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1) Who issues International Financial Reporting Standards?
The IFRS Advisory Committee
The International Federation of Accounts
The International Accounting Standards Board
2) Which of the following statements is true?
A company is run by directors on behalf of its members
The directors of a company are liable for any losses of the company
A sole trader business is owned by shareholders and operated by the proprietor
Partners are liable for losses in a partnership in proportion to their profit share ratio
3) Identify, by indicating the relevant box in the table below, whether each of the following statements is true or false.
A. A supplier of goods on credit is interested only in the statement of financial position, i.e., an indication of the current state of affairs.
B. The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions.
4) Which of the following statements best defines a statement of financial position?
It is a summary of income and expenditure for an accounting period
It is a summary of assets and expenses at a specified date
It is a summary of assets, liabilities and equity at a specified date
It is a summary of cash receipts and payments made during an accounting period
5) Which of the following are advantages of trading as a limited liability company?
Operating as a limited liability company is more risky than operating as a sole trader because the sole trader is only liable for the debts up to the amount he has invested whereas shareholders of a business are liable for all the debts of the business.
Operating as a limited liability company makes raising finance easier because additional shares can be issued to raise additional cash.
Both 1 and 2
Neither 1 or 2
6) What is the main purpose of financial accounting?
To record all transactions in the books of account
To provide management with detailed analyses of costs
To calculate profit or loss for an accounting period
To enable preparation of financial statements that provides information about an entity’s financial performance and position
7) Which of the following best describes corporate governance?
Corporate governance is the system by which companies and other entities are directed and controlled.
Corporate governance is the system of rules and regulations surrounding financial reporting.
Corporate governance is carried out by the finance department in preparing the financial statements.
Corporate governance is the system by which an entity monitors its impact on the natural environment.
8) Which of the following statements relating to a partnership of twenty persons and a limited liability company with twenty shareholders, each with a five per cent shareholding, is true?
Both partnerships and limited liability companies are able to own assets in their own name.
The members of a limited liability company have the right to participate in the management of that company, whereas partners do not have the right to participate in the management of their partnership.
The partners have the right to participate in the management of the partnership, whereas members of a limited liability company do not have the right to participate in the management of that company.
Partnerships are subject to the same regulations regarding introduction and withdrawal of capital from the business as a limited liability company.
9) Which ONE of the following statements correctly describes how International Financial Reporting Standards (IFRSs) should be used?
To prevent national bodies from developing their own financial reporting standards
To ensure high ethical standards are maintained by financial reporting professionals internationally
To facilitate the enforcement of a single set of global financial reporting standards
To provide examples of best financial reporting practice for national bodies who develop their own requirements
10) Are the following statements relating to the IASB’s Conceptual Framework for Financial Reporting true or false?
A. It is a financial reporting standard
B. It acts as authoritative where a specific IFRS conflicts with the conceptual framework
C. It assists preparers in developing consistent accounting policies when no standard applies
D. It assists all parties in understanding and interpreting IFRS Standards