question 16

The main role of the Financial Reporting Council (FRC)is to develop a new conceptual framework for financial reporting.

Accepted Answer

The main role of the Financial Reporting Council (FRC) is to regulate auditors, accountants, and actuaries, and to set the UK’s Corporate Governance and Stewardship Codes. While it does influence financial reporting standards, the development of a new conceptual framework for financial reporting is more directly a task for accounting standards boards like the International Accounting Standards Board (IASB).

Question 17

Financial accounting can be considered a process involving the collection and processing of financial information to assist the decision-making needs of parties internal to an organisation.

Accepted Answer

Financial accounting primarily focuses on the collection and processing of financial information to meet the needs of external parties, such as investors, creditors, and regulators, rather than internal decision-making needs, which are addressed by managerial accounting.

Question 18

Corporate governance is the framework of rules,relationships,systems and processes within and by which authority is exercised and controlled in corporations.

Accepted Answer

This statement accurately defines corporate governance.

Question 19

Accounting cannot be considered to be 'culture free' because the value systems of accountants may be expected to be related to and derived from the values of the society with special reference to work related values and,as such,impacts on accounting systems.

Accepted Answer

Accounting is not culture free as the value systems of accountants are usually influenced by the values of the society in which they operate, especially in regards to work-related values that shape accounting systems.

Question 20

IASB are initials that stand for:
A)International Accounting Standards Board
B)Independent Accounting Standards Bureau
C)International Accounting Standards Bureau
D)International Accounting Supervision Board

Accepted Answer

IASB stands for International Accounting Standards Board, which is responsible for developing and promoting global accounting standards known as International Financial Reporting Standards (IFRS).

Quiz 1: An Overview of the International External Reporting Environment