Accounting Multiple Choice Question – 15 May 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Accounting

According to SSAP 2….?

Select ONE answer:

  1. the financial statements of a firm must always be prepared on the basis that the firm is a going concern.
  2. materiality is a ‘fundamental’ accounting concept.
  3. when two or more accounting concepts conflict, the prudence concept overrides the other concept(s).
  4. None of the above.

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. The financial statements of a firm should be prepared on the basis that the firm is a going concern, only when this is considered to be the case. If it is considered that the firm is not a going concern, its accounts should be prepared on that basis. This will mean that assets will be shown at their market value, provision will have to be made for redundancy costs, costs associated with selling assets etc. and all liabilities will be shown as current liabilities (as the firm is unlikely to be in business after more than one year to pay long- term liabilities).
  2. Although the materiality concept is a well-recognised accounting concept, it is not one of the ‘fundamental’ accounting concepts referred to in SSAP2.
  3. Correct
  4. Not correct

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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