Answer the following multiple choice questions. Indicate your choice by only selecting only one option from the four options given below. 1.> Which one of the following statements is incorrect? 1. Inconsistencies in the measurement of financial statements can have an effect on whether financial statements can provide faithful representation. 2. In order to select a measurement basis the nature of the information in both the statement of financial position and the statement of financial performance must be considered. 3. Relevance of information provided by a measurement basis is affected by the characteristics of the asset or the liability and contribution to future cash flows. 4. A legal entity is an example of a Reporting Entity.

2.> When payment to purchase property, plant and equipment item is deferred for six months, the cash price equivalent of the asset will be calculated as the total amount payable reduced by interest for the whole six months. In this manner the asset is recorded at its: 1. Historical cost; 2. Value in use; 3. Current cost; 4. Fair value.

3.> Which one of the following is an example of a financial asset? 1. Leased assets; 2. Cash; 3. Trade and other creditors; 4. Prepaid expenses.

8. >Which one of the following statements regarding inventory is correct? 1. The recovery of net realisable value written down is recognised as a reduction in cost of sales expense. 2. The recovery of net realisable value written down is recognised as an income. 3. Conversion costs are excluded in the cost if inventory. 4. Abnormal spillage expense is excluded in the cost of inventory and the cost of sales.

The normal capacity of Company X is 50 000 units per annum. The fixed production overhead incurred is R800 000. The actual production of the Company X is 40 000 units. 9. >The fixed production overhead per unit for Company X is: 1. R20 2. R800 000 3. R16 4. R1,25

10.> The fixed production overheads under or over allocated is as follows: 1. R200 000 under allocated 2. R200 000 over allocated 3. R160 000 over allocated 4. R160 000 under allocated