Tag: Risk

According to the Conceptual Framework for Financial Reporting to support the effective working of capital markets for the benefit of businesses, then financial statements must have which ONE of fundamental qualitative characteristics listed below?

Select ONE answer:

1. Understandability
2. Faithfulness of representation
3. Comparability
4. Timeliness

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 == > Faithfulness of representation is one of the fundamental characteristics that investors will be able to rely on them in making their decisions. Understandability, Timeliness and Verifiability are enhancing characteristics to this fundamental characteristic.
3. Not correct
4. Not correct

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

According to the Conceptual Framework for Financial Reporting to support the effective working of capital markets for the benefit of businesses, then financial statements must have which ONE of fundamental qualitative characteristics listed below?

Select ONE answer:

1. Relevance
2. Comparability
3. Timeliness
4. Verifiability

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 == > Relevance is one of the fundamental characteristics that investors will be able to rely on them in making their decisions. Comparability, Timeliness and Verifiability are enhancing characteristics to this fundamental characteristic.
2. Not correct
3. Not correct
4. Not correct

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

In relation to users of financial information, which of the following statements is true?

Select ONE answer:

1. External users evaluate the performance of a company’s management using management accounting
2. Financial reporting provides information to managers and people outside the company, such as investors
3. Management accounting provides information to managers and people outside the company, such as investors
4. Financial reporting generates confidential information for internal decision makers such as executives and management

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 == > External users do not have access to management accounting information (1) and (3). Financial reporting does provide information to both managers and people outside the company, such as investors (2) but it is not confidential (4).
3. Not correct
4. Not correct

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

Which of the following issues are key in relation to information processing in a company’s accounting systems?

Issue 1 Completeness
Issue 2 Non-repudiation
Issue 3 Verifiability

Select ONE answer:

1. Issues 1 and 2 only
2. Issues 2 and 3 only
3. Issues 1 and 3 only
4. Issues 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 == > To be effective, information processing should meet the CATIVA criteria – completeness, accuracy, timeliness, inalterability, verifiability and assessability. Non-repudiation is one of the ACIANA qualities of information systems security.
4. Not correct

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

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

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