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2 marksAccounting Standards and Conceptual Framework

CAPE Accounting Unit 1 · 2016 · Paper 2 · Question 1(a)(iii)

The regulatory framework requires companies to provide users with relevant and reliable financial statements reflecting the economic substance of transactions.

Using an appropriate example, explain the term 'Reliability'.

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Other parts of this question

  1. 1(a)(i)Using an appropriate example, explain the term 'Substance over form'.[2 marks]
  2. 1(a)(ii)Using an appropriate example, explain the term 'Relevance'.[2 marks]
  3. 1(b)(i)List the FIVE elements of a full set of financial statements as required by IFRS for SMEs.[5 marks]
  4. 1(b)(ii)State FOUR reasons why financial statements do not provide users with all the information they need.[4 marks]
  5. 1(b)(iii)Give FOUR reasons why the role of the external auditor is important to users of financial statements.[4 marks]
  6. 1(c)(i)State FOUR appropriate controls that may be used for Accounts receivable.[4 marks]
  7. 1(c)(ii)State FOUR appropriate controls that may be used for Cash at bank.[4 marks]
  8. 1(d)(i)Prepare the journal entry to record the issue of ordinary shares.[2 marks]
  9. 1(d)(ii)Prepare the journal entry to record the issue of preference shares.[2 marks]
  10. 1(d)(iii)Prepare the journal entry to record the distribution of preference dividends.[2 marks]
  11. 1(d)(iv)Prepare the journal entry to record the transfer of profits to general reserve.[2 marks]

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