Chapter 1 Self-test questions

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. Information on dividends in a set of financial statements would be of most interest to:

Investors correct incorrect

Employees correct incorrect

Customers correct incorrect

Lenders correct incorrect

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. Financial information that is faithfully represented is: Please select all that apply

Timely correct incorrect

Free from error correct incorrect

Complete correct incorrect

Understandable correct incorrect

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. Which one of the following is not a characteristic of a partnership?

Written agreement correct incorrect

Run by one individual correct incorrect

Unlimited liability correct incorrect

Profits shared correct incorrect

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. Accounting summarises numerical data relating to past events and presents this data as information to managers and other interested parties as a basis for both _________________ and control purposes

Your response

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. Which of the following characteristics describe management accounting? Please select all that apply

Present accounting and cost information to users outside an organisation. correct incorrect

Focuses on what has been achieved in the past. correct incorrect

Produces reports to evaluate the results of plans made in the past to see whether these plans achieved their aims. correct incorrect

Presents information that is used to help managers manage the business and its activities. correct incorrect

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. Persons entrusted by others with resources are in the position of ___________, looking after those resources for the benefit of other parties.

Your response

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. The following are characteristics of different types of business organisation. Match the characteristics to the correct organisations.

Able to sue and be sued in their own name.

Select an answer choice Partnerships Sole traders Public limited companies Limited companies

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.

Two or more individuals are involved in the running of the business.

Select an answer choice Public limited companies Partnerships Limited companies Sole traders

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.

Must comply with corporate governance rules.

Select an answer choice Sole traders Partnerships Public limited companies Limited companies

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.

Assume total responsibility for the success or failure of their businesses.

Select an answer choice Limited companies Partnerships Public limited companies Sole traders

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. Financial accounting is concerned with reporting accounting and cost information to users within an organisation.

True correct incorrect

False correct incorrect

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. Accounting information is quantitative not qualitative.

True correct incorrect

False correct incorrect

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. Accounting is important because:
Please select all that apply.

It enables control to be exercised over operations and activities. correct incorrect

It provides information for business decision making. correct incorrect

It enables businesses to show the monetary effect of business decisions and economic events. correct incorrect

It presents a wide range of both qualitative and quantitative information from which to evaluate a business' performance. correct incorrect

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. Financial statements record all the most valuable assets of organisations.

True correct incorrect

False correct incorrect

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. There are two fundamental and four enhancing qualitative characteristics of financial information.

True correct incorrect

False correct incorrect

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. To help users understand financial information presented, that information should be:
Please select all that apply.

Verifiable correct incorrect

Presented clearly correct incorrect

Classified correct incorrect

Characterized correct incorrect

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. Which one of the following statements is false?

Perfectly faithful representation of economic phenomena in words and numbers requires that the information presented must have three characteristics: it must be complete, neutral and free from error. correct incorrect

Cost and management accounting is concerned with reporting accounting and cost information to users within an organization to assist managers in managing the business and its activities. correct incorrect

The IASB recognizes that there is a cost in collecting, processing, verifying and disseminating financial information so information should only be presented if the benefits of providing that information outweigh the costs of obtaining it. correct incorrect

Accounting reports on the costs of natural resources used in production processes and other business activities. correct incorrect

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. Which one of the following statements is not true?

The decision usefulness of information is enhanced if it is available to users in time for it to be capable of influencing their decisions. correct incorrect

To ensure verifiability, it should be possible to prove the financial information presented is accurate in all major respects. correct incorrect

Free from error means that information must be perfectly accurate correct incorrect

Where information is comparable, similarities and differences are readily apparent. correct incorrect