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Part 2 - MCQ 1. The business entity concept states that: a. an organisation and its owners are separate entities for accounting purposes. b. business entities must prepare financial statements according to accounting standards. c. financial statements should be prepared by all business entities. d. accounting policies apply to all business entities in preference to accounting standards. 2. Assets are recorded at their original purchase price according to the a. Historical Cost Principle b. Cost Benefit Principle c. Consistency Principle d. Materiality Principle 3. Switching accounting principles every year would violate the: a. Conservatism Principle b. Full disclosure Principle c. Historical Cost Principle d. Consistency Principle 4. Revenue being record in the same period as expenses follow which principle? a. Going concern Principle b. Matching Principle c. Historical Cost Principle d. Consistency Principle 5. An entity is consider to be in business/ operation for indefinite period. This is called? a. Substance over form concept b. Going concern concept c. Entity concept d. Prudence concept 6. The concept of 'substance over form' means that: a. the substance of the statement of financial position is more important than the form of the statement of comprehensive income b. only substantial assets, usually non-current assets, may be revalued to form good financial statements. c. the economic reality of a transaction should be accounted for in preference to the legal position. d. substantially all of an organisations assets can be valued without reference to the form of UK law

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