Deck 1: Entities and Financial Reporting Standards

Question 1

In a statement of financial position for a sole trader the balance of the non-current assets are usually included at:

A) Cost
B) Book value
C) Scrap value
D) Replacement value

Answer 1

Book value

Question 2

In accounting the term 'purchases' means:

A) All items bought
B) Only goods bought on credit
C) Only goods bought and paid for
D) Only goods bought for resale

Answer 2

Only goods bought for resale

Question 3

Which of the following is an investment in an associated company?

A) A trademark
B) A motor vehicle
C) A share certificate for a quoted company
D) A stake in a subsidiary

Answer 3

A stake in a subsidiary

Question 4

A partnership is:

A) When two or more people get together to form a business
B) When members get together to form a business
C) When a business is incorporated by law as a separate legal entity
D) When an individual starts a business on their own

Question 5

Which of the following may be classified as an intangible non-current asset?

A) Leasehold premises.
B) Investments.
C) Goodwill.
D) Trade receivables.

Question 6

The following information should be used to answer questions 6 to 9
A. SimonStatement of financial position as at 31 March 20Y0


-The owner's capital employed in the business at the date of the statement of financial position is:

A) £12,000
B) £14,000
C) £19,000
D) £21,350

Question 7

The historical cost value of non-current assets is:

A) £5,000
B) £17,000
C) £22,000
D) £27,000

Question 8

The accumulated depreciation on non-current assets is:

A) £5,000
B) £17,000
C) £22,000
D) £27,000

Question 9

The book value of non-current assets is:

A) £5,000
B) £17,000
C) £22,000
D) £27,000

Question 10

Which of the following is not a liability?

A) Bank loan
B) Bank deposit account
C) Trade payables
D) Tax owing

Question 11

Which of the following is correct?
A statement of financial position has the following sub-headings:

A) Non-current assets, Current assets, Owners' capital, Non-current liabilities, Current liabilities
B) Current assets, Income, Non-current assets, Owners' capital, Non-current liabilities
C) Owners capital, Non-current liabilities, Current liabilities, Current assets,
D) Liabilities, Assets, Non-current income, Non-current expenditure, Owners capital

Question 12

Which order should the following items appear in the statement of financial position?
1)Inventory
2)Cash
3)Trade receivables
4)Prepayments

A) 2, 4, 3, 1
B) 4, 2, 3, 1
C) 1, 2, 3, 4
D) 1, 3, 4, 2

Question 13

Which of the following documents is not a component of financial statements but forms part of the annual return?

A) Statement of financial position
B) Statement of cash flows
C) Financial review
D) Comprehensive income statement

Question 14

Which of the following should appear in the income statement?

A) Rent
B) Motor vehicles
C) Plant and Machinery
D) Computer equipment

Question 15

Which of the following should not appear in the income statement?

A) Stationery
B) Advertising
C) Fixtures
D) Rates

Question 16

Which of the following should appear in the statement of financial position?

A) Wages
B) Drawings
C) Purchases
D) Heat and light