The Qualitative Characteristics of Financial Information (Y7C2)

1	Which accounting concept should be considered if the owner of a business takes goods from inventory for his own personal use?
	A	The fair presentation concept
	B	The accruals concept
	C	The going concern concept
	D	The business entity concept
2	Sales revenue should be recognised when goods and services have been supplied; costs are incurred when goods and services have been received. Which accounting concept governs the above?
	A	The business entity concept
	B	The materiality concept
	C	The accruals concept
	D	The duality concept
3	Which accounting concept states that omitting or misstating this information could influence users of the financial statements?
	A	The consistency concept
	B	The accruals concept
	C	The materiality concept
	D	The going concern concept
4	According to the IASB’s Conceptual Framework for Financial Reporting, which TWO of the following are part of faithful representation?
	1	It is neutral
	2	It is relevant
	3	It is presented fairly
	4	It is free from material error
	A	1 and 2
	B	2 and 3
	C	1 and 4
	D	3 and 4
5	Which of the following accounting concepts means that similar items should receive a similar accounting treatment?
	A	Going concern
	B	Accruals
	C	Matching
	D	Consistency
6	Listed below are some characteristics of financial information.
	1	Relevance
	2	Consistency
	3	Faithful representation
	4	Accuracy
	Which of these are qualitative characteristics of financial information according to the IASB’s Conceptual Framework for Financial Reporting?
	A	1 and 2 only
	B	2 and 4 only
	C	3 and 4 only
	D	1 and 3 only
7	Which ONE of the following statements describes faithful representation, a qualitative characteristic of faithful representation?
	A	Revenue earned must be matched against the expenditure incurred in earning it.
	B	Having information available to decision-makers in time to be capable of influencing their decisions.
	C	The presentation and classification of items in the financial statements should stay the same from one period to the next.
	D	Financial information should be complete, neutral and free from error
8	Listed below are some comments on accounting concepts.
	1	Financial statements always treat the business as a separate entity.
	2	Materiality means that only items having a physical existence may be recognised as assets.
	3	Provisions are estimates and therefore can be altered to make the financial results of a business more attractive to investors.
	Which, if any, of these comments is correct, according to the IASB’s Conceptual Framework for Financial Reporting?
	A	1 only
	B	2 only
	C	3 only
	D	None of them
9	Which of the following statements about accounting concepts and the characteristics of financial information are correct?
	1	The concept of accruals requires transactions to be reflected in the financial statements once the cash or its equivalent is received or paid.
	2	Information is material if its omission or misstatement could influence the economic decisions of users taken on the financial statements.
	3	Based on faithful representation, it may sometimes be necessary to exclude material information from financial statements due to difficulties establishing an accurate figure.
	A	1 only
	B	1 and 2 only
	C	2 only
	D	2 and 3only
10	The IASB’s Conceptual Framework for Financial Reporting gives six qualitative characteristics of financial information. What are these six characteristics?
	A	Relevance, Faithful representation, Comparability, Verifiability, Timeliness and Understandability
	B	Accuracy, Faithful representation, Comparability, Verifiability, Timeliness and Understandability
	C	Relevance, Faithful representation, Consistency, Verifiability, Timeliness and Understandability
	D	Relevance, Comparability, Consistency, Verifiability, Timeliness and Understandability
11	Which one of the following is not a qualitative characteristic of financial information according to the Conceptual framework for Financial Reporting?
	A	Faithful representation
	B	Relevance
	C	Timeliness
	D	Accruals
12	According to the IASB Conceptual framework which of the following is not an objective of financial statements?
	A	Providing information regarding the financial position of a business
	B	Providing information regarding the performance of a business
	C	Enabling users to assess the performance of management to aid decision making
	D	Providing reliable investment advise
13	Which of the following statement about accounting concepts and policies is/are correct?
	1	Companies should never change the presentation or classification of items in their financial statements, even if there is a significant change in the nature of operations.
	2	Companies should create provisions in times of company growth to be utilised in more difficult times, to smooth profits.
	A	1 only
	B	2 only
	C	1 and 2
	D	Both are incorrect