Month: January 2024

Accounting Multiple Choice Question – 11 January 2024

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

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Listed below are two comments on accounting conventions.

  1. According to the lASB’s Conceptual Framework, financial information must be either relevant or faithfully represented if it is to be useful.
  2. Materiality means that only items having a physical existence may be recognised as assets.

Which, if either, of these comments is correct?

Select ONE answer:

  1. 1 only
  2. 2 only
  3. Both of them
  4. Neither of them

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 -Information must be both relevant and faithfully represented to be useful and Materiality concerns whether an item in the financial statements can influence users’ decisions; there is no absolute amount that makes an item material.

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Accounting Multiple Choice Question – 10 January 2024

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

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Which of the following statements about accounting concepts and the characteristics of financial information is correct?

Select ONE answer:

  1. Financial statements are required to give a true and fair view. These terms have clear definitions which are included in IAS1
  2. The historical cost concept means that only items capable of being measured in monetary terms can be recognised in financial statements
  3. It may sometimes be necessary to exclude information that is relevant and reliable from financial statements because it is too difficult for some users to understand
  4. A specific disclosure requirement of an IAS1 need not be satisfied if the information is immaterial

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 – While financial statements are required to give a true and fair view, these terms are not defined in statute, they tend to be determined in courts of law or on the facts (1). Recognition of items based on monetary amounts is the money measurement concept, not the historical cost concept (2). Items should not be excluded because of being difficult to understand (3).

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Accounting Multiple Choice Question – 9 January 2024

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

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The accounting principle which, in times of rising prices, tends to understate asset values and overstate profits, is?

Select ONE answer:

  1. Going concern
  2. Accruals
  3. Consistency
  4. Historical cost

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- Profit will be overstated due to depreciation based on understated assets, and cost of sales based on understated inventory.

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Accounting Multiple Choice Question – 8 January 2024

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

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Information is relevant if it can make a difference in the decisions made by users.

According to the IASB’s Conceptual Framework, financial information can make a difference in decisions if it has which of the following features?

  1. Predictive value
  2. Comparative value
  3. Historic value
  4. Confirmatory value

Select ONE answer:

  1. 1 and 3 only
  2. 2 and 4 only
  3. 1 and 4 only
  4. 2 and 3 only

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 – Financial information can make a difference to decisions if it has predictive value (it can be used to predict future outcomes) or confirmatory value (it provides feedback about previous evaluations).
  4. Not correct

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Accounting Multiple Choice Question – 7 January 2024

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

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According to IAS 1 Presentation of Financial Statements which two of the following are objectives of financial statements?

A To show the results of management’s stewardship of the resources entrusted to it
B To provide a basis for valuing the entity
C To provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions
D To facilitate comparison of financial performance between entities operating in different industries
E To assist management and those charged with governance in making timely economic decisions about deployment of the entity’s resources

Select ONE answer:

  1. D & E
  2. B & C
  3. A & C
  4. A & B

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 – A and C – International Accounting Standard I (AS 1) Presentation of Financial Statements provides the objective of financial statements. It states that the objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions (C). In addition, it states that the financial statements also show the results of management’s stewardship of the resources entrusted to it (A).
  4. Not correct

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