ompany, a disadvantage of operating as a partnership is: A) limited life B) mutual agency C) unlimited liability D) all of the above 63) Full file at https://TestbankDirect.eu/ Test Bank for Accounting An Introduction 6th Edition by Atrill Full file at https://TestbankDirect.eu/ 64) A common aspect of questionable figures in financial reports is: A) overstating figures for expenses and liabilities B) overstating figures for income and assets C) understating figures for income and expenses D) overstating figures for income and understating figures for assets 64) 65) Sustainability reporting focuses on: A) environmental and social factors C) customer satisfaction 65) B) financial aspects D) Both A and C 66) Which of these is not generally regarded as a reason for the recent spate of dubious accounting practices by large companies? A) Lack of accounting standards B) Too rapid growth financed by borrowing, which leads to a liquidity crisis C) Greed by executives D) Pressure on managers to meet investors' unrealistic expectations for continually rising profits 66) 67) Which of the following is not an aspect of accounting and finance potential managers need to understand? A) The design of the accounting information system B) How investment decisions are made C) How businesses are financed D) Reading and interpreting financial reports 67) Full file at https://TestbankDirect.eu/ Test Bank for Accounting An Introduction 6th Edition by Atrill Full file atKey https://TestbankDirect.eu/ Answer Testname: UNTITLED1 1) A 2) D 3) C 4) B 5) D 6) D 7) D 8) D 9) A 10) C 11) D 12) B 13) A 14) Relevance means that accounting information should have the ability to influence decision-making Relevance may refer to helping to confirm past events or assisting in the prediction of future events If information is not relevant to decision-making, it is not useful and should not be produced Reliability means accounting information should be objective and able to be independently verified For example, transaction-based information is reliable as it is evidenced by documents such as invoices, cheques, credit notes and contracts Reliable information should be free from bias and material error Historical cost information is generally regarded as more reliable than alternatives such as estimated market values Comparability means that valid comparisons can be made between accounting reports across a number of accounting periods For comparisons to be valid, items which are basically the same must be consistently measured and presented in the same manner Understandability means that to be most useful, accounting reports should be expressed as clearly as possible and should be capable of being understood by the user groups they are prepared for The cost/benefit test provides a limit on the production of relevant, reliable comparable and understandable accounting information as, even if the information has all four qualities, it only makes economic sense to produce it if the benefit of its being available is greater than the cost of providing it A problem of applying the cost/benefit test is that, in practice, both the costs and the benefits of accounting information are difficult to identify with accuracy 15) D 16) D 17) B 18) B 19) C 20) B 21) D 22) C 23) D 24) D 25) D 26) B 27) C 28) C 29) C 30) D 31) D Full file at https://TestbankDirect.eu/ Test Bank for Accounting An Introduction 6th Edition by Atrill Full file atKey https://TestbankDirect.eu/ Answer Testname: UNTITLED1 32) A 33) A 34) B 35) A 36) D 37) A 38) B 39) C 40) A 41) C 42) D 43) A 44) B 45) A 46) C 47) The purpose of the statement of comprehensive income is to show how much profit was generated by the entity from its operating activities during a particular period This is achieved by recording all the income earned in the period and deducting from it all the expenses incurred in earning that income If income exceeds expenses, a profit is earned If income is less than expenses, there is a loss The purpose of the statement of financial position is to show the financial position of the entity at the end of an accounting period This is achieved by listing the assets controlled by the entity on a particular date and deducting all amounts owed to parties other than the owner Total assets held less liabilities owed is the amount of equity the owner has in the entity Examples of assets owned are: cash at bank, inventory, land and buildings, equipment, motor vehicles Examples of liabilities are amounts owing to creditors and lenders The purpose of the statement of cash flows is to show the change in the cash position over a particular period and the movements in cash that caused that change This is achieved by listing all inflows and outflows of cash for the period If inflows exceed outflows, there has been a net increase in cash If the opposite is true, then there has been a net outflow of cash 48) C 49) C 50) B 51) B 52) D 53) C 54) C 55) C 56) A 57) B 58) D 59) D 60) D 61) D 62) B 63) D 64) B 65) A 66) A 67) A 10 Full file at https://TestbankDirect.eu/