5018ACC S2 Assumed Knowledge quiz

Question 1

Why is it important that all UK companies comply with the relevant accounting standards?

Accepted Answer

All the above

Question 2

What concept guides the accounting treatment of equipment originally purchased for £20,000 which would now cost £30,000?

Accepted Answer

Historic cost: Keep it in our books at its original cost of £20,000

Question 3

What is the cost price of Rita's dining set if she sells it for £1,200 which includes a profit margin of 50%?

Accepted Answer

£600

Question 4

In the statement of cash flows, how would you treat a credit bank balance found in the statement of financial position?

Accepted Answer

As a negative cash equivalent

Question 5

The accounting equation is:

Accepted Answer

Assets – Liabilities = Capital

Question 6

Which of the following is NOT an investing cash flow in the statement of cash flows?

Accepted Answer

Dividends paid

Question 7

Each transaction will result in entries on 2 sides of the ledger – what terms do we use for these sides in accounting?

Accepted Answer

Debit side and credit side

Question 8

What are the Framework’s 2 fundamental qualitative characteristics of useful financial information?

Accepted Answer

Relevance and faithful representation

Question 9

What is the accounting term for "determining the value at which an item is to be included in the financial statements"?

Accepted Answer

Measurement

Question 10

What is the cost price of Rita's dining set if she sells it for £1,200 which includes a profit mark-up of 50%?

Accepted Answer

£800

Question 11

What is the accounting term for "including an item in the financial statements"?

Accepted Answer

Recognition

Question 12

A machine bought for £5,000 was debited to Purchases a/c and credited to Bank a/c. What is the error and its correction?

Accepted Answer

Principle: Dr Machinery cost a/c and Cr Purchases a/c £5,000

Question 13

How do we calculate tax paid in the year when preparing the statement of cash flows?

Accepted Answer

Opening tax liability + tax charge in the SOPL – closing tax liability

Question 14

In question 19, with reference to IAS 2, what value of inventory that should be reported in Chester plc’s accounts?

Accepted Answer

£3,550

Question 15

What accounting concept guides the treatment of £5,000 owed by a customer who has gone bankrupt?

Accepted Answer

Prudence

Question 16

The primary reason why a company charges depreciation each year is:

Accepted Answer

To spread the cost of a non-current asset over its useful life

Question 17

What are the 4 enhancing qualitative characteristics of useful financial information cited in the Framework?

Accepted Answer

Comparability, understandability, verifiability and timeliness

Question 18

What concept guides the accounting treatment of a sole trader’s son's private bills paid by the business?

Accepted Answer

Business entity

Question 19

When preparing a statement of cash flows which of the following items is NOT a non-cash item?

Accepted Answer

Increase in inventory

Question 20

How do we treat an increase in inventory in the year in when preparing the statement of cash flows?

Accepted Answer

As resulting in a decrease in operating cash flows

Question 21

Which of the following is correct?

Accepted Answer

Assets 25,000, Liabilities 11,000, Equity 14,000

Question 22

Based on information in question 23, what is Troy's profit or loss on disposal?

Accepted Answer

Loss on disposal of £2,850

Question 23

Which of the following is NOT a financing cash flow in the statement of cash flows?

Accepted Answer

Cash received from customers

Question 24

What are the sections which show an entity’s uses and sources of cash in the statement of cash flows?

Accepted Answer

A. Operating, investing and financing activities

Question 25

How many elements of financial accounting information are there, which are referred to in the Framework?

Accepted Answer

5

Question 26

Looking at the information of N Traders on page 3, does an asset exist for N Traders at 31st August 2024?

Accepted Answer

No

Question 27

Looking at the information of N Traders on page 3, does a liability exist for N Traders at 31st August 2024?

Accepted Answer

No liability as the clean-up is not an unavoidable requirement

Question 28

Who are the primary users of general purpose financial reporting according to the Conceptual Framework?

Accepted Answer

Investors and lenders

Question 29

Which of the following is incorrect?

Accepted Answer

Increase in allowance for receivables: Dr Allowance a/c & Cr Bad debts

Question 30

What is the objective of general purpose financial reporting?

Accepted Answer

To support decision-making by users by providing useful entity information

5018ACC S2 Assumed Knowledge quiz

Questions 30

5018ACC S2 Assumed Knowledge quiz

Questions 30