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CPA Australia CPA Financial Accounting and Reporting Sample Questions:

1. Which one of the following financial statements helps provide information about factors that might affect an entity's liquidity or solvency?

A) statement of profit or loss and other comprehensive income
B) notes to the financial statements
C) statement of cash flows
D) statement of changes in equity

2. A decrease in assets is most likely to be recognised in the financial report as

A) a change in equity.
B) an expense.
C) a liability.
D) revenue earned.

3. A decision has been made to change the value of a major non-current asset, upon which depreciation is based, from original cost to a revalued amount. This results in a change in

A) accounting estimate and does not need to be disclosed.
B) measurement basis and does not need to be disclosed.
C) accounting estimate and must be disclosed.
D) measurement basis and must be disclosed.

4. Which one of the following is a benefit of developing financial reporting standards using a conceptual framework?

A) The interpretation of non-financial information is made easier.
B) The interpretation of financial reporting standards by anybody would be easy.
C) A financial reporting environment based on standardised principles would be created.
D) The financial statements based on these standards would be error-free.

5. According to IASB's Conceptual Framework, an expense is a decrease in economic benefits in the form of
I.
outflows.
II.
decreases of assets.
III.
incurrences of liabilities.
IV.
contributions to equity holders.

A) I, II and III only
B) I, III and IV only
C) I, II and IV only
D) II, III and IV only

Solutions:

Question # 1 Answer: C

Question # 2 Answer: B

Question # 3 Answer: D

Question # 4 Answer: C

Question # 5 Answer: A