WorksheetsChapter 1 - Introduction to accounting
Total questions: 14
Worksheet time: 14mins
Which three of the following are fundamental principles of the IESBA Code of Ethics for Professional Accountants?
Integrity
Objectivity
Independence
Confidentiality
Courtesy
There are two main approaches to a code of professional ethics: a rules-based ethical code and a code based upon a set of principles. Indicate whether the following statements are true or false.
1. A code based upon a set of principles requires a professional accountant to comply with a set of
specific rules.2. A rules-based code requires a professional accountant to identify, evaluate and address threats to
compliance with fundamental ethical principles.
True - True
False - False
True - False
False - True
Which of the following best explains what is meant by ‘capital expenditure’?
A on non-current assets, including repairs and maintenance
B on expensive items over £10,000
C on the acquisition of non-current assets, or improvement in their earning capacity
D on items relating to owners’ capital
According to the IASB’s Conceptual Framework, which of the following are enhancing qualitative characteristics?
A Comparability, understandability, timeliness, verifiability
B Consistency, prudence, measurability, verifiability
C Consistency, reliability, measurability, timeliness
D Materiality, understandability, measurability, reliability
Which of the following statements best describes ethical guidance in the UK?
Ethical guidance provides a set of rules which must be followed in all circumstances
Ethical guidance is a framework containing a combination of rules and principles, the application of which is dependent on the professional judgement of the accountant based on the specific circumstances
Ethical guidance provides a set of principles which can be applied at the discretion of the accountant
Ethical guidance is a series of legal requirements
Which of the following items should be treated as capital expenditure in the financial statements of a sole trader?
A £500 taken by the proprietor to buy himself a music system
B £800 spent on purchasing a new laptop to replace his secretary’s old one
C £2,000 on purchasing a machine for resale
D £150 paid to a painter for redecorating his office
Which of the following is an aspect of relevance, according to the IASB’s Conceptual Framework?
A Neutrality
B Free from error
C Completeness
D Materiality
According to IAS 1, Presentation of Financial Statements, compliance with IFRS Standards will normally ensure that:
the entity’s inventory is valued at net realisable value
the entity’s assets are valued at their break-up value
the entity’s financial statements are prepared on the assumption that it is a going concern
the entity’s financial position, financial performance and cash flows are presented fairly
Which of the following is the best description of fair presentation in accordance with IAS 1, Presentation of Financial Statements?
The financial statements are accurate
The financial statements are as accurate as possible given the accounting systems of the organisation
The directors of the company have stated that the financial statements are accurate and correctly prepared
The financial statements are reliable in that they faithfully reflect the effects of transactions, other events and conditions
Which of the following definitions of the going concern concept in accounting is consistent with the definition given in IAS 1, Presentation of Financial Statements?
The directors do not intend to liquidate the entity or to cease trading in the foreseeable future
The entity is able to pay its debts as and when they fall due
The directors expect the entity’s assets to yield future economic benefits
Financial statements have been prepared on the assumption that the entity is solvent and would be able to pay all creditors in full in the event of being wound up
The directors of Lagon plc wish to omit an item from the company’s financial statements on the grounds that it is commercially sensitive. Information on the item would influence the users of the information when making economic decisions. According to IAS 1, Presentation of Financial Statements, the item is said to be:
neutral
prudent
material
understandable
Which, if either, of these comments is correct? (1) According to the IASB’s Conceptual Framework, financial information must be either relevant or faithfully represented if it is to be useful. (2) Materiality means that only items having a physical existence may be recognised as assets.
1 only
2 only
Both of them
Neither of them
Which of the following statements is correct?
The ICAEW Code of Ethics applies to its members only
The ICAEW Code of Ethics applies to its members and employees of member firms only
The ICAEW Code of Ethics applies to its members, employees of member firms and ICAEW students
The ICAEW Code of Ethics applies to its members, employees of member firms, ICAEW students and all other members of UK accountancy bodies
Which of the following should be accounted for as capital expenditure?
A The annual cost of painting a factory floor
B The repair of a window in a building
C The purchase of a vehicle by a garage for re-sale
D Legal fees incurred on the purchase of a building
