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CPA Australia CPA Financial Accounting and Reporting Sample Questions:

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

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

2. 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) tax agencies.
D) regulatory authorities.

3. The International Federation of Accountants (IFAC) was established by

A) the International Accounting Standards Board.
B) various professional accounting bodies.
C) the United Nations.
D) the Organization for Economic Co-operation & Development.

4. 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) changes in equity.
C) cash flow.
D) comprehensive income.

5. 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?

A) statement of financial position
B) statement of comprehensive income
C) statement of cash flows
D) statement of changes in equity

Solutions: