Exercise_Topic1 (Group C)

Which of the following statements about users of accounting information is INCORRECT?

• income tax department is considered as external users.

• management is considered as internal users.

• employees are considered as internal users.

• government is considered as internal users.

The following defines the characteristics of a sole trader. Which one is CORRECT?

• It is governed by the Companies Act 2016

• The accounts of a sole trader must be audited.

• Its liability is unlimited.

• It is governed by the Partnership Act 1961

From the legal of view, which type of business organization has a separate legal entity from its owners,

where the owners are not personally liable for the debts of the business?

• Company

• Sole Proprietorship

• Partnership

• None of the above

The accounting process involves all of the following EXCEPT:

• Identifying economic transactions that are relevant to the business.

• Communicating financial information to users by preparing financial reports.

• Recording non quantifiable economic events.

• Analysing and interpreting financial reports.

What is the purpose of accounting?

i. Provide financial information to the users.

ii. Assist the management to make decision.

iii. Can be used as a tool of performance evaluation.

iv. To increase the wealth of the business. (accounting cant increase the wealth)

• i, ii and iii

• i, iii and iv

• i, ii and iv

• i, ii and iv

Management Accounting is mainly concerned with:

• Providing financial information to managers

• Recording information for tax purposes

• Communicating financial information to shareholder

• Auditing the accounts of the company

Which of the following is NOT one of the four sequential stages of an accounting information system?

• Information analysis

• Information recording

• Information correcting

• Information identification

Which of the following is NOT one of the forms of business organisation?

• Corporations

• Partnerships

• Sole proprietorships

• Investors

What is the main purpose of financial accounting?

• Organise financial information

• Provide useful, financial information to outsiders

• Keep track of company expenses

• Minimise company taxes

Accounting concepts must be defined clearly and well understood by both who prepare financial statements and use the information therein for decision making because of the following reasons:

i. The information in financial statements then become more meaningful

ii. It would assist accountants to account for unusual transactions

iii. It would assist Standard Makers to be consistent in their pronouncements

iv. It would improve comparability of financial statements

 Which of the above statements are CORRECT?

• i & ii

• i, ii, & iii

• ii, iii, & iv

• All four