FAC 1503 ASSIGNMENT 1

Question 1 Please match the accounting term with the most suitable definition, example or description provided. B. Reflects the cash inflows and outflows of the business for a specific period. C. Reflects: Assets = Equity + Liabilities 1. Statement of financial position 2. Statement of changes in equity 3. Statement of cash flows Question 2 Solvency is the availability of cash and other items, which can easily be converted into cash to pay short term debt. True False Question 3 Loans from banks will be classified as equity. True False Question 4 Accounting is the bookkeeping method, which generates a financial record of the most important business transactions entered into by a business (entity). True False Question 5 The management of a business are an example of external users of financial information. True False Question 6 Equity can be calculated as follows for a company: Issued share capital, plus accumulated reserves, plus retained earnings (accumulated profits minus accumulated losses). True False Question 7 Verifiability refers to the fact that the information and disclosure in the financial statements must be such that different knowledgeable and independent observers can reach consensus that it is a faithful representation. True False Question 8 Creditors of an entity use the accounting information contained in the financial statements of an entity to … A. assess the ability of the entity to continue as a going concern. B. regulate the activities of the entity. C. assess the risk and return on an investment in the entity. D. assess the ability of the entity to pay amounts owing. Question 9 Which of the following is not an internal control? A. The review of receipts against deposits. B. Separate bank accounts C. The initialling of changes and receipts D. No cash to be issued Question 10 A receipt is a source document which is written acknowledgement that the seller has received payment (goods or money) from the buyer. True False Question 11