Question 1

The New Zealand Framework's definition of an asset is:

Accepted Answer

A)  a resource controlled by the entity as a result of past events and from which economic benefits are expected to flow to the entity. 
B)  the claims of outsiders against the entity. 
C)  a resource owned by the business that will provide future benefits. 
D)  an item of value held by the entity. 
A)  a resource controlled by the entity as a result of past events and from which economic benefits are expected to flow to the entity. 
B)  the claims of outsiders against the entity. 
C)  a resource owned by the business that will provide future benefits. 
D)  an item of value held by the entity. A

Question 2

What is the overall effect on the balance sheet when the business sells inventory for a profit of $3,000?

Accepted Answer

A)  no change in total assets; no change in total equity 
B)  increase total assets by $3,000; increase total equity by $3,000 
C)  increase total assets by $3,000; decrease total equity by $3,000 
D)  none of the above 
A)  no change in total assets; no change in total equity 
B)  increase total assets by $3,000; increase total equity by $3,000 
C)  increase total assets by $3,000; decrease total equity by $3,000 
D)  none of the above B

Question 3

The effect on the balance sheet when a debtor pays the amount that is owed is:

Accepted Answer

A)  increase asset bank; increase equity. 
B)  increase asset bank; decrease asset debtor. 
C)  increase asset bank; decrease asset debtor; increase equity. 
D)  none of the above. 
A)  increase asset bank; increase equity. 
B)  increase asset bank; decrease asset debtor. 
C)  increase asset bank; decrease asset debtor; increase equity. 
D)  none of the above. B

Question 4

If liabilities are $45,000 and equity is $68,900, assets are:

Accepted Answer

A)  $113,100 
B)  $113,900 
C)  $23,100 
D)  $23,900 
A)  $113,100 
B)  $113,900 
C)  $23,100 
D)  $23,900

Question 5

Published balance sheets in New Zealand are mostly presented in which format?

Accepted Answer

A)  horizontal format 
B)  parallel format 
C)  'T' format 
D)  vertical format 
A)  horizontal format 
B)  parallel format 
C)  'T' format 
D)  vertical format

Question 6

The statement concerning the reserves component of equity that is not correct is:

Accepted Answer

A)  Reserves represent cash. 
B)  The higher the dividend paid by the company, the lower the reserves. 
C)  Retained earnings and reserves are often classified under the general heading of reserves. 
D)  Many reserves arise as transfers from retained earnings. 
A)  Reserves represent cash. 
B)  The higher the dividend paid by the company, the lower the reserves. 
C)  Retained earnings and reserves are often classified under the general heading of reserves. 
D)  Many reserves arise as transfers from retained earnings.

Question 7

There is a growing tendency for many non-current assets to be valued on the basis of market values. The item which is most likely to be valued at market value is:

Accepted Answer

A)  motor vehicles. 
B)  accounts receivable. 
C)  goodwill. 
D)  the assets of a life insurer. 
A)  motor vehicles. 
B)  accounts receivable. 
C)  goodwill. 
D)  the assets of a life insurer.

Question 8

The accounting convention that means only those transactions that are capable of being expressed in monetary terms are recorded is the:

Accepted Answer

A)  historical cost convention. 
B)  conservatism convention. 
C)  money measurement convention. 
D)  reliability convention. 
A)  historical cost convention. 
B)  conservatism convention. 
C)  money measurement convention. 
D)  reliability convention.

Question 9

'A present obligation of an entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits', is the New Zealand Framework's definition of:

Accepted Answer

A)  equity. 
B)  a liability. 
C)  an expense. 
D)  an asset. 
A)  equity. 
B)  a liability. 
C)  an expense. 
D)  an asset.

Question 10

Calculate the profit for the year if capital at the beginning is $35,000, capital at the end is $40,000 and during the year the owner withdrew $15,000.

Accepted Answer

A)  $20,000 
B)  $15,000 
C)  $10,000 
D)  $5,000 
A)  $20,000 
B)  $15,000 
C)  $10,000 
D)  $5,000

Question 11

Non-current liabilities represent:

Accepted Answer

A)  amounts due to outsiders which are not payable within 12 months. 
B)  amounts due to the owner of the business which are not payable within 12 months. 
C)  amounts due and payable to outsiders within 12 months. 
D)  A and B 
A)  amounts due to outsiders which are not payable within 12 months. 
B)  amounts due to the owner of the business which are not payable within 12 months. 
C)  amounts due and payable to outsiders within 12 months. 
D)  A and B

Question 12

Calculate equity. Cash at bank $3,400; inventory $1,200; accounts receivable $2,500; accounts payable $1,700; loan from ABC Bank $3,500.

Accepted Answer

A)  $8,900 
B)  $12,300 
C)  $5,300 
D)  $1,900 
A)  $8,900 
B)  $12,300 
C)  $5,300 
D)  $1,900

Question 13

Assets are classified as either current or non-current. Current assets are:

Accepted Answer

A)  expected to be turned into cash within 12 months. 
B)  goodwill. 
C)  the infrastructure assets. 
D)  all of the above. 
A)  expected to be turned into cash within 12 months. 
B)  goodwill. 
C)  the infrastructure assets. 
D)  all of the above.

Question 14

Under the revaluation standard, upward valuations of assets are allocated directly to a reserve (equity) account and do not increase profit, while downward revaluations are treated as an expense and reduce profit. The accounting principle underpinning this treatment is:

Accepted Answer

A)  accounting entity. 
B)  prudence (conservatism). 
C)  going concern. 
D)  materialism. 
A)  accounting entity. 
B)  prudence (conservatism). 
C)  going concern. 
D)  materialism.

Question 15

In the accounting equation, claims on the business are of two broad types:

Accepted Answer

A)  bills payable and bills receivable. 
B)  debtors and creditors. 
C)  liabilities and equity. 
D)  loans to and loans from outsiders. 
A)  bills payable and bills receivable. 
B)  debtors and creditors. 
C)  liabilities and equity. 
D)  loans to and loans from outsiders.

Question 16

The accounting convention which results in the anticipation of losses but not of profits is:

Accepted Answer

A)  prudence (conservatism). 
B)  matching. 
C)  going concern. 
D)  none of the above. 
A)  prudence (conservatism). 
B)  matching. 
C)  going concern. 
D)  none of the above.

Question 17

The effect on the balance sheet when the owner contributes her private vehicle for the exclusive use of the business is:

Accepted Answer

A)  increase asset vehicle; increase owner's drawings. 
B)  increase asset vehicle; decrease equity. 
C)  increase asset vehicle; increase equity. 
D)  none of the above. 
A)  increase asset vehicle; increase owner's drawings. 
B)  increase asset vehicle; decrease equity. 
C)  increase asset vehicle; increase equity. 
D)  none of the above.

Question 18

Identify the item that would appear in the equity section of the balance sheet.

Accepted Answer

A)  loan from ABC Bank 
B)  bank overdraft 
C)  drawings by the owner 
D)  loan to family member 
A)  loan from ABC Bank 
B)  bank overdraft 
C)  drawings by the owner 
D)  loan to family member

Question 19

The statement concerning the Conceptual Framework that is not true is:

Accepted Answer

A)  It is a legal requirement that all entities comply with the New Zealand Framework. 
B)  It has a significant influence on new accounting standards and on the revision of existing standards. 
C)  It represents a logical, theoretical structure to support and direct accounting practice. 
D)  The FRSB is now using the International Framework which it has called the New Zealand Framework. 
A)  It is a legal requirement that all entities comply with the New Zealand Framework. 
B)  It has a significant influence on new accounting standards and on the revision of existing standards. 
C)  It represents a logical, theoretical structure to support and direct accounting practice. 
D)  The FRSB is now using the International Framework which it has called the New Zealand Framework.

Question 20

The effect on the balance sheet when the owner withdraws money from the business is:

Accepted Answer

A)  decrease asset bank; decrease equity. 
B)  increase drawings; increase equity. 
C)  decrease asset bank; increase equity. 
D)  decrease drawings; decrease equity. 
A)  decrease asset bank; decrease equity. 
B)  increase drawings; increase equity. 
C)  decrease asset bank; increase equity. 
D)  decrease drawings; decrease equity.

The New Zealand Framework's definition of an asset is:

What is the overall effect on the balance sheet when the business sells inventory for a profit of $3,000?

The effect on the balance sheet when a debtor pays the amount that is owed is:

If liabilities are $45,000 and equity is $68,900, assets are:

Published balance sheets in New Zealand are mostly presented in which format?

The statement concerning the reserves component of equity that is not correct is:

There is a growing tendency for many non-current assets to be valued on the basis of market values. The item which is most likely to be valued at market value is:

The accounting convention that means only those transactions that are capable of being expressed in monetary terms are recorded is the:

'A present obligation of an entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits', is the New Zealand Framework's definition of:

Calculate the profit for the year if capital at the beginning is $35,000, capital at the end is $40,000 and during the year the owner withdrew $15,000.

Non-current liabilities represent:

Calculate equity. Cash at bank $3,400; inventory $1,200; accounts receivable $2,500; accounts payable $1,700; loan from ABC Bank $3,500.

Assets are classified as either current or non-current. Current assets are:

Under the revaluation standard, upward valuations of assets are allocated directly to a reserve (equity) account and do not increase profit, while downward revaluations are treated as an expense and reduce profit. The accounting principle underpinning this treatment is:

In the accounting equation, claims on the business are of two broad types:

The accounting convention which results in the anticipation of losses but not of profits is:

The effect on the balance sheet when the owner contributes her private vehicle for the exclusive use of the business is:

Identify the item that would appear in the equity section of the balance sheet.

The statement concerning the Conceptual Framework that is not true is:

The effect on the balance sheet when the owner withdraws money from the business is:

Introduction to Accounting

Different Accounting Entities

Measuring and Reporting Financial Performance

Measuring and Reporting Cash Flows

Analysis and Interpretation of Financial Statements

Costvolumeprofit Analysis and Marginal Analysis

Full Costing

Budgeting

Projected Financial Statements

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Trends and Issues in Accounting

Filters

Exam 3: Measuring and Reporting Financial Position

The New Zealand Framework's definition of an asset is:

What is the overall effect on the balance sheet when the business sells inventory for a profit of $3,000?

The effect on the balance sheet when a debtor pays the amount that is owed is:

If liabilities are $45,000 and equity is $68,900, assets are:

Published balance sheets in New Zealand are mostly presented in which format?

The statement concerning the reserves component of equity that is not correct is:

There is a growing tendency for many non-current assets to be valued on the basis of market values. The item which is most likely to be valued at market value is:

The accounting convention that means only those transactions that are capable of being expressed in monetary terms are recorded is the:

'A present obligation of an entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits', is the New Zealand Framework's definition of:

Calculate the profit for the year if capital at the beginning is $35,000, capital at the end is $40,000 and during the year the owner withdrew $15,000.

Non-current liabilities represent:

Calculate equity. Cash at bank $3,400; inventory $1,200; accounts receivable $2,500; accounts payable $1,700; loan from ABC Bank $3,500.

Assets are classified as either current or non-current. Current assets are:

Under the revaluation standard, upward valuations of assets are allocated directly to a reserve (equity) account and do not increase profit, while downward revaluations are treated as an expense and reduce profit. The accounting principle underpinning this treatment is:

In the accounting equation, claims on the business are of two broad types:

The accounting convention which results in the anticipation of losses but not of profits is:

The effect on the balance sheet when the owner contributes her private vehicle for the exclusive use of the business is:

Identify the item that would appear in the equity section of the balance sheet.

The statement concerning the Conceptual Framework that is not true is:

The effect on the balance sheet when the owner withdraws money from the business is:

Introduction to Accounting

Different Accounting Entities

Measuring and Reporting Financial Performance

Measuring and Reporting Cash Flows

Analysis and Interpretation of Financial Statements

Costvolumeprofit Analysis and Marginal Analysis

Full Costing

Budgeting

Projected Financial Statements

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Trends and Issues in Accounting

Filters