Exam (elaborations)
ICAEW Q Bank Exam With 100% Verified Solutions Latest Update
- Course
- Institution
ICAEW Q Bank Exam With 100% Verified Solutions Latest Update...
[Show more]
Content preview
ICAEW Q Bank Exam With 100% VerifiedSolutions Latest Update
Which of the following best explains what is meant by 'capital expenditure'? Capital
expenditure is expenditure:
A on non-current assets, including repairs and maintenance
B on expensive items over £10,000
C on the acquisition of non-current assets, or improvement in their earning capacity
D on items relating to owners' capital - Answer C Capital expenditure relates to the
acquisition of, or improvement of the earning capacity of, non-current assets
Which of the following should be accounted for as capital expenditure?
A The annual cost of painting a factory floor
B The repair of a window in a building
C The purchase of a vehicle by a garage for re-sale
D Legal fees incurred on the purchase of a building - Answer D Legal fees incurred on
the purchase of a building - the others are all revenue expenditure.
Which of the following should be treated as a capital expenditure in the financial
statements of a sole trader?
A £500 taken by the proprietor to buy himself a music system.
B £800 spent on purchasing a new PC to replace his secretary's old one
C £2,000 on purchasing a machine for resale
D £150 paid to a painter for redecorating his office - Answer B £800 spent on purchasing
a new PC to replace his secretary's old one. Item A is drawings, C is the acquisition of a
current asset in the form of inventory and D is a revenue expense.
Which of the following is a characteristic of relevance, according to the IASB's
,Conceptual Framework?
A Neutrality
B Free from error
C Completeness
D Materiality - Answer D Information's materiality is relevant to its relevance. A, B and C
are all characteristics which make information a faithful representation of what it
purports to represent
Under the IASB Conceptual Framework, which of the following are enhancing qualitative
characteristics?
A Comparability, understandability, timeliness, verifiability
B Consistency, prudence, measurability, verifiability
C Consistency, reliability, measurability, timeliness
D Materiality, understandability, measurability, reliability - Answer A This is set out in
paragraph 2.23-2.36 of the IASB's Conceptual Framework
In relation to the business of a sole trader, which two of the following does the
government and its agencies need to be able to do?
A Establish levels of tax revenue
B Assess whether the business will continue in existence
C Produce national statistics
d Assess the owner's stewardship
E Make decisions about their investment - Answer A,C Both tax and national statistics
will apply to the needs of government and its agencies. Whether the business will
continue as a going concern (B) is an issue for the sole trader, its suppliers, customers
and employees. Probably only the sole trader is interested in their own stewardship (D)
of the business's resources; this is really only an issue for company owners, as is (E).
Information about an entity's financial position is mainly derived from:
A the statement of profit or loss
B the statement of financial position
, C retained earnings
D the statement of cash flows Best Answer B The financial position of an end is reflected
in the resources it controls - assets, financial structure - debt and capital, liquidity - cash
and solvency - ability to pay its debts. The items in A most of this information is available
in the statement of financial position -B. Statement of profit or loss offers primarily data
on the financial performance of an entity, and the statement of cash flows presents the
changes in the financial position. Retained earnings is a figure in the statement of
financial position that accrues movements over the years in retained earnings.
IASB Conceptual Framework The IASB Conceptual Framework asserts that information
about which two of the following activities may enable users to determine the reporting
entity's financial strengths and weaknesses?
A The economic resources it controls
B Its financial performance in the past
C The demographic structure of the local economy
D The entity's claims (the entity's liabilities)
E Its governance structure - Answer A,D The IASB's Conceptual Framework states that
information about the economic resources (A) and claims (D) of an entity can help users
to identify the reporting entity's financial strengths and weaknesses. That information
can then be used to help users to assess the reporting entity's liquidity and solvency.
IAS 1 Presentation of Financial Statements Which two of the following are objectives of
financial statements?
A To show the results of management's stewardship of the resources entrusted to it
B To provide a basis for valuing the entity
C To provide information about the financial position, financial performance and cash
flows of an entity that is useful to a wide range of users in making economic decisions
D To enable comparison to be made of the financial performance between entities
operating in different industries
E To enable management and those charged with governance to make timely economic
decisions about how to allocate the entity's resources - See A,C International
Accounting Standard 1 (IAS 1), Presentation of Financial Statements sets out the
objective of financial statements. It says that the objective of financial statements is to
provide information about the financial position, financial performance and cash flows
of an entity that is useful to a wide range of users in making economic decisions (C).
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Easton. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now