Question 1

Which type of information would be of most interest to trade creditors?

Accepted Answer

A)  Dividends declared 
B)  Ability to pay debts 
C)  Pollution of waterways adjacent to the firm's factory 
D)  Continuity of orders for the firm's products 
A)  Dividends declared 
B)  Ability to pay debts 
C)  Pollution of waterways adjacent to the firm's factory 
D)  Continuity of orders for the firm's products B

Question 2

ABC is a company that commenced business on 1 January 2016. Below are the balances in the 30 June 2016 financial statements.
 
What is the balance of liabilities?

Accepted Answer

A)  $7000 
B)  $9000 
C)  $15 000 
D)  None of the answers provided 
A)  $7000 
B)  $9000 
C)  $15 000 
D)  None of the answers provided B

Question 3

During 2015 a company makes cash sales of $900 000. It pays $300 000 in expenses and owes $90 000 for services it received in 2015 but payable in 2016. It pays $150 000 in dividends. What is the profit for 2015?

Accepted Answer

A)  $360 000 
B)  $510 000 
C)  $600 000 
D)  None of the answers provided 
A)  $360 000 
B)  $510 000 
C)  $600 000 
D)  None of the answers provided B

Question 4

A user's main demand is for credible periodic reporting of an enterprise's financial position and performance. Credible means:

Accepted Answer

A)  100 per cent 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. 
A)  100 per cent 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.

Question 5

Which of the following is NOT an asset?

Accepted Answer

A)  Marketable securities 
B)  Accounts receivable 
C)  Provisions for employee entitlements 
D)  Inventory 
A)  Marketable securities 
B)  Accounts receivable 
C)  Provisions for employee entitlements 
D)  Inventory

Question 6

Given the following information, what is the balance of shareholders' equity?
$
Cash
30 000
Inventory
60 000
Equipment
200 000
Accounts payable
50 000
Taxes payable
40 000
Loans to the company
150 000

Accepted Answer

A)  $40 000 
B)  $50 000 
C)  $100 000 
D)  None of the answers provided 
A)  $40 000 
B)  $50 000 
C)  $100 000 
D)  None of the answers provided

Question 7

Which of the following is NOT shown in the heading of the balance sheet?

Accepted Answer

A)  The name of the enterprise 
B)  The title of the report 
C)  The period covered by the report 
D)  All of the answers are shown in the heading 
A)  The name of the enterprise 
B)  The title of the report 
C)  The period covered by the report 
D)  All of the answers are shown in the heading

Question 8

ABC is a company that commenced business on 1 January 2016. Below are the balances in the 30 June 2016 financial statements.
 
What is the balance of assets?

Accepted Answer

A)  $8000 
B)  $10 000 
C)  $16 000 
D)  None of the answers provided 
A)  $8000 
B)  $10 000 
C)  $16 000 
D)  None of the answers provided

Question 9

The owner of a corner store keeps separate private and business transactions. To which financial statement assumption does this relate?

Accepted Answer

A)  Materiality 
B)  Accounting entity 
C)  Accounting period 
D)  Going concern 
A)  Materiality 
B)  Accounting entity 
C)  Accounting period 
D)  Going concern

Question 10

Which of the following statements about accrual accounting is NOT true?

Accepted Answer

A)  The impact of transactions on the financial statements is recognised when the cash is received or paid. 
B)  The financial statements include estimates. 
C)  Judgements made by accountants affect profit. 
D)  Transactions are recognised at the time when revenue and expenses occur. 
A)  The impact of transactions on the financial statements is recognised when the cash is received or paid. 
B)  The financial statements include estimates. 
C)  Judgements made by accountants affect profit. 
D)  Transactions are recognised at the time when revenue and expenses occur.

Question 11

Which of the following statements about shareholders' equity is NOT true?

Accepted Answer

A)  Shareholders' equity is the excess of assets over liabilities. 
B)  Shareholders' equity consists of two main elements: share capital and retained profits. 
C)  Shareholders' equity is a residual claim of the shareholders on the assets of the organisation. 
D)  Shareholders' equity is the amount shareholders will receive in dividends in the future. 
A)  Shareholders' equity is the excess of assets over liabilities. 
B)  Shareholders' equity consists of two main elements: share capital and retained profits. 
C)  Shareholders' equity is a residual claim of the shareholders on the assets of the organisation. 
D)  Shareholders' equity is the amount shareholders will receive in dividends in the future.

Question 12

Use the information given below to answer the following question.
 
What is the cash flow from operations for 2016?

Accepted Answer

A)  $52 000 
B)  $62 000 
C)  $70 000 
D)  $104 000 
A)  $52 000 
B)  $62 000 
C)  $70 000 
D)  $104 000

Question 13

During 2016, a company makes credit sales of $600 000, of which $350 000 is collected at year-end. It pays $220 000 in expenses and owes $20 000 for electricity used during 2016. What would the profit be if cash accounting rather than accrual accounting were used?

Accepted Answer

A)  $130 000. 
B)  $110 000. 
C)  $380 000. 
D)  $730 000. 
A)  $130 000. 
B)  $110 000. 
C)  $380 000. 
D)  $730 000.

Question 14

Financial statements are prepared on the premise that the organisation will continue operations in the foreseeable future. To which financial statement assumption does this relate?

Accepted Answer

A)  Accounting entity 
B)  Monetary 
C)  Historical cost 
D)  Going concern 
A)  Accounting entity 
B)  Monetary 
C)  Historical cost 
D)  Going concern

Question 15

Which of the following statements about external company auditors is NOT true?

Accepted Answer

A)  External company auditors provide assurance that the financial statements audited by them contain no mistakes. 
B)  External company auditors cannot credibly audit statements they have prepared. 
C)  External company auditors must be independent. 
D)  Auditing arose because users demanded some assurance that managers' reports on their performance were reliable. 
A)  External company auditors provide assurance that the financial statements audited by them contain no mistakes. 
B)  External company auditors cannot credibly audit statements they have prepared. 
C)  External company auditors must be independent. 
D)  Auditing arose because users demanded some assurance that managers' reports on their performance were reliable.

Question 16

The owner withdraws inventory for his own use from the business. To which financial statement assumption does this relate?

Accepted Answer

A)  Materiality 
B)  Monetary 
C)  Accounting period 
D)  Accounting entity 
A)  Materiality 
B)  Monetary 
C)  Accounting period 
D)  Accounting entity

Question 17

Does measuring economic performance involve: (i) estimates; (ii) adjustments; and/or (iii) judgements?

Accepted Answer

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

Question 18

What is the net profit for 2016 given the following information?
$
Cash sales
10 000
Credit sales
30 000
Cash received from accounts receivable
22 000
Wages paid
8000
Wages owing at year-end
5000

Accepted Answer

A)  $22 000 
B)  $27 000 
C)  $32 000 
D)  None of the answers provided 
A)  $22 000 
B)  $27 000 
C)  $32 000 
D)  None of the answers provided

Question 19

Which of the following organisations may use financial statements?
1) Australian Taxation Office
2) A church congregation
3) A university

Accepted Answer

A)  1 and 2 only 
B)  2 and 3 only 
C)  1 and 3 only 
D)  1, 2 and 3 
A)  1 and 2 only 
B)  2 and 3 only 
C)  1 and 3 only 
D)  1, 2 and 3

Question 20

The life of a business is divided into equal periods to determine profit or loss for that period. What assumption/concept underlies this procedure?

Accepted Answer

A)  Materiality 
B)  Monetary 
C)  Accounting period 
D)  Accounting entity 
A)  Materiality 
B)  Monetary 
C)  Accounting period 
D)  Accounting entity

Which type of information would be of most interest to trade creditors?

ABC is a company that commenced business on 1 January 2016. Below are the balances in the 30 June 2016 financial statements. What is the balance of liabilities?

During 2015 a company makes cash sales of $900 000. It pays $300 000 in expenses and owes $90 000 for services it received in 2015 but payable in 2016. It pays $150 000 in dividends. What is the profit for 2015?

A user's main demand is for credible periodic reporting of an enterprise's financial position and performance. Credible means:

Which of the following is NOT an asset?

Given the following information, what is the balance of shareholders' equity? $ Cash 30 000 Inventory 60 000 Equipment 200 000 Accounts payable 50 000 Taxes payable 40 000 Loans to the company 150 000

Which of the following is NOT shown in the heading of the balance sheet?

ABC is a company that commenced business on 1 January 2016. Below are the balances in the 30 June 2016 financial statements. What is the balance of assets?

The owner of a corner store keeps separate private and business transactions. To which financial statement assumption does this relate?

Which of the following statements about accrual accounting is NOT true?

Which of the following statements about shareholders' equity is NOT true?

Use the information given below to answer the following question. What is the cash flow from operations for 2016?

During 2016, a company makes credit sales of $600 000, of which $350 000 is collected at year-end. It pays $220 000 in expenses and owes $20 000 for electricity used during 2016. What would the profit be if cash accounting rather than accrual accounting were used?

Financial statements are prepared on the premise that the organisation will continue operations in the foreseeable future. To which financial statement assumption does this relate?

Which of the following statements about external company auditors is NOT true?

The owner withdraws inventory for his own use from the business. To which financial statement assumption does this relate?

Does measuring economic performance involve: (i) estimates; (ii) adjustments; and/or (iii) judgements?

What is the net profit for 2016 given the following information? $ Cash sales 10 000 Credit sales 30 000 Cash received from accounts receivable 22 000 Wages paid 8000 Wages owing at year-end 5000

Which of the following organisations may use financial statements? 1) Australian Taxation Office 2) A church congregation 3) A university

The life of a business is divided into equal periods to determine profit or loss for that period. What assumption/concept underlies this procedure?

Measuring and Evaluating Financial Position and Financial Performance

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 1: Introduction to Financial Accounting

Which type of information would be of most interest to trade creditors?

ABC is a company that commenced business on 1 January 2016. Below are the balances in the 30 June 2016 financial statements. What is the balance of liabilities?

During 2015 a company makes cash sales of $900 000. It pays $300 000 in expenses and owes $90 000 for services it received in 2015 but payable in 2016. It pays $150 000 in dividends. What is the profit for 2015?

A user's main demand is for credible periodic reporting of an enterprise's financial position and performance. Credible means:

Which of the following is NOT an asset?

Given the following information, what is the balance of shareholders' equity? $ Cash 30 000 Inventory 60 000 Equipment 200 000 Accounts payable 50 000 Taxes payable 40 000 Loans to the company 150 000

Which of the following is NOT shown in the heading of the balance sheet?

ABC is a company that commenced business on 1 January 2016. Below are the balances in the 30 June 2016 financial statements. What is the balance of assets?

The owner of a corner store keeps separate private and business transactions. To which financial statement assumption does this relate?

Which of the following statements about accrual accounting is NOT true?

Which of the following statements about shareholders' equity is NOT true?

Use the information given below to answer the following question. What is the cash flow from operations for 2016?

During 2016, a company makes credit sales of $600 000, of which $350 000 is collected at year-end. It pays $220 000 in expenses and owes $20 000 for electricity used during 2016. What would the profit be if cash accounting rather than accrual accounting were used?

Financial statements are prepared on the premise that the organisation will continue operations in the foreseeable future. To which financial statement assumption does this relate?

Which of the following statements about external company auditors is NOT true?

The owner withdraws inventory for his own use from the business. To which financial statement assumption does this relate?

Does measuring economic performance involve: (i) estimates; (ii) adjustments; and/or (iii) judgements?

What is the net profit for 2016 given the following information? $ Cash sales 10 000 Credit sales 30 000 Cash received from accounts receivable 22 000 Wages paid 8000 Wages owing at year-end 5000

Which of the following organisations may use financial statements? 1) Australian Taxation Office 2) A church congregation 3) A university

The life of a business is divided into equal periods to determine profit or loss for that period. What assumption/concept underlies this procedure?

Measuring and Evaluating Financial Position and Financial Performance

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