Accounting Multiple Choice Question – 4 March 2025

The professional accountant should always be aware that there are certain accounting principles that underlie accounting, financial reporting and assurance.

The following statements about specific accounting principles were made by a consultant:

Statement 1: It is assumed that the company will continue on long enough to carry out its objectives and commitments, so non-current assets are shown at cost less accumulated depreciation.

Statement 2: A very large company’s financial statements have the amounts rounded to the nearest £1,000.

Which accounting principle is at issue in each statement?

Select ONE answer:

1. Statement 1. Prudence and Statement 2. Going concern
2. Statement 1. Materiality and Statement 2. Prudence
3. Statement 1. Going concern and Statement 2. Materiality
4. Statement 1. Going concern and Statement 2. Prudence

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 == > Going concern and Materiality
4. Not correct

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