Accounting Concepts – Page 4

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 2016 – L1 – Q2 – Preparation of Partnership accounts

Preparation of partnership appropriation account and identification of accounting concepts with correct treatment.

Question

a) Mensah and Asamoah have been in partnership for several years. Up to 30th September 2015, the partnership agreement stated that there should be no partners’ salaries and partners should not receive any interest on capital put into the business. It was agreed that profit and losses were shared equally between Mensah and Asamoah.

Asamoah made a loan to the partnership during the year ended 31st May 2015 and no repayments have been made.

From 1st October 2015, the partners decided to change the partnership agreement and the terms were as follows:
i) Interest on the partner’s loan account is to be 4% per annum.
ii) Interest on partners’ capital accounts is to be 6% per annum.
iii) Interest on partners’ total drawings is to be charged at 3% per annum. (For the period 1st October 2015 to 31st May 2016, interest on drawings were: Mensah GHȼ542; Asamoah GHȼ422).
iv) Mensah’s partnership salary is to be GHȼ13,200 per annum.
v) Profits and losses will be split between Mensah and Asamoah in the proportion 3:1 respectively.
vi) No account has been taken of the interest on Asamoah’s loan. The draft profit for the year ended 31st May 2016 was GHȼ38,760. Profits were accrued evenly before allowing for loan interest.
vii) The following balances were extracted from the books of account for the year ended 31st May 2016.

	Mensah (GHȼ)	Asamoah (GHȼ)
Capital accounts	94,200	74,300
Drawings for the year	27,100	21,100
Current accounts at 1st June 2015	10,520	(8,276)
Partner’s loan account		10,800

Required: Prepare the partners’ appropriation account for the year ended 31st May 2016, showing clearly the appropriation of profit for the periods: i) 1st June 2015 – 30th September 2015 and ii) 1st October 2015 – 31st May 2016. (11 marks)

b) For each of the following statements, identify the accounting concept involved and briefly explain the correct accounting treatment in each case. i) A business has good industrial relations and wishes to record this in the accounts at a value of GHȼ10,000. (3 marks) ii) A business has bought two door mats costing GHȼ2 each. These are expected to last many years and have been recorded under non-current assets. (3 marks) iii) Goods to the value of GHȼ3,000 were dispatched to a customer in the final month of the financial year. The invoice for these goods has been issued but no cash has been received from the customer. No entry has been made in the accounts at the financial year end. (3 marks)

Answer

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Tags: Accounting Concepts, Appropriation Account, Partnership, Profit Sharing
Level: Level 1

Topic: Preparation of Partnership accounts

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.

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.

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

This question tests understanding of the duality concept in accounting.

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.

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

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

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

Recognize the accounting concept for sales revenue recognition.

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

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

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

Identifies the concept that implies independence of judgment.

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

Listing and benefits of accounting concepts.

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

Definition of accounting concepts.

FA – Nov 2016 – L1 – Q2 – Preparation of Partnership accounts

Preparation of partnership appropriation account and identification of accounting concepts with correct treatment.

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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.

You're reporting an error for "FA – May 2013 – L1 – SA – Q5 – Depreciation Methods and Accounting for Disposals"

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 2016 – L1 – Q2 – Preparation of Partnership accounts

Preparation of partnership appropriation account and identification of accounting concepts with correct treatment.

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