Qs I got wrong 1

Question 1

12 Which of the following statements about accounting concepts and the characteristics of financial
information is correct?
A Financial statements are required to give a true and fair view. These terms have clear definitions
which are included in IAS 1, Presentation of Financial Statements .
B The historical cost concept means that only items capable of being measured in monetary terms
can be recognised in financial statements.
C It may sometimes be necessary to exclude information that is relevant and reliable from financial
statements because it is too difficult for some users to understand.
D A specific disclosure requirement of an IFRS Accounting Standard need not be satisfied if the
information is immaterial.

Answer 1

2 Correct answer(s):
D A specific disclosure requirement of an IFRS Accounting Standard need not be satisfied if the
information is immaterial.
Disclosures are not required if the information they provide is immaterial. While financial statements
are required to give a true and fair view, these terms are not defined in statute, they tend to be
determined in courts of law or on the facts (A). Recognition of items on the basis of monetary
amounts is the money measurement concept, not the historical cost concept (B). Items should not be
excluded on the basis of being difficult to understand (C).

Question 2

14 Which of the following is the best description of fair presentation in accordance with IAS 1,
Presentation of Financial Statements ?
A The financial statements are accurate.
B The financial statements are as accurate as possible given the accounting systems of the
organisation.
C The directors of the company have stated that the financial statements are accurate and correctly
prepared.
D The financial statements are reliable in that they faithfully reflect the effects of transactions, other
events and conditions .

Answer 2

14 Correct answer(s):
D The financial statements are reliable in that they faithfully reflect the effects of transactions, other
events and conditions.
This statement is consistent with the definition given in IAS 1, para. 15.

Question 3

15 Which of the following definitions of the going concern concept in accounting is consistent with the
definition given in IAS 1, Presentation of Financial Statements ?
A The directors do not intend to liquidate the entity or to cease trading in the foreseeable future.
B The entity is able to pay its debts as and when they fall due.
C The directors expect the entity’s assets to yield future economic benefits.
D Financial statements have been prepared on the assumption that the entity is solvent and would
be able to pay all creditors in full in the event of being wound up.

Answer 3

15 Correct answer(s):
A The directors do not intend to liquidate the entity or to cease trading in the foreseeable future.
According to IAS 1, para. 25, going concern relates to whether the entity will continue in operational
existence without liquidating, ceasing trading or being unable to avoid these things (A).
SAMPLE EXAM

Question 4

18 The International Sustainability Standards Board (ISSB) was established in 2021 and will issue IFRS
Sustainability Disclosure Standards.
Requirement
Which of the following statements regarding sustainability reporting is true?
A There is a legal requirement for UK companies to disclose information relating to sustainability in
their financial statements.
B The ISSB will initially focus on climate-related disclosures.
C The IFRS Sustainability Disclosure Standards will replace IFRS Accounting Standards.
D There has not previously been any guidance issued relating to the disclosure of sustainability
information.

Answer 4

18 Correct answer(s):
B The ISSB will initially focus on climate-related disclosures.
The ISSB will initially focus on climate-related disclosures due to the urgent need for information on
climate-related matters.
There is currently no legal requirement for UK companies to disclose information relating to
sustainability, however many choose to disclose such information. The IFRS Sustainability Disclosure
Standards will complement rather than replace IFRS Accounting Standards. Several other
organisations have issued guidance relating to the disclosure of sustainability information and the
ISSB will build on the work done by some of these organisations.

Question 5

20 Which of the following statements is correct?
A The ICAEW Code of Ethics applies to its members only.
B The ICAEW Code of Ethics applies to its members and employees of member firms only.
C The ICAEW Code of Ethics applies to its members, employees of member firms and ICAEW
students.
D The ICAEW Code of Ethics applies to its members, employees of member firms, ICAEW students
and all other members of UK accountancy bodies.

Answer 5

20 Correct answer(s):
C The ICAEW Code of Ethics applies to its members, employees of member firms and ICAEW
students.
ICAEW 2024 1: Introduction to accounting 165
It also applies to affiliates and where applicable, member firms.