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CPA Australia CPA Financial Accounting and Reporting Sample Questions:

1. According to the IASB's Conceptual Framework, the key reason general purpose financial statements are produced is to satisfy the information needs of

A) internal users.
B) capital providers.
C) employees.
D) management.

2. Which one of the following practices is not considered creative accounting?

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

3. The concept of transparency in corporate governance means that listed companies should disclose

A) their future strategy.
B) confidential issues relating to competitors.
C) only mandatory information by management.
D) material information that affects decisions.

4. What is the difference between positive and normative accounting theories?

A) Normative accounting theory predicts what is expected to occur rather than explaining what should occur.
B) Normative accounting theory explains what should occur instead of predicting what is expected to occur.
C) Positive accounting theory explains what should occur.
D) Normative accounting theory specifies the prediction rules for items.

5. A rules-based approach to standard setting

A) provides a broad framework for standard setting.
B) helps a standard-setting body to prioritise matters.
C) ensures there are no conflicts within accounting standards as each issue is handled just once.
D) prescribes standards that attempt to cover all eventualities a business may face.

Solutions: