Accounting Concepts – Page 3

FR – Nov 2019 – L2 – Q4a – Ethical Issues in Financial Reporting

Explain the concepts of substance over form and going concern in financial reporting.

Question

The IASB’s framework for preparation and presentation of financial statements requires financial statements to be prepared on the basis that they comply with certain accounting concepts and underlying assumptions.

Required:

Explain the meaning of each of the following concepts and the underlying assumption:

Substance over form
Going concern
(6 Marks)

Answer

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Tags: Accounting Concepts, Going Concern, Substance Over Form
Level: Level 2

Topic: Ethical Issues in Financial Reporting
Series: NOV 2019

FA – Nov 2011 – L1 – SA – Q15 – Accounting Concepts

This question asks which of the given options does not belong to the group of accounting concepts.

Question

Which of the following does not belong to the group?
A. Going concern concept
B. Realisation concept
C. Matching concept
D. Entity concept
E. Profitability concept

Answer

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Tags: Accounting Concepts, Fundamental Principles
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q7 – Accounting Concepts

This question tests understanding of the duality concept in accounting.

Question

The accounting concept that says every debit entry must have a corresponding credit entry is
A. Going concern
B. Duality concept
C. Historical cost concept
D. Money measurement concept
E. Consistency concept

Answer

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Tags: Accounting Concepts, Duality Concept
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2011

FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

Question

a. Explain the term ‘accounting concepts’. (2 Marks)

b. With particular reference to the accounting treatments, explain the following accounting concepts:
i. Entity (2 Marks)
ii. Going concern (2 Marks)
iii. Accrual (2 Marks)
iv. Materiality and aggregation (2 Marks)
v. Consistency (2 Marks)

c. In accordance with IAS 1 – Presentation of Financial Statements, highlight six qualitative characteristics of general-purpose financial statements. (4 Marks)

d. Financial statements provide information to users, and each user’s information requirement is not always the same.

Required:
Using the table below and the example provided, list four users of financial statements and their information needs.

S/N	Users	Information Needs
1	Employees	Wage negotiation and determination of job security
2
3
4

(Total: 20 Marks)

Answer

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Tags: Accounting Concepts, Financial Statements, IAS 1, Materiality, Users of financial statements
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2020

FA – Nov 2020 – L1 – SA – Q11 – Accounting Concepts

Identifies the accounting convention that suggests using a valuation method that understates rather than overstates results.

Question

Which of the following accounting conventions suggests that accountants should use a method of valuation that understates rather than overstates results?
A. Conservatism
B. Historical
C. Monetary
D. Cost
E. Substance over form

Answer

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Tags: Accounting Concepts, Conservatism
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2020

FA – Nov 2012 – L1 – SB – Q34 – Accounting Concepts

Recognize the accounting concept for sales revenue recognition.

Question

The accounting concept which states that sales revenue should be recognized when goods and services have been received is known as?

Answer

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Tags: Accounting Concepts, Revenue, Sales
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2012

FA – May 2013 – L1 – SA – Q5 – Depreciation Methods and Accounting for Disposals

This question tests the understanding of depreciation charged on non-current assets.

Question

Depreciation charged on non-current assets is known to be:

A. The amount spent to buy the non-current asset
B. The salvage value of a non-current asset
C. The part of the cost of non-current asset consumed during its period of use
D. The amount of money spent in replacing non-current assets
E. The part of the cost of non-current asset reserved to be consumed in future periods

Answer

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Tags: Accounting Concepts, Depreciation, Non-current Assets
Level: Level 1

Topic: Depreciation Methods and Accounting for Disposals
Series: MAY 2013

FA – May 2014 – L1 – SA – Q2 – Accounting Concepts

Identifies the concept that implies independence of judgment.

Question

Which concept connotes independence of judgment on the part of the Accountant preparing financial statements?

Answer

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Tags: Accounting Concepts, Independence, Objectivity
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2014

FA – Nov 2013 – L1 – SB – Q1b – Accounting Concepts

Listing and benefits of accounting concepts.

Question

List any SIX accounting concepts and state their benefits.

Answer

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Tags: Accounting Concepts, Accounting principles, Benefits of Accounting Concepts, Financial Reporting
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2013

FA – Nov 2013 – L1 – SB – Q1a – Accounting Concepts

Definition of accounting concepts.

Question

Define accounting concepts.

Answer

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Tags: Accounting Concepts, Accounting principles, Financial Reporting
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2013

FA – Nov 2014 – L1 – SB – Q1a – Accounting Concepts

Writing short notes on five fundamental accounting concepts.

Question

A reliable financial statement is the product of properly maintained financial records and adequate use of necessary accounting concepts.

Write short notes on the following accounting concepts:

i. Business entity (2 Marks)
ii. Going concern (2 Marks)
iii. Matching (2 Marks)
iv. Consistency (2 Marks)
v. Materiality and aggregation (2 Marks)
(Total 10 Marks)

Answer

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Tags: Accounting Concepts, Conceptual Framework, Financial Reporting
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2014

FA – Nov 2014 – L1 – SA – Q18 – Accounting Concepts

Identifying the accounting concept that governs recognizing transactions in the period they occur.

Question

Accounting for the effects of transactions and other events and circumstances on a reporting entity’s economic resources and claims in the period in which those effects occur, even if the resulting cash receipts and payments occur in a different period, is governed by which of the following accounting concepts?

A. Cash basis
B. Accrual
C. Matching
D. Consistency
E. Going concern

Answer

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Tags: Accounting Concepts, Accrual Accounting, Financial Reporting
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2014

FA – Nov 2023 – L1 – SB – Q2 -Accounting Concepts

Explain key accounting concepts used in preparing financial statements.

Question

Briefly explain the following accounting concepts in the preparation of financial statements:
i. Going concern
ii. Consistency
iii. Accrual
iv. Fair presentation
v. Substance over form
vi. Prudence
vii. Materiality

Answer

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Tags: Accounting Concepts, Financial Statements, Preparation
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2023

BL – Nov 2019 – L1 – SA – Q3 -Introduction to Law

Identifying the fundamental assumptions in the preparation of financial statements

Question

Question:
Which of the following combinations of accounting concepts are the fundamental assumptions in the preparation of financial statements?
A. Accrual and double entry
B. Going concern and entity
C. Materiality and consistency
D. Accrual and going concern
E. Going concern and offsetting

Answer

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Tags: Accounting Concepts, Financial Statements, Fundamental Assumptions
Level: Level 1

Topic: Introduction to Law
Series: NOV 2019

FA – May 2023 – L1 – SA – Q15 – Accounting Treatment for Accruals and Prepayments

Identifying the accounting concept that justifies adjustments for prepaid and accrued expenses.

Question

In the process of drawing up financial statements, adjustments are made for prepaid expenses and accrued expenses in order to comply with which of the following fundamental accounting concepts?

A. Matching

B. Prudency

C. Aggregation

D. Duality

E. Consistency

Answer

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Tags: Accounting Concepts, Accruals, Prepaid Expenses
Level: Level 1

Topic: Accruals and Prepayments
Series: MAY 2023

FA – Nov 2019 – L1 – SA – Q3 Accounting Concepts-

Identify the fundamental accounting assumptions for preparing financial statements.

Question

Which of the following combinations of accounting concepts are the fundamental assumptions in the preparation of financial statements?

Answer

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Tags: Accounting Concepts, Fundamental Assumptions
Level: Level 1

Topic: Accounting Concepts
Series: NOV 2019

BMF – May 2024 – L1 – SA – Q11 – Basics of Business Finance and Financial Markets

Understanding the accruals concept in accounting.

Question

Which of the following correctly describes the accruals concept in accounting?
A. Expenses are recognised in the statement of profit or loss in the same period as the related sales
B. Income is recognised in the statement of profit or loss when cash is paid
C. Sales are recognised in the statement of profit or loss when the related expenses are paid
D. Expenses are recognised in the statement of profit or loss as they are paid
E. Income and expenses are recognised in the statement of profit or loss as they arise

Answer

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Tags: Accounting Concepts, Accruals, Financial Reporting
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: MAY 2024

FA – MAY 2015 – L1 – SA – Q14 – Accounting Concepts

Identify which option is not an accounting concept.

Question

Which of the following is NOT an accounting concept?
A. Information
B. Historical cost
C. Consistency
D. Accrual
E. Going concern

Answer

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Tags: Accounting Concepts, Consistency, Historical Cost
Level: Level 1

Topic: Accounting Concepts
Series: MAY 2015

FA – Mar/July 2020 – L1 – SA – Q12 – Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Identifying correct statements related to accounting concepts

Question

Which of the following statements is/are correct?
(i) Materiality means that only items having a physical existence may be recognised as assets.
(ii) The substance over form convention means that the legal form of a transaction must always be shown in financial statements even if this differs from the commercial effect.
(iii) The money measurement concept means that only an item capable of being measured in monetary terms can be recognised in financial statements.
A. I
B. I, II and III
C. I and II
D. II and III
E. III

Answer

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Tags: Accounting Concepts, Materiality, Money Measurement, Substance Over Form
Level: Level 1

Topic: Accounting Concepts
Series: MAR/JULY 2020

FA – Mar/July 2020 – L1 – SA – Q7 – Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Accounting concept that gives special treatment to significant items

Question

Which of the following concepts requires the accountant to give special accounting treatment to items of significant value?
A. Accrual
B. Going concern
C. Materiality
D. Entity
E. Dual aspect

Answer

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Tags: Accounting Concepts, Accrual, Going Concern, Materiality
Level: Level 1

Topic: Accounting Concepts
Series: MAR/JULY 2020

Question Tag: Accounting Concepts

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FR – Nov 2019 – L2 – Q4a – Ethical Issues in Financial Reporting

Explain the concepts of substance over form and going concern in financial reporting.

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FA – Nov 2011 – L1 – SA – Q15 – Accounting Concepts

This question asks which of the given options does not belong to the group of accounting concepts.

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FA – Nov 2011 – L1 – SA – Q7 – Accounting Concepts

This question tests understanding of the duality concept in accounting.

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FA – Nov 2020 – L1 – SB – Q2 -Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Explain accounting concepts, provide examples, and list users of financial statements.

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FA – Nov 2020 – L1 – SA – Q11 – Accounting Concepts

Identifies the accounting convention that suggests using a valuation method that understates rather than overstates results.

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FA – Nov 2012 – L1 – SB – Q34 – Accounting Concepts

Recognize the accounting concept for sales revenue recognition.

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FA – May 2013 – L1 – SA – Q5 – Depreciation Methods and Accounting for Disposals

This question tests the understanding of depreciation charged on non-current assets.

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FA – May 2014 – L1 – SA – Q2 – Accounting Concepts

Identifies the concept that implies independence of judgment.

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FA – Nov 2013 – L1 – SB – Q1b – Accounting Concepts

Listing and benefits of accounting concepts.

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FA – Nov 2013 – L1 – SB – Q1a – Accounting Concepts

Definition of accounting concepts.

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FA – Nov 2014 – L1 – SB – Q1a – Accounting Concepts

Writing short notes on five fundamental accounting concepts.

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FA – Nov 2014 – L1 – SA – Q18 – Accounting Concepts

Identifying the accounting concept that governs recognizing transactions in the period they occur.

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FA – Nov 2023 – L1 – SB – Q2 -Accounting Concepts

Explain key accounting concepts used in preparing financial statements.

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BL – Nov 2019 – L1 – SA – Q3 -Introduction to Law

Identifying the fundamental assumptions in the preparation of financial statements

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FA – May 2023 – L1 – SA – Q15 – Accounting Treatment for Accruals and Prepayments

Identifying the accounting concept that justifies adjustments for prepaid and accrued expenses.

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FA – Nov 2019 – L1 – SA – Q3 Accounting Concepts-

Identify the fundamental accounting assumptions for preparing financial statements.

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BMF – May 2024 – L1 – SA – Q11 – Basics of Business Finance and Financial Markets

Understanding the accruals concept in accounting.

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FA – MAY 2015 – L1 – SA – Q14 – Accounting Concepts

Identify which option is not an accounting concept.

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FA – Mar/July 2020 – L1 – SA – Q12 – Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Identifying correct statements related to accounting concepts

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FA – Mar/July 2020 – L1 – SA – Q7 – Accounting Concepts (e.g., Going Concern, Accruals, Materiality)

Accounting concept that gives special treatment to significant items

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