CPA Australia CPA Financial Accounting and Reporting - Financial-Accounting-and-Reporting Exam Questions [2026]

QUESTION NO: 1
As per the International Accounting Standards Board conceptual framework, which of the following holds the primary responsibility for preparing and presenting financial statements?
I)owners
II)auditors
III)directors

A. II and III only B. I only C. III only D. I and II only

Correct Answer: C

QUESTION NO: 2
Which one of the following would be recognised in the statement of profit or loss and other comprehensive income?

A. employee wages B. prepayment of expenses C. inventory D. retained earnings

Correct Answer: A

QUESTION NO: 3
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. the company's accounting policies. B. various management accounting reports. C. financial statements as specified by IAS 1 Presentation of Financial Statements. D. the annual financial report.

Correct Answer: B

QUESTION NO: 4
Which one of these is a key principle of good corporate governance?

A. restriction of shareholders' rights in decision-making B. effective communication with shareholders C. non-disclosure of directors' agency relationship with the company D. effective management of the employees of the company

Correct Answer: B

QUESTION NO: 5
Which one of the following includes social reporting guidelines?

A. International Financial Reporting Standards (IFRS) B. International Accounting Standards (IAS) C. Global Reporting Initiative (GRI) D. Generally Accepted Accounting Principles (GAAP)

Correct Answer: C

QUESTION NO: 6
Which one of the following methods is not used for 'creative accounting'?

A. off balance sheet financing B. profit smoothing C. aggressive debt management D. window dressing

Correct Answer: C

QUESTION NO: 7
The Framework for the Preparation and Presentation of Financial Statements which assists the development of the International Financial Reporting Standards (IFRS) was originally approved by the

A. IFRS Interpretations Committee (IFRIC). B. International Accounting Standards Committee (IASC). C. International Federation of Accountants (IFAC). D. International Accounting Standards Board (IASB).

Correct Answer: B

QUESTION NO: 8
Which of the following statements are correct in the context of accounting concepts and principles?
I)The going concern assumption requires that assets be carried at their cost values.
II)Prudence allows the creation of contingency reserves and more generous provisions.
III)Financial information is considered complete even if it excludes non-material information.
IV)Understandability does not require complex information to be excluded from financial reports.

A. II and III only B. I and III only C. II and IV only D. III and IV only

Correct Answer: D

QUESTION NO: 9
Which one of the following practices is not considered creative accounting?

A. profit smoothing B. aggressive earnings management C. trading in derivatives D. window dressing

Correct Answer: C

QUESTION NO: 10
Restrictions on the scope of a specific accounting standard are stated in

A. various Statements of Accounting Concepts (SACs) issued by the AASB. B. that specific standard. C. the explanatory materials provided by the AASB. D. the IASB's Conceptual Framework.

Correct Answer: B