5. To find the value of closing inventory at the end of a period we: A....

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5. To find the value of closing inventory at the end of a period we: A. Do this by physically counting the inventory (i.e. stocktaking). B. Look in the inventory account. C. Deduct opening inventory from cost of goods sold. D. Deduct cost of goods sold from sales. 6. Which of these best describes non-current assets? A. Items bought to be used in the business. B. Items which will not wear out quickly. C. Expensive items bought for the business. D. Items having a long life and not bought specifically for resale. 7. When the financial statement are prepared, the Bad Debts Account is closed by a transfer to the A. Statement of financial position. B. Profit and Loss Account. C. Trading Account. D. Allowance for Doubtful Debts Account. 8. An Allowance for Doubtful Debts is created: A. Debtors become bankrupt. B. When debtors cease to be in business. C. To provide for possible bad debts. D. To write-off bad debts. 9. Identify the appropriate qualitative characteristics being described in the statements below. Information that is capable of making a difference in a decision is said to have this fundamental quality. A. Faithful representation B. Comparability C. Materiality D. Relevance 10. The historical cost principle provides that: A. Assets and equities be expressed in terms of a common denominator. B. The recorded amount of an acquired item should be the fair market value of the item. C. The expenses of generating revenue should be recognized in the same period that the related revenue is recognized. D. Items whose costs are insignificant compared to other amounts on the financial statements may be accounted for in the most expedient manner. 11. The expenses relating to personal use should be treated as drawings rather than as business expenses. This is in accordance with A. Matching concept. B. Prudence concept. C. Separate entity concept. D. Substance over form concept. 5. To find the value of closing inventory at the end of a period we: A. Do this by physically counting the inventory (i.e. stocktaking). B. Look in the inventory account. C. Deduct opening inventory from cost of goods sold. D. Deduct cost of goods sold from sales. 6. Which of these best describes non-current assets? A. Items bought to be used in the business. B. Items which will not wear out quickly. C. Expensive items bought for the business. D. Items having a long life and not bought specifically for resale. 7. When the financial statement are prepared, the Bad Debts Account is closed by a transfer to the A. Statement of financial position. B. Profit and Loss Account. C. Trading Account. D. Allowance for Doubtful Debts Account. 8. An Allowance for Doubtful Debts is created: A. Debtors become bankrupt. B. When debtors cease to be in business. C. To provide for possible bad debts. D. To write-off bad debts. 9. Identify the appropriate qualitative characteristics being described in the statements below. Information that is capable of making a difference in a decision is said to have this fundamental quality. A. Faithful representation B. Comparability C. Materiality D. Relevance 10. The historical cost principle provides that: A. Assets and equities be expressed in terms of a common denominator. B. The recorded amount of an acquired item should be the fair market value of the item. C. The expenses of generating revenue should be recognized in the same period that the related revenue is recognized. D. Items whose costs are insignificant compared to other amounts on the financial statements may be accounted for in the most expedient manner. 11. The expenses relating to personal use should be treated as drawings rather than as business expenses. This is in accordance with A. Matching concept. B. Prudence concept. C. Separate entity concept. D. Substance over form concept.

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5 Answer Look in the inventory Account Explanation The inventory account shows the value of the inve... View the full answer