level: Level 1 of Review
Questions and Answers List
level questions: Level 1 of Review
| Question | Answer |
|---|---|
| What items appear on the Statement of Cash Flows under the heading Financing Activities? | Proceeds from the issue of shares & Long term borrowings made or repaid |
| According to IAS 38 – Intangible assets – how should research be treated in the financial statements? | Research costs should be expensed in the Income Statement. |
| What are capital reserves? | The share premium account and the revaluation reserve. They represent amounts owing to shareholders, but this amount cannot be paid out as dividend. |
| What are the differences between ordinary and preference shares? | Ordinary shares have voting rights – preference shares usually do not. The dividend on ordinary shares is recommended by the directors – preference shares carry a fixed dividend. The ordinary dividend is paid out of profits left after the preference dividend has been paid. |
| What are compensating errors? | Compensating errors are two or more errors when the net effect is zero. |
| What is an error of commission? | An error of commission is when an entry has been posted to the wrong account. |