1.What is the conceptual framework for financial reporting? A. A set of items which make up an entitys statements of financial position. B. A set of regulations which govern Auditing reporting. C. A set of financial standards. D. A set of principles which underpin financial reporting.

2. Accruals is: A. Income is recognised in the financial accounts as cash is received, not when it is earned. Expenditure is recognised as it is paid for, not when it is incurred. B. Income is recognised in the financial accounts it is earned, not when cash is received. Expenditure is recognised as it is paid for, not when it is incurred. C. Income is recognised in the financial accounts as it is earned, not when the cash is received. Expenditure is recognised as it is incurred, not when it is paid for. D. Income is recognised in the financial accounts as cash is received, not when it is earned. Expenditure is recognised as it is incurred, not when it is paid for.

3. A retailer paid $90,000 as rent and treated the whole amount as expenditure for the year, overlooking the fact that the amount was for a five-year period commencing from the beginning of that year. The effect of this error would be: A. Net profit and current liabilities will be understated by $90,000. B Net profit and current assets are understated by $90,000. C. Net profit and current assets are understated by $72,000. D. Net profit and current assets are overstated by $72,000.

4. Private company is a locally incorporated company where the maximum

number of shareholders is limited to _____ A. 20 B. 25 C. 50 D. 55