Question 1

Shareholders wealth consists of two sources:

Accepted Answer

A)  Dividends and share price 
B)  Profit and share price 
C)  ROCE and dividends 
D)  Growth and dividends 
A)  Dividends and share price 
B)  Profit and share price 
C)  ROCE and dividends 
D)  Growth and dividends A

Question 2

Which fundamental accounting concept stipulates that revenue and costs are recognized as they are earned or incurred?

Accepted Answer

A)  Consistency 
B)  Comparability 
C)  Accruals 
D)  Prudence 
A)  Consistency 
B)  Comparability 
C)  Accruals 
D)  Prudence C

Question 3

Which of the following statements is false?

Accepted Answer

A)  Goodwill is an intangible asset 
B)  Goodwill is the excess of the price paid for the business, acquired over the net fair value of identifiable assets 
C)  According to IFRS 3, internally generated goodwill must be shown as an asset on the statement of financial position 
D)  Goodwill is recognized only where it is the result of a transaction 
A)  Goodwill is an intangible asset 
B)  Goodwill is the excess of the price paid for the business, acquired over the net fair value of identifiable assets 
C)  According to IFRS 3, internally generated goodwill must be shown as an asset on the statement of financial position 
D)  Goodwill is recognized only where it is the result of a transaction C

Question 4

The objective of "reliability" in the ASB's Statement of Principles overrides which fundamental accounting concept?

Accepted Answer

A)  Comparability 
B)  Going concern 
C)  Accruals 
D)  Prudence 
A)  Comparability 
B)  Going concern 
C)  Accruals 
D)  Prudence

Question 5

The establishment of the limited liability company made the position of creditors less secure

Accepted Answer

A) True 
 B)False

Question 6

Financial accounting can measure the "true value" of a company

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is correct?

Accepted Answer

A)  Inventories should be shown at the lower of cost and net realizable value 
B)  Inventories should be shown at net realizable value 
C)  Inventories should be shown at cost 
D)  Inventories should be shown at the higher of cost and net realizable value 
A)  Inventories should be shown at the lower of cost and net realizable value 
B)  Inventories should be shown at net realizable value 
C)  Inventories should be shown at cost 
D)  Inventories should be shown at the higher of cost and net realizable value

Question 8

During the year,the total amount for equity can change because:

Accepted Answer

A)  Additional shares are issued 
B)  Property has been revalued 
C)  Dividends are paid 
D)  All of the above 
A)  Additional shares are issued 
B)  Property has been revalued 
C)  Dividends are paid 
D)  All of the above

Question 9

Which of the following statements is false?

Accepted Answer

A)  The auditors prepare the financial statements 
B)  Auditors are responsible for finding fraud 
C)  The financial statements show what a company is worth 
D)  All of the above 
A)  The auditors prepare the financial statements 
B)  Auditors are responsible for finding fraud 
C)  The financial statements show what a company is worth 
D)  All of the above

Question 10

The going concern concept assumes that the business will continue in operational existence for only a limited period of time

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is NOT generally recognised as being an asset in the financial statements of a company?

Accepted Answer

A)  Goodwill following the sale of a business 
B)  Plant & Machinery used in the business bought on a hire purchase contract 
C)  Stock held for resale 
D)  Skills and qualifications of Staff 
A)  Goodwill following the sale of a business 
B)  Plant & Machinery used in the business bought on a hire purchase contract 
C)  Stock held for resale 
D)  Skills and qualifications of Staff

Question 12

According to ASB's Statement of Principles for Financial Reporting,what 4 objectives should financial accounting statements meet?

Accepted Answer

A)  Accruals, capital maintenance, understandability and relevance 
B)  Relevance, reliability, comparability and understandability 
C)  Prudence, relevance, accruals and comparability 
D)  True and fair view, capital maintenance, reliability and prudence 
A)  Accruals, capital maintenance, understandability and relevance 
B)  Relevance, reliability, comparability and understandability 
C)  Prudence, relevance, accruals and comparability 
D)  True and fair view, capital maintenance, reliability and prudence

Question 13

If a company buys goods for £50,and then sells half of these for £100.How much profit would be recognised?

Accepted Answer

A)  £25 
B)  £50 
C)  £75 
D)  £100 
A)  £25 
B)  £50 
C)  £75 
D)  £100

Question 14

Unincorporated businesses,such as sole traders and most partnerships,are required by law to produce a statement of financial position and income statement

Accepted Answer

A) True 
 B)False

Question 15

The measurement of profit is useful:

Accepted Answer

A)  As a guide to dividend decisions 
B)  As a basis for taxation 
C)  Statements A and B are both correct 
D)  None of the above 
A)  As a guide to dividend decisions 
B)  As a basis for taxation 
C)  Statements A and B are both correct 
D)  None of the above

Question 16

Which of the following concepts suggests that minor items will not affect the true and fair view of a set of financial statements?

Accepted Answer

A)  Duality 
B)  Materiality 
C)  Objectivity 
D)  Consistency 
A)  Duality 
B)  Materiality 
C)  Objectivity 
D)  Consistency

Question 17

The four main objectives of the "Statement of Principles for Financial Reporting" are:

Accepted Answer

A)  Going Concern, Accruals, Consistency and Prudence 
B)  Relevance, Reliability, Comparability and Understandability 
C)  Going Concern, Relevance, Consistency and Comparability 
D)  Accruals, Prudence, Reliability and Understandability 
A)  Going Concern, Accruals, Consistency and Prudence 
B)  Relevance, Reliability, Comparability and Understandability 
C)  Going Concern, Relevance, Consistency and Comparability 
D)  Accruals, Prudence, Reliability and Understandability

Question 18

Which of the following statements is correct?

Accepted Answer

A)  In a period of rising prices, cost of sales is overstated 
B)  In a period of rising prices, return on capital employed (ROC
E)  is understated 
C)  In a period of rising prices, asset values are understated 
D)  In a period of rising prices, depreciation is overstated 
A)  In a period of rising prices, cost of sales is overstated 
B)  In a period of rising prices, return on capital employed (ROC
E)  is understated 
C)  In a period of rising prices, asset values are understated 
D)  In a period of rising prices, depreciation is overstated

Question 19

Which accounting concept is associated with recording items at original cost?

Accepted Answer

A)  Current cost 
B)  Historic cost 
C)  Current market value 
D)  Relevant cost 
A)  Current cost 
B)  Historic cost 
C)  Current market value 
D)  Relevant cost

Question 20

Which of the following is false?

Accepted Answer

A)  A company's statement of financial position should only include the assets that it owns 
B)  An asset is a resource controlled by the enterprise as the result of past events from which economic benefits are expected to flow 
C)  A company's statement of financial position should include all the assets that it controls 
D)  A company's statement of financial position may include financial assets, including shares it owns in another company 
A)  A company's statement of financial position should only include the assets that it owns 
B)  An asset is a resource controlled by the enterprise as the result of past events from which economic benefits are expected to flow 
C)  A company's statement of financial position should include all the assets that it controls 
D)  A company's statement of financial position may include financial assets, including shares it owns in another company

Shareholders wealth consists of two sources:

Which fundamental accounting concept stipulates that revenue and costs are recognized as they are earned or incurred?

Which of the following statements is false?

The objective of "reliability" in the ASB's Statement of Principles overrides which fundamental accounting concept?

The establishment of the limited liability company made the position of creditors less secure

Financial accounting can measure the "true value" of a company

Which of the following statements is correct?

During the year,the total amount for equity can change because:

Which of the following statements is false?

The going concern concept assumes that the business will continue in operational existence for only a limited period of time

Which of the following is NOT generally recognised as being an asset in the financial statements of a company?

According to ASB's Statement of Principles for Financial Reporting,what 4 objectives should financial accounting statements meet?

If a company buys goods for £50,and then sells half of these for £100.How much profit would be recognised?

Unincorporated businesses,such as sole traders and most partnerships,are required by law to produce a statement of financial position and income statement

The measurement of profit is useful:

Which of the following concepts suggests that minor items will not affect the true and fair view of a set of financial statements?

The four main objectives of the "Statement of Principles for Financial Reporting" are:

Which of the following statements is correct?

Which accounting concept is associated with recording items at original cost?

Which of the following is false?

The Statement of Financial Position Balance Sheetand What It Tells Us

The Income Statement Profit and Loss Account

Ratios and Interpretation: a Straightforward Introduction

How the Stock Market Assesses Company Performance

Cash Flow Statements: Understanding and Preparation

Advanced Interpretation of Company and Group Accounts

Current Issues in Financial Reporting

Bookkeeping to Trial Balance

Trial Balance to Final Accounts

Financing a Business

Management of Working Capital

Introduction to Management Accounting

Investment Appraisal

Budgetary Planning and Control

Absorption Costing

Marginal Costing and Decision-Making

Standard Costing and Variance Analysis

Incomplete Records

Filters

Exam 3: The Development of Financial Reporting

Shareholders wealth consists of two sources:

Which fundamental accounting concept stipulates that revenue and costs are recognized as they are earned or incurred?

Which of the following statements is false?

The objective of "reliability" in the ASB's Statement of Principles overrides which fundamental accounting concept?

The establishment of the limited liability company made the position of creditors less secure

Financial accounting can measure the "true value" of a company

Which of the following statements is correct?

During the year,the total amount for equity can change because:

Which of the following statements is false?

The going concern concept assumes that the business will continue in operational existence for only a limited period of time

Which of the following is NOT generally recognised as being an asset in the financial statements of a company?

According to ASB's Statement of Principles for Financial Reporting,what 4 objectives should financial accounting statements meet?

If a company buys goods for £50,and then sells half of these for £100.How much profit would be recognised?

Unincorporated businesses,such as sole traders and most partnerships,are required by law to produce a statement of financial position and income statement

The measurement of profit is useful:

Which of the following concepts suggests that minor items will not affect the true and fair view of a set of financial statements?

The four main objectives of the "Statement of Principles for Financial Reporting" are:

Which of the following statements is correct?

Which accounting concept is associated with recording items at original cost?

Which of the following is false?

The Statement of Financial Position Balance Sheetand What It Tells Us

The Income Statement Profit and Loss Account

Ratios and Interpretation: a Straightforward Introduction

How the Stock Market Assesses Company Performance

Cash Flow Statements: Understanding and Preparation

Advanced Interpretation of Company and Group Accounts

Current Issues in Financial Reporting

Bookkeeping to Trial Balance

Trial Balance to Final Accounts

Financing a Business

Management of Working Capital

Introduction to Management Accounting

Investment Appraisal

Budgetary Planning and Control

Absorption Costing

Marginal Costing and Decision-Making

Standard Costing and Variance Analysis

Incomplete Records

Filters