Spot the Lie: Concepts (ACCA FA)

Exercise and reference answers

Questions

1. False statement

   Prudence means recognising gains before they are realised.

   Statements

   1. Going concern assumes the business will continue trading.
   2. The accruals concept matches income with related expenses.
   3. Prudence means recognising gains before they are realised.

2. False statement

   Consistency requires changing methods every year.

   Statements

   1. Consistency requires changing methods every year.
   2. Materiality depends on the size and nature of an item.
   3. The business entity concept separates owner and business.

3. False statement

   Faithful representation allows deliberate bias.

   Statements

   1. Substance over form looks at economic reality.
   2. Faithful representation allows deliberate bias.
   3. Historical cost records assets at original purchase price.

Instructions

Tap the one false statement.