Question

Question 1) Which of the following is included in the cost of constructing a building?

1. Insurance costs during construction
2. The purchase of the delivery truck used to deliver construction materials
3. Cost of repairing vandalism damage during construction
4. Cost of removing the demolished building existing on the land when it was purchased

Question 2 : Which of the following is an investing activity?

1. Payment of dividends
2. Purchase of inventory for cash
3. Purchase of equipment for cash
4. Purchase of company shares

Question 3: Capitalising an expenditure rather than recording it as an expense:

1. Impacts the amount of total comprehensive income reported during an accounting period, but has no effect on the total carrying amount of non- current assets on the statement of financial position
2. Impacts the total carrying amount of non-current assets on the statement of financial position, but has no effect on the amount of total comprehensive income reported during the accounting period
3. Impacts the total carrying amount of non-current assets reported on the statement of financial position and the amount of total comprehensive income reported during a period
4. Has no impact on the carrying amount of non-current assets on the statement of financial position or the amount of income reported on the statement of comprehensive income

Answer 1

Question 1) Which of the following is included in the cost of constructing a building?
Insurance costs during construction	Correct	It is included in the cost of constructing a building
The purchase of the delivery truck used to deliver construction materials	Includes under truck accounts
Cost of repairing vandalism damage during construction	includes under Other accounts
Cost of removing the demolished building existing on the land when it was purchased	Includes under Land Acount
Question 2 : Which of the following is an investing activity?
Payment of dividends	Financing Activities
Purchase of inventory for cash	Operating Activities
Purchase of equipment for cash	Investing Activities	correct
Purchase of company shares	Financing Activities
Question 3: Capitalising an expenditure rather than recording it as an expense:
Impacts the amount of total comprehensive income reported during an accounting period, but has no effect on the total carrying amount of non- current assets on the statement of financial position
Impacts the total carrying amount of non-current assets on the statement of financial position, but has no effect on the amount of total comprehensive income reported during the accounting period
Impacts the total carrying amount of non-current assets reported on the statement of financial position and the amount of total comprehensive income reported during a period	Correct	All capitalized expenses are written off in future accounting periods with the help of depreciation of fixed assets or amortization of tangible assets.
Has no impact on the carrying amount of non-current assets on the statement of financial position or the amount of income reported on the statement of comprehensive income