FA18 Accounting concepts

Raymond Company has been adopting different methods to calculate depreciation on its motor vehicles for the past 4 years.

Which of the following accounting principle / concept was violated?

• Business entity

• Consistency

• Historical Cost

• Going Concern

• Accrual

In order to present a better liquidity position, the owner decides to include his personal bank account in the business’s statement of financial position.

Which of the following accounting principle / concept was violated?

• Business entity

• Consistency

• Historical Cost

• Going Concern

• Accrual

Thomas Chan bought an antique motor car for his personal use at a cost of $800,000. As at 31 March 2007, this car was shown as a current asset at the market value of $830,000 on his company’s statement of financial position.

Which of the following accounting principle / concept was violated?

• Business entity

• Consistency

• Historical Cost

• Going Concern

• Accrual

Elton Lee’s business had been running at a loss during the past three years. Since costs of operation had been rising, Elton decided to close his business on 1 January 2009. In the balance sheet at 31 December 2008, Elton listed the assets at their book values.

Which of the following accounting principle / concept was violated?

• Business entity

• Consistency

• Historical Cost

• Going Concern

• Accrual

The owner of Gorock Co bought a laptop computer himself and kept it on business premises. He used this computer to trade his own securities on the Internet and for personal entertainment. The accountant recorded the laptop computer as office equipment and depreciated it at 10% per annum on cost.

Which of the following accounting principle / concept was violated?

• Business entity

• Consistency

• Historical Cost

• Going Concern

• Accrual

Included in the closing inventory were items that cost $7,850 but could only be sold for $5,000. The company’s accountant decided to value these items at the net realisable value.

Which of the following accounting principle / concept was violated?

• Business entity

• Consistency

• Historical Cost

• Going Concern

• No violation

Goods bought in the year ended 31 December 2016 but not paid for until 2017 should be treated as purchases in 2016

Which of the following accounting principle / concept was violated?

• Business entity

• Consistency

• Historical Cost

• Going Concern

• No violation