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For each of the italicized statements below, state whether the statement is true or false based on the IASBs Conceptual Framework for Financial Reporting. Give a reason for your answer.

1. (a) A supplier has agreed to supply goods worth GH20,500 to DML Ltd on credit. The goods are to be

   delivered next week.

   This means that DML Ltd has incurred a liability for the value of the goods.

2. (b) Ester, a customer of PT Ltd, has paid GHS2,000 in advance for goods. As of now, the goods have

   not been delivered.

   This means that PT Ltd has obtained an asset worth GHS2,000 but has not incurred a liability of

   the same amount.

3. (c) J-Force Ltd has consumed electricity power on account. A bill for GHS689.54 has been received,

   but payment has not been made yet.

   This means that J-Force Ltd has incurred an expense equal to GHS689.54, the amount on the bill.

4. (d) Fiifi-P Ltd sells goods costing GHS15,000 for GHS14,000 cash.

   This means that the equity of the firm has increased.

5. (e) Fiifi-K Ltd plans to sell one of the machines it uses to manufacture its product. Though the machine

   was bought for GHS30,000 five years ago, the firm expects to receive only GHS7,000 from its sale.

   This means that presently the machine in question can be classified as a current asset.

6. (f) One of the factories of Faf Sports Hub was destroyed by fire, and property and plants worth GHS50,000 were lost. However, the firm received GHS45,000 from its insurers. The company has incurred an operating expense worth GHS50,000.

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