Identify if the following statement is true or false -  The separate entity accounting principle recognises that the owner’s finances are separate to those of the business and therefore business transactions should be recorded separately.*1 pointTRUEFALSE

Identify if the following statement is true or false -  It is easier to monitor the financial performance and position of the business if it has a separate account to that of its owner.*1 pointTRUEFALSE

In recording transactions for a business, the accountant will follow the Accounting Entity principle. This means that the accountant will:a.record cash transactions separately from credit transactionsb.separate spending on purchases from spending on non-current assetsc.separate the financial activities of the business from those of the ownerd.record revenues and expenses separately to calculate profits and losses

The following statements relate to the business transactions topic. Choose all of the statements that are false:Question 3AnswerAll accrual accounting systems, no matter how simple or complex, follow the same basic recording rules.A numerical error in recording an item in the accounting system will become evident when the balance sheet does not balance.Generally speaking, business events are important and relevant for the entity but often lack the criteria to enable recording.Under ‘double entry’ accounting, all transactions will only affect a maximum of two elements in a business.An owner-related transaction that involves withdrawing inventory for personal use would affect the statement of cash flows.

The following statements relate to the business transactions topic. Choose all of the statements that are false:Question 5AnswerDouble-entry accounting implies that business transactions have a dual effect on the elements of accounting.Both sides of the accounting equation must always be affected for a transaction to occur.Business events may affect a business but generally cannot be recorded.Since owner’s drawings involve the use of personal funds, they are never recorded in the business records.The size of a business may affect the type of accounting system they use.

Accounting is only relevant to profit-oriented organisations. Question 1 Answer True False