The Multiple Choice Questions Blog

For the following circumstance described in respect of inventory, select which financial statement assertion would be affected.

• Inventory items were excluded from the total in the financial statements in error.

Select ONE answer:

1. Completeness
2. Accuracy, valuation and allocation
3. Cut-off
4. Net Realisable Value

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – The completeness assertion is affected by the omission of inventory items (i.e., inventory is not complete).
2. Not correct
3. Not correct
4. Not correct

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For the following circumstance described in respect of inventory, select which financial statement assertion would be affected.

• Damaged inventory items have not been written down to net realisable value.

Select ONE answer:

1. Net Realisable Value
2. Completeness
3. Cut-off
4. Accuracy, valuation and allocation

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – The cut-off assertion is affected by including inventory sold in inventory at the end of the period (i.e., cut-off is incorrect). Where damaged items have not been written down to NRV, then the accuracy, valuation and allocation assertion is directly affected (i.e., inventory is incorrectly valued).

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the following circumstance described in respect of inventory, select which financial statement assertion would be affected.

• Inventory sold by the end of the period has been included in inventory.

Select ONE answer:

1. Net Realisable Value
2. Completeness
3. Accuracy, valuation and allocation
4. Cut-off

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – The cut-off assertion is affected by including inventory sold in inventory at the end of the period (i.e., cut-off is incorrect). Where damaged items have not been written down to NRV, then the accuracy, valuation and allocation assertion is directly affected (i.e., inventory is incorrectly valued).

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which ONE of the following procedures would provide evidence of the rights and obligations of motor vehicles?

Select ONE answer:

1. Physical inspection of motor vehicles
2. Vouching a sample of motor vehicles in the asset register to sales brochures
3. Review of purchase invoices for motor vehicles acquired in the period
4. Confirmation that calculations on the non-current asset schedule are correct in respect of motor vehicles

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Physical inspection and confirmation of calculations provide evidence of existence and valuation, respectively, as opposed to rights and obligations. The rights and obligations assertion means that the entity holds or controls the rights to assets. Although registration documents show the registered keeper, not the owner, the keeper is likely to have control of the asset. Purchase invoices give evidence of ownership (which gives control).
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which ONE of the following procedures would provide evidence of rights and obligations of motor vehicles?

Select ONE answer:

1. Physical inspection of motor vehicles
2. Vouching a sample of motor vehicles in the asset register to registration documents
3. Review of motor expenses invoices paid in the period
4. Confirmation that calculations on the non-current asset schedule are correct in respect of motor vehicles

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – Physical inspection and confirmation of calculations provide evidence of existence and valuation respectively as opposed to rights and obligations. The rights and obligations assertion means that the entity holds or controls the rights to assets. Although registration documents show registered keeper, not owner, the keeper is likely to have control of the asset. Purchase invoices give evidence of ownership (which gives control).
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.