1. [单选题]18 Which of the following statements about accounting ratios and their interpretation are correct?
1 A low-geared company is more able to survive a downturn in profit than a highly-geared company. 2 If a company has a high price earnings ratio, this will often indicate that the market expects its profits to rise. 3 All companies should try to achieve a current ratio (current assets/current liabilities) of 2:1.
A. 2 and 3 only
B. 1 and 3 only
C. 1 and 2 only
D. All three statements are correct
2. [单选题]Faithful representation is a fundamental characteristic of useful information within the IASB’s Conceptual framework for financial reporting.
A. Which of the following accounting treatments correctly applies the principle of faithful representation?
B. Reporting a transaction based on its legal status rather than its economic substance
C. Excluding a subsidiary from consolidation because its activities are not compatible with those of the rest of the group
D. Recording the whole of the net proceeds from the issue of a loan note which is potentially convertible to equity shares as debt (liability)
E. Allocating part of the sales proceeds of a motor vehicle to interest received even though it was sold with 0% (interest free) finance
