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Belarus Auditor Qualification Examination study materials
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Belarus Auditor Qualification Examination practice questions

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Question 1Legislation and Regulation of Auditing Activity

Which body is empowered to issue the rules (standards) of audit activity that are binding on audit organizations in Belarus?

  1. The National Statistical Committee
  2. The Ministry of Finance of the Republic of Belarus Correct answer.
  3. The Supreme Court of the Republic of Belarus
  4. The National Bank of the Republic of Belarus

Explanation

Under the Belarusian law on auditing activity, the Ministry of Finance is the state body that regulates auditing activity and adopts the national rules (standards) of audit activity. The National Bank sets rules only for audits of banks and non-bank credit and financial institutions within its own remit.

Question 2Legislation and Regulation of Auditing Activity

An individual wishes to obtain an auditor qualification certificate in Belarus. Which requirement applies to practical work experience?

  1. At least three years of work in a related economic or legal field
  2. Work experience in any field of at least five years
  3. No practical experience is required if the qualification examination is passed
  4. At least one year of work as an assistant auditor or in an audit organization Correct answer.

Explanation

The certification requirements combine education, passing the qualification examination and a period of practical work in auditing, typically at least one year as an assistant auditor or in an audit organization. General economic or legal experience does not substitute for audit-specific practice.

Question 3Legislation and Regulation of Auditing Activity

Which of the following engagements is classified as an audit activity under Belarusian law?

  1. A tax advisory consultation
  2. An agreed-upon procedure engagement over financial information
  3. A statutory audit of annual financial statements Correct answer.
  4. Compilation of financial statements without assurance

Explanation

Audit activity covers statutory and other audits of financial statements together with related audit services expressly listed in the legislation. Agreed-upon procedures and compilations are related services but are not themselves audits.

Question 4Legislation and Regulation of Auditing Activity

An audit organization is preparing to audit a joint-stock company whose shares are not traded on an exchange. Which statement about the statutory audit obligation is correct?

  1. A statutory audit is never mandatory for non-listed companies
  2. A statutory audit is required only if the company has foreign investors
  3. A statutory audit is mandatory only if the company's revenue exceeds the threshold set by law Correct answer.
  4. A statutory audit is mandatory for every joint-stock company regardless of revenue

Explanation

Belarusian law sets mandatory audit criteria based on indicators such as revenue and asset value; a joint-stock company is subject to mandatory audit when it meets those statutory thresholds. Being a joint-stock company alone does not automatically trigger a mandatory audit.

Question 5Legislation and Regulation of Auditing Activity

Which principle requires an auditor to be independent of the audited entity in both fact and appearance?

  1. Independence Correct answer.
  2. Objectivity of evidence
  3. Professional scepticism
  4. Confidentiality

Explanation

Independence is the principle requiring the auditor to be free of relationships that could compromise, or appear to compromise, professional judgement. Confidentiality and scepticism are distinct principles addressing information handling and attitude of mind.

Question 6Legislation and Regulation of Auditing Activity

An auditor discovers that a close family member is the chief accountant of a prospective audit client. What is the most appropriate course of action?

  1. Accept the engagement because family relationships are not addressed by ethical rules
  2. Accept the engagement but disclose the relationship to the client's board
  3. Accept the engagement and rely on the family member's representations
  4. Decline the engagement or remove the threat by not assigning the auditor to that engagement Correct answer.

Explanation

A close family relationship with a key officer of the client creates a significant self-interest and familiarity threat to independence. The threat must be eliminated, for example by declining the engagement or ensuring the auditor is not part of the engagement team.

Question 7Legislation and Regulation of Auditing Activity

Which document typically sets out the agreed scope, responsibilities and terms of an audit engagement?

  1. The audit engagement letter Correct answer.
  2. The auditor's report
  3. The general audit plan
  4. The management representation letter

Explanation

The engagement letter records the agreed terms of the engagement, including scope, responsibilities of the parties and the basis of the fee. It is signed before the audit begins and protects both auditor and client.

Question 8Legislation and Regulation of Auditing Activity

Which of the following is an example of an assurance engagement other than an audit of financial statements?

  1. Bookkeeping services for a small entity
  2. Representation of a client before tax authorities
  3. Design of an internal control system
  4. A review of financial statements providing limited assurance Correct answer.

Explanation

A review of financial statements is an assurance engagement that provides limited assurance, distinct from an audit which provides reasonable assurance. Bookkeeping, system design and representation are non-assurance services.

Question 9Legislation and Regulation of Auditing Activity

How long must an audit organization generally retain audit working papers and the audit report under Belarusian requirements?

  1. Indefinitely, with no defined minimum
  2. At least five years after the report date Correct answer.
  3. One year after the report date
  4. Three years after the report date

Explanation

Belarusian rules require audit documentation to be kept for a defined minimum period, generally at least five years after the date of the auditor's report. This supports regulatory inspection and quality reviews.

Question 10Legislation and Regulation of Auditing Activity

Which of the following constitutes a violation of auditor confidentiality?

  1. Disclosing client information to the Ministry of Finance during a lawful quality inspection
  2. Keeping working papers in a secure archive
  3. Discussing a client's confidential pricing data with a friend outside the firm Correct answer.
  4. Providing information under a court order

Explanation

Confidentiality prohibits disclosure of client information to third parties without authority, including casual discussion with outsiders. Disclosure required by law, such as to a regulator during inspection or under a court order, is permitted.

Question 11Legislation and Regulation of Auditing Activity

An audit organization is asked to audit an entity where the same firm also prepared the financial statements. What is the primary concern?

  1. The audit fee may be too low
  2. The self-review threat to independence Correct answer.
  3. The lack of a written engagement letter
  4. The risk that the client will not pay on time

Explanation

Preparing the financial statements and then auditing them creates a self-review threat, because the auditor would be evaluating its own work. Safeguards or declining the audit may be required to preserve independence.

Question 12Legislation and Regulation of Auditing Activity

Which body maintains the register of auditors and audit organizations in Belarus?

  1. The Chamber of Commerce
  2. The Ministry of Finance Correct answer.
  3. The Ministry of Justice
  4. The National Bank

Explanation

The Ministry of Finance, as the regulator of auditing activity, maintains the register of auditors and audit organizations. Registration is a precondition for lawful audit practice.

Question 13Legislation and Regulation of Auditing Activity

An audit organization wishes to provide audit services. Which condition is essential for lawful practice?

  1. Membership in a self-regulatory organization only
  2. Approval from the client's industry association
  3. Inclusion in the register of audit organizations maintained by the regulator Correct answer.
  4. A separate licence for each client engagement

Explanation

Lawful audit practice requires the audit organization to be entered in the state register maintained by the Ministry of Finance. Registration confirms compliance with organizational and personnel requirements.

Question 14Legislation and Regulation of Auditing Activity

Which of the following best describes the auditor's duty of professional scepticism?

  1. Avoiding communication with management
  2. Assuming management is dishonest in all matters
  3. Maintaining a questioning attitude and critically assessing evidence Correct answer.
  4. Accepting documentary evidence without further inquiry

Explanation

Professional scepticism means the auditor maintains a questioning attitude, critically evaluates evidence and remains alert to possible misstatement or fraud. It does not mean presuming dishonesty or refusing to communicate.

Question 15Legislation and Regulation of Auditing Activity

An auditor is offered a substantial loan by the client's chief executive during the engagement. How should the auditor respond?

  1. Accept it only if repaid before the report is issued
  2. Accept it as a personal matter unrelated to the audit
  3. Decline it because it creates a self-interest threat to independence Correct answer.
  4. Accept it but disclose it in the auditor's report

Explanation

A loan from a client officer creates a direct self-interest threat that compromises independence. Ethical rules prohibit such financial relationships, and the auditor must decline the loan.

Question 16Legislation and Regulation of Auditing Activity

Which of the following is a key element of an audit organization's internal quality control system?

  1. Setting the marketing budget for the firm
  2. Negotiating lower fees with clients
  3. Selecting office furniture suppliers
  4. Monitoring and review of completed engagements Correct answer.

Explanation

A quality control system includes policies on engagement performance and monitoring, such as reviews of completed engagements. These procedures help ensure consistent audit quality and compliance with standards.

Question 17Legislation and Regulation of Auditing Activity

An audit client refuses to allow the auditor to confirm balances directly with its bank. What is the most appropriate auditor response?

  1. Perform alternative procedures and consider the effect on the audit opinion Correct answer.
  2. Withdraw immediately without further work
  3. Report the client to the tax authorities
  4. Accept the refusal and rely solely on management's verbal assurances

Explanation

When a requested external confirmation is refused, the auditor should perform alternative procedures to obtain sufficient appropriate evidence and consider the implications for the audit opinion. Immediate withdrawal or reporting to tax authorities is not the automatic response.

Question 18Legislation and Regulation of Auditing Activity

Which statement about the auditor's report is correct under Belarusian rules?

  1. It replaces the client's responsibility for the financial statements
  2. It guarantees the absence of all fraud
  3. It expresses an opinion on the financial statements taken as a whole Correct answer.
  4. It must always be unqualified if the client pays the fee

Explanation

The auditor's report expresses an opinion on whether the financial statements present fairly, in all material respects, the financial position and results. It does not guarantee the absence of fraud nor relieve management of its responsibilities.

Question 19Legislation and Regulation of Auditing Activity

An auditor concludes that the financial statements are materially misstated and the effect is pervasive. Which opinion should be expressed?

  1. Disclaimer of opinion
  2. Adverse opinion Correct answer.
  3. Qualified opinion
  4. Unmodified opinion

Explanation

When misstatements are both material and pervasive, the auditor expresses an adverse opinion. A qualified opinion is used when the effect is material but not pervasive, and a disclaimer is used when the auditor cannot obtain sufficient evidence.

Question 20Legislation and Regulation of Auditing Activity

Which of the following activities is incompatible with the auditor's independence when performed for an audit client?

  1. Reviewing the client's accounting policies
  2. Assuming management responsibility for operating the client's business Correct answer.
  3. Inquiring of the client's legal counsel
  4. Reading the client's minutes of board meetings

Explanation

Assuming management responsibilities creates a threat to independence because the auditor would be making decisions for the client and later reviewing them. Reading minutes, reviewing policies and making inquiries are normal audit procedures.

Question 21Legislation and Regulation of Auditing Activity

What is the primary purpose of the qualification examination for auditors in Belarus?

  1. To replace the practical experience requirement
  2. To rank candidates for employment in audit firms
  3. To determine the fee the auditor may charge
  4. To assess whether the candidate meets the knowledge requirements for certification Correct answer.

Explanation

The qualification examination verifies that the candidate possesses the required theoretical and practical knowledge to be certified as an auditor. It does not rank candidates, set fees or substitute for practical experience.

Question 22Legislation and Regulation of Auditing Activity

An audit organization is approached to audit an entity in which one of its partners holds a controlling shareholding. What is the appropriate conclusion?

  1. The engagement may proceed because the partner will not sign the report
  2. The engagement should not be accepted because independence is compromised Correct answer.
  3. The engagement may proceed if the fee is increased
  4. The engagement may proceed if the shareholder abstains from voting

Explanation

A direct financial interest of a partner in the audit client creates an unavoidable self-interest threat to the firm's independence. The engagement should be declined or the interest eliminated before acceptance.

Question 23Legislation and Regulation of Auditing Activity

Which of the following documents must an auditor ordinarily obtain from management at the conclusion of an audit?

  1. A list of the client's competitors
  2. A written representation letter confirming management's responsibilities and representations Correct answer.
  3. A personal guarantee of the client's solvency
  4. A copy of the client's marketing plan

Explanation

The auditor obtains written representations from management confirming its responsibilities for the financial statements and the representations made during the audit. This supports the reliability of other evidence.

Question 24Legislation and Regulation of Auditing Activity

An auditor identifies a suspected fraud involving senior management. According to professional standards, what is the appropriate action?

  1. Discuss it only with the client's external legal advisers
  2. Ignore it because senior management is responsible for the entity
  3. Report the matter to the appropriate level of management and, where required, to those charged with governance Correct answer.
  4. Conceal it to protect the client's reputation

Explanation

Fraud involving senior management must be communicated to those charged with governance and, where legal or regulatory requirements apply, to regulators. Concealing it or limiting disclosure to external advisers is inappropriate.

Question 25Legislation and Regulation of Auditing Activity

Which of the following is a related service that an audit organization may provide without expressing assurance?

  1. Issuing an adverse audit opinion
  2. Compilation of financial statements Correct answer.
  3. Expressing limited assurance on a review
  4. Statutory audit of annual financial statements

Explanation

Compilation of financial statements is a related service in which the accountant assembles information without providing assurance. Audits and reviews are assurance engagements, and an adverse opinion is a form of audit conclusion.

Question 26Legislation and Regulation of Auditing Activity

Under Belarusian auditing legislation, which body is responsible for state regulation of audit activity and for adopting the rules (standards) of audit activity?

  1. The National Bank of the Republic of Belarus
  2. The Supreme Court of the Republic of Belarus
  3. The National Statistical Committee of the Republic of Belarus
  4. The Ministry of Finance of the Republic of Belarus Correct answer.

Explanation

State regulation of audit activity in Belarus is entrusted to the Ministry of Finance, which adopts the national rules (standards) of audit activity and exercises oversight of the profession. The National Bank regulates banking, not the audit profession generally. Other state bodies do not adopt audit standards.

Question 27Legislation and Regulation of Auditing Activity

An audit organization has completed an engagement and is assembling the final audit file. According to professional standards on documentation, the assembly of the final audit file should ordinarily be completed within what period after the date of the auditor's report?

  1. Within 60 days Correct answer.
  2. Within 180 days
  3. Within 30 days
  4. Within 120 days

Explanation

Professional standards require the auditor to assemble the final audit file on a timely basis, ordinarily within 60 days after the date of the auditor's report. This administrative deadline ensures the file reflects the work completed before the report was issued. Longer periods weaken the link between the report and the supporting evidence.

Question 28Legislation and Regulation of Auditing Activity

An audit organization is offered an engagement to compile the financial statements of a small entity and will issue a compilation report stating that no assurance is expressed. How should this engagement be classified?

  1. As a review engagement providing limited assurance
  2. As an audit of financial statements
  3. As an agreed-upon procedures engagement providing negative assurance
  4. As a related service that is not an assurance engagement Correct answer.

Explanation

Compilation of financial statements is a related service in which the practitioner assists management in preparing information without obtaining evidence to express assurance. Because no assurance is expressed, it is not an audit or a review. It is also distinct from agreed-upon procedures, where findings are reported without assurance.

Question 29Legislation and Regulation of Auditing Activity

An auditor is engaged to audit an entity and plans to rely on the work of an internal audit function. Which condition is most important before such reliance can reduce the external auditor's own procedures?

  1. The internal audit function must be assessed as adequately objective and competent for the areas involved Correct answer.
  2. The internal audit work must have been completed within the same calendar month as the external audit
  3. The internal audit function must be staffed entirely by certified auditors
  4. The internal auditors must report directly to the external auditor during the engagement

Explanation

The external auditor may use the work of internal audit only after evaluating the function's objectivity and technical competence, and then determining the nature and extent of procedures to perform on that work. Reliance is a matter of professional judgement, not of reporting lines or certification of internal staff. Timing alone does not establish the reliability of internal audit work.

Question 30Legislation and Regulation of Auditing Activity

An auditor of a listed entity identifies a material uncertainty related to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern, and management's disclosures about it are adequate. How should the auditor address this in the auditor's report?

  1. Issue a qualified opinion because a material uncertainty always results in modification
  2. Disclaim an opinion on the financial statements as a whole
  3. Include a separate section headed 'Material Uncertainty Related to Going Concern' drawing users' attention to the disclosure Correct answer.
  4. Omit any reference because adequate disclosure by management resolves the matter entirely

Explanation

When the going concern basis is appropriate and the disclosures are adequate, the auditor expresses an unmodified opinion but includes a separate section drawing attention to the material uncertainty. This preserves the unmodified opinion while highlighting the matter for users. A disclaimer or qualification is reserved for inadequate disclosure or an inappropriate going concern basis.

Question 31Accounting and Financial Reporting

Under Belarusian accounting rules, which document is the primary source document used to record the receipt of materials from a supplier?

  1. The bank statement (выписка банка)
  2. The purchase requisition (заявка на закупку)
  3. The supplier's payment invoice (платёжное требование)
  4. The goods delivery note (товарно-транспортная накладная) Correct answer.

Explanation

A source document must confirm the fact of a business transaction. The goods delivery note records the physical movement of goods between the parties and is the basis for posting inventory receipt. Payment and bank documents confirm settlement, not receipt of goods.

Question 32Accounting and Financial Reporting

According to the Belarusian Law on Accounting and Reporting, over what minimum period must an organisation retain primary accounting documents after the reporting year in which they were prepared?

  1. One year
  2. Three years
  3. Ten years
  4. Five years Correct answer.

Explanation

Belarusian accounting legislation requires primary documents and accounting registers to be kept for at least five years after the year of use, unless a longer period is set by other legislation. Shorter periods do not satisfy the statutory retention rule.

Question 33Accounting and Financial Reporting

An entity uses the perpetual inventory system. It purchases goods for 12,000 rubles with VAT of 2,400 rubles and pays a transport company 1,000 rubles (no VAT). At what amount should the goods be recorded in inventory?

  1. 14,400 rubles
  2. 15,400 rubles
  3. 13,000 rubles Correct answer.
  4. 12,000 rubles

Explanation

Inventory cost includes the purchase price and directly attributable costs such as transport, while recoverable VAT is excluded. Thus 12,000 plus 1,000 equals 13,000 rubles. VAT is recorded separately as input VAT.

Question 34Accounting and Financial Reporting

Which method of inventory valuation is permitted under Belarusian accounting standards for financial reporting purposes?

  1. Replacement cost method
  2. Base stock method
  3. Last-in, first-out (LIFO)
  4. First-in, first-out (FIFO) Correct answer.

Explanation

Belarusian standards permit FIFO and weighted average cost for inventory measurement. LIFO, base stock and replacement cost are not permitted for statutory financial statements.

Question 35Accounting and Financial Reporting

A machine is acquired for 60,000 rubles. Its estimated useful life is 5 years and its residual value is 5,000 rubles. Using the straight-line method, what is the annual depreciation charge?

  1. 10,000 rubles
  2. 11,000 rubles Correct answer.
  3. 12,000 rubles
  4. 13,000 rubles

Explanation

Straight-line depreciation equals depreciable amount divided by useful life. Depreciable amount is 60,000 minus 5,000, i.e. 55,000, divided by 5 years equals 11,000 rubles per year.

Question 36Accounting and Financial Reporting

Which condition must be satisfied before an item of property, plant and equipment is recognised as an asset?

  1. Future economic benefits are probable and cost can be measured reliably Correct answer.
  2. The item must be located on the entity's own premises
  3. The item must be insured against loss
  4. The item must have been fully paid for in cash

Explanation

Recognition of property, plant and equipment requires that future economic benefits are probable and that the cost can be measured reliably. Payment status, insurance and physical location are not recognition criteria.

Question 37Accounting and Financial Reporting

An entity incurs 8,000 rubles on routine repairs of a building and 40,000 rubles on a major upgrade that extends the useful life. How should these amounts be treated?

  1. Both amounts are expensed
  2. Both amounts are capitalised
  3. The repairs are capitalised and the upgrade is expensed
  4. The repairs are expensed and the upgrade is capitalised Correct answer.

Explanation

Costs that maintain an asset's existing condition are expensed as incurred, while costs that improve or extend the asset's capacity or life are capitalised. Routine repairs therefore go to expenses and the qualifying upgrade is added to the asset's carrying amount.

Question 38Accounting and Financial Reporting

Which of the following is an intangible asset under Belarusian accounting rules?

  1. Employee training costs
  2. An internally generated brand name developed over several years
  3. A purchased software licence with a useful life of four years Correct answer.
  4. A prepayment for goods to be delivered next year

Explanation

An acquired software licence is identifiable, non-monetary and controlled by the entity, so it qualifies as an intangible asset. Internally generated brands, training costs and prepayments do not meet the recognition criteria for intangibles.

Question 39Accounting and Financial Reporting

An entity issues goods to a customer for 24,000 rubles including VAT at 20%. What amount of VAT is included in the invoice total?

  1. 5,000 rubles
  2. 4,800 rubles
  3. 2,400 rubles
  4. 4,000 rubles Correct answer.

Explanation

When VAT is included in the total, the tax is extracted as total multiplied by the rate divided by 100 plus the rate: 24,000 times 20/120 equals 4,000 rubles. The net revenue is then 20,000 rubles.

Question 40Accounting and Financial Reporting

Which financial statement reports changes in share capital, retained earnings and other equity components for the period?

  1. The statement of cash flows
  2. The statement of changes in equity Correct answer.
  3. The statement of financial position
  4. The statement of profit and loss

Explanation

The statement of changes in equity reconciles opening and closing balances of each equity component and discloses movements such as profit, dividends and revaluations. The other statements report financial position, cash flows or performance.

Question 41Accounting and Financial Reporting

An entity's total assets are 500,000 rubles and total liabilities are 320,000 rubles. What is the amount of equity?

  1. 320,000 rubles
  2. 500,000 rubles
  3. 820,000 rubles
  4. 180,000 rubles Correct answer.

Explanation

From the accounting equation, equity equals assets minus liabilities. Thus 500,000 minus 320,000 equals 180,000 rubles.

Question 42Accounting and Financial Reporting

Which of the following correctly describes the double-entry effect of recording a sale of goods on credit?

  1. Debit revenue and credit receivables
  2. Debit receivables and credit revenue Correct answer.
  3. Debit cash and credit revenue
  4. Debit inventory and credit receivables

Explanation

A credit sale increases a receivable (debit) and recognises revenue (credit). Cash is not affected because settlement has not yet occurred, and revenue is not debited on a sale.

Question 43Accounting and Financial Reporting

An entity's trial balance shows total debits of 145,000 rubles and total credits of 140,000 rubles. What does this most likely indicate?

  1. The accounts are correctly balanced
  2. The entity has a cash shortage of 5,000 rubles
  3. The entity has earned a profit of 5,000 rubles
  4. There is an error in recording or posting Correct answer.

Explanation

In a correctly kept double-entry system total debits must equal total credits. A difference of 5,000 rubles signals an error such as a one-sided posting or an arithmetic mistake. It does not by itself indicate profit or cash shortage.

Question 44Accounting and Financial Reporting

Which of the following items is classified as a current liability on the statement of financial position?

  1. Share capital
  2. A long-term deferred tax liability
  3. Trade payables due within 30 days Correct answer.
  4. A bank loan repayable in five years

Explanation

A liability is current when it is expected to be settled within the normal operating cycle or within twelve months. Trade payables due in 30 days meet this criterion, whereas long-term loans, share capital and long-term deferred tax do not.

Question 45Accounting and Financial Reporting

An entity has cash of 20,000 rubles, receivables of 30,000 rubles, inventory of 50,000 rubles and current liabilities of 40,000 rubles. What is the quick (acid-test) ratio?

  1. 2.50
  2. 0.75
  3. 1.25 Correct answer.
  4. 2.00

Explanation

The quick ratio excludes inventory: (cash 20,000 plus receivables 30,000) divided by current liabilities 40,000 equals 1.25. Including inventory would give the current ratio of 2.50.

Question 46Accounting and Financial Reporting

Under Belarusian rules, when should revenue from the sale of goods be recognised?

  1. When the goods are shipped and risks and rewards are transferred to the buyer Correct answer.
  2. When the invoice is printed
  3. When the sales contract is signed
  4. When cash is received from the customer

Explanation

Revenue from goods is recognised when control, risks and rewards pass to the buyer and the amount can be measured reliably. Signing a contract, receiving cash or issuing an invoice does not by itself determine the timing of recognition.

Question 47Accounting and Financial Reporting

An entity's profit before tax is 100,000 rubles. Accounting expenses include a fine of 6,000 rubles that is not deductible for tax purposes, and the income tax rate is 20%. What is the current income tax expense?

  1. 21,200 rubles Correct answer.
  2. 20,000 rubles
  3. 18,800 rubles
  4. 12,000 rubles

Explanation

Non-deductible expenses increase taxable profit. Taxable profit is 100,000 plus 6,000 equals 106,000, and tax at 20% is 21,200 rubles. The fine creates a permanent difference.

Question 48Accounting and Financial Reporting

Which of the following creates a deferred tax liability?

  1. A dividend paid to shareholders
  2. A tax loss carried forward
  3. Tax depreciation exceeding accounting depreciation in early years Correct answer.
  4. A fine that is not deductible for tax purposes

Explanation

When tax depreciation exceeds accounting depreciation, the carrying amount of the asset exceeds its tax base, creating a taxable temporary difference and thus a deferred tax liability. Non-deductible fines are permanent differences, and tax losses create deferred tax assets.

Question 49Accounting and Financial Reporting

A company's bank statement shows a balance of 80,000 rubles while its cash book shows 76,000 rubles. Outstanding cheques issued but not yet cleared total 5,000 rubles and bank charges of 1,000 rubles were not recorded in the cash book. What is the correct adjusted cash book balance?

  1. 81,000 rubles
  2. 76,000 rubles
  3. 75,000 rubles Correct answer.
  4. 77,000 rubles

Explanation

Bank charges not yet recorded must be deducted from the cash book balance: 76,000 minus 1,000 equals 75,000 rubles. Outstanding cheques affect the bank statement reconciliation, not the cash book adjustment.

Question 50Accounting and Financial Reporting

Which of the following best describes the purpose of an accounting policy?

  1. To set the specific principles, bases and conventions adopted in preparing financial statements Correct answer.
  2. To record each individual transaction in the ledger
  3. To list the names of the entity's auditors
  4. To describe the organisational structure of the accounting department

Explanation

An accounting policy defines the specific principles, bases, conventions, rules and practices applied in preparing and presenting financial statements. It is not a transaction record, an organisational chart or an auditor list.