Month: January 2025

Ted, the chief executive of Alex plc is discussing the firm’s most recent financial statements with his finance director, Lucy.

Ted is not convinced about the usefulness of much of the information in the financial statements and specifically he makes three statements about the specific characteristics of the information that he feels may undermine its usefulness to him.

Statement 1 It lacks timeliness
Statement 2 A high level of regulation applies to it
Statement 3 It contains a high level of aggregation

Which of these statements identify characteristics that are likely to undermine the information’s usefulness?

Select ONE answer:

1. Statements 1 and 2 only
2. Statements 2 and 3 only
3. Statements 1 and 3 only
4. Statements 1, 2 and 3

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 == > Its lack of timeliness undermines usefulness. The high level of regulation does not undermine usefulness. The high level of aggregation it contains undermines usefulness.
4. Not correct

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