Tutorial Questions 1 14

Topics: Balance sheet, Generally Accepted Accounting Principles, Expense Pages: 21 (5115 words) Published: December 10, 2014
T1 & 2 (Q)
(1) Which one of the following is an example of an internal stakeholder? A A shareholder
B Investment analyst / consultant
CA manager
DA supplier

(2) What is the primary responsibility of the external auditor? A To verify all the financial transactions and supporting documentation of the client B To ensure that the client’s financial statements are reasonably accurate and free from bias C To report all financial irregularities to the shareholders of the client D To ensure that all the client’s financial statements are prepared and submitted to the relevant authorities on time

(3) To whom is the internal auditor primarily accountable?
A The audit committee of the company
B The company as a separate entity
C The shareholders of the company
D The employees of the company

(4) Identify any four user groups of financial statements and explain what information that are of interest to them. (2) Top of Form

(5) “The business entity concept requires a business to be treated as being separate from its owners” Is this statement true or false?
A True
B False

(6) Which of the following statements are correct?
(1) Materiality means that only items having a physical existence may be recognised as assets.

(2) The substance over form convention means that the legal form of a transaction must always be shown in financial statements even if this differs from the commercial effect.

(3) The money measurement concept is that only items capable of being measured in monetary terms can be recognised in financial statements.

A 2 only
B 1, 2 and 3
C 1 only
D 3 only

(8) What is the main purpose of a balance sheet?
ITo report assets, liabilities at a particular date
IITo report capital (owner ship equity) at a particular date IIITo report on valuation & information about business activities at a over a specific period of time. IVTo report on the growth in value of business at a particular date

AI only
BI & II only
CIII & IV only
DIV only

(9) What accounting concept / principle describe the following statement? “All business transactions shall be expressed in common money terms to facilitate comparison & evaluation purposes”. AMatching

BMateriality
CMonetary
DSubstance over form

(10) Which of the following statements explain the consistency concept? A$1,200 was taken up in accounting records as purchase of 100 units of merchandise at $12 per unit. BStocks that have been taken from business for own use by a sole proprietor is known as drawings. CDepreciation rate of 15% per annum has been decided upon by the management to be applied on all company’s owned motor vehicles. DDiscount allowed & commission received will be taken up in the relevant financial statement in order to derive the profit or loss for the business.

(11) “The purchase of an air filtration & purifier equipment valued at $5,000. ABC Sdn Bhd treated it as an expense item where as for Perkongsian XYZ, it was taken up as business asset.” The above brief statement explains the concept of …..

AMateriality
BConsistency
CHistorical cost
DMonetary

(12) State the main reason for preparing a balance sheet.

(13) Explain the following accounting terms:
(i) Going concern concept;
(ii) Accruals concept;
(iii) Reliability;
(iv) Understandability.

(14) Briefly explain, the basic accounting principle which requires prepayment to be incorporated in final accounts.

(15) State & briefly explain four qualitative characteristics of financial statements.
(16) Identify & briefly explain the applicable accounting conventions / concepts for the following scenario: (a) A business entity has been in operation for the past 5 years & has been preparing its accounts for 12 months ending 31 December. One of the partners requested the latest accounts to be prepared for 18 months in order to “present a much impressive” accounts to for the review of its loan provider....
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