CMKTF7

1.  The Conceptual Framework deals with the qualitative characteristics of financial statements. True or False?

• A.              True
• B.              False

2.  The Conceptual Framework normally prevails over International Financial Reporting Standards where there is a conflict between the two. True or False?

• A.              True
• B.              False

3.  The Conceptual Framework deals with the objectives of financial statements. True or False? T

• A.              True
• B.              False

4.  Which one of the following terms best describes assets recorded at the amount that represents the immediate purchase cost of an equivalent asset?

• A.    Realisable value
• B.    Present value
• C.    Current cost
• D.    Historical cost

5.  Which one of the following terms best describes information that influences the economic decisions of users?

• A.    Relevant
• B.    Prospective
• C.    Understandable
• D.    Reliable

6.  Which one of the following terms best describes financial statements whose basis of accounting recognises transactions and other events when they occur?

• A.    Accrual basis of accounting
• B.    Cash basis of accounting
• C.    Invoice basis of accounting
• D.    Going concern basis of accounting

7.  Which one of the following is the best description of faithful representation' in relation to information in financial statements?

• A.    Inclusion of a degree of caution
• B.    Complete, neutral and free from error
• C.    Influence on the economic decisions of users
• D.    Comprehensibility to users

2.  Which of these costs may be included in inventories of manufactured cars for resale?

• a. Import duties
• b.  Selling commissions to agents
• c.  Fixed production overheads
• d.  Interest
• e.   Transport costs

3.  Which of these costs may be included in the cost of inventories of raw materials and purchased components?

• a.  Import duties
• b. Transport costs
• c.  Interest
• d. Variable production overheads
• e.  Quantity discounts received

4.  Which of the following statements about IAS 2 Inventories are correct?

• a.              Production overheads should be included in cost on the basis of a company's actual level of activity in the period.
• b.              In arriving at the net realisable value of inventories, settlement discounts must be deducted from the expected selling price.
• c.              In arriving at the cost of inventories, FIFO and weighted average cost formulas are acceptable.
• d.              It is permitted to value finished goods inventories at materials plus labour cost only, without adding production overheads.