Identifying the Limitations of Financial Reporting (HSC SSCE Business Studies): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
ShowHide
Practise the questions
10 questions from this quiz
Why might financial reports give a misleading picture of a business?
Why might financial reports give a misleading picture of a business?
Businesses present info as positively as possible
What are normalised earnings?
What are normalised earnings?
Earnings adjusted for one-off items
What happens when a business expenses a cost immediately?
What happens when a business expenses a cost immediately?
It reduces profit in that accounting period
When are costs usually capitalised?
When are costs usually capitalised?
When they provide future economic value
What is a disadvantage of using historical cost for assets?
What is a disadvantage of using historical cost for assets?
Doesn't reflect current market value
Why are intangible assets difficult to value?
Why are intangible assets difficult to value?
No set formula for calculating their value
What does the matching principle state?
What does the matching principle state?
Record expenses in same period as related revenue
What don't financial reports disclose well about debt?
What don't financial reports disclose well about debt?
When debts are due for repayment
What characterises a highly geared business?
What characterises a highly geared business?
Higher risk but greater potential for profit
What is the main risk of not reading notes to financial statements?
What is the main risk of not reading notes to financial statements?
Missing crucial information about the business