1 . Which of the following is NOT a purpose of the Conceptual Framework?

A. It is useful to financial statement users when trying to understand and interpret the financial reports they are reviewing.

B. It is a useful TOP for account preparers and auditors when there is no specific accounting standard that addresses a particular issue.

C. It acts as a frame of TOP when the IASB (and other accounting standard-setters) develops new accounting standards and other reporting guidance.

D. It establishes inconsistency on a number of key issues.

2 . The basis upon which the personal assets of the owner are excluded from the business's balance sheet is referred to as which assumption?

Materiality

A. Accounting entity

B. Accrual basis

C. Going concern

3 . Why is the placing of an order with a supplier not regarded as a transaction?

A. Because the computer software cannot record it.

B. Because the entity may cancel the order.

C. Because an exchange between the entity and the supplier has not yet occurred.

D. The placing of an order is regarded as a transaction.

4 . Which of the following is an example of a relevant source document related to cash contributed from the owner of an organisation?

A. Cash receipt slip

B. Purchase invoice from supplier

C. Sales invoice generated by the organisation

D. Cheque butt

5 . There is no way to create or increase an asset without doing which of the following at the same time?

A. Increasing another asset, incurring a liability, or increasing owners' equity

B. Reducing another asset, incurring a liability, or reducing owners' equity.

C. Reducing another asset, incurring a liability, or increasing owners' equity.

D. Reducing another asset, reducing a liability, or increasing owners' equity.

6 . Which of the following statements is correct?

A. The normal balance for an asset is a credit.

B. The normal balance for equity is a credit.

C. The normal balance for income is a debit.

D. The normal balance for a liability is a debit.

7 . Which of the following factors will influence the preparation of the balance sheet for larger organisations?

A. The application of accounting principles (these principles include the entity concept, the accounting period convention, the monetary unit convention, the going concern assumption, and the convention of accrual accounting).

B. Efforts taken to ensure that the financial information being presented satisfies the qualitative characteristics that useful financial information is expected to possess (which include the fundamental qualitative characteristics of relevance and representational faithfulness, as well as the enhancing qualitative characteristics of comparability, verifiability, timeliness and understandability).

C. Efforts to comply with the requirements embodied within accounting standards.

D. All of these choices.

8 . Which of the following statements is FALSE in relation to equity?

A. Equity is defined as the residual interest in the assets of the entity after deducting its liabilities.

B. The owners' equity section of a sole trader will typically include share capital, retained earnings and reserves.

C. A reserve is a component of equity and can be created in a variety of ways, including as a result of a revaluation of a non- current asset

D. None of these choices.