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Exam (elaborations)

ACCA FA Practice & Revision Kit Study Questions and Answers

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ACCA FA Practice & Revision Kit Study Questions and Answers 1.1 Who issues International Financial Reporting Standards? A The IFRS Advisory Committee B The stock exchange C The International Accounting Standards Board D The government - ANSWERC The role of the IASB is to develop and publish I...

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  • October 28, 2024
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  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • ACCA
  • ACCA
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FIRST PUBLISH OCTOBER 2024




ACCA FA Practice & Revision Kit Study

Questions and Answers


1.1 Who issues International Financial Reporting Standards?


A The IFRS Advisory Committee


B The stock exchange


C The International Accounting Standards Board


D The government - ANSWER✔✔C The role of the IASB is to develop and publish International Financial

Reporting Standards.


1.2 Which groups of people are most likely to be interested in the financial statements of a sole trader?


1 Shareholders of the company


2 The business's bank manager


3 The tax authorities


4 Financial analysts



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A 1 and 2 only


B 2 and 3 only


C 2, 3 and 4 only


D 1, 2 and 3 only - ANSWER✔✔B A sole trader does not have any shareholders. The financial statements

are unlikely to be of interest to a financial analyst, they are more usually interested in the financial

statements of public companies.term-3


1.3 Identify, by indicating the relevant box in the table below, whether each of the following statements

is true or false.




A supplier of goods on credit is interested only in the statement of financial position, ie an indication of

the current state of affairs.




The objective of financial statements is to provide information about the financial position, performance

and changes in financial position of an entity that is useful to a wide range of users in making economic

decisions. - ANSWER✔✔(1) is false - although the supplier needs to know the current situation, the

supplier also needs to be able to assess future prospects to ensure the entity has the ability to pay and

to support an ongoing relationship.



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(2) is the IASB's Conceptual Framework description of the purpose of financial statements, and is

therefore true.


1.4 Which of the following are advantages of trading as a limited liability company?


1 Operating as a limited liability company makes raising finance easier because additional shares can be

issued to raise additional cash.


2 Operating as a limited liability company is more risky than operating as a sole trader because the

shareholders of a business are liable for all the debts of the business whereas the sole trader is only

liable for the debts up to the amount he has invested.


A 1 only


B 2 only


C Both1and2


D Neither 1 or 2 - ANSWER✔✔A (2) is incorrect - shareholders are only liable for the debts of the

business up to the amount they


have invested in shares, whereas sole traders are liable for all of the debts of the business.


1.5 Which of the following best describes corporate governance?


A Corporate governance is the system of rules and regulations surrounding financial reporting.



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