Download ACCY 231 Exam Questions and Answers: Financial Reporting and Regulatory Frameworks and more Exams Accounting in PDF only on Docsity!
Questions and Answers 2026
Companies act 1993 -
correct answer ✅Key regulatory source of financial
reporting. Mandates that NZ companies prepare FS annually. Sets out rules for who prepares FS, Audit requirements & filing and disclosure obligations Large company definition CA1993 -
correct answer ✅A company that in the two preceding
accounting periods meets at least one of the following thresholds: Total Assets > $66mil OR Total Revenue > $33mil Large overseas company definition CA1993 -
correct answer ✅Company incorporated outside of NZ
but operating within. Meets at least one of the following thresholds: Total Assets >$22mil OR Total Revenue $11mil Public Benefit Entities (PBE) CA1993 requirement -
correct answer ✅Required to prepare General Purpose
Financial Reports (GPFR)
Questions and Answers 2026
Companies with 10+ shareholders CA requirement -
correct answer ✅Must prepare FS unless opted out
through shareholder resolution (Section 207I) Companies with <10 shareholders CA requirement -
correct answer ✅Not required to prepare FS unless
opted in by shareholders (section 207K) Companies required to audit CA1993 -
correct answer ✅Large companies, Large overseas
companies, Public entities, Companies required by constitution or shareholders, FMC reporting entities Financial reporting Act 2013 -
correct answer ✅Defines who must prepare FS, Which
NZGAAP standards apply and how compliance is enforced Role of XRB -
correct answer ✅Determines NZGAAP & issues
accounting/auditing standards, sets multi-tier reporting framework
Questions and Answers 2026
Charities act 2005: -
correct answer ✅Requires registered charities to
prepare and audit FS fair value management -
correct answer ✅represents the current value of an
asset or liability in a transaction under normal market conditions between independent parties. replaces historical cost to reflect the present value of an asset/liability. IFRS introduced standardised rules to prevent missuse. IFRS fair value objectives -
correct answer ✅1. define fair value 2. set framework
for measuring fair value 3. requires discloresures about fair value measurements principal market -
correct answer ✅market with the highest trading
volume used to determine fair value Most advantageous market -
correct answer ✅if no principle market exists - choose
Questions and Answers 2026
market that results in highest net proceeds for selling asset liability (after transport & transaction costs) access to market -
correct answer ✅entity must have access to selected
market in order to use market prices 3 levels NZIFRS fair value hierachy: -
correct answer ✅1. market approach 2. obervable
inputs 3. discounted cash flow measurement techniques in fair value -
correct answer ✅1. market approach 2. cost approach
- income approach market approach measurement techniques -
correct answer ✅uses market transactions for
identical/similar assets cost approach measurement technique -
correct answer ✅uses replacement cost of an asset
Questions and Answers 2026
best estimate -
correct answer ✅expected cost to settle an obligation
discounting -
correct answer ✅if settlement is long term, discount
provision to pv risk adjustments -
correct answer ✅consider interest rates risk but not
credit risk contingent liabilties -
correct answer ✅1. possible obligation confirmed by
future outcomes 2. present obligation but fails recognition criteria constructive obligation -
correct answer ✅exists when a company through past
actions or current statements indicates that it will accept certain responsibilities and, as a result, has created a valid expectation on the part of other parties that it will discharge those responsibilities
Questions and Answers 2026
contingent asset -
correct answer ✅1. possible asset from past events 2.
confirmed by future events not within the entitys control 3. do not recognise but disclose if income is probable. Data analytics -
correct answer ✅The process of interpreting and
analysing datasets to find meaningful insights the 4 V's of big data -
correct answer ✅1. Volume 2. Variety 3. Velocity 4.
Veracity Volume (DA) -
correct answer ✅The total amount of data
Variety (DA) -
correct answer ✅The different types of data (numbers,
text, images etc)
Questions and Answers 2026
Objective of general purpose financial reporting according to the conceptual framework -
correct answer ✅To provide financial information about
the reporting entity that is useful to existing or potential investors, lenders and other creditors to help make decisions about providing resources to the entity. What is the aim of the GPFR objectives according to the conceptual framework -
correct answer ✅The aim is to enhance resource
allocation by providing a true picture of the entities financial performance and position. Fundamental qualitative characteristics of financial reporting information -
correct answer ✅1. Relevance 2. Faithful
Representation Fundamental qualitative characteristic 1. Relevance attributes -
correct answer ✅1. Information is capable of
Questions and Answers 2026
influencing decision making 2. Information has either predictive value and/or confirmatory value (or both) Fundamental qualitative characteristic 2. Faithful Representation -
correct answer ✅Information must be complete,
neutral and free from error Enhancing characteristics of financial reporting -
correct answer ✅3. Comparability 4. Verifiability 5.
Timeliness 6. Understandability Enhancing characteristics of financial reporting: comparability -
correct answer ✅Information has consistent
measurement and presentation of items (enhances relevance) Enhancing characteristics of financial reporting: Verifiability -
correct answer ✅Information should be able to be
reproduced with same data sets (enhances reliability)
Questions and Answers 2026
- Because so specific, no blanket quantitative threshold can be used to determine what is/nt material. Measurement uncertainty and faithful representations
correct answer ✅1. Measurement uncertainty occurs
when information cannot be measured directly and thus must be estimated 2. Reasonable estimates that are accurate, clear and explained and described does not undermine reliability of financial report. Key recognition criteria/characteristics of an asset -
correct answer ✅An measurable economic resource
controlled by the entity from a past event/transaction that holds a probable economic inflow/benefit. Key recognition criteria/characteristics of an liability -
correct answer ✅A measurable present obligation to
another entity that has resulted from a past transaction/event and will result in a probable outflow of economic resources.
