ACCOUNTING CONCEPTS
Q.1
Jamil apportions his business expenses over the accounting periods to which they relate, rather than recording them
in the accounting period in which they are paid. What accounting concept is Jamil applying?
A.
Accruals
B.
Consistency
C.
Prudence
D.
Going concern
Q.2
What is correctly described in IAS 1 Presentation of Financial Statements as the specific principles, rules and
practices used when preparing financial accounts?
A. Accounting conventions
B. Measurement bases
C. Estimation techniques D. Accounting policies
Q.3
Alfa Limited acquired a paper punch for $12 during the current year. Although the paper punch has an expected life
of four years, the business treated the cost of the punch as an expense for the current year. Which of the following
accounting conventions is being applied by trading treating the cost of the paper punch in this manner?
A.
Materiality
B.
Prudence
C.
Going concern
D.
Accruals
Q.4
When preparing the final accounts, a sole trader wished to change his method of depreciation from straight line to
reducing balance, but his accountant suggested that this would only be allowable if the new method presented a
truer and fairer view. Upon which principle has the accountant based his answer:?
A.
Materiality
B.
Going concern
C.
Prudence
D.
Consistency
Q.5
What is the MAIN purpose of accounting standards?
A.
B.
C.
D.
To narrow the variety of accounting practices between companies
To provide research evidence concerning accounting practices
To produce ideal accounting practices that cannot be achieved but which companies should strive towards
To widen the variety of accounting practices available to companies
Q.6
Irtaza treats all small purchases of office equipment such as staplers as revenue expenditure. Which accounting
concept is he applying?
A.
Materiality
B.
Historic cost
C.
Matching
D.
Substance over form
Q.7
When applying the going concern concept, how long is it assumed that the business will continue for?
A. Indefinitely
C. The foreseeable future
B. Five years from the balance sheet date
D. 12 months from the balance sheet date
Q.8
Consider the following statements about the need for accounts to give a true and fair view.
1.
2.
This is required so that the market value of the business can be assessed from the accounts
This is required so that users can place reasonable reliance on the information in the accounts
Which of the following is true?
A.
Only 2 is correct
B.
Neither 1 nor 2 are correct
C. Both 1 and 2 are correct
D. Only 1 is correct
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