QUESTION 1 (1 mark) Which one of the following statements is incorrect? 1. 2. 3. When Generally accepted accounting practice (GAAP) applies to a specific country, the reference to this country is included in the name of the GAAP. In South Africa the International Financial Reporting Standards (IFRS) is an ultimate financial reporting standard for state owned entities like Eskom. In instances where a Standard is in conflict with the Conceptual Framework, the requirements of the standard must be adhered to International Financial Reporting Standards (IFRS) deal with the recognition, measurement, presentation and disclosure requirements of financial statements, and the standards are based on the IFRS Conceptual Framework for Financial Reporting. 4 QUESTION 2 (1 mark) The two most important fundemantal qualitative characteristics which financial information must have to make it useful are the following: 1. 2 3 Relevance and materiality Relevance and detail representation Relevance and faithful representation Relevance and reliability QUESTION 3 (1 mark) ION 3 (1 mark) Which one of the following is classified as an adjustment? 1. Recording the payment of accrued expenses 2. Recording the depreciation for the year 3. Recording the credit losses recovered 4. Writing off additional credit loss QUESTION 4 (1 mark) A subsistence allowance paid to a partner is recorded by 1. debiting the subsistence (salaries) account and disclosing the transaction as an accrued expense in the statement of financial position. 2. debiting the subsistence (salaries) to partners' account and crediting the partner's current account. 3. debiting the statement of profit or loss and other comprehensive income and crediting the statement of changes in equity. 4. debiting the drawings account of the partner and crediting the bank account