Tag: Financial Statements

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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Accounting Multiple Choice Question – 6 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 the IASB’s Conceptual Framework, information on which two of the following areas can help users identify the reporting entity’s financial strengths and weaknesses?

A The economic resources it controls
B Its financial performance in the past
C The demographic structure of the local economy
D The entity’s claims (the entity’s liabilities)
E Its management structure

Select ONE answer:

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

  1. Correct – A & D – The IASB’s Conceptual Framework states that information about the economic resources (A) and claims (D) of an entity can help users to identify the reporting entity’s financial strengths and weaknesses. That information can then be used to help users to assess the reporting entity’s liquidity and solvency.
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 5 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 the IASB’s Conceptual Framework, which qualitative characteristics enhance the usefulness of information that is relevant and faithfully represented?

Select ONE answer:

  1. Comparability, understandability, timeliness, verifiability
  2. Consistency, prudence, measurability, verifiability
  3. Consistency, reliability, measurability, timeliness
  4. Materiality, understandability, measurability, reliability

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 – This is set out in paragraph QC19 of the lASB’s Conceptual Framework
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 27 December 2023

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

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Which three of the following users of financial statements are likely to be interested in the financial statements of a very small private limited company?

  1. UK stock market analysts
  2. The company’s employees
  3. The company’s bank
  4. Very large Institutional shareholders
  5. The company’s suppliers

Select ONE answer:

  1. 2, 3 and 5
  2. 1, 3 and 5
  3. 2, 3 and 4
  4. 3, 4 and 5

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 company’s employees would be interested in the financial statements of the company as they want to know whether or not they would have a job in the future. The company’s bank may be interested in the financial statements as the company being a very small company, would need to take out loans from the bank. The bank wants to access the ability of the company to repay the loan. The company’s suppliers, similar to it’s employees, will want to know if they will be able to continue selling their products to the company in the future thereby building a good relationship with the company. UK stock market analysts may only be interested in public limited companies as it provides information about investment to aid investors into deciding which companies to invest in.
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 1 November 2023

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

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At Alex Trading Ltd’s accounting year-end, the accountant Simon writes cheques to pay trade payables and records them in the books immediately.

The cheques are then deliberately retained by the accountant for two weeks.

What effect does this have on the year-end statement of financial position?

Select ONE answer:

  1. the accounts show a higher figure for cash
  2. the accounts show a lower figure for trade payables
  3. to improve Alex Trading Ltd’s cash flow
  4. to improve Alex Trading Ltd’s gearing

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
  3. Not correct
  4. Not correct

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