Deck 2: Wealth and the Measurement of Profit

Question 1

Eva has identified what she owns and preovded costs and estimates at the start and end of the year as set out below. Description Historic Cost Replacement cost Net realisable value* Start End Start End Start End Car 12000 Not applicable 12000 11 500 11000 9000 Clothes 4000 4 800 4000 4 500 3 800 3 500 Flat 160000 Not applicable 160000 180000 150000 170000 Cash 6000 4 400 6000 4 400 6000 4 400 Eva's wealth measured in terms of replacement cost at the end of the period is:

A) £182000
B) £181 200
C) £200 400
D) £170 800
E) £186 900

Answer 1

C

Question 2

Eva has identified what she owns and preovded costs and estimates at the start and end of the year as set out below. Description Historic Cost Replacement cost Net realisable value* Start End Start End Start End Car 12000 Not applicable 12000 11 500 11000 9000 Clothes 4000 4 800 4000 4 500 3 800 3 500 Flat 160000 Not applicable 160000 180000 150000 170000 Cash 6000 4 400 6000 4 400 6000 4 400 The difference between the historic costs of the clothes at the start and end of the period is because:

A) Historically the costs of clothes have always gone up
B) Buying that wardrobe of clothes would cost more at the end of the year than they did at the start
C) Eva has bought some more clothes during the year

Answer 2

C

Question 3

Eva has identified what she owns and preovded costs and estimates at the start and end of the year as set out below. Description Historic Cost Replacement cost Net realisable value* Start End Start End Start End Car 12000 Not applicable 12000 11 500 11000 9000 Clothes 4000 4 800 4000 4 500 3 800 3 500 Flat 160000 Not applicable 160000 180000 150000 170000 Cash 6000 4 400 6000 4 400 6000 4 400 Eva's wealth measured in terms of historic cost at the start of the period is:

A) £182000
B) £181 200
C) £200 400
D) £170 800
E) £186 900

Answer 3

A

Question 4

Profit is a measure of performance.

Question 5

Wealth is a dynamic measure taken over a period of time.

Question 6

Written down cost describes the act of recording the cost.

Question 7

Eva has identified what she owns and preovded costs and estimates at the start and end of the year as set out below. Description Historic Cost Replacement cost Net realisable value* Start End Start End Start End Car 12000 Not applicable 12000 11 500 11000 9000 Clothes 4000 4 800 4000 4 500 3 800 3 500 Flat 160000 Not applicable 160000 180000 150000 170000 Cash 6000 4 400 6000 4 400 6000 4 400 Eva's wealth measured in terms of replacement cost at the start of the period is:

A) £182000
B) £181 200
C) £200 400
D) £170 800
E) £186 900

Question 8

There is no connection between the measurement of income and wealth.

Question 9

Accounting always allows or changes in taste and technology.

Question 10

Cost is easy to ascertain.

Question 11

Eva has identified what she owns and preovded costs and estimates at the start and end of the year as set out below. Description Historic Cost Replacement cost Net realisable value* Start End Start End Start End Car 12000 Not applicable 12000 11 500 11000 9000 Clothes 4000 4 800 4000 4 500 3 800 3 500 Flat 160000 Not applicable 160000 180000 150000 170000 Cash 6000 4 400 6000 4 400 6000 4 400 Eva's wealth measured in terms of net realisable value at the end of the period is:

A) £182000
B) £181 200
C) £200 400
D) £170 800
E) £186 900

Question 12

Income can be derived from wealth.

Question 13

Eva has identified what she owns and preovded costs and estimates at the start and end of the year as set out below. Description Historic Cost Replacement cost Net realisable value* Start End Start End Start End Car 12000 Not applicable 12000 11 500 11000 9000 Clothes 4000 4 800 4000 4 500 3 800 3 500 Flat 160000 Not applicable 160000 180000 150000 170000 Cash 6000 4 400 6000 4 400 6000 4 400 Eva's wealth measured in terms of historic cost at the end of the period is:

A) £182000
B) £181 200
C) £200 400
D) £170 800
E) £186 900

Question 14

Eva has identified what she owns and preovded costs and estimates at the start and end of the year as set out below. Description Historic Cost Replacement cost Net realisable value* Start End Start End Start End Car 12000 Not applicable 12000 11 500 11000 9000 Clothes 4000 4 800 4000 4 500 3 800 3 500 Flat 160000 Not applicable 160000 180000 150000 170000 Cash 6000 4 400 6000 4 400 6000 4 400 Eva's wealth measured in terms of net realisable value at the start of the period is:

A) £182000
B) £181 200
C) £200 400
D) £170 800
E) £186 900

Question 15

Net realisable value should never be used as the primary measure as it is uncertain.

Question 16

Inflation is irrelevant to accounting.

Question 17

Wealth can be derived from income.