THE UNIVERSITY OF ZAMBIA

DEPARTMENT OF ECONOMICS
PRINCIPLE OF ACCOUNTING BBA 2210
TUTORIAL SHEET ONE
2024
QUESTION ONE
1. Which of the following lists the four (4) enhancing qualitative characteristics of Financial
Statements as defined in the IASB's Conceptual Framework for Financial Reporting?
A. Relevance, faithful representation, materiality and going concern
B. Comparability, verifiability, timeliness and understandability
C. Relevance, comparability, verifiability and going concern
D. Timeliness, understandability, materiality and faithful representation
2. Financial statements differ from management accounts in that they:
(A) are prepared monthly for internal control purposes. (B) contain details of costs incurred in
manufacturing. (C) are summarized and prepared mainly for external users of accounting
information. (D) provide information to enable the trial balance to be prepared.
3. Which one of the following does not apply to the preparation of financial statements?
(A) They are prepared annually. (B) They provide a summary of the outcome of financial
transactions. (C) They are prepared mainly for external users of accounting information.
(D)They are prepared to show the detailed costs of manufacturing and trading.
4. Which of the following statements gives the best definition of the objective of accounting?
(A) To provide useful information to users. (B) To record, categorize and summarize financial
transactions. (C) To calculate the taxation due to the government. (D) To calculate the
amount of dividend to pay to shareholders.
5.Which of the following are the advantages of trading as a limited liability company?
(i) Operating as limited liability company makes raising finance easier because additional share
can be issued to raise additional cash. (ii) Operating as limited liability company is riskier 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 debt up to the amount he has invested.
A. (i) only B. (ii) only C. Both (i) and (ii) D. Neither (i) nor (ii)
6.Which of the following statement correctly describes the contents of the statement of financial
position?
A. A list of ledger balances showing debit and credit columns.
B. A list of all the assets owned and all the liabilities owed by a business.
C. A record of income generated, and expenditure incurred over a given period.
D. A record of the amount of cash generated and used by a company in a given period.
7. Which of the following statement correctly describe the contents of the statement of profit or
loss?
A. A list of ledger balances showing debit and credit columns
B. A list of all the assets owned and all the liabilities owed by a business
C. A record of income generated, and expenditure incurred over a given period
D. A record of the amount of cash generated and used by a company in a given period
8.Which accounting concept should be considered if the owner of a business takes goods from
inventory for their own personal use?
(A). The materiality concept (B). The accrual concept (C). The going concern concept
(D). The business entity concept
9. Sales revenue should be recognized when goods and services have been supplied to the
customer; costs are incurred when goods and services have been received. Which accounting
concept governs the above?
(A). The business entity concept (B). The materiality concept (C). The accrual concept (D). The
duality concept
10.Which accounting concept state that omitting or misstating financial information could
influence the users of the financial statements?
(A) The consistency concept (B). The accrual concept (C). The materiality concept (D) The
going concern concept
11 Which of the following accounting concept is means that similar items should receive similar
accounting treatment?
(A) Conformity (B). Accruals (C) Matching (D) Consistency
12. Which of the following statement about accounting concepts and characteristics of financial
information is correct? (i) The concept of accrual requires transactions to be reflected in the
financial statements once the cash or its equivalent is received or paid. (ii) Information is
material if its omission or misstatement could influence the economic decisions of the users
taken on the basis of the financial statements. (iii) Based on faithful representation, it may
sometimes be necessary to exclude material information from the financial statements due to
difficulties in establishing the accurate figure.
(A) I only (B) i and ii only (C) ii only (D) ii and iii only
13. The IASB’s Conceptual Framework gives six (6) qualitative characteristics of financial
information. What are these six characteristics?
A. Relevance, faithful representation, comparability, verifiability, timeliness, and
understandability.
B. Accuracy, faithful representation, comparability, verifiability, timeliness, and
understandability
C. Relevance, faithful representation, consistency, verifiability, timeliness, and
understandability.
D. Relevance, comparability, consistency, verifiability, timeliness, and understandability.
QUESTION TWO
The International Accounting Standard Boards (IASB) conceptual framework for financial
reporting provides for the basis and structure of how financial statements are prepared and
reported. To this effect, the conceptual framework contains among others, the following topics:
(i) Qualitative characteristics of useful financial information; (ii) The elements of financial
statements; (iii) Recognition and de-recognition of elements of financial statements; (iv)
Measurement of the elements of financial statements.
I. Discuss the importance of having a conceptual framework for financial reporting.
II. Identify and explain the elements of Financial Statements that are related to the Statement
of Profit or Loss and Other Comprehensive Income.
III. Explain the criteria for de-recognition of Assets and Liabilities.
IV. Briefly explain the underlying assumption in the preparation of financial statements.
V. Discuss the fundamentals and enhancing qualitative characteristics of useful financial
information.
VI. Describe the four (4) different measurement bases that are available to entities that follow
provisions of the IASB Conceptual Framework for financial reporting.
VII. Compare and contrast between financial accounting and management accounting.
VIII What information would these users of financial information be interested in?
(i) Investors (ii) Employees (iii) Lenders (iv) Suppliers (v) Customers (vi) Government and their
agencies (vii) Public