Please write clearly in block capitals.
Centre number Candidate number
Surname
Forename(s)
Candidate signatu re
I declare this is my own work.
A+level
Financial Accounting Exam – Chapters 1
to 4 Questions with Correct, Verified
Answers
Time allowed: 3 hours
Materials
For this paper you must have: For Examiner’s Use
• a calculator. Section Mark
A
Instructions
• Use black ink or black ball-point pen. B
• Fill in the boxes at the top of this page. C
• Answer all questions.
TOTAL
• You must answer the questions in the spaces provided. Do not write
outside the box around each page or on blank pages.
• If you need extra space for your answer(s), use the lined pages at the end
of this book. Write the question number against your answer(s).
• Do all rough work in this answer book. Cross through any
work you do not want to be marked.
Information
• The marks for each question are shown in brackets.
• The maximum mark for this paper is 120.
EXAM/V/ST/V /E8
,ACCOUNTING BASICS - ✔✔
Accounting is...
It does 3 things - ✔✔An information system
1) Measures business activity
2) Processes data into reports
3) Communicates results to decision makers
Financial Statements - ✔✔-End (and key) product of accounting process
-Report on business in monetary terms
Financial Accounting vs Managerial Accounting - ✔✔Financial Accounting
-Provides information for external decision makers
-Investors
-Creditors
-Taxing authorities
Managerial Accounting
-Provides information for internal decision makers
-Managers
-Individual business owners
Audits - ✔✔To provide reliable information, the SEC requires companies to have their financial statements audited by
independent accountants.
An audit is a financial examination. The independent accountants then tell whether or not the financial statements give
a fair picture of the company's situation.
Enron Corp., for example, was one of the largest companies in the United States before it began reporting misleading
data.
Sarbanes-Oxley Act (SOX) - ✔✔made it a criminal offense to falsify financial statements.
, It also created a new watchdog agency, the Public Companies Accounting Oversight Board, to monitor the work of
accountants.
Types of Business Organizations - ✔✔1) Proprietorships
- 1 owner
- life of organization limited by owner's choice/death
- owner is personally liable
2) Partnerships
- 2 or more owners
- life limited by owner's choice/death
- partners are personally liable
3) Corporations
- owned by stockholders
- life is indefinite
- stockholders not personally liable
4) Limited Liability
- owned by members
- life is indefinite
- member are not personally liable
Stock - ✔✔- refers to ownership of a company
- split into "shares"
- owners of stock = "stockholders"/"shareholders"
Generally Accepted Accounting Principles (GAAP) - ✔✔Goal: to provide useful information to those making investment
and lending decisions
List of Accounting Principles - ✔✔1) Entity Concept: a business is separate from its owner
2) Reliability: accounting information is accurate and free from bias
Centre number Candidate number
Surname
Forename(s)
Candidate signatu re
I declare this is my own work.
A+level
Financial Accounting Exam – Chapters 1
to 4 Questions with Correct, Verified
Answers
Time allowed: 3 hours
Materials
For this paper you must have: For Examiner’s Use
• a calculator. Section Mark
A
Instructions
• Use black ink or black ball-point pen. B
• Fill in the boxes at the top of this page. C
• Answer all questions.
TOTAL
• You must answer the questions in the spaces provided. Do not write
outside the box around each page or on blank pages.
• If you need extra space for your answer(s), use the lined pages at the end
of this book. Write the question number against your answer(s).
• Do all rough work in this answer book. Cross through any
work you do not want to be marked.
Information
• The marks for each question are shown in brackets.
• The maximum mark for this paper is 120.
EXAM/V/ST/V /E8
,ACCOUNTING BASICS - ✔✔
Accounting is...
It does 3 things - ✔✔An information system
1) Measures business activity
2) Processes data into reports
3) Communicates results to decision makers
Financial Statements - ✔✔-End (and key) product of accounting process
-Report on business in monetary terms
Financial Accounting vs Managerial Accounting - ✔✔Financial Accounting
-Provides information for external decision makers
-Investors
-Creditors
-Taxing authorities
Managerial Accounting
-Provides information for internal decision makers
-Managers
-Individual business owners
Audits - ✔✔To provide reliable information, the SEC requires companies to have their financial statements audited by
independent accountants.
An audit is a financial examination. The independent accountants then tell whether or not the financial statements give
a fair picture of the company's situation.
Enron Corp., for example, was one of the largest companies in the United States before it began reporting misleading
data.
Sarbanes-Oxley Act (SOX) - ✔✔made it a criminal offense to falsify financial statements.
, It also created a new watchdog agency, the Public Companies Accounting Oversight Board, to monitor the work of
accountants.
Types of Business Organizations - ✔✔1) Proprietorships
- 1 owner
- life of organization limited by owner's choice/death
- owner is personally liable
2) Partnerships
- 2 or more owners
- life limited by owner's choice/death
- partners are personally liable
3) Corporations
- owned by stockholders
- life is indefinite
- stockholders not personally liable
4) Limited Liability
- owned by members
- life is indefinite
- member are not personally liable
Stock - ✔✔- refers to ownership of a company
- split into "shares"
- owners of stock = "stockholders"/"shareholders"
Generally Accepted Accounting Principles (GAAP) - ✔✔Goal: to provide useful information to those making investment
and lending decisions
List of Accounting Principles - ✔✔1) Entity Concept: a business is separate from its owner
2) Reliability: accounting information is accurate and free from bias
