Page 435 - Microsoft Word - 00 BA3 IW Prelims STUDENT.docx

Answers to supplementary objective test

questions

CHAPTER 1 – THE ACCOUNTING ENVIRONMENT

1.1 A

Management require very detailed information in order to make informed
decisions with regard to operations (e.g. whether to shut down a particular
product line or source new suppliers). Other parties need far less detail.

1.2 D

1.3 C

1.4 A

Accounting involves recording transactions as they occur and then summarising
them in the form of the financial statements.

Financial accounting describes the production of accounts for external use.

CHAPTER 2 – THE REGULATORY FRAMEWORK OF FINANCIAL
REPORTING

2.1 A

2.2 A

Accounting standards provide guidance on common transactions. They cannot
provide guidance on all types of transactions.

2.3 C

429