2 Marks The following statements relate to the Business Structures topic. Choose all of the statements that are true: Select one or more: 1 OFTA a. Members of the general public who wish to become shareholders are able to purchase shares in private and public of 14 companies. b. If a partnership has two owners and one wishes to leave the business, the structure may become a sole trader. Generally speaking, as an entity grows in size, the control of each owner decreases. C. d. A disadvantage of the company structure compared to a partnership is the concept of limited liability. e. There is little difference in the level of regulation between business structures. Report question issue I Notes (+ B 2 Marks The following statements relate to the Introduction to Accounting topic. Choose all of the statements that are false: Select one or more: a. Reliability and faithful representation are considered to be of equal importance as comparability and timeliness. 2014 of 14 b. All six of the qualitative characteristics help to improve the usefulness of financial accounting information for decision making. c. The Conceptual Framework provides a foundation upon which accounting rules and procedures are based. d. Accrual accounting is only needed to account for situations where the cash flow occurs some time later than the underlying transaction. 0 e. All five elements of accounting have both a definition and recognition criteria that must both be satisfied before recording can take place. Report question issue ! Notes (+ Incure 2 Marks The following statements relate to the Balance Sheets topic. Choose all of the statements that are true: Select one or more: a. The order of presentation of assets in a balance sheet is commonly classified as currenton-current, but can also be arranged in order of liquidity. 3 0f14 of 14 b. The value shown in the balance sheet for a non-current asset represents what the asset could be sold for at that point in time. OC. An entity could have loans appearing as both current and non-current liabilities depending on their repayment dates. d. A balance sheet presented in t-format follows the accounting equation represented as A - L = OE. e. Owner's equity in the balance sheet represents the owner's share of the business at the start of the accounting period being reported. Report question issue ! Notes (+ N Marks The following statements relate to the Income Statement topic. Choose all of the statements that are false; Select one or more: 4 4 OFTA a. Comparing two consecutive income statements can usually enable a user to determine the depreciation method being of 14 used. b. The income statement is usually the first report to be prepared at the end of the period. C. The income statement of a trading entity reveals more information than the income statement of a service entity. d. The income statement depicts financial performance for the upcoming period. e. The preparation of an income statement is not required for a not-for-profit organisation. Report question issue o Notes (+ N Marks The following statements relate to the Cash Flow Statement topic. Choose all of the statements that are true: Select one or more: a. 5 OFTA It is always preferable if the Net Cash from Financing Activities section of the statement of cash flows is positive. of 14 b. If Net Cash Flows from Operating Activities is negative, it could be a sign of short-term cash flow concerns. C. The statement of cash flows is essential to assess a business because it is possible to be profitable in the income statement while experiencing cash flow difficulties. d. Usually if a business upgrades its equipment (by selling old equipment and buying new equipment), their Net Cash Flow from Investing Activities will be a positive subtotal in the statement of cash flows. e. The statement of cash flows is related to information in the balance sheet. Report question issue ! Notes (+ 2 Marks The following statements relate to the Analysis and Interpretation topic. Choose all of the statements that are false: Select one or more: 6 of 14 of 14 a. The Gross Profit Margin Ratio will always be higher than the Profit Margin Ratio. O b. An improvement in the Days' Debtors' ratio could result from shorter credit terms offered to customers. C. The higher the Debt Ratio of an entity, the higher the financial risk. d. Shareholders will always like the Dividend Payout Ratio to be as high as possible. e. It is impossible for the Quick (Acid Test) Ratio and the Current Ratio to be the same amount for a trading entity. Report question issue Notes +