Questions and Answers of Advanced Financial Accounting An International

The purchase of an asset on credit: (a) Increases assets and increases owner's equity. (b) Increases assets and increases liabilities. (c) Decreases assets and increases liabilities. (d) Leaves total
The effect of a credit entry on the payables account is to: (a) Decrease the account balance. (b) Increase the account balance. (c) Decrease or increase the account balance. (d) Decrease and increase
After elimination of any transactions with the owners, the profit of an enterprise can be seen as: (a) The increase in the net assets of the enterprise over a period. (b) Its total sales for a
Which of the following is correct? (a) Profit does not alter equity. (b) Profit reduces equity. (c) Equity can only come from profit. (d) Profit increases equity.
According to the IASB’s Framework, the main purpose of financing reporting is to:(a) Calculate taxable income.(b) Enable investors to make economic decisions.(c) Calculate prudently distributable
In the IASB’s Framework:(a) Prudence overrides relevance.(b) Relevance overrides reliability.(c) Relevance and reliability must be maximized, with a trade-off when they conflict.(d) Reliability
The going concern convention states that:(a) All enterprises must be accounted for as going concerns.(b) Accounting only needs to be done for going concerns.(c) Predictions cannot be used when
The convention of consistency refers to consistent use of accounting principles:(a) Among firms.(b) Across accounting periods.(c) Throughout the accounting period.(d) Within industries.
Mr. Bod has paid rent of i2,400 for the period 1 April 20X1 to 31 March 20X2.His first accounts are drawn up for the nine months ended 31 December 20X1.His first accounts should show:(a) A rent
The charging of depreciation expense over the life of an asset rather than the immediate full expensing of its cost is an example of:(a) Consistency.(b) Matching.(c) Prudence.(d) Reliability.
On 21 December 20X1, your client paid i10,000 for an advertising campaign. The advertisements will be heard on local radio stations between 1 January and 31 January 20X2. Your client believes that,
The stated accounting policy treatment for foreign currency translation for SKF, a Swedish company, for 2002 is as follows:Translation of foreign financial statements The current rate method is used

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