Purpose Of Accounting Info

Question 1

Types of business entity

Answer 1

Sole traders
Partnership
Limited liability

Question 2

The objectives of Financial statements

Answer 2

IRFS foundations conceptual framework states the objective it to provide info about the reporting entity that is useful to existing and potential investors etc in making decisions relating to providing resources to the entity

Question 3

Who are the primary users of FS

Answer 3

Investors lenders and other creditors

Question 4

What does the SOFP show

Answer 4

Lists all assets controlled and liabilities owed at a particular day

Question 5

Equation for equity

Answer 5

Assets - liabilities = equities
Net assets = equity

Question 6

What does a p+L show

Answer 6

Displays income and expense in a reporting period ( shows the performance of an entity)

Question 7

What is GAAP

Answer 7

Generally accepted accounting practices

Question 8

Uk gaap comes from

Answer 8

Companies act
Uk iafrs
Exchange listing requirements

Question 9

What’s are FS required to give

Answer 9

True and fair view of the company

Question 10

What are the IESBA code of ethics

Answer 10

Integrity
Objectivity
Pro competence
Confidentiality
Pro behaviour

Question 11

What are the fundamental qualitative characteristics of financial info (per conceptual framework)

Answer 11

Relevance
Faithful rep

Question 12

What is relevant info and what is it affected by

Answer 12

Relevant if it makes a diff to users decision
Eg has predictive or confirmatory value

Affected by nature and materiality

Question 13

What is fathful rep

Answer 13

Faithful rep show complete unbiased and free from error information

Question 14

What are enhancing qualitative characteristics

Answer 14

Comparability (from one period to next)
Verifiability
Timeliness
Understandability

Question 15

What is going concern

Answer 15

Entity viewed as continuing in operation for the foreseeable future

Question 16

What is the accruals basis of accounting

Answer 16

Income and expenses are earned or incurred in the reporting period to which they relate

Question 17

When is something material

Answer 17

When it can influence the economic decision of users.

Question 18

What is historical convention.

Answer 18

Items are usually measured in the FS at historical cost eg at the amount the business paid to acquire them

Question 19

What is diff between capex and revex

Answer 19

Capex - expenditure on the acquisition of nca

Revex expenditure incurred for trade purposes or the maintenance of nca’s

Question 20

What is capital income and revenue income

Answer 20

Cap income - proceeds from sale of NcA

Rev income - income from sale if trading assets