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NEW QUESTION 43
Which one of the following methods is not used for ‘creative accounting’?
- A. window dressing
- B. off balance sheet financing
- C. profit smoothing
- D. aggressive debt management
Answer: D
NEW QUESTION 44
Which of the following statements are correct in the context of accounting concepts and principles?
I)The going concern assumption requires that assets be carried at their cost values.
II)Prudence allows the creation of contingency reserves and more generous provisions.
III)Financial information is considered complete even if it excludes non-material information.
IV)Understandability does not require complex information to be excluded from financial reports.
- A. I and III only
- B. III and IV only
- C. II and IV only
- D. II and III only
Answer: B
NEW QUESTION 45
Which one of the following is an accurate definition of fair value of an asset?
- A. The amount yet to be written off over the remainder of the asset’s useful life.
- B. The price for which an asset could be sold in an orderly transaction between market participants at the measurement date.
- C. The price for which an asset could be sold net of disposal costs.
- D. The cost of replacing an asset with an identical item.
Answer: B
NEW QUESTION 46
Which accounting theory is best described by the statement ‘An approach to accounting is one where a theory is thought of as a body of knowledge that explains and attempts to predict actual accounting practice’?
- A. historical cost accounting theory
- B. positive accounting theory
- C. normative accounting theory
- D. general accounting theory
Answer: B
NEW QUESTION 47
JK Ltd intentionally over-valued its closing inventories to increase profitability for the year 20X8. This would help them to better price a planned share issue in 20X9. By doing this they have breached the concept of
- A. substance over form.
- B. neutrality.
- C. understandability.
- D. completeness.
Answer: B
NEW QUESTION 48
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