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1 Which of the following characteristics of financial information contribute to reliability, according to BFRS Framework for the Preparation and Presentation of Financial Statements?

(1) Freedom from bias

(2) Freedom from material error (3) Faithful representation (4) Consistency

A All of the above B (1), (2) and (3) C (1), (2) and (4) D (3) and (4)

2 Which two of the following, per BFRS Framework for the Preparation and Presentation of Financial

Statements, represent the underlying assumptions relating to financial statements?

(1) The accounts have been prepared on an accrual basis

(2) Users are assumed to have sufficient knowledge to be able to understand the financial statements (3) The accounting policies used have been disclosed

(4) The business is expected to continue in operation for the foreseeable future (5) The information presented is free from material error or bias

A (1) and (3) B (2) and (3) C (1) and (4) D (3) and (5)

3 Which of the following are the four principal qualitative characteristics of financial information as set out in BFRS Framework for the Preparation and Presentation of Financial Statements?

A Fair presentation, relevance, reliability and comparability B Relevance, comparability, materiality and understandability C Relevance, reliability, comparability and understandability D Materiality, comparability, reliability and fair presentation

4 According to BFRS Framework for the Preparation and Presentation of Financial Statements which of the following does an entity’s income statement, balance sheet and cash flow statement primarily measure?

Income statement Balance sheet Cash flow statement

A Financial position Financial performance Financial adaptability B Financial performance Financial adaptability Financial position C Financial adaptability Financial position Financial position D Financial performance Financial position Financial adaptability

5 Which of the following does BFRS Framework for the Preparation and Presentation of Financial Statements regard as the essential features of an asset?

(1) The item is acquired at a cost which can be reliably measured

(2) Rights to future economic benefits from the item must be legally enforceable (3) Rights to future economic benefits from the item must be controlled by the entity A (1) and (2)

B (2) only C (3) only D All of the above

6 Which of the following does BFRS Framework for the Preparation and Presentation of Financial Statements regard as the essential features of a liability?

(1) The amount of the obligation must be certain (2) The obligation must be legally enforceable

(3) Settlement of the obligation must involve an outflow of cash (4) The obligation must arise from past events

A (1) and (3) B (2) only C (4) only D (3) and (4)

7 According to BFRS Framework for the Preparation and Presentation of Financial Statements, which of the following characteristics should make financial information relevant to users?

(1) Materiality

(2) Predictive value and confirmatory value (3) Completeness (4) Faithful representation (5) Comparability A (1), (2) and (3) B (2) and (4) C (1) and (2) D (4) and (5)

8 Which of the following are roles of the International Accounting Standards Committee Foundation (IASCF)?

(1) To issue IFRS

(2) To examine any identified or alleged departures from IFRS (3) To guide the International Accounting Standards Board (IASB) (4) To secure finance

A (1) and (2) B (1) and (3) C (2) and (4) D (3) and (4)

9 Which of the following capital maintenance concepts is most closely associated with historic cost accounting?

A Real financial capital maintenance B Money financial capital maintenance C Operating capital maintenance D Physical capital maintenance

10 Brodie Ltd has been in business for one year, making all sales at a constant margin of 50%.

During the year, Brodie Ltd sold goods with a total selling price of CU210,000. CU130,000 of these sales were made to credit customers, of which CU100,000 had been received by the end of the year. The remaining CU80,000 were cash sales. Expenses paid during the year amounted to CU20,000 with CU2,000 accrued expenses at the year end.

How much profit did Brodie Ltd make for the year under the accrual basis and under the cash accounting basis?

Accrual basis Cash accounting basis

A CU85,000 CU68,000

B CU83,000 CU70,000

C CU83,000 CUnil

D CU48,000 CU40,000

11 Doyle Ltd made a profit of CU100,000 for 20X4 based on historic cost accounting principles. General price indices during the year have increased by 5% and specific price indices by 10%.

How much profit should Doyle Ltd record for 20X4 under three different capital maintenance concepts? A CU100,000 under real financial capital maintenance, CU95,000 under money financial capital

maintenance, and CU90,000 under physical capital maintenance

B CU100,000 under money financial capital maintenance, CU90,000 under real financial capital maintenance, and CU95,000 under physical capital maintenance

C CU100,000 under money financial capital maintenance, CU95,000 under real financial capital maintenance, and CU90,000 under physical capital maintenance

D CU90,000 under money financial capital maintenance, CU100,000 under real financial capital maintenance, and CU95,000 under physical capital maintenance

12 Gene Ltd has the following assets and liabilities at 31 December 20X5.

Note CU

Fixtures and fittings at carrying amount ₍₁₎ 10,000

Receivables ₍₂₎ 8,000

Cash and cash equivalents 1,000

Payables (5,000)

14,000 Notes

(1) The fixtures and fittings have been held for three years and had an estimated useful life of six years. If the fixtures and fittings were to be sold on 31 December 20X5 they would realise CU14,000. (2) If Gene Ltd was to cease trading it is estimated that an allowance against receivables of CU500

would need to be made.

At what amount would the net assets be stated in the balance sheet of Gene Ltd at 31 December 20X5 under the break-up basis and under the cash accounting basis?

Break-up basis Cash accounting basis

A CU17,500 CU21,000

B CU15,000 CU11,000

C CU17,500 CU11,000

13 Which of the following contribute to the qualitative characteristic of comparability, according to BFRS Framework for the Preparation and Presentation of Financial Statements?

(1) Neutrality

(2) Corresponding information (3) Disclosure of accounting policies (4) Materiality

A All of the above B (1), (2) and (3) C (1), (2) and (4) D (2) and (3)

14 Sam Ltd owns a building with a fair value and carrying amount on 30 June 20X3 of CU500,000. On 1 July 20X3 Sam Ltd sold this building to Tyler Ltd for CU400,000. The sale agreement provides for Sam Ltd to repurchase the building in four years’ time for CU600,000, when the fair value of the building is estimated to be at least CU700,000.

How should the above transaction be accounted for in the financial statements of Sam Ltd for the year ended 30 June 20X4?

A A loss on disposal of a non-current asset of CU100,000 B A profit on disposal of a non-current asset of CU100,000 C A loan of CU500,000

D A loan of CU400,000 and accrued interest

15 Which of the following shows the meaning of the term GAAP in the UK? A Generally accepted accounting procedures

B General accounting and audit practice C Generally agreed accounting practice D Generally accepted accounting practice

16 The BFRS Framework for the Preparation and Presentation of Financial Statements defines a number of elements of financial statements.

Which of the following represents those elements of the financial statements directly related to the measurement of financial position?

A Assets, liabilities and cash flows B Assets, liabilities and equity C Income, expenses and equity D Income, expenses and cash flows