Exam 2019, questions PDF

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QUIZ 1 1. The life of a business is divided into equal periods to determine profit or loss for that period. What assumption/concept underlies this procedure? Select one: a. materiality b. monetary concept c. accounting period d. accounting entity 2. Which of the following requirements is not necessary for an asset to be reported on the balance sheet? Select one: a. Probable future economic benefits b. Result of past transactions c. Owned by the reporting entity d. Able to be reliably measured 3. During 2016, a company makes credit sales of $500 000, of which $375 000 is collected at year-end. It pays $200 000 in expenses and owes $25 000 electricity used during 2016. Accrual Profit is: Select one: a. $300 000 b. $275 000 c. $175 000 d. $150 000 4. A user's main demand is for credible periodic reporting of an enterprise's financial position and performance. Credible means: Select one: a. 100% Accurate b. Easily understandable by users of financial statements c. Sufficiently trustworthy and competently prepared for it to be used to make decisions d. Relevant to the needs of decision makers 5. The balance of retained profits at the beginning of a period was $1000 and at the end of the period $850. A dividend of $50 was declared and paid. What was the net profit/loss for the period? Select one: a. net loss $100 b. net profit $100 c. net loss $200 d. none of the above 6. Which of the following items is normally classified as a current liability? Select one: a. inventories

b. accounts payable c. intangibles d. accounts receivable 7. Additional credit sales of $2 million (cost price $1.5 million) are made on credit. This transaction will: Select one: a. increase net profit, increase cash, and increase total assets b. increase net profit, increase total assets but not affect cash c. increase net profit, and not affect cash or total assets d. none of the above 8. Working capital is calculated as current assets less current liabilities. Consider the following summarised balance sheet of Apcor Ltd at 30 June 2015:

What was Apcor Ltd's working capital at 30 June 2015? Select one: a. $2 000 000 b. $500 000 c. $400 000 d. $200 000 9. LPR is a company that commenced business on 1 January 2013. Below are the balances in the 30 June 2013 financial statements. $ Cash 1000 Share capital 6000 Accounts receivable 3000 Accounts payable 2000 Loan owed 7000 Land 10 000 Inventory 2000 Cost of goods sold 1500 Wages expense 2500 Sales 5000 What is the balance of liabilities? Select one: a. $7000

b. $9000 c. $15000 d. none of the above 10. LPR is a company that commenced business on 1 January 2013. Below are the balances in the 30 June 2013 financial statements.

Cash Share capital Accounts receivable Accounts payable Loan owed Land Inventory Cost of goods sold Wages expense Sales

$ 1000 6000 3000 2000 7000 10 000 2000 1500 2500 5000

What is the net profit for the period ending 30 June 2013? Select one: a. $1000 b. $2500 c. $3500 d. none of the above 11. Which of the following accounts is not closed off at year-end? Select one: a. Cost of Goods Sold b. Amortisation Expense c. Interest Revenue d. Accounts Receivable 12. Which type of information would be of most interest to shareholders? Select one: a. Profitability b. long-term financial stability c. pollution of waterways adjacent to the firm's factory d. continuity of orders for the firm's products 13. Which of the following statements is true? Select one: a. if the liabilities owed by a business total $450 000, then the assets also total $450 000 b. if the assets owned by a business total $500 000, then shareholders' equity also totals $500 000 c. if the assets owned by a business total $90 000 and liabilities total $50 000, then shareholders' equity totals $40 000

d. if the assets owned by a business total $90 000 and liabilities total $50 000, then shareholders' equity totals $140 000 14. Which of the following is an accounting transaction? Select one: a. Making a purchase order b. Establishing a bank overdraf c. Hiring a new staff member d. None of the above 15. Given the information below:

Assume no dividends were declared during the year. What is the balance of total assets at 30 June 2011? Select one: a. 200 000 b. $210 000 c. $290 000 d. none of the above 16. Shareholders invest $100 000 in a business. $80 000 worth of inventory was bought on credit, and of that, $10 000 worth of damaged inventory was returned. Equipment costing $200 000 was purchased, which was financed by a loan from the seller, repayable in 5 years. The business paid $40 000 to accounts payable. Total assets increased by: Select one: a. $100 000 b. $170 000 c. $330 000 d. none of the above 17. A chart of accounts is: Select one: a. a means of ensuring that the debits equal the credits

b. a chronological record of all transactions c. a list of the titles of all accounts in the ledger, together with an appropriate numbering system for the accounts d. none of the above 18. If a transaction causes an asset account to increase, which of the following related effects may also occur? Select one: a. A decrease of equal amount in a liability account b. An increase of equal amount in another asset account c. A decrease of equal amount in an owner's equity account d. An increase of equal amount in a liability account 19. Which of the following is revenue of a business? Select one: a. Sales of goods in cash b. Dividends received on shares c. Sales of goods on credit d. All of the above are revenues of a business 20. Which of the following entries correctly records the receipt of an electricity bill from the power company? Select one: a. Dr Electricity Expense Cr Electricity Payable b. Dr Electricity Payable Cr Accounts Payable c. Dr Accounts Payable Cr Electricity Expense d. Dr Accounts Payable Cr Utilities Payable 21. If a transaction causes an asset account to increase, which of the following related effects occur? Select one: a. A decrease of equal amount in a liability account b. An increase of equal amount in another asset account c. A decrease of equal amount in an owner's equity account d. An increase of equal amount in a liability account 22. Which of the following statements is true? Select one: a. if the liabilities owed by a business total $450 000, then the assets also total $450 000 b. if the assets owned by a business total $500 000, then shareholders' equity also totals $500 000 c. if the assets owned by a business total $90 000 and liabilities total $50 000, then shareholders' equity totals $40 000 d. if the assets owned by a business total $90 000 and liabilities total $50 000, then shareholders' equity totals $140 000

23. Which of the following are debits? Select one: a. contributions of capital b. increases in revenues c. increases in liabilities d. decreases in owner's equity 24. Additional credit sales of $2 million (cost price $1.5 million) are made on credit. This transaction will: Select one: a. Increase net profit, increase cash, and increase total assets b. increase net profit, increase total assets but not affect cash c. increase net profit, and not affect cash or total assets d. none of the above 25. In profit measurement, private transaction of owners are not taken into account. What assumption/concept underlies this procedure? Select one: a. materiality b. monetary concept c. accounting period d. accounting entity 26. The purpose of dividing assets and liabilities into current and non-current classes is to help the reader of the balance sheet to determine: Select one: a. the short-term financial position of the firm b. the long-term financial position of the firm c. the likely future financial performance by the firm d. both A and B 27. Which of the following may be a liability of a business enterprise? Select one: a. share capital b. wages payable c. retained profits d. none of the above

28. Retained profits of Livermore Pty Ltd at 1 July 2010 were $5500. The accounting record for year ended 30 June 2011 showed the following information:

What were Livermore's retained profits at 30 June 2011? Select one: a. $3750 b. $7250 c. $8750 d. none of the above 29. Which of the following is an expense? Select one: a. prepaid insurance d. dividends paid c. purchase of inventory d. none of the above 30. A $10 000 payment was made to accounts payable, as a result: Select one: a. an asset decreased and an expense decreased b. an asset decreased and a liability decreased c. an asset decreased and an expense increased d. a liability decreased and an expense increased 31. Which type of information would be of most interest to a trade creditor? a. Dividends declared b. Ability to pay debts c. Pollution of waterways adjacent to the firm's factory d. Continuity of order for the firm's product 32. Which of the following is not a transaction? a. The purchase of inventory from suppliers b. The donation of a motor vehicle to the company c. Payment of legal fees d. The compensation sought by an individual taking legal proceedings against the company 33. To which balance sheet grouping does the item 'Bank Overdraf' belong? Select one: a. current asset

b. non-current asset c. current liability d. non-current liability 34. LPR is a company that commenced business on 1 January 2013. Below are the balances in the 30 June 2013 financial statements.

Cash Share capital Accounts receivable Accounts payable Loan owed Land Inventory Cost of goods sold Wages expense Sales

$ 1000 6000 3000 2000 7000 10 000 2000 1500 2500 5000

What is the balance of assets? Select one: a. $80 000 b. $10 000 c. $16 000 d. none of the above 35. Using the Australian dollar to measure accounting transactions allows comparisons across periods. What assumption/concept underlies this procedure? a. accounting entity b. monetary concept c. historical cost d. going concern 36. Which of the following accounts is not closed off at year-end? a. Cost of Goods Sold b. Amortisation Expense c. Interest Revenue d. Accounts Receivable

37. Given the information below for 2015:

What is the cash profit of the business for 2015? Select one: a. $9 000 b. $14 000 c. $24 000 d. none of the above 38. Which of the following statements about financial accounting is true? Select one: a. The only aspects of a business enterprise of concern to management are financial position and financial performance b. Financial accounting keeps a record of all events affecting an organisation c. Managers are concerned with the reliability of financial reports, not with how they will be interpreted d. Financial statements are summaries of a large number of individual events 39. Which of the following relates to both the balance sheet and the income statement? Select one: a. dividends paid to shareholders b. the opening balance of retained profits c. total shareholder's equity d. net profit3 40. Given the following information, how much revenue would be recognised in June? (1) Sales on credit of $100,000 in June, 20% to be collected in June (2) Collected $70,000 in June from customers for May sales (3) Received a deposit in June from a customer for $30,000; the work is to be carried out in August Revenue is: Select one: a. $90 000 b. $100 000 c. $130 000 d. $170 000

41. The balance of retained profits at the beginning of a period was $1000 and at the end of the period $850. A dividend of $50 was declared and paid. What was the net profit/loss for the period? Select one: a. a net loss $100 b. net profit $100 c. net loss $200 d. none of the above 42. Which of the following requirements is not necessary for an asset to be reported on the balance sheet? Select one: a. Probable future economic benefits b. Result of past transactions c. Owned by the reporting entity d. Able to be reliably measured 43. A customer provides a deposit of $500 000 near year-end. The product will not be delivered until next year. This transaction will: Select one: a. Increase net profit, increase cash, and increase total assets b. increase net profit and cash but not total assets c. increase total assets and cash but not net profit d. none of the above 44. The holders of bonds (Interest bearing loan) maturing in 15 years' time would be most interested in which type of information? Select one: a. proposed expansion of the business b. long-term financial stability c. liquidity d. profitability 45. If a machine is acquired in exchange for $9,000 cash and a $21,000 loan, then: Select one: a. Total assets increase b. Total liabilities decrease c. Owner's equity increases d. Expenses increase

46. Greening Ltd is a newly established business selling computer hardware. Shown below are ledger accounts in T-account form, with entries made for the first month of operations.

Use the information given above to answer the following question: What does transaction (2) represent? Select one: a. Purchase of inventory on credit b. Purchase of inventory for cash c. Sale of inventory on credit d. Sale of inventory for cash 48. Consider the following information. A Paid $20 000 of accounts payable B Received $100 000 from accounts receivable C Purchased inventory of $200 000 on credit D Credit sales of $700 000 (cost of goods sold was $450 000) E $10 000 of prepayments expired during the month What is the profit for the period? Select one: a. $120 000 b. $240 000 c. $250 000 d. none of the above 49. Given the following information calculate the gross profit:

Select one: a. $30,000 b. $60,000 c. $35,000 d. $20 000

QUIZ 2 1. At year-end Shify Ltd had a balance of Accounts Receivable of $90 000 and an Allowance for Doubtful Debts of $4000. It was decided to write off the debt of Wriggler totalling $2500 as irrecoverable. It was further decided that the Allowance for Doubtful Debts should stand at 5% of Accounts Receivable. What was the journal entry needed to write off the debt of Wriggler as irrecoverable? Select one:

a. Dr Bad Debts Expense..........$2500 Cr Accounts Receivable..........$2500 b. Dr Bad Debts Expense..........$2500 Cr Allowance for Doubtful Debts..........$2500 c. Dr Allowance for Doubtful Debts..........$2500 Cr Accounts Receivable..........$2500 d. none of the above 2. The statement that compares the balance as shown in the bank's records with the balance in the Cash at Bank account at a particular date is known as the: Select one: a. bank statement b. bank reconciliation statement c. bank control account d. cash flow statement 3. Which of the following may NOT be a subsidiary ledger? Select one: a. creditors b. property, plant and equipment c. finished goods inventory d. cost of goods sold. 4. Accompanying the bank statement was a debit memorandum for an NSF (not sufficient funds) cheque received from a customer. What entry is required in the company's accounts? Select one: a. Dr Other Revenue Cr Cash b. Dr Cash Cr Other Revenue c. Dr Cash Cr Accounts Receivable d. Dr Accounts Receivable Cr Cash 5. At the end of the financial year, the usual adjusting entry for accrued salaries owed to employees was omitted. Which of the following statements is true? Select one: a. Salary expense for the year was overstated. b. The total of the liabilities at the end of the year was overstated. c. Net profit for the year was understated. d. Shareholders' equity at the end of the year was overstated.

6. Which of the following is NOT a way that management can establish proper control over the enterprise's affairs? Select one: a. rotation of employees over a range of jobs b. combining record-keeping with handling of assets c. carrying insurance on assets d. requiring staff to take annual leave 7. Based on the special journal for sales shown below what is posted to the subsidiary ledger account/s?

Select one: a. $40 000 and $60 000 b. $80 000 and $140 000 c. $100 000 d. $220 000 8. Which of the following is NOT true of a sound system of internal control? Select one: a. implementation of controls involves costs b. a sound system of internal control is the responsibility of management c. all errors and irregularities should be eliminated d. a sound system of internal control is fundamental to the production of reliable financial reports 9. Able Ltd operates on a five-day working week. Employees are paid on Thursday for work completed to Wednesday. The weekly wages bill is $40 000. If 30 June 2011 fell on a Tuesday, what was the accrued wages payable on 30 June 2011? Select one: a. $8000 b. $16 000 c. $32 000 d. none of the above

10. Gum Ltd maintains subsidiary ledgers for debtors and creditors. At 1 July 2008, debtors owed $4000, and $7200 was owing to creditors. Transactions for year ended 30 June 2009 were as follows:

What was the balance of the Debtors control account at 30 June 2009? Select one:

a. $3000 b. $7000 c. $10 000 d. none of the above 11. In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for a cheque outstanding at end of month, $450, is to: Select one: a. add it to the balance as per bank statement b. deduct it from the balance as per bank statement c. add it to the balance per company records d. deduct it from the balance per company records 12. Gum Ltd maintains subsidiary ledgers for debtors and creditors. At 1 July 2008, debtors owed $4000, and $7200 was owing to creditors. Transactions for year ended 30 June 2009 were as follows:

What was the balance of the Creditors control account at 30 June 2009? Select one: a. $5200 b. $5500 c. $6000 d. none of the above 13. In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for $650 that a customer paid directly into the company's bank account is to: Select one: a. add it to the balance as per bank statement b. deduct it from the balance as per bank statement c. add it to the balance per company records d. deduct it from the balance per company records 14. The trial balance of Allen Ltd at balance date showed a credit balance of $5000 in the Allowance for Doubtful Debts account. Although the account of a customer outstanding at $1400 had been determined to be uncollectable, this had not been written off. What was the effect of this neglect on the year-end balance sheet? Select one: a. there was an understatement of total liabilities b. there was an overstatement of total assets and shareholders' equity c. there was an understatement of total assets and shareholders' equity

d. there was no effect on total liabilities, assets or shareholders' equity 15. Choo Ltd invested $200 000 with a bank for one year at 12% on 1 September 2010 (interest payable at end of loan). What is the adjusting journal entry at balance date, 30 June 2011? Select one: a. Dr Accrued Revenue $18 000 Cr Interest Revenue $18 000 b. Dr Accrued Interest $20 000 Cr Interest Revenue $20 000 c. Dr Accrued Revenue $24 000 Cr Interest Revenue $24 000 d. Dr Unearned Revenue $18 000 Cr Interest Revenue $18 000 16. A credit balance in a customer's account in the Debtors ledger could be due to: Select one: a. increased credit sales in the period b. an overpayment by the customer c. a bad debt d. none of the above 17. Griffin Ltd made a sale of $800 to a customer on terms of 2.5/10, n/30 on 1 July. The account was paid on 8 July. Griffin Ltd would make which of the following postings to the ledger on 8 July? Select one: a. DR Discount expense $20 b. DR Accounts receivable $800 c. CR Discount revenue $20 d. CR Discount expense $20. 18. The entry to recognise the depreciation of plant for the period is: Select one: a. Dr. Accumulated depreciation; Cr. Plant b. Dr. Depreciation expense; Cr Plant c. Dr. Depreciation expense; Cr. Accumulated depreciation d. Dr. Accumulated depreciation; Cr. Depreciation expense 19. In preparing a bank reconciliation statement for a business with a substantial bank balance, the appropriate treatment for monthly service charge appearing on the bank statement, $45, is to: Select one: a. add it to the balance as per bank statement b. deduct it from the balance as per bank statement c. add it to the balance per company records d. deduc...