Date:

Duration: $60$ minutes

PART I$-$ MULTIPLE CHOICE QUESTIONS $(4\mathrm{.}5$ marks$)$:

PART the best response for each question

$1.$ The following items have to be considered in finalising the financial statements of $\backslash ($ Q $\backslash ),$ a limited liability company:

$(1)$ The company gives warranties on its products. The company's statistics show that about $\backslash (5\backslash \%\backslash )$ of sales give $$:

$(2)$ The company has guaranteed to pay the overdraft of another company. The likelihood of a liability arising rise to a warranty claim. under the guarantee is assessed as possible.

According to LAS $37$ Provisions, Contingent Liabilities and Contingent assets, what is the correct action to be taken in the financial statements for these items?

A$.$ Create a provision in $(1)$ and Disclose by the Notes in $(2)$

$\backslash ($ B $\backslash ).$ Disclose by the Notes in $(1)$ and Do nothing in $(2)$

C$.$ Create a provision in both $(1)$ and $(2)$

D$.$ Disclose by the Notes in both $(1)$ and $(2)$