FAA - week 2 - revision quiz

Which of the following is correct in describing "reporting entity"?

• Any business is a reporting entity because any business needs accounting information.

• Any business registered as a company is a reporting entity

• A business where it is expected that users depend on the general-purpose financial reports to enable them to make economic decisions.

• All of the above is correct

Which of the following is a correct expression of the "Monetary principle" in accounting?

• A business' main objective is to earn money

• Items included in accounting records must be able to be expressed in monetary terms

• Transactions should only recorded when it involves flow of money.

• All items in financial statements are recorded in $ value.

The "entity concept" in accounting means:

• A company can operate independently

• An entity is separately identified and accounted for, in which owners' transactions are separate from the entity's transactions.

• An entity is a business that is required to provide accounting information.

• None of the above

Which of the following are qualitative characteristics of financial statements?

• Verifiability

• Relevance

• Comparability

• Understandability

Which of the following statements is correct?

• Transactions should be recorded at the time cash is received or paid

• Transactions should be recorded on accrual basis, not cash basis.

• Transactions should be recorded on either cash basis or accrual basis, depending on circumstances.

• All of the above

An item is recorded when:

• Definition (of asset, liability, income and expense) is met.

• When criteria to recognise the item is met

• When both definition and recognition criteria are satisfied

• None of the above