Question 1

Which of the following accounts would appear in an income statement?

Accepted Answer

A)  Accumulated depreciation 
B)  Cost of goods sold 
C)  Rent payable 
D)  None of the answers provided 
A)  Accumulated depreciation 
B)  Cost of goods sold 
C)  Rent payable 
D)  None of the answers provided

Question 2

James has a business mowing lawns. On 31 December 2016, he has a utility truck worth $7000, a mower worth $250 and an edger worth $110. Fuel on hand cost $70. Customers owe him $360 and he owes his fuel supplier $90. He owes his sister $5000, which is a long-term loan, and he has $110 in his business bank account. What is James's owners' equity?

Accepted Answer

A)  $110 
B)  $2590 
C)  $2810 
D)  $7810 
A)  $110 
B)  $2590 
C)  $2810 
D)  $7810

Question 3

The Great Escape Company has just purchased a supply of 80 000 litres of diesel fuel for its buses. The diesel fuel is an expense to the company in the accounting period in which the fuel is:

Accepted Answer

A)  ordered from the supplier. 
B)  received from the supplier. 
C)  paid for. 
D)  consumed in the running of the buses. 
A)  ordered from the supplier. 
B)  received from the supplier. 
C)  paid for. 
D)  consumed in the running of the buses.

Question 4

To which balance sheet grouping does the item 'accumulated depreciation on equipment' belong?

Accepted Answer

A)  Current asset 
B)  Noncurrent asset 
C)  Current liability 
D)  Noncurrent liability 
A)  Current asset 
B)  Noncurrent asset 
C)  Current liability 
D)  Noncurrent liability

Question 5

Which of the following statements about assets is NOT true?

Accepted Answer

A)  Assets provide future economic benefits. 
B)  Assets are economic resources controlled by an organisation. 
C)  Assets result from past transactions or other events. 
D)  Assets are recorded at the amount they can be sold for. 
A)  Assets provide future economic benefits. 
B)  Assets are economic resources controlled by an organisation. 
C)  Assets result from past transactions or other events. 
D)  Assets are recorded at the amount they can be sold for.

Question 6

During 2016, Lift Ltd earned revenues of $500 and incurred expenses of $650. Retained profits at 1 January 2016 were $400, and at 31 December 2016 they were $225. What was the dividend declared by Lift Ltd during the year?

Accepted Answer

A)  $25 
B)  $175 
C)  $325 
D)  None of the answers provided 
A)  $25 
B)  $175 
C)  $325 
D)  None of the answers provided

Question 7

Given only the following information, what is the balance of shareholders' equity?

Accepted Answer

A)  $40 000 
B)  $50 000 
C)  $100 000 
D)  $140 000 
A)  $40 000 
B)  $50 000 
C)  $100 000 
D)  $140 000

Question 8

James has a business mowing lawns. On 31 December 2016, he has a utility truck worth $7000, a mower worth $250 and an edger worth $110. Fuel on hand cost $70. Customers owe him $360 and he owes his fuel supplier $90. He owes his sister $5000, which is a long-term loan, and he has $110 in his business bank account. What is James's current ratio?

Accepted Answer

A)  4.2:1 
B)  4.7:1 
C)  5:1 
D)  6:1 
A)  4.2:1 
B)  4.7:1 
C)  5:1 
D)  6:1

Question 9

During 2016, Beta Ltd incurred expenses of $250 and earned a net profit of $50. Retained profits at 1 January 2016 stood at $70 and dividends declared and paid totalled $30. What were the revenues of Beta Ltd during 2016?

Accepted Answer

A)  $200 
B)  $250 
C)  $300 
D)  $330 
A)  $200 
B)  $250 
C)  $300 
D)  $330

Question 10

Which of the following is NOT a revenue of a company?

Accepted Answer

A)  Sale of goods 
B)  Dividends received on shares 
C)  Rent from premises 
D)  Issue of shares 
A)  Sale of goods 
B)  Dividends received on shares 
C)  Rent from premises 
D)  Issue of shares

Question 11

The connecting link between the balance sheet and the income statement is:

Accepted Answer

A)  dividends paid to shareholders. 
B)  the opening balance of retained profits. 
C)  total shareholders' equity. 
D)  net profit after tax. 
A)  dividends paid to shareholders. 
B)  the opening balance of retained profits. 
C)  total shareholders' equity. 
D)  net profit after tax.

Question 12

The balance of retained profits at the beginning of a period was $1000 and at the end of the period it was $850. A dividend of $50 was declared and paid. What was the net profit/loss for the period?

Accepted Answer

A)  Net loss $100 
B)  Net profit $100 
C)  Net loss $200 
D)  Net profit $200 
A)  Net loss $100 
B)  Net profit $100 
C)  Net loss $200 
D)  Net profit $200

Question 13

Shareholders invest $100 000 in a business. Inventory of $80 000 is bought on credit and damaged inventory that was purchased on credit for $10 000 was returned. Equipment costing $200 000 was purchased, which was financed by a loan from the seller, repayable in five years. The business paid $40 000 to accounts payable. Total assets increased by:

Accepted Answer

A)  $100 000. 
B)  $170 000. 
C)  $330 000. 
D)  none of the answers provided. 
A)  $100 000. 
B)  $170 000. 
C)  $330 000. 
D)  none of the answers provided.

Question 14

If a business pays a 12-month insurance premium of $1200 on 1 April 2016, at 30 June 2016 the prepayment will be equal to:

Accepted Answer

A)  $0. 
B)  $300. 
C)  $900. 
D)  $1200. 
A)  $0. 
B)  $300. 
C)  $900. 
D)  $1200.

Question 15

Which of the following CANNOT be classified as a current liability?

Accepted Answer

A)  Accounts payable 
B)  Provision for long service leave 
C)  Loans 
D)  Inventory 
A)  Accounts payable 
B)  Provision for long service leave 
C)  Loans 
D)  Inventory

Question 16

If a company pays a 12-month insurance premium for $2400 on 1 June 2016, then at 30 June 2016 the accounts will show:

Accepted Answer

A)  a prepayment of $2200 in the balance sheet and an insurance expense of $200 in the profit and loss account. 
B)  a prepayment of $200 in the balance sheet and an insurance expense of $2000 in the profit and loss account. 
C)  a $2400 asset in the balance sheet. 
D)  a $2400 expense in the profit and loss statement. 
A)  a prepayment of $2200 in the balance sheet and an insurance expense of $200 in the profit and loss account. 
B)  a prepayment of $200 in the balance sheet and an insurance expense of $2000 in the profit and loss account. 
C)  a $2400 asset in the balance sheet. 
D)  a $2400 expense in the profit and loss statement.

Question 17

Which of the following is NOT a revenue of a company?

Accepted Answer

A)  Cash sales 
B)  Credit sales 
C)  Interest on investments 
D)  Borrowing from a bank 
A)  Cash sales 
B)  Credit sales 
C)  Interest on investments 
D)  Borrowing from a bank

Question 18

If the last wages bill for the year is paid on 28 June and $6000 is owing at 30 June in unpaid wages, then:

Accepted Answer

A)  the $6000 would appear as accrued wages payable in the balance sheet but it would not be included in the expenses for the year. 
B)  the $6000 would appear as accrued wages payable in the balance sheet and would be included in the expenses for the year. 
C)  the $6000 would not be included in either the balance sheet or the profit and loss statement. 
D)  the $6000 would appear as an expense in the profit and loss statement. 
A)  the $6000 would appear as accrued wages payable in the balance sheet but it would not be included in the expenses for the year. 
B)  the $6000 would appear as accrued wages payable in the balance sheet and would be included in the expenses for the year. 
C)  the $6000 would not be included in either the balance sheet or the profit and loss statement. 
D)  the $6000 would appear as an expense in the profit and loss statement.

Question 19

Consider the following transactions:
 
Which of the above transactions increase June 2016 expenses?

Accepted Answer

A)  (ii) only 
B)  (i) and (ii) only 
C)  (i), (ii) and (iii) only. 
D)  (i), (ii) and (iv) only. 
A)  (ii) only 
B)  (i) and (ii) only 
C)  (i), (ii) and (iii) only. 
D)  (i), (ii) and (iv) only.

Question 20

A company buys 100 televisions for $500 each. It sells 60 televisions for $900 each. What is the 'cost of goods sold' expense?

Accepted Answer

A)  $50 000 
B)  $24 000 
C)  $54 000 
D)  $30 000 
A)  $50 000 
B)  $24 000 
C)  $54 000 
D)  $30 000

Which of the following accounts would appear in an income statement?

The Great Escape Company has just purchased a supply of 80 000 litres of diesel fuel for its buses. The diesel fuel is an expense to the company in the accounting period in which the fuel is:

To which balance sheet grouping does the item 'accumulated depreciation on equipment' belong?

Which of the following statements about assets is NOT true?

During 2016, Lift Ltd earned revenues of $500 and incurred expenses of $650. Retained profits at 1 January 2016 were $400, and at 31 December 2016 they were $225. What was the dividend declared by Lift Ltd during the year?

Given only the following information, what is the balance of shareholders' equity?

During 2016, Beta Ltd incurred expenses of $250 and earned a net profit of $50. Retained profits at 1 January 2016 stood at $70 and dividends declared and paid totalled $30. What were the revenues of Beta Ltd during 2016?

Which of the following is NOT a revenue of a company?

The connecting link between the balance sheet and the income statement is:

The balance of retained profits at the beginning of a period was $1000 and at the end of the period it was $850. A dividend of $50 was declared and paid. What was the net profit/loss for the period?

If a business pays a 12-month insurance premium of $1200 on 1 April 2016, at 30 June 2016 the prepayment will be equal to:

Which of the following CANNOT be classified as a current liability?

If a company pays a 12-month insurance premium for $2400 on 1 June 2016, then at 30 June 2016 the accounts will show:

Which of the following is NOT a revenue of a company?

If the last wages bill for the year is paid on 28 June and $6000 is owing at 30 June in unpaid wages, then:

Consider the following transactions: Which of the above transactions increase June 2016 expenses?

A company buys 100 televisions for $500 each. It sells 60 televisions for $900 each. What is the 'cost of goods sold' expense?

Introduction to Financial Accounting

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, Accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters

Exam 2: Measuring and Evaluating Financial Position and Financial Performance

Which of the following accounts would appear in an income statement?

The Great Escape Company has just purchased a supply of 80 000 litres of diesel fuel for its buses. The diesel fuel is an expense to the company in the accounting period in which the fuel is:

To which balance sheet grouping does the item 'accumulated depreciation on equipment' belong?

Which of the following statements about assets is NOT true?

During 2016, Lift Ltd earned revenues of $500 and incurred expenses of $650. Retained profits at 1 January 2016 were $400, and at 31 December 2016 they were $225. What was the dividend declared by Lift Ltd during the year?

Given only the following information, what is the balance of shareholders' equity?

During 2016, Beta Ltd incurred expenses of $250 and earned a net profit of $50. Retained profits at 1 January 2016 stood at $70 and dividends declared and paid totalled $30. What were the revenues of Beta Ltd during 2016?

Which of the following is NOT a revenue of a company?

The connecting link between the balance sheet and the income statement is:

The balance of retained profits at the beginning of a period was $1000 and at the end of the period it was $850. A dividend of $50 was declared and paid. What was the net profit/loss for the period?

If a business pays a 12-month insurance premium of $1200 on 1 April 2016, at 30 June 2016 the prepayment will be equal to:

Which of the following CANNOT be classified as a current liability?

If a company pays a 12-month insurance premium for $2400 on 1 June 2016, then at 30 June 2016 the accounts will show:

Which of the following is NOT a revenue of a company?

If the last wages bill for the year is paid on 28 June and $6000 is owing at 30 June in unpaid wages, then:

Consider the following transactions: Which of the above transactions increase June 2016 expenses?

A company buys 100 televisions for $500 each. It sells 60 televisions for $900 each. What is the 'cost of goods sold' expense?

Introduction to Financial Accounting

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, Accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters