Financial AccountingExercise-Introduction to Accounting

1. The basic accounting principle/concept according to which business record must be kept separate from the personal records of the owner is known as

2. What is the role of the IASB?

3. Which ONE of the following is NOT an objective of the IFRS Foundation?

4. __________ is the art of recording, classifying and summarizing the transactions and events of a business and interpreting the results thereof.

5. Which of the following statements is/are true?
1 A supplier of goods on credit is interested only in the statement of financial position, i.e. an indication of the current state of affairs.
2 The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions.

6. Which ONE of the following statements correctly describes the contents of the Statement of Financial Position?

7. Which groups of people are most likely to be interested in the financial statements of a sole trader?
1      Shareholders of the company
2     The business’s bank manager
3     The tax authorities
4     Financial analysts

8. Which of the following are advantages of trading as a limited liability company?
1     Operating as a limited liability company makes raising finance easier because additional shares can be issued to raise additional cash.
2    Operating as a limited liability company is riskier than operating as a sole trader because the shareholders of a business are liable for all the debts of the business whereas the sole trader is only liable for the debts up to the amount he has invested.

9. Which ONE of the following statements correctly describes how International Financial Reporting Standards (IFRSs) should be used?

10. Which one of the following is NOT a feature of sole proprietorship business.

11. Which of the following statements is/are true?
1    Directors of companies have a duty of care to show reasonable competence in their management of the affairs of a company.
2    Directors of companies must act honestly in what they consider to be the best interest of the company.
3    A Director’s main aim should be to create wealth for the shareholders of the company.

12. Which of the following statements is/are true?
1    The IFRS Interpretations Committee is a forum for the IASB to consult with the outside world.
2    The IFRS Foundation produces IFRSs. The IFRS Foundation is overseen by the IASB.
3    One of the objectives of the IFRS Foundation is to bring about convergence of national accounting

13. The term “Debit” is derived from______________ language.

 

14. The main purpose of ___________ is to ascertain true result of the business operation during particular period of time.

15. Which ONE of the following statements correctly describes the contents of the Statement of Profit or Loss?

16. Which of the following statements is/are true?
1      The directors of a company are ultimately responsible for the preparation of financial statements, even if the majority of the work on them is performed by the finance department.
2      If financial statements are audited, then the responsibility for those financial statements instead falls on the auditors instead of the directors.
3      There are generally no laws surrounding the duties of directors in managing the affairs of a company.

17. An accounting system is used by a business to

18. A business event which can be measured in terms of money and must be recorded in books of accounts is called

19. Which of the following are TRUE of partnerships?
1    The partners’ individual exposure to debt is limited.
2    Financial statements for the partnership by law must be produced and made public.
3    A partnership is not a separate legal entity from the partners themselves.