Financial Accounting

Question 1

1The dual aspect concept states that

Easy

A. assets are valued at market price B. only cash is recorded C. profits are shared equally D. every transaction has two equal and opposite effects

Question 2

2Treating the owner and the business as separate is the

Hard

A. accruals concept B. business entity concept C. consistency concept D. dual aspect concept

Question 3

3The prudence concept requires accountants to

Medium

A. overstate profits B. value assets at selling price C. anticipate losses but not profits D. ignore losses

Question 4

4The concept that a business is treated as separate from its owner is the

Easy

A. going concern concept B. consistency concept C. prudence concept D. business entity concept

Question 5

5The concept that assumes a business will continue operating for the foreseeable future is the

Easy

A. matching concept B. materiality concept C. realisation concept D. going concern concept

Question 6

6Income is recognised when earned, not when cash is received, under the

Hard

A. cash concept B. money measurement concept C. prudence concept D. accruals concept

Question 7

7Prudence requires that

Easy

A. all profits are anticipated B. no provisions are made C. losses are provided for but profits are not anticipated D. assets are overstated

Question 8

8Which statement of the accounting equation is correct?

Easy

A. Assets = Capital − Liabilities B. Liabilities = Assets + Capital C. Assets = Capital + Liabilities D. Capital = Assets + Liabilities

Question 9

9Using the same accounting methods from year to year follows the

Easy

A. realisation concept B. consistency concept C. materiality concept D. dual aspect concept

Question 10

10Which group uses accounting information to decide whether to lend to a business?

Easy

A. competitors only B. customers only C. banks and creditors D. the press