Accounting Concepts (Edexcel IGCSE Accounting: Introduction to Bookkeeping & Accounting): Exam Questions

Which accounting concept is described in the statement
‘Profits and assets are not overstated’?

Identify the accounting concept of which the recording of other payables and receivables is an application.

Identify the accounting concept being applied when a trader always uses the same method of depreciation.

Jack provided the following information for the year ended 30 April 2023.

State the accounting concept that applies when taking stationery for personal use.

Jack provided the following information for the year ended 30 April 2023.

Explain, referring to an accounting concept, why it was necessary to adjust for the amount paid in advance on 30 April 2023.

Accounting concept

Explanation

Explain why the prudence concept applies when creating a provision for irrecoverable debts.

Inventory should be valued at the lower of cost and net realisable value.

Identify which accounting concept this is an application of.

State two accounting concepts that apply when preparing financial statements.

Identify the accounting concept being described.

“Financial statements can record only information that has a monetary value”

State one accounting concept applied when making a provision for irrecoverable debts.

Explain why the following accounting concept should be applied when maintaining a provision for irrecoverable debts, Prudence.

Explain why the following accounting concept should be applied when maintaining a provision for irrecoverable debts, Accruals.

State three accounting concepts together with a brief description of each.

A trader includes the cost of small items of office equipment as expenses in the income statement.

Identify which accounting concept is being applied.

State one accounting concept that applies when providing for depreciation.

Amira, a sole trader, does not keep full accounting records. She has provided the following information.

During the year ended 31 March 2021 Amira sold her motor vehicle for $22 940.

In addition, she purchased a new motor vehicle costing $50 000. Motor vehicles are depreciated at 20% per annum using the reducing balance method. A full year's depreciation is charged in the year of purchase and none in the year of disposal.

Amira borrowed $50 000 as an interest free loan repayable in five equal annual instalments. The first instalment was paid on 31 March 2021.

Her cash drawings during the year amounted to $25 000 and she also took goods costing $5 000 for her personal use.

At 31 March 2021 irrecoverable debts of $2 500 were to be written off. A provision for irrecoverable debts of 5% was to be created.

Explain, referring to a relevant accounting concept, why Amira introduced a provision for irrecoverable debts.

Explain, referring to a relevant accounting concept, why Amira introduced a provision for irrecoverable debts used the reducing balance method rather than the straight line method of depreciating her motor vehicle.

State two accounting concepts that apply when writing off an irrecoverable debt.

Explain, by referring to an appropriate accounting concept, why it is necessary to adjust for a payment in advance.

Inventory should be valued at the lower of cost or net realisable value.

Which accounting concept is this an application of?

State two concepts that apply when depreciating non-current assets.

Evaluate why it is necessary for a business to account for other receivables and other payables.

Which one of the following is an accounting concept?

State which accounting concept has not been applied in each scenario.

State two accounting concepts that apply when charging depreciation.

State which accounting concept applies in each scenario.

Define the terms:

(i) profitability

[1]

(ii) liquidity.

[1]

A business provided the following information.

Evaluate the performance of the business over the two years.