Tag: Topic 17

Accounting Multiple Choice Question – 15 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 directors of Alex Trading plc wish to omit an item from the company’s financial statements on the grounds that it is commercially sensitive.

Information on this item would influence the stakeholders when making economic decisions.

According to IAS 1 Presentation of Financial Statements, the item is thus said to be?

Select ONE answer:

  1. Neutral
  2. Prudent
  3. Material
  4. Understandable

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 – Omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions of users taken, based on the financial statements
  4. Not correct

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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 – 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 – 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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