Fundamentals Of Accounting And Auditing MCQ - Accounting And Auditing Section 2
- A There is no definition of a reserve in the accounting standard or in the Corporations Act.
- B Reserves may be established by normal practice.
- C Movements in a revaluation reserve can be reclassified in a later period as part of profit or loss.
- D The reserve's accounts of a company are regarded as equity.
- A contributed equity from shareholders;
- B profits retained by the company before tax is paid to the government;
- C net cash retained by the company before any payment for dividends to shareholders;
- D profits retained by the company after payment and provision for dividends, and after any transfer to and from reserves;
- A The tax-effect method focuses on the differences between an entity’s balance sheet prepared under accounting standards and its tax-based balance sheet prepared in accordance with income tax legislation.
- B Accounting entries for current tax liabilities and assets are based on an assessment of an entity’s current taxable income or tax loss.
- C AASB 112 requires a company to account for both the current and the future tax consequences of its economic events.
- D Income tax expense recognized in the accounting records as a result of movements in current tax liabilities (assets).
