Introduction to Accounting Standards and Concepts
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Questions and Answers

What do accounting standards emphasize more on, according to the text?

  • Historical cost
  • Neutrality (correct)
  • Fair values
  • Prudence

    • How are non-current assets disclosed according to the Cost concept?

  • At cost less depreciation less any impairment (correct)
  • At market value
  • At fair value only
  • At original cost only

    • What is the purpose of depreciation for assets like Machinery or Office furniture?

  • To reflect the appreciation in value
  • To reduce their cost
  • To write off every year due to diminishing value (correct)
  • To increase their value

    • Under the Money measurement concept, what is excluded from being measured?

    <p>Items that can't be measured in monetary terms</p> Signup and view all the answers

    What is a conservative approach towards recording investment type assets?

    <p>Recording at market value</p> Signup and view all the answers

    What is the definition of the business entity concept?

    <p>All of the above</p> Signup and view all the answers

    According to the realization concept, when is income recognized?

    <p>When the customer buys the product on account</p> Signup and view all the answers

    What is the definition of the accrual concept?

    <p>Both a and c</p> Signup and view all the answers

    What is an example of the accrual concept?

    <p>Company A pays R30,000 rentals for Feb, March and April on 1 Feb 2014, with a year-end of 31 March</p> Signup and view all the answers

    What is the definition of goodwill?

    <p>All of the above</p> Signup and view all the answers

    According to the matching concept, which of the following statements is true?

    <p>Income and expenses should be disclosed in the same Income Statement when earned or incurred</p> Signup and view all the answers

    What does the dual aspect concept form the basis for?

    <p>Double-entry bookkeeping</p> Signup and view all the answers

    According to the materiality principle, when should an issue be disclosed?

    <p>Only if the issue would add to the reader's understanding of the business</p> Signup and view all the answers

    Which of the following statements best describes the prudence concept?

    <p>Assets and profits should be reported at the lowest reasonable figure, while liabilities and expenses should be reported at the highest reasonable figure</p> Signup and view all the answers

    What is the assumption behind the going concern concept?

    <p>The business will continue in operational existence for at least the next 12 months</p> Signup and view all the answers

    What should be disclosed when there is a change to accounting policies?

    <p>The change should be disclosed, and the impact should be explained</p> Signup and view all the answers

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