Question 1

Bookkeeping is:&#10;A) Preparing a set of financial statements from the final books of account&#10;B) Preparing invoices for customers&#10;C) Collecting and recording transactions in the books of account&#10;D) Communicating an entity's results to users.

Accepted Answer

Bookkeeping specifically refers to the process of collecting, recording, and organizing all financial transactions in the books of account. This is a foundational accounting activity that ensures data is accurately captured for financial analysis and reporting.

Question 2

Information on the financial adaptability of an entity is obtained from the entity's?&#10;A) Statement of Comprehensive Income&#10;B) Statement of Financial Position&#10;C) Statement of Cash Flows&#10;D) Statement of Changes in Equity

Accepted Answer

The Statement of Cash Flows provides information on how an entity generates and uses cash and cash equivalents. This includes its ability to generate cash from its operations, which is crucial for understanding its financial adaptability in meeting its obligations and financing its activities.

Question 3

Information on the financial performance of an entity is obtained from an entity's?&#10;A) Statement of Comprehensive Income&#10;B) Statement of Financial Position&#10;C) Statement of Cash Flows&#10;D) Statement of Changes in Equity

Accepted Answer

The Statement of Comprehensive Income provides information on an entity's financial performance, showing revenues, expenses, and profits over a specific period.

Question 4

According to the IASB's Framework for the preparation and presentation of financial statements, which of the following is not an objective of financial statements?&#10;A) Providing information regarding the financial position of a business&#10;B) Providing information regarding the performance of a business&#10;C) Providing information on the financial adaptability of a business&#10;D) Helping to assess the going concern status of a business

Accepted Answer

The IASB Framework does not explicitly state that assessing the going concern status is an objective of financial statements, although it is an underlying assumption in preparing them.

Question 5

Which of the following statements gives the best definition of the objective of accounting?&#10;A) To calculate the taxation due to the government&#10;B) To calculate the dividend to pay to the equity holders&#10;C) To provide useful information for users&#10;D) To record, categorise and summarise financial transactions

Accepted Answer

The primary objective of accounting is to provide useful financial information to various users, such as investors, creditors, and management, to aid in decision-making.

Question 6

The framework for the preparation and presentation of financial statements identifies several user groups. Which of the following is not specifically referred to as a user of financial statement?&#10;A) The public&#10;B) Government&#10;C) Management&#10;D) Suppliers

Accepted Answer

Management is not specifically referred to as a user in the framework for the preparation and presentation of financial statements because they are considered part of the entity preparing the statements, rather than external users who rely on the information provided.

Question 7

Investor's are defined in the framework as:&#10;A) Providers of share capital&#10;B) Providers of risk capital&#10;C) Providers of debt capital&#10;D) Providers of bank loans

Accepted Answer

Providers of risk capital are those who invest in a business or project with the potential for high returns but also with the risk of losing their investment.

Question 8

Which of the following user groups is mentioned in the framework as one of the main stakeholders in an entity?&#10;A) The analyst-advisor group&#10;B) Competitors&#10;C) The public&#10;D) Takeover bidders

Accepted Answer

The public is mentioned in the framework as one of the main stakeholders in an entity because they are affected by the entity's activities and have a right to information about the entity.

Question 9

Which of the following are not considered to influence the required disclosures in the financial statements of a plc in the UK?&#10;A) Local authorities&#10;B) The Companies Act 2006&#10;C) The rules of the London Stock Exchange&#10;D) The International Accounting Standards

Accepted Answer

Local authorities do not directly influence the required disclosures in the financial statements of a public limited company (plc) in the UK. The Companies Act 2006, the rules of the London Stock Exchange, and the International Accounting Standards are all key frameworks and regulations that dictate the financial reporting and disclosure requirements for plcs in the UK.

Question 10

Which of the following is provided voluntarily by management to satisfy the needs of users?&#10;A) The directors report&#10;B) The statement of value added&#10;C) The notes to the financial statements&#10;D) The remuneration report

Accepted Answer

The statement of value added is not a mandatory financial statement and is often provided voluntarily by management to give additional insights into the company's economic contributions.

Question 11

Which of the following reports is required by the regulatory framework of accounting in the UK?&#10;A) An employee report&#10;B) An environmental report&#10;C) Simplified financial statements&#10;D) A director's report

Accepted Answer

The answer of Which of the following reports is required...

Question 12

Which of the following user groups are deemed to be the most important (in the context of providing information to satisfy their needs) according to the Framework?&#10;A) Management&#10;B) Employees&#10;C) Investors&#10;D) The business contact group

Accepted Answer

The answer of Which of the following user groups are...

Question 13

What is the custodial role of business enterprises?&#10;A) This refers to the entity's policies in relation to holding cash on site&#10;B) This refers to the entity's internal controls&#10;C)This refers to the entity's responsibility to safeguard assets and to use them appropriately for the benefit of the owners&#10;D) This refers to the role of customs and the procedures in place to ensure efficient communication channels are in place with customs and revenue.

Accepted Answer

The answer of What is the custodial role of business...

Question 14

The main aim of accounting is:&#10;A) To provide sufficient information to prepare a trial balance&#10;B) To record all the bank and cash transactions that occur in a business&#10;C) To enable a business to see the amounts owing to it from customers&#10;D) To provide financial information to the users

Accepted Answer

The answer of The main aim of accounting is:&#10;A) To...

Question 15

What is the other term used to describe 'true and fair view'&#10;A) Fair presentation&#10;B) Correct presentation&#10;C) Valid presentation&#10;D) Prudent presentation

Accepted Answer

The answer of What is the other term used to...

Question 16

Which of the following are not purposes of financial statements?
To help management make decisions
To calculate taxable income
To allow users to make economic decisions
To determine the amount which is legally distributable to equity shareholders

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

Accepted Answer

The answer of Which of the following are not purposes...

Deck 3: The Nature and Objectives of Financial Accounting