1. Which of the following are true about trading as a limited company?

1. Operating as a limited liability company makes raising finance easier because additional shares can be issued to raise additional cash.
2. Operating as a limited liability company is riskier than operating as a sole trader because the shareholders of a business are liable for all the debts of the business whereas the sole trader is only liable for the debts up to the amount he has invested.

1. (i) only
2. (ii) only
3. Both (i) and (ii)
4. Neither (i) nor (ii)

2. Which of the following statements about accounting concepts and policies is/are correct?

1. Companies should never change the presentation or classification of items in their financial statements, even if there is a significant change in the nature of operations.
2. Information in financial statements should be presented to be understood by users with a reasonable knowledge of business and accounting.
3. Companies should create large provisions in times of company growth so that they can utilise in more difficult times to keep profits the same.

1. (i) and (ii)
2. (ii) and (iii)
3. (i) only
4. (ii) only

3. Which accounting concept requires that foreseen losses should be anticipated and taken into account immediately?

1. The consistency concept
2. The accruals concept
3. The prudence concept
4. The going concern concept

4. Which of the following statements about accounting concepts are correct?

1. The accruals concept requires that revenue earned must be matched against the expenditure incurred in earning it.
2. The prudence concept means that understating assets and overstating liabilities is desirable in preparing financial statements.
3. The duality concept means that for every transaction, there will be a double effect on the position of a business as recorded in the accounts.

1. (i), (ii) and (iii)
2. (i) and (ii)
3. (i) and (iii)
4. (ii) and (iii)

5. The profit earned by the business in 2020 was RM72,500. The proprietor injected new capital of RM8,000 during the year and withdrew goods for her private use which had cost RM2,200.

If net assets at the beginning of 2020 were RM101,700, what were the closing net assets?

1. RM35,000
2. RM39,400
3. RM168,400
4. RM180,000

6. The provision for doubtful debts is an example of which accounting concept?

1. Accruals
2. Consistency
3. Matching
4. Prudence

7. Depreciation is best described as:

1. a means of spreading the payment for non-current assets over a period of years
2. a decline in the market value of the assets
3. a means of spreading the net cost of non-current assets over their estimated useful life
4. a means of estimating the amount of money needed to replace the assets

8. Which accounting concept requires that amount of goods taken from inventory by the proprietor of a business are treated as drawings?

1. Accruals
2. Prudence
3. Separate entity
4. Duality