5.The cost of acquisition of shares bought back is treated as a(n) __________ of the equity of the entity. The acquisition cost includes the purchase consideration ______ incidental cost. A. Reduction, less B. Increase, less C. Increase, plus D. Reduction, plus

6. Financial statements prepared on the ________ basis inform users not only of _______ transaction involving the payment and receipt of cash but also of obligations to pay cash in the future and of resources that represent cash to be received in the future. They provide information about _______ transactions and other events that is _______ useful to users in making economic decisions.

A. actual, past, past, least B. accrual, current, past, most C. accrual, past, past, most D. actual, past, current, least

7. Elimination of inter entity balances and transactions which of the following does it explain? A. parent concept of consolidation B. entity concept of consolidation C. proprietorship concept of consolidation D. partial ownership concept of consolidation

8.With regard to preparing consolidated income statement which of the following statement is correct? A. Only the group portion of subsidiarys sales, cost of sales and expenses are included. B. Non controlling interest is identified immediately after consolidating operating profit C. Consolidated movement of equity excludes the parent companys dividend D. Only the group portion of the subsidiarys post acquisition profit in brought forward in the consolidated movement of equity

9. Which of the following statements is correct with regard to calculation of cash generated by operating activities, when using the indirect method: i) Increase in the amount of interest remaining unpaid should be added ii) Depreciation and amortisation of intangibles should be added iii) Loss of asset disposal will have to be added to profit to determine the cash flow from operations iv) Increase in inventory should be deducted A. i, ii, and iv B. i, ii, and iii C. ii, iii, and iv D. i, iii and iv

10. Which of the following is not a limitation of ratio analysis? A. Different accounting definitions, methods, techniques and policies used by various businesses may affect the comparability B. A constant market price for the share will affect the comparability of the ratios between two financial periods C. It is difficult to set up a proper standard for good performance D. Short-term fluctuations may not be reflected