Test: ACG35 Contemporary issues in accounting | Quizlet
NAME
7 Matching questions
1. Arguments in favour of regulation
INCORRECT
No answer given
THE ANSWER
B. -Markets for information not efficient
-'On average' market efficiency arguments ignore the rights B. -Markets for information not efficient
of individuals
-Those able to demand information can often do so as a
result of power over scarce resources, while those with
limited power are generally unable to secure information
without regulation (even though the organisation may
impact their existence)
-Investors need protection from fraudulent organisations
producing misleading information
-Regulation leads to uniform methods thus
enhancing comparability
2. The tax base for revenue in advance is
INCORRECT
No answer given
THE ANSWER
F. carrying amount - revenue received in advance
3. Measurement of agricultural produce
INCORRECT
No answer given
THE ANSWER
D. Fair value less point of sale costs at each point of
harvest. This becomes "cost" for AASB102 (Inventories)
4. arguments for full cost mothod
INCORRECT
No answer given
THE ANSWER
C. 1. costs are associated with overall effort to discover
reserves and thus should be recognised as asset.
2. statement shows 'true worth' of the deposit.
- relevance vs reliability argument trade-off
- overstating the balance sheet and understating the P/L
https://quizlet.com/147547077/test
4/22/20, 11(50
5%
A. there is a present obligation as a result of a past event
resulting in a probable outflow of resources and can be
reliably estimated
-'On average' market efficiency arguments ignore the
rights of individuals
-Those able to demand information can often do so as a
result of power over scarce resources, while those with
limited power are generally unable to secure information
without regulation (even though the organisation may
impact their existence)
-Investors need protection from fraudulent organisations
producing misleading information
-Regulation leads to uniform methods thus
enhancing comparability
C. 1. costs are associated with overall effort to discover
reserves and thus should be recognised as asset.
2. statement shows 'true worth' of the deposit.
- relevance vs reliability argument trade-off
- overstating the balance sheet and understating the P/L
D. Fair value less point of sale costs at each point of
harvest. This becomes "cost" for AASB102 (Inventories)
E. Accounting profit/loss
+accounting expense not deductible for tax
+accounting expenses where the amount differs from
deductible amounts
+taxable income where the amount differs from
accounting revenue
- accounting revenues not subject to taxation
- accounting revenues where the amount differs from
taxable income
- accounting revenues where the amount differs from
accounting expense
x tax rate %
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Test: ACG35 Contemporary issues in accounting | Quizlet 4/22/20, 11(50

5. evaluation includes.. F. carrying amount - revenue received in advance

INCORRECT
G. work undertaken to determine the technical feasibility
No answer given
and commercial viability of the prospect
THE ANSWER

G. work undertaken to determine the technical feasibility

and commercial viability of the prospect

6. A provision is recognised on the statement of financial

position when

INCORRECT

No answer given
THE ANSWER

A. there is a present obligation as a result of a past event

resulting in a probable outflow of resources and can be
reliably estimated

7. Calculation of current tax liability

INCORRECT

No answer given
THE ANSWER

E. Accounting profit/loss
+accounting expense not deductible for tax
+accounting expenses where the amount differs from
deductible amounts
+taxable income where the amount differs from accounting
revenue
- accounting revenues not subject to taxation
- accounting revenues where the amount differs from
taxable income
- accounting revenues where the amount differs from
accounting expense
x tax rate %

7 Multiple choice questions

1. covers a range of activities including exploration for and production/sale of non-renewable natural resources such as
minerals, oil and natural gas

A.
Four approaches to exploration and evaluation costs

B. What is the definition of extractive industries

C.
How does a finance lease affect financial statements?

D.
Iasb has a hierarchy for measurement of assets at fair value

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Test: ACG35 Contemporary issues in accounting | Quizlet 4/22/20, 11(50

2. Values change in response to something ie futures options swaps

A. Derivative

B.
A provision is

C.
The minimum lease payments and unguaranteed residual value equal

D.
A finance lease is

3. Commissions, levies by agencies and commodity exchanges and transfer taxes. DOES NOT include any costs incurred
in getting assets to a market.

A.
What is an area-of-interest

B.
A present obligation may be

C.
Exp and Eval AASB 6 measurement requirements

D. Point of sale costs include

4. fair value of leased asset and any initial direct costs of the lessor

A.
Fair value of biological assets can be determined by

B.
Fundamental qualitative characteristics for iasb conceptual framework

C.
Measurement of agricultural produce

D. The minimum lease payments and unguaranteed residual value equal

5. a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow
from the entity of resources embodyng economic benefits

A.
How does a finance lease affect financial statements?

B. The conceptual framework defines a liability as

C.
Steps involved in calculating deferred tax

D.
Differences in recognised transactions result in

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Test: ACG35 Contemporary issues in accounting | Quizlet 4/22/20, 11(50

6. Movements in the prices of goods and services included in a general price index (CPI) may not reflect specific price
movements in different industries
Information generated under CPPA may be confusing to users
Studies of share price reactions failed to find much support for decision usefulness of CPPA data

A. What are the criticisms of CPPA-based financial statements compared to the criticisms of CCA-based financial
statements?

B.
What is the distinguishing factor between liabilities and provisions?

C.
How do you think companies might respond to negative/bad publicity being published in the media?

D.
If no market is available to reliably measure fair value of biological assets (not agri produce)...Measure at

7. Active market, recent transactions, adjusted prices for similar goods, sector benchmarks

A.
Measurement of agricultural produce

B.
Four approaches to exploration and evaluation costs

C. Fair value of biological assets can be determined by

D.
Measurement of biological assets

6 True/False questions

1. a possible obligation whose existence will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly in control of the entity or a present obligation that fails the recognition
criteria → AASB 137 defines a contingent liability as

INCORRECT

No answer given
THE ANSWER

True

2. a liability of uncertain timing or amount → An operating lease is

INCORRECT

No answer given
THE ANSWER

False
It should be → A provision is

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Test: ACG35 Contemporary issues in accounting | Quizlet 4/22/20, 11(50

3. Initiallr recognised at cost. Thereafter entity can choose cost or revaluation model. → Classification of financial
instruments

INCORRECT

No answer given
THE ANSWER

False
It should be → Mining exploration and evaluation assets

4. The main agency problems involved in debtholder-shareholder relationships are:

Excessive dividend payments. This lowers the value of debt because it reduces available funds to service the debt. It
transfers wealth from within the firm, where it is available to lenders, to the shareholders.
Claim dilution. When further debt is issued, this makes the original debt riskier and lowers its value to the original
debtholders.
Asset substitution. When debt is issued that reflects (and subsequently projects) a particular risk, a higher risk is
undertaken.
Underinvestment. This occurs when management or shareholders reject desirable positive NPV projects on the grounds
that most of the benefits accrue to debt holders → Explain how agency costs of debt arise, and how debt contracts
can be designed to reduce those costs.

INCORRECT

No answer given
THE ANSWER

True

5. - Written off exploration and eval costs and number of projects is relevant to investors when assessing the value of
extractive firms
- implementation of AASB6 has led to an improvement in info relevance in assessing firm bvalue → Expl and eval study
found..

INCORRECT

No answer given
THE ANSWER

True

6. Not providing prescription

Not value free as it asserts assumption all action is driven by self-interest
Too negative and simplistic a perspective of humankind
Issues have not shown great development
Ignore organizational specific relationship
Not providing prescription
Could alienate academic accountants from their counterparts with the profession → Criticism of PAT

INCORRECT

No answer given
THE ANSWER

True

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