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CPA Australia CPA Financial Accounting and Reporting Sample Questions:

1. Which accounting theory is best described by the statement 'An approach to accounting is one where a theory is thought of as a body of knowledge that explains and attempts to predict actual accounting practice'?

A) positive accounting theory
B) normative accounting theory
C) historical cost accounting theory
D) general accounting theory

2. The ability of a company to pay its bills when and as they fall due is a measure of

A) solvency.
B) compliance with the conceptual framework.
C) the true and fair view of the financial report.
D) economic value.

3. In an efficient market, normally if interest rates rise, share prices will

A) fall in anticipation of a reversal in the interest rate cycle.
B) fall since investors expect a higher return.
C) rise since banks invest their increased profits.
D) rise due to the overall positive sentiment.

4. When business managers seek detailed information about the profitability or efficiency of different parts of their operations, they would find the most useful information in

A) various management accounting reports.
B) the company's accounting policies.
C) the annual financial report.
D) financial statements as specified by IAS 1 Presentation of Financial Statements.

5. Generally accepted accounting practice recognises revenue when

A) goods are dispatched to the customer.
B) customers order goods.
C) cash is received for the goods.
D) goods are produced.

Solutions: