QUESTION ONE [10] Four alternatives are presented for each of the following questions. Choose the correct alternative for each of the questions/statements. The letter corresponding to your choice must be recorded next to the question number in your solution. Example: Question No. 1.18 Alphabet F 1.1 Financial records are usually maintained using an assumption that the business intends to continue its operations for the foreseeable future. This concept is referred to as the: A) Consistency concept B) Going concern concept C) Prudence concept D) Matching concept 1.2 The idea that assets and income should not be overstated, and liabilities and expenses should not be understated is called the: A) Consistence concept B) Going concern concept C) Prudence concept D) Matching concept 1.3 Which one of the following concepts best assists users of financial statements when they need to compare information on financial statements? A) Matching concept B) Accrual concept C) Consistency concept D) Prudence concep 1.4 The principle that any personal transactions undertaken by the owner of an entity must be kept separate from the transactions of the business is known as: A) Entity principle B) Principle of duality c) Consistency principle D) Accrual principle 1.5 Complete the following sentence. The purpose of the statement of changes in equity is to; A) Measure the performance of the entity by determining the profit or loss for the financial period. B) Measure the ability of an entity to generate, manage and utilise cash effectively. C) Express the financial position at a given point in time. D) Reconcile the net worth of an entity at the beginning of the financial period to the net worth at the end of the financial period. 1.6 Which one of the following statements concerning assets is correct? A) Physical form is essential to the existence of an asset. B) Ownership is essential to recognise a resource in the financial statements. C) An asset is a present obligation of an entity arising from past events. D) Control is essential to recognise a resource as an asset. 1.7 Which of the following is not an example of an intangible asset; A) Computer software. B) Computer hardware. C) Patents and trade marks D) Goodwill. 1.8 Machinery with a capitalized cost of R260 000 was bought on 30 April 2018 and was ready for use on that day. However, the machine was put to use on 1 June 2018. The estimated useful life of the machine if 5 years and the estimated residual value if R20 000. If we use the straight line method, the amount of depreciation recorded for this machine on 31 December 2018, the financial year end, would be A) R28 000 B) R32 000 C) R24 000 D) R26 000 1.9 Consider the information provided in 1.8 above about the machine purchased on 30 April 2018. Assume the machine was put into use on the day of purchase and that we use the reducing balance method at a depreciation rate of 30% per year, which one of the following amounts must be recorded as depreciation for the year ended 31 December 2019? A) R62 400 B) R52 400 C) R64 350 D) R59 400 1.10 An underwriter: A) Deregisters debentures and shares. B) Writes the footnotes at the bottom of the statement of financial position. C) Insures against under subscription of shares and debentures. D) Insures against over subscription of shares and debentures