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Introduction To Accounting, Regulatory Framework And Accounting Conventions

Question 1 of 3

Q1 . The business entity concept requires that a business is treated as separate from its owners.

Q2 . A trade receivable is an example of:

Q3 . Some of the content of financial statements of companies might be specified by national company law.

Q4 . What is the role of IFRIC?

Q5 . A loan of $30,000 from a bank repayable in 3 years' time is:

Q6 . Which of the following items are items of capital expenditure? Cost of re-decorating offices Purchase of additional machinery Construction of an extension to the Head Office building

Q7 . Which of the following are differences between sole traders and limited liability companies? 1. A sole traders' financial statements are private; a company's financial statements are sent to shareholders and are publicly filed 2. Only companies have capital invested into the business 3. A sole trader is fully and personally liable for any losses that the business might make; a company's shareholders are not personally liable for any losses that the company might make.

Q8 . If there is undue delay in reporting financial information, the information might lose its:

Q9 . Which of the following items are items of capital expenditure? Computer repair Purchase of a property Short-term hire of machinery

Q10 . International accounting standards are written primarily with regards to information needs of which type of users?

Q11 . Which of the following characteristics of financial information contribute to reliability? 1. Completeness 2. Prudence 3. Neutrality 4. Faithful Representation

Q12 . Which of the following are examples of qualitative characteristics?

Q13 . A company prepares its financial statements to 31 December each year. It hires an item of equipment for the period 1st November Year 1 to 30 April Year 2, at a cost of $42,000. However it does not have to pay the hire charge until the end of the hire period, at the end of April Year 2. What expense for equipment hire should be included in the income statement for the year to 31 December Year 1?

Q14 . Which of the following statements are true? 1. Materiality means only items that have a physical existence is recognized as assets. 2. Substance over form convention means that the legal form of a transaction must always be shown in financial statements even if this differs from the commercial effect. 3. Money measurement concept means that only items capable of being measured in monetary terms can be recognized in financial statements.

Q15 . In times of rising prices, what effect does a historical cost concept have on a company's asset values and profits?

Q16 . A company prepares its financial statements to 31 December every year. It pays rental costs on an office building annually in advance. It paid rental costs of $600,000 on 31 May Year 1 and $660,000 on 31 May Year 2. What is the expense for the office rental for the year 31 December Year 2?

Q17 . Which of the following statements are correct? Prudence requires that expenses should never be over-stated in the financial statements. The going concern assumption is that the business entity will continue in operation for the foreseeable future. Complex items should not be excluded from the financial statements on the grounds that they would not be understandable for many users.

Q18 . Which of the following is not an aspect of reliability of financial information?