Question 1

Financial information that is understandable must possess the characteristic of simplicity.

Accepted Answer

A) True 
 B)False

Question 2

Old information is not useful in making decisions.

Accepted Answer

A) True 
 B)False

Question 3

Information is material by size only.

Accepted Answer

A) True 
 B)False

Question 4

Which one of the following statements is correct?

Accepted Answer

A)  The IASB states in its Conceptual Framework for Financial Reporting that the objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders, other creditors, regulators and members of the public in making decisions about providing resources to the entity. 
B)  Information should only be presented if the benefits of providing this information outweigh the costs of obtaining it. 
C)  Comparability means consistency. 
D)  Items in financial statements are material only by nature.

Question 5

Accounting information fails to: Please select all that apply.

Accepted Answer

A)  Present information on social damage caused by an entity. 
B)  Measure the skills and knowledge base of organisations. 
C)  Exclude subjective valuations from financial statements. 
D)  Provide measures of the quality of organisational performance.

Question 6

Relevant information:
Please select all that apply.

Accepted Answer

A)  May be predictive 
B)  Must be complete, neutral, and free from error 
C)  Can assist users in making predictions about the future 
D)  May be confirmatory

Question 7

Which user group of financial statements would be most interested in information relating to retirement benefit schemes?

Accepted Answer

A)  Shareholders 
B)  Lenders 
C)  Employees 
D)  Customers

Exam 1: Introduction to Accounting

Financial information that is understandable must possess the characteristic of simplicity.

Old information is not useful in making decisions.

Information is material by size only.

Which one of the following statements is correct?

Accounting information fails to: Please select all that apply.

Relevant information: Please select all that apply.

Which user group of financial statements would be most interested in information relating to retirement benefit schemes?