Financial Reporting Basics Quiz
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Questions and Answers

What are the elements of financial position?

  • Assets, Liabilities and Equity (correct)
  • Historical Cost, Current Cost, Realizable Value and Present Value
  • Understandability, Relevance, Reliability and Comparability
  • Revenues and Expenses

    • What are the fundamental recognition criteria for elements of financial statements?

  • Understandability, Relevance, Reliability and Comparability
  • Historical Cost, Current Cost, Realizable Value and Present Value
  • Revenues, Expenses, Assets, Liabilities and Equity
  • Definition, Measurability, Relevance and Reliability (correct)

    • What is the process of including an eligible item in the financial statement called?

  • Recognition (correct)
  • Measurement
  • Comparability
  • Summarization

    • Which of the following is NOT a measurement basis detailed in the framework?

    <p>Fair Market Value (B)</p> Signup and view all the answers

    What is GAAP?

    <p>A cluster of accounting standards and common industry practices developed over years (B)</p> Signup and view all the answers

    What is one of the purposes of GAAP?

    <p>To provide a standardized approach to preparing financial statements, making them more comparable. (D)</p> Signup and view all the answers

    Which of the following is NOT a characteristic of financial statements?

    <p>Objectivity (D)</p> Signup and view all the answers

    Which of the following best describes the role of accounting conventions in financial reporting?

    <p>They provide a set of general principles and guidelines for accountants to follow. (A)</p> Signup and view all the answers

    Which of these is a drawback of the going concern concept?

    <p>It can lead to the overvaluation of assets during periods of inflation. (D)</p> Signup and view all the answers

    What is a main purpose of the accrual concept?

    <p>To match revenues and expenses to the period in which they are earned or incurred. (A)</p> Signup and view all the answers

    Which of the following is NOT a benefit of the consistency concept?

    <p>It ensures that the same accounting methods are used by all companies. (D)</p> Signup and view all the answers

    What is a criticism of the consistency concept?

    <p>It can prevent accountants from using their initiative to apply more effective methods. (C)</p> Signup and view all the answers

    What is the primary objective of the prudence concept?

    <p>To anticipate for losses and avoid anticipating for profit. (D)</p> Signup and view all the answers

    Which concept is primarily responsible for the year-end adjustments made in accounting?

    <p>Accrual concept. (C)</p> Signup and view all the answers

    Which of these statements accurately describes a relationship between two concepts?

    <p>The consistency concept can sometimes conflict with the prudence concept. (B)</p> Signup and view all the answers

    Which of the following is NOT a primary objective of accounting?

    <p>To predict future economic trends. (C)</p> Signup and view all the answers

    What is the key difference between bookkeeping and accounting?

    <p>Bookkeeping involves recording transactions, while accounting focuses on analyzing and interpreting data for decision making. (D)</p> Signup and view all the answers

    Which of the following accurately reflects the process of financial data interpretation?

    <p>Collecting data, analyzing data, interpreting data, communicating data. (B)</p> Signup and view all the answers

    What is the purpose of accounting transactions being quantified in monetary terms?

    <p>To allow for the comparison of transactions over time. (B)</p> Signup and view all the answers

    Which of the following is NOT a benefit of maintaining bookkeeping records?

    <p>It helps to predict future sales trends. (D)</p> Signup and view all the answers

    Considering the acronym C2PEAR for the objectives of accounting, what does the 'E' represent?

    <p>Economic (A)</p> Signup and view all the answers

    What is a key element of bookkeeping that is mentioned in the text?

    <p>Maintaining ledgers. (D)</p> Signup and view all the answers

    Why is it important that financial information is communicated to appropriate users?

    <p>To assist in making informed decisions regarding the business. (C)</p> Signup and view all the answers

    What is the effect on the accounting equation when goods are withdrawn for private use?

    <p>Assets and capital both decrease (B)</p> Signup and view all the answers

    What happens to the bank balance when cash is withdrawn from the bank for business use?

    <p>The bank balance decreases (D)</p> Signup and view all the answers

    Which of the following describes the effect of buying goods on credit from a supplier?

    <p>Assets increase and liabilities increase (C)</p> Signup and view all the answers

    When a loan is contracted and a current bank account is opened, what is the effect on the accounting equation?

    <p>Liabilities and assets both increase (B)</p> Signup and view all the answers

    What is the result of recording transactions involving nominal accounts directly in the balance sheet?

    <p>It eliminates the need for a profit and loss account (D)</p> Signup and view all the answers

    What effect does the withdrawal of cash for private use have on capital?

    <p>Capital decreases by the amount withdrawn (A)</p> Signup and view all the answers

    What is the overall effect of selling goods on credit?

    <p>Increase in assets and increase in income (C)</p> Signup and view all the answers

    How does paying a creditor by cheque affect the accounting equation?

    <p>Assets decrease with no effect on liabilities (D)</p> Signup and view all the answers

    What event led to the US Securities and Exchange Commission (SEC) overseeing public companies?

    <p>The 1934 Securities and Exchange Act (D)</p> Signup and view all the answers

    What is the main purpose of the Financial Accounting Standards Board (FASB)?

    <p>Setting accounting standards for public companies in the U.S. (D)</p> Signup and view all the answers

    What is the primary benefit of a conceptual framework in accounting?

    <p>It provides a basis for resolving disputes over accounting practices. (D)</p> Signup and view all the answers

    What is one of the main purposes of the Securities and Exchange Commission (SEC)?

    <p>Supervising public companies to ensure they follow the rules. (A)</p> Signup and view all the answers

    Why was the Securities and Exchange Commission (SEC) established?

    <p>To regulate the stock market after the crash of 1929. (A)</p> Signup and view all the answers

    What is the purpose of the Conceptual Framework in accounting?

    <p>To provide a foundation for developing consistent accounting rules and standards. (B)</p> Signup and view all the answers

    What is credited when cash is used to start a business?

    <p>Capital A/C (B)</p> Signup and view all the answers

    When goods are bought for resale on credit, which account is credited?

    <p>Creditors A/C (A)</p> Signup and view all the answers

    In a cash sale transaction, which account is debited?

    <p>Cash A/C (C)</p> Signup and view all the answers

    What happens when debtors settle their dues with a cheque?

    <p>Debtors A/C is debited and Bank A/C is credited (D)</p> Signup and view all the answers

    What is the double entry for expenses paid by cheque?

    <p>Dr. Expenses A/C, Cr. Bank A/C (C)</p> Signup and view all the answers

    What is the correct double entry for cash received from debtors?

    <p>Dr. Cash A/C, Cr. Debtors A/C (B)</p> Signup and view all the answers

    In which scenario is the Cash A/C debited?

    <p>When cash is withdrawn for personal use (A)</p> Signup and view all the answers

    When purchasing a fixed asset for cash, which account is debited?

    <p>Fixed Asset A/C (D)</p> Signup and view all the answers

    Study Notes

    UGBS 205: Fundamentals of Accounting Methods

    • Course taught by Darko Kwanbena Emmanuel (DKE) & Harrison Korbla Setsofia (HKS)
    • Comprehensive notes and illustrations, solved and unsolved exercises, and past examination questions
    • Targeted at University of Ghana Business School students
    • Focuses on accounting methods, including nature of accounting, accounting concepts and conventions, accounting equation, recognition/measurement of elements of financial statements (including financial statements), double entry principles, books of original entry, control accounts, bank reconciliation, capital expenditure/revenue expenditure, depreciation of tangible non-current assets, and financial statement adjustments.
    • Comprehensive and detailed coverage of the course material

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    Description

    Test your knowledge on the key elements of financial position and the principles of GAAP. This quiz covers recognition criteria, measurement bases, and key concepts in financial reporting. Challenge yourself and see how well you understand the foundations of accounting!

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