Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

Lushan and Samson serve as the directors of Z Limited, which was formed on 1 January 2016, and they are drawing up financial statements in line with International Accounting Standards.
(a)[4]

State four reasons why the business ought to comply with International Accounting Standards when financial statements are prepared.

(b)[2]

Explain what stewardship means in relation to the role of the directors.

(c)[8]

Prepare a revised draft statement of financial position at 31 December 2016 after taking the information provided to Julia into account.

(d)[6]

Explain the changes you have made to the statement of financial position in (c).

(e)[5]

Discuss the advantages and disadvantages for Jack of having his accounts audited.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme. One marking point: Financial statements ought to be understandable

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