Question 1

The statement about current value that is true is:

Accepted Answer

A)  The second-hand sale value of an asset is not an example of current value. 
B)  Current value can only be defined one way. 
C)  Current values are based on transactions. 
D)  An accounting system could be produced based on current value rather than historical cost. 
A)  The second-hand sale value of an asset is not an example of current value. 
B)  Current value can only be defined one way. 
C)  Current values are based on transactions. 
D)  An accounting system could be produced based on current value rather than historical cost.

Question 2

The correct version of the accounting equation is:

Accepted Answer

A)  assets = equity + liabilities. 
B)  liabilities = assets + equity. 
C)  equity = assets + liabilities. 
D)  none of the above. 
A)  assets = equity + liabilities. 
B)  liabilities = assets + equity. 
C)  equity = assets + liabilities. 
D)  none of the above.

Question 3

Identify the item which is not necessarily a liability.

Accepted Answer

A)  bank overdraft 
B)  provision for holiday pay 
C)  loan 
D)  None of the above, i.e. all are necessarily liabilities. 
A)  bank overdraft 
B)  provision for holiday pay 
C)  loan 
D)  None of the above, i.e. all are necessarily liabilities.

Question 4

The accounting convention that requires the activities of the business to be kept separate from the activities of the owner is the:

Accepted Answer

A)  accounting period convention. 
B)  conservatism convention. 
C)  dual aspect convention. 
D)  business entity convention. 
A)  accounting period convention. 
B)  conservatism convention. 
C)  dual aspect convention. 
D)  business entity convention.

Question 5

If liabilities are $55,000 and assets are $123,600, equity is:

Accepted Answer

A)  $178,400 
B)  $178,600 
C)  $68,600 
D)  $68,400 
A)  $178,400 
B)  $178,600 
C)  $68,600 
D)  $68,400

Question 6

Identify the intangible asset.

Accepted Answer

A)  accounts payable 
B)  brand name 
C)  inventory 
D)  loan 
A)  accounts payable 
B)  brand name 
C)  inventory 
D)  loan

Question 7

Identify the current asset.

Accepted Answer

A)  delivery vehicle 
B)  inventory 
C)  fixtures and fittings 
D)  loan to L Hardie repayable in 2 years 
A)  delivery vehicle 
B)  inventory 
C)  fixtures and fittings 
D)  loan to L Hardie repayable in 2 years

Question 8

Which of these is not always a characteristic of an asset?

Accepted Answer

A)  expected future economic benefits 
B)  ability of the benefit to be measured in money terms 
C)  exclusive control of the economic benefits 
D)  legal ownership by the entity 
A)  expected future economic benefits 
B)  ability of the benefit to be measured in money terms 
C)  exclusive control of the economic benefits 
D)  legal ownership by the entity

Question 9

The accounting convention that requires items in the balance sheet to be valued at their acquisition cost is the:

Accepted Answer

A)  money measurement convention. 
B)  realisation convention. 
C)  historical cost convention. 
D)  matching convention. 
A)  money measurement convention. 
B)  realisation convention. 
C)  historical cost convention. 
D)  matching convention.

Question 10

The purpose of the balance sheet is:

Accepted Answer

A)  to list the assets of the business and the claims against the assets at a particular point of time. 
B)  to determine the cash inflows and outflows over a period of time. 
C)  to determine the profit earned over a period of time. 
D)  all of the above. 
A)  to list the assets of the business and the claims against the assets at a particular point of time. 
B)  to determine the cash inflows and outflows over a period of time. 
C)  to determine the profit earned over a period of time. 
D)  all of the above.

Question 11

The recognition criteria for liabilities included in the New Zealand Framework is/are:

Accepted Answer

A)  present obligation. 
B)  probability of occurrence. 
C)  reliability of measurement. 
D)  B and C 
A)  present obligation. 
B)  probability of occurrence. 
C)  reliability of measurement. 
D)  B and C

Question 12

Which aspect of business performance does the balance sheet directly provide insight into?

Accepted Answer

A)  profitability 
B)  share price 
C)  cash flows 
D)  the relative proportions of funds contributed by owners and outsiders 
A)  profitability 
B)  share price 
C)  cash flows 
D)  the relative proportions of funds contributed by owners and outsiders

Question 13

Which of these is not an asset?

Accepted Answer

A)  accounts payable 
B)  accounts receivable 
C)  loan to J. Troja 
D)  A and B 
A)  accounts payable 
B)  accounts receivable 
C)  loan to J. Troja 
D)  A and B

Question 14

The accounting convention that requires the continuous life of the business to be divided into time periods of the same length for the purpose of measuring profit, is the:

Accepted Answer

A)  accounting period convention. 
B)  matching convention. 
C)  going concern convention. 
D)  business entity convention. 
A)  accounting period convention. 
B)  matching convention. 
C)  going concern convention. 
D)  business entity convention.

Question 15

Calculate the missing cash at bank account balance from these balance sheet items: equity $5,700; debtors $890; creditors $450; inventory $360; loan to a friend $1,400.

Accepted Answer

A)  $6,300 
B)  $3,500 
C)  $5,400 
D)  $2,600 
A)  $6,300 
B)  $3,500 
C)  $5,400 
D)  $2,600

Question 16

What is the effect on the balance sheet when the business buys a car for $25,000, paying a deposit of $5,000 and promising to pay the balance within 60 days?

Accepted Answer

A)  increase asset vehicle by $20,000; increase liability accounts payable by $20,000 
B)  increase asset vehicle by $25,000; decrease asset bank by $5,000; increase liability accounts payable by $20,000 
C)  increase asset vehicle by $5,000; decrease asset bank by $5,000 
D)  none of the above 
A)  increase asset vehicle by $20,000; increase liability accounts payable by $20,000 
B)  increase asset vehicle by $25,000; decrease asset bank by $5,000; increase liability accounts payable by $20,000 
C)  increase asset vehicle by $5,000; decrease asset bank by $5,000 
D)  none of the above

Question 17

The accounting convention that calls for financial reports to err on the side of caution is the:

Accepted Answer

A)  stable monetary unit convention. 
B)  accounting period convention. 
C)  prudence (conservatism) convention. 
D)  objectivity convention. 
A)  stable monetary unit convention. 
B)  accounting period convention. 
C)  prudence (conservatism) convention. 
D)  objectivity convention.

Question 18

Which of these does not belong with the others?

Accepted Answer

A)  prepaid wages 
B)  mortgage loan 
C)  trade creditors 
D)  bank overdraft 
A)  prepaid wages 
B)  mortgage loan 
C)  trade creditors 
D)  bank overdraft

Question 19

The effect on the balance sheet of a business buying supplies for cash is to:

Accepted Answer

A)  increase asset supplies; decrease asset bank. 
B)  decrease asset supplies; increase asset bank. 
C)  increase asset supplies; increase asset bank. 
D)  decrease asset supplies; decrease asset bank. 
A)  increase asset supplies; decrease asset bank. 
B)  decrease asset supplies; increase asset bank. 
C)  increase asset supplies; increase asset bank. 
D)  decrease asset supplies; decrease asset bank.

Question 20

If the prudence (conservatism) convention conflicts with another convention, which will normally prevail?

Accepted Answer

A)  the other convention 
B)  prudence (conservatism) 
C)  conventions never conflict so the issue does not arise 
D)  50% of the time prudence and 50% of the time the other convention 
A)  the other convention 
B)  prudence (conservatism) 
C)  conventions never conflict so the issue does not arise 
D)  50% of the time prudence and 50% of the time the other convention

The statement about current value that is true is:

The correct version of the accounting equation is:

Identify the item which is not necessarily a liability.

The accounting convention that requires the activities of the business to be kept separate from the activities of the owner is the:

If liabilities are $55,000 and assets are $123,600, equity is:

Identify the intangible asset.

Identify the current asset.

Which of these is not always a characteristic of an asset?

The accounting convention that requires items in the balance sheet to be valued at their acquisition cost is the:

The purpose of the balance sheet is:

The recognition criteria for liabilities included in the New Zealand Framework is/are:

Which aspect of business performance does the balance sheet directly provide insight into?

Which of these is not an asset?

The accounting convention that requires the continuous life of the business to be divided into time periods of the same length for the purpose of measuring profit, is the:

Calculate the missing cash at bank account balance from these balance sheet items: equity $5,700; debtors $890; creditors $450; inventory $360; loan to a friend $1,400.

What is the effect on the balance sheet when the business buys a car for $25,000, paying a deposit of $5,000 and promising to pay the balance within 60 days?

The accounting convention that calls for financial reports to err on the side of caution is the:

Which of these does not belong with the others?

The effect on the balance sheet of a business buying supplies for cash is to:

If the prudence (conservatism) convention conflicts with another convention, which will normally prevail?

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 statement about current value that is true is:

The correct version of the accounting equation is:

Identify the item which is not necessarily a liability.

The accounting convention that requires the activities of the business to be kept separate from the activities of the owner is the:

If liabilities are $55,000 and assets are $123,600, equity is:

Identify the intangible asset.

Identify the current asset.

Which of these is not always a characteristic of an asset?

The accounting convention that requires items in the balance sheet to be valued at their acquisition cost is the:

The purpose of the balance sheet is:

The recognition criteria for liabilities included in the New Zealand Framework is/are:

Which aspect of business performance does the balance sheet directly provide insight into?

Which of these is not an asset?

The accounting convention that requires the continuous life of the business to be divided into time periods of the same length for the purpose of measuring profit, is the:

Calculate the missing cash at bank account balance from these balance sheet items: equity $5,700; debtors $890; creditors $450; inventory $360; loan to a friend $1,400.

What is the effect on the balance sheet when the business buys a car for $25,000, paying a deposit of $5,000 and promising to pay the balance within 60 days?

The accounting convention that calls for financial reports to err on the side of caution is the:

Which of these does not belong with the others?

The effect on the balance sheet of a business buying supplies for cash is to:

If the prudence (conservatism) convention conflicts with another convention, which will normally prevail?

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