Self Test Question-conceptual Framework-mhs (1)

SELF TEST QUESTION CONCEPTUAL FRAMEWORK 1. Which ONE of the following statements best describes the term 'liability'? A An excess of equity over current assets B Resources to meet financial commitments as they fall due C The residual interest in the assets of the entity after deducting all its liabilities D A present obligation of the entity arising from past events Short Analysis 2. Are the following statements regarding the term 'profit' true or false? (1) Profit is any amount over and above that required to maintain the capital at the beginning of the period. (2) Profit is the residual amount that remains after expenses have been deducted from income. Statement (1) Statement (2) A False False B False True C True False D True True Short Analysis 3. Which ONE of the following statements best describes the term 'financial position'? A The net income and expenses of an entity B The net of financial assets less liabilities of an entity C The potential to contribute to the flow of cash and cash equivalents to the entity D The assets, liabilities and equity of an entity Short Analysis 4. Which ONE of the following statements best describes the term 'going concern'? A When current liabilities of an entity exceed current assets B The ability of the entity to continue in operation for the foreseeable future C The potential to contribute to the flow of cash and cash equivalents to the entity D The expenses of an entity exceed its income Short Analysis 5. Which ONE of the following terms best describes the relationship of the assets, liabilities and equity of an entity? A Financial performance B Financial position C Future economic benefit D Obligation Short Analysis

6. Which ONE of the following terms best describes assets recorded at the amount that represents the immediate purchase cost of an equivalent asset? A Historical cost B Realisable value C Present value D Current cost Short Analysis 7. Which ONE of the following is true of the qualitative characteristic of 'understandability' in relation to information in financial statements? A Users should be willing to study the information with reasonable diligence B Users are expected to have significant business knowledge C Financial statements should exclude complex matters D Financial statements should be fee from material error Short Analysis 8. Which ONE of the following terms best describes information in financial statements that is neutral? A Understandable B Reliable C Relevant D Unbiased Short Analysis 9. Which ONE of the following terms best describes the amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal? A Fair value B Realisable value C Residual value D Value in use Short Analysis 10. Which ONE of the following terms best describes financial statements whose basis of accounting recognises transactions and other events when they occur? A Accrual basis of accounting B Going concern basis of accounting C Cash basis of accounting D Invoice basis of accounting Short Analysis