Adjustments for final account

Which is the following is not listed as a qualitative characteristics of financial information?

• Relevance

• Faithful representation

• Understandability

• Trustworthiness

What are unearned revenues?

• Asset

• Liability

• Income

• Temporary account

If an item of expense is not adjusted for accrual, which of the following is the most likely consequence?

• The expense is correctly stated

• The expense is overstated

• The expense is understated

• The liability component in the balance sheet will be overstated

At the year-end a business wrote off bad debt. What is the effect of this?

• Capital reduced and non-current assets reduced

• Capital reduced and current assets reduced

• Current liabilities increased and non-current assets reduced

• Current liabilities and current assets reduced

A business transaction which records income earned

• will increase assets and reduce equity

• will increase assets and liabilities

• will leave total assets unchanged

• will increase assets and equity

An expense will have the following effect

• reduce assets and liabilities

• leave equity unchanged

• have the same effect as liability

• reduce equity

The net book value of assets is obtained by deducting _______ with accumulated depreciation.

• depreciation

• market value

• percentage of depreciation

• cost

The value of asset recorded in the statement of financial position is at _______ .

• cost

• market value

• net book value

• cost plus accumulated depreciation