Accounting Self-Test

Which of the following is classified as revenue expenditure?

• Purchase of inventories for resale

• Purchase of a motor vehicle to deliver goods to customers

• Purchase of machinery for use in production

• Purchase of a warehouse to store inventory

According to IAS 1 which of the following does not represent an objective of financial statements?

• To provide information to investors in making economic decisions

• To provide information to managers in making business decisions

• To show the results of management's stewardship of the resources entrusted to it

• To help users predict the entity's future cash flows

Which one of the following issues in an entity's financial statements is likely to be of most interest to an entity's lender?

• Whether the entity has paid a dividend

• Whether the entity will repay a loan when it falls due

• Whether the entity will continue to be able to employ people

• Whether the entity patronises local suppliers.

A statement of financial position is best described as:

• A snapshot of the entity's financial position at a particular point in time

• A record of an entity's financial performance over a period of time

• A list of all the income and expenses of the entity at a particular point in time

• A list of all the assets and liabilities of the entity over a period of time

Which of the following would not be a suitable question to ask yourself when resolving an ethical dilemma?

• Would my colleagues think my solution is reasonable?

• Have I thought about all the possible consequences of my solution?

• Could I defend my solution under public scrutiny?

• Does my solution benefit my career?

Which of the following is not a source of the accounting rules embodied in UK GAAP?

• The Companies Act 2006

• UK accounting standards

• Listing requirements of the London Stock Exchange

• Accounting requirements of an entity's US parent company

Materiality is an entity-specific aspect of which qualitative characteristic?

• Relevance

• Understandability

• Faithful representation

• Comparability

Which of the following is an item of capital expenditure?

• Cost of goods sold

• Purchase of a machine

• Repairs to a machine

• Wages cost

Which of the following is an asset?

• A trade payable

• A loan

• Drawings

• A prepayment

Which of the following is a liability?

• Depreciation

• An accrual

• Cash at bank

• Plant and machinery.