Question 1

Which accounting concept is involved in the requirement that financial statements contain information that is useful to those who are making decisions?

Accepted Answer

The concept of relevance is involved in the requirement that financial statements contain information that is useful for decision-making. Relevant information helps users of financial statements to make decisions by providing information that is material, timely, and has predictive or confirmatory value.

Question 2

A balance sheet:

Accepted Answer

A balance sheet lists the assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of the financial position of an entity. It does not show present replacement cost or changes during a period of time, although it can capture events that have affected the financial position of the entity up to that point in time.

Question 3

Use the information given below at 30 June 2019 to answer the following question.  What is the balance of shareholder equity?

Accepted Answer

The answer of Use the information given below at 30...

Question 4

During 2018 a company makes cash sales of $900 000. It pays $300 000 in expenses and owes $90 000 for services it received in 2018 but are payable in 2019. It pays $170 000 in dividends. What is the profit for 2018?

Accepted Answer

Profit = Revenue - Expenses

Revenue = Cash Sales = $900,000

Expenses = $300,000

Therefore, Profit before adjusting for outstanding payable = $600,000 ($900,000 - $300,000)

However, the company also owes for services in 2018 that are payable in 2019.

This means that $90,000 of the expenses are related to these services and should not be included in the calculation for profits.

Adjusted Profit = Profit before adjusting for outstanding payable - Outstanding Payable + Dividends

Adjusted Profit = $600,000 - $90,000 + $170,000

Adjusted Profit = $680,000

Therefore, the profit for 2018 is $680,000, which is closest to option B) $510,000.

Question 5

Mike's Mulching (MM) had the following assets and liabilities:  What would shareholders' equity be?

Accepted Answer

Shareholders' equity is calculated as follows:
Shareholders' equity = Total assets - Total liabilities
From the balance sheet provided, we can see that total assets are $13,300 and total liabilities are $0. Therefore, shareholders' equity would be $13,300.

Question 6

The preparation of financial statements in a similar form to those of other companies facilitates:

Accepted Answer

Preparing financial statements in a similar form to other companies facilitates comparability, which is the ability to compare financial information between different companies and time periods. This allows for more meaningful analysis and decision-making. Materiality, faithful representation, and understandability are also important accounting concepts, but they are not directly related to the preparation of financial statements in a similar form.

Question 7

Use the information given below at 30 June 2019 to answer the following question.  What is the balance of total assets at 30 June 2019?

Accepted Answer

The balance of total assets is the sum of current assets and non-current assets. Adding up the figures given for current assets and non-current assets, we get:
$150,000 (current assets) + $270,000 (non-current assets) = $420,000. Therefore, the correct answer is B.

Question 8

The practice by Woolworths Ltd of presenting their financial statements in millions of dollars is an application of the concept of:

Accepted Answer

The presentation of financial statements in millions of dollars is an application of the concept of materiality, which involves presenting information that is relevant and significant to users of the financial statements. By presenting the financial information in millions of dollars, Woolworths is focusing on the significant digits and making it easier for users to analyze and understand the information.

Question 9

Identify the accounting concept or principle that relates to the statement in the following statement: Information should have predictive value and/or feedback value.

Accepted Answer

The accounting concept that relates to the statement is relevance. Relevant information is important for decision-making because it has predictive value (helps users forecast future outcomes) and/or feedback value (confirms or corrects prior expectations).

Quiz 1: Introduction to Financial Accounting

Which accounting concept is involved in the requirement that financial statements contain information that is useful to those who are making decisions?

A balance sheet:

Use the information given below at 30 June 2019 to answer the following question. What is the balance of shareholder equity?

During 2018 a company makes cash sales of $900 000. It pays $300 000 in expenses and owes $90 000 for services it received in 2018 but are payable in 2019. It pays $170 000 in dividends. What is the profit for 2018?

Mike's Mulching (MM) had the following assets and liabilities: What would shareholders' equity be?

The preparation of financial statements in a similar form to those of other companies facilitates:

Use the information given below at 30 June 2019 to answer the following question. What is the balance of total assets at 30 June 2019?

The practice by Woolworths Ltd of presenting their financial statements in millions of dollars is an application of the concept of:

Identify the accounting concept or principle that relates to the statement in the following statement: Information should have predictive value and/or feedback value.