Intro to Financial

Statements
Sample Questions
 QUESTION 1

/ F A LSE
TRUEAn enhancingqualitative characteristic is
confirmatory value.
 QUESTION 2

/ F A LSE
TRUE Financialstatement users are assumed to have
no reasonable knowledge of business and
financial accounting matters.
 QUESTION 3

/ F A LSE
TRUE The idea
of consistency does not mean that
entities cannot switch from one accounting
method to another.
 QUESTION 4

H O I C E
T I P L EC
M UL
Which best describes the term "going concern"?

A When current liabilities exceed current assets

The ability of entity to continue in operation

B
for the foreseeable future.

The potential to contribute to the flow of cash

C
and cash equivalents to the entity

D The expenses exceed income

 QUESTION 5

H O IC E
I P LE C
MU L T
A complete set of financial statements includes the following
components, except

A Statement of financial position, statement of

comprehensive income and statement of cash flows.

B Statement of changes in equity

Notes, comprising a summary of significant

C accounting policies and other explanatory
information.

Reports and statements such as environmental

D
reports and value added statements
 QUESTION 6

H O I C E
T I P L EC
M UL
Financial statements must be prepared at least

A Annually

B Quarterly

C Semi-annually

D Every two years

 QUESTION 7

H O IC E
I P LE C
MU L T
The overall objectives of financial reporting is to provide
information

A That is useful for decision making

B About assets, liabilities, and owner's equity

C About financial performance during a period

That allows owners to assess management

D
performance
 QUESTION 8

H O IC E
I P LE C
MU L T
Which of the following is the best description of faithful
representation in relation to information in financial
statements.

A Influence on the economic decision of users

B Inclusion of a degree of caution

C Freedom from material error

D Comprehensibility to users.
 QUESTION 9

H O IC E
I P LE C
MU L T
Which of the following statements is true in relation to the
enhancing qualitative characteristic of understandability?

Users have a reasonable knowledge of business and economic

A activities and review the information with reasonable
diligence.

B Users are expected to have a significant business knowledge.

C Financial statements shall exclude complex matters

D Financial statements shall be free from material error

 QUESTION 10

H O IC E
I P LE C
MU L T
What is meant by comparability when discussing financial
accounting information?

A Information has predictive and confirmatory value

B Information is reasonably free from error

Information is measured and reported in a similar

C
fashion across entities

D Information is timely
answers

1. FALSE 6. A
2. FALSE 7. A
3. FALSE 8. C
4. B 9. A
5. D 10. C