Lecture Topic 3(1)

Lecture Topic 3(1) - ACCT 2542 Session 2, 2010 Quiz 2...

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ACCT 2542 Session 2, 2010 Quiz 2 True/False 1. Currently the IFRS do not contain specific guidelines for non-profit organisations and non- governmental organisations concerning the accounting treatment and presentation of their financial statements. The statement is True. There is no definition of the term ‘not-for-profit’ in any international Financial Reporting Standards. Section 3.2 ‘Types of companies’ 2. Underwriting commission fees paid to underwriters are treated as expenses as they are not considered to be an integral part of the equity issue transaction. The statement is False. AASB 132, paragraph 37 provides that such costs are to be accounted for as a reduction in the share capital being raised. Section 3.4 “Contributed equity: Issue of share capital” Multiple Choice 3. ABC Ltd was registered as a corporation on 1 July 20X9. On 4 July 20X9, ABC Ltd issued a prospectus offering 100 000 ordinary shares at an issue price of $2.50 each, payable $1.50 on application and $1.00 on allotment. Application closed on 1 August 20X9 with the company having received applications for 110,000 shares. The shares were allotted on 15 August 20X9, with the over-subscription amount being refunded to unsuccessful applicants. All allotment monies were received by 31 August 20X9. Following the allotment the balance in the Share Capital account would be: A $100 000 Credit; B $250 000 Credit; C $100 000 Debit; D $250 000 Debit. ANSWER: B Section 3.4 “Contributed equity: Issue of share capital” 4. The qualitative characteristic of reliability of financial information means that the information is: I. Representationally faithful.
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II. Neutral. III. Prudent. IV.Costless. V. Complete in all material respects. A I, III and V only; B II, III and IV only; C I, III and IV only; D I, II, III and V only. ANSWER: D Section 2.6.1 “The current Framework” 5. Where a material error for a prior period is detected, an adjustment A must be made to the prior period comparative balances; B may be recognised directly in retained earnings; C may be deferred and recognised in a later accounting period; D is not necessary, but the item must be fully explained in the notes to the financial statements. ANSWER: A Section 18.3 “AASB 108 Accounting policies, changes”
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ACCT 2542 Session 2, 2010 Quiz 2 with solution True/False 1. Shareholders holding ordinary shares in a company would be entitled to participate in a rights issue? The statement is True. This means that shareholders have the right to participate in any new issues of shares at the same class. Section 3.3 ‘Key features of the corporate structure’ 2. An entity is not permitted to change its accounting policies. The statement is False.
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Lecture Topic 3(1) - ACCT 2542 Session 2, 2010 Quiz 2...

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