1.

Which financial statement confirms how much a business owns and

how much it owes at a certain point in time?
a. Cash flow
b. Balance sheet
c. Profit & loss

2. The going concern principle means that

a. We expect the business to continue trading for the foreseeable
future
b. The business is no longer trading
c. The business has not yet been started

3. Management accounting
a. Is closely regulated
b. Contains only financial information
c. Provides management in a form that is useful for managers

4. The historical cost convention

a. Means that we can measure what we own at the latest cost value
b. We value what we own at the cost of what we paid for it

5. Which financial statement explains how much we have sold and spent in
a certain period?
a. Cash flow
b. Profit & loss
c. Balance sheet

6. The business entity convention

a. The owner and the business are one and the same
b. The business and the owner are separate
7. The monetary unit principle means we create financial reports in the
currency of the country we trade in
a. True
b. False

8. The time period convention means we must create our financial reports
in 12 periods each year
a. True
b. False
c. Maybe

9. Which financial statement measures the change in cash incomings and

outgoings from period to period?
a. Balance sheet
b. Cash flow
c. Profit & loss

10. Financial accounting is subject to local standards and regulations

a. True
b. False