CPA Australia Financial-Accounting-and-Reporting Exam Questions Free Practice Test

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Questions # 1:

Which one of the following is the correct treatment of sales?

Options:

Cash sales are recorded in the receivables ledger prior to posting to the general ledger.

Credit sales are recorded in the receivables ledger prior to posting to the general ledger.

Cash and credit sales are recorded in the receivables ledger prior to posting to the general ledger.

Credit sales are not recorded in the receivables ledger prior to posting to the general ledger.

Questions # 2:

Which one of the following is an objective of the International Federation of Accountants (IFAC)?

Options:

to provide advice on accounting standards to the OECD

to issue new international financial reporting standards (IFRS)

to establish high quality professional standards in accountancy

to provide direction to the Financial Accounting Standards Board (FASB)

Questions # 3:

Which form of capital market efficiency exists when share prices on the stock market reflect all information whether public or not?

Options:

allocative efficiency

strong form efficiency

semi-strong form efficiency

information processing efficiency

Questions # 4:

According to the Australian Accounting Standards Board, which one of the following is a benefit of adopting International Financial Reporting Standards (IFRSs)?

Options:

to increase foreign investors' understanding of local financial reports

to enable the national government to control activities of foreign multinationals

to make it easier for tax authorities to calculate taxes on investors' overseas income

to become a resource for developing nations who can easily adopt IFRSs as a full set of standards

Questions # 5:

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

Options:

profit smoothing

window dressing

trading in derivatives

aggressive earnings management

Questions # 6:

Historical cost accounting provides financial information that is

Options:

relevant for decision making.

relevant and reliable for decision making.

relevant but may not be reliable for decision making.

reliable but may not be relevant for decision making.

Questions # 7:

In a strong efficient market, the finance manager will

Options:

analyse historical data on takeover targets.

maximise the net present value of the firm's investments.

develop strategies to disclose the company's profit or loss.

employ analysts to determine the best time to issue shares.

Questions # 8:

Liquidity of a company is based on its ability to

Options:

buy back shares.

meet long term commitments.

pay dividends to shareholders.

meet short term commitments.

Questions # 9:

Which one of the following best describes the objective of the International Financial Reporting Standards (IFRS) Foundation?

Options:

to co-ordinate the accounting profession on a global scale by issuing and establishing international standards

to develop an International regulatory framework in the national jurisdictions of countries that produce accountants

to guide investors who compare the financial statements of one entity in one country with those of another entity located elsewhere

to promote the application, convergence and use of International Financial Reporting Standards (IFRS) as a high quality reporting solution

Questions # 10:

A company's financial report is compliant with International Financial Reporting Standards. Where in the report would an investor find the amount of money received by the company for investment activities?

Options:

statement of cash flows

statement of financial position

statement of changes in equity

statement of comprehensive income

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