Hoggett Financial Accounting 6th edition Page 1 of 8

Hoggett Financial Accounting 6th

edition
Practice Test
Chapter 1
For each question select the one best response.

Question 1 of 36
The job of the modern accountant is a challenging one. The most critical requirement is:

A. Neatness
B. Punctuality

C. Ability to manage change

D. Ability to add up
Correct. The most critical requirement for an accountant in the modern world is the
ability to manage change.

Question 2 of 36
Select the correct order in which the steps in the decision making process occur.
1. Gather information
2. Establish goals
3. Choose a course of action
4. Evaluate alternatives
A. 1, 2, 3, 4
B. 4, 3, 2, 1
C. 2, 4, 1, 3
D. 2, 1, 4, 3
Incorrect. D is correct. The correct order in which the steps in the decision making
process occur are 2. Establish goals, 1. Gather information, 4, Evaluate alternatives, 3.
Choose a course of action.

Question 3 of 36
Which of the following is not an economic decision?

A. Religious belief

B. Taking out a loan

C. Purchasing a mobile phone
D. Renting a flat
Correct. Choosing a religious belief is not an economic decision.

Question 4 of 36

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Accounting is defined as the process of identifying, measuring, recording and

_______________ economic information to permit informed judgements and economic
decisions by users of the information.
A. Observing

B. Communicating
C. Processing
D. Certifying
Incorrect. B is correct. Accounting is defined as the process of identifying, measuring,
recording and communicating economic information to permit informed judgements and
economic decisions by users of the information.

Question 5 of 36
The economic events which constitute the inputs into the accounting system are known
as:
A. Transactions
B. Accounting reports
C. Costs
D. Ledgers
Correct. The economic events which constitute the inputs into the accounting system are
known as transactions.

Question 6 of 36
Decision-makers who are responsible for planning and controlling the operations of an
organisation from within are known as:
A. Internal decision-makers
B. External decision-makers
C. Primary decision-makers
D. General decision-makers
Correct. Decision-makers who are responsible for planning and controlling the operations
of an organisation from within are known as internal decision-makers.

Question 7 of 36
How many of the following decisions would be made by external as opposed to internal
decision-makers? Investing funds in the business, assessing an application for a loan,
expanding the product range, hiring staff.
A. 1

B. 2
C. 3
D. 4
Incorrect. B is correct. (2) Investing funds in the business and assessing an application
for a loan are the decisions which would be made by external decision-makers.

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Question 8 of 36
The two broad branches into which accounting is divided are:

A. Company and partnership

B. Taxation and audit

C. Management and financial

D. Commercial and non-commercial
Incorrect. C is correct. The two broad branches of accounting are management
accounting and financial accounting.

Question 9 of 36
Which of the following is not a characteristic of financial accounting?

A. Compliance with accountant standards

B. Annual reporting
C. Verification by audit
D. Format determined by the user
Incorrect. D is correct. Format determined by the user is not a characteristic of financial
accounting.

Question 10 of 36
Reports prepared for users who have specialist needs and who have the authority to
obtain the information to meet those needs are known as:
A. Special-purpose reports
B. General-purpose financial reports

C. Not-for-profit reports
D. Historical cost reports
Correct. Reports prepared for users who have specialist needs and who have the
authority to obtain the information to meet those needs are known as special-purpose
reports.

Question 11 of 36
Which of the following is not a general-purpose financial report?

A. Profit and loss statement

B. Balance sheet
C. Cash flow statement
D. Sales budget
Incorrect. D is correct. A sales budget is not a general-purpose financial report.

Question 12 of 36
The accounting profession in Australia is largely:

A. Self-regulated

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B. Regulated by parliament
C. Regulated by the stock exchange
D. Unregulated
Correct. The accounting profession in Australia is largely self-regulated.

Question 13 of 36
The address of the website of the Institute of Chartered Accountants in Australia is:

A. www.icaa.asn.au

B. www.icaa.org.au
C. www.chartered.com.au
D. www.acc.org.au
Incorrect. B is correct. The address of the website of the Institute of Chartered
Accountants in Australia, is www.icaa.org.au.

Question 14 of 36
Which of the following is not one of the four areas in which public accountants tend to
specialise?
A. External audit

B. Taxation services
C. Insolvency
D. Cost accounting
Incorrect. D is correct. Cost accounting is not one of the four areas in which public
accountants tend to specialise.

Question 15 of 36
The area of accounting that deals with the preparation of plans and forecasts of future
operations is called:
A. Auditing
B. Costing
C. Budgeting
D. Liquidating
Incorrect. C is correct. The area of accounting that deals with the preparation of plans
and forecasts of future operations is called budgeting.

Question 16 of 36
The area of accounting concerned with the management of resources for federal state
and local government is known as:
A. Public accounting
B. Commercial accounting
C. Government accounting
D. Financial accounting

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Incorrect. C is correct. The area of accounting concerned with the management of

resources for federal state and local government is known as government accounting.

Question 17 of 36
Which of the following has not been found by research to be a common ethical issue
faced by accountants?
A. Confidentiality

B. Failure to maintain technical competence

C. Difficulty in admitting to mistakes
D. Taking money from the cash register
Incorrect. D is correct. Taking money from the cash register has not been found by
research to be a common ethical issue faced by accountants.

Question 18 of 36
Some knowledge of accounting can help non-accountant professionals to do their jobs
more effectively.
True

False
Correct. Some knowledge of accounting can help non-accountant professionals to do
their jobs more effectively.

Question 19 of 36
Accounting has been described as the music of business.
True

False
Correct. Accounting has been described as the language of business.

Question 20 of 36
Buying a newspaper is not an economic decision.
True

False
Correct. Buying a newspaper is an economic decision.

Question 21 of 36
The economic events which constitute the inputs into the accounting system are known
as accounting standards.
True
False
Correct. The economic events which constitute the inputs into the accounting system are
known as transactions.

Question 22 of 36

Accounting is defined as the independent examination by an accountant of the financial

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statements and supporting documents of an entity.

True

False
Incorrect. The statement is false. Accounting is defined as the process of identifying,
measuring, recording and communicating economic information to permit economic
decision- making by users of the information.

Question 23 of 36
Summarising and classifying are part of the recording of accounting transactions. These
processes are important in providing information in a form that is useful for decision
making.
True
False
Incorrect. The statement is true. Summarising and classifying are important processes in
providing accounting information in a form that is useful for decision making.

Question 24 of 36
Internal as well as external decision-makers can make use of general- purpose financial
reports.
True

False
Incorrect. The statement is true. Internal as well as external decision-makers can make
use of general-purpose financial reports.

Question 25 of 36
Accountants are not just concerned with recording past events but are involved in
estimating the dollar effects of future activities.
True
False
Corect. Accountants are not just concerned with recording past events but are involved in
estimating the dollar effects of future activities.

Question 26 of 36
Businesses prepare their management accounting reports at the end of the financial
year.
True
False
Correct. Businesses prepare their management accounting reports throughout the year,
as needed.

Question 27 of 36
Australian businesses with an annual turnover greater than $50 000 must register for
GST (Goods and Services Tax).
True
False

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Correct. Australian businesses with an annual turnover greater than $50 000 must
register for GST (Goods and Services Tax).

Question 28 of 36
The format and content of financial accounting reports are dictated by accounting
standards but management reports are not subject to standards and can be tailored to
meet the specific information needs of users.
True

False
Incorrect. The statement is true. The format and content of financial accounting reports
are dictated by accounting standards but management reports are not subject to
standards and can be tailored to meet the specific information needs of users.

Question 29 of 36
The Institute of Chartered Accountants in Australia and CPA Australia are the two major
professional bodies that oversee the accounting profession in Australia.
True
False
Correct. The Institute of Chartered Accountants in Australia and CPA Australia are the
two major professional bodies that oversee the accounting profession in Australia.

Question 30 of 36
Services offered by public accountants to their clients may include advising on the
installation of computer systems.
True

False
Correct. Services offered by public accountants to their clients may include advising on
the installation of computer systems.

Question 31 of 36
Knowledge of tax laws and regulations is not important for accounting professionals.
True

False
Correct. Knowledge of tax laws and regulations is vital for accounting professionals.

Question 32 of 36
Accounting reports are a summary of thousands of transactions.
True

False
Correct. Accounting reports are a summary of thousands of transactions.

Question 33 of 36
The collapse of large corporations creates pressure from the community to raise ethical
standards in business.
True

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False
Correct. The collapse of large corporations creates pressure from the community to raise
ethical standards in business.

Question 34 of 36
A proposal by a client or an employer to manipulate the profit report is a common ethical
dilemma faced by accountants.
True
False
Incorrect. The statement is true. A proposal by a client or an employer to manipulate the
profit report is a common ethical dilemma faced by accountants.

Question 35 of 36
A CPA is an accountant who has met the qualifications and experience requirements for
membership of the Institute of Chartered Accountants in Australia.
True

False
Incorrect. The statement is false. A CPA is an accountant who has met the qualifications
and experience requirements for membership of CPA Australia.

Question 36 of 36
Ethics can be taught although, ultimately, maintaining appropriate ethical standards is
the responsibility of the individual.
True

False
Incorrect. The statement is true. Ethics can be taught although, ultimately, maintaining
appropriate ethical standards is the responsibility of the individual.

Practice test score: 18 out of 36 Continue

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