Question 1

Which of the following transactions for July represents an expense for the month?

Accepted Answer

A)  Paid $15 000 in advance as first payment for a new computing system. 
B)  Purchased inventory on account for resale in August. 
C)  Paid cash of $2000 to the bank for July interest on loan. 
D)  Borrowed $80 000 from the bank, repayable over four years. 
A)  Paid $15 000 in advance as first payment for a new computing system. 
B)  Purchased inventory on account for resale in August. 
C)  Paid cash of $2000 to the bank for July interest on loan. 
D)  Borrowed $80 000 from the bank, repayable over four years.

Question 2

The net profit figure is often referred to as the 'bottom line' and is the residual of income after deducting expenses for the period.

Accepted Answer

A) True 
 B)False

Question 3

What effect do revenues and expenses eventually have on Owners' Investment? Revenues Expenses

Accepted Answer

A)  Decrease Decrease 
B)  Decrease Increase 
C)  Increase Increase 
D)  Increase Decrease 
A)  Decrease Decrease 
B)  Decrease Increase 
C)  Increase Increase 
D)  Increase Decrease

Question 4

At year end, Elliott counted the office supplies on hand, which amounted to $1500. The firm had $900 of supplies on hand at the start of the year, and had purchased $6000 of supplies during the year. What was the total office supplies expense for the year?

Accepted Answer

A)  $6900 
B)  $3600 
C)  $5400 
D)  $4500 
A)  $6900 
B)  $3600 
C)  $5400 
D)  $4500

Question 5

The Flying High Company recorded a net profit for the year but paid no dividends. Comparing the balance sheet at the end of the year with the one at the beginning of the year, which of the following must be true?

Accepted Answer

A)  Current assets would be higher. 
B)  Non-current assets would be higher. 
C)  Liabilities would be higher. 
D)  Shareholders' equity would be higher. 
A)  Current assets would be higher. 
B)  Non-current assets would be higher. 
C)  Liabilities would be higher. 
D)  Shareholders' equity would be higher.

Question 6

Colombo commenced business as a sole proprietor providing computer repair services on 1 June. Colombo contributed land and buildings at $120 000, equipment at $19 000 and cash of $13 000. Transactions during June were as follows:
   (a) Complete a worksheet for the month of June, including any final adjustments. Record all property, plant and equipment in a single column of that name.
(b) Prepare the statement of comprehensive income for June and the balance sheet at 30 June.

Accepted Answer

(a)
 @#IMG-DLM& (b)
Colombo
Statement of

Question 7

The Stealth Company reports the following information for the start of this year:   Assume that owners invested $3000 during this year and that withdrawals were $12 000. Net profit for the year must have been:

Accepted Answer

A)  $12 000 
B)  $14 000 
C)  $16 000 
D)  $17 000 
A)  $12 000 
B)  $14 000 
C)  $16 000 
D)  $17 000

Question 8

What information does a statement of comprehensive income not show?

Accepted Answer

A)  Net Profit 
B)  Revenues 
C)  Liabilities 
D)  Tax Expense 
A)  Net Profit 
B)  Revenues 
C)  Liabilities 
D)  Tax Expense

Question 9

Greenmango Ltd recorded payments made for the following items during the year ended 30 June:
   Would the expenditure on the foregoing items meet the definition of (i) expenses, (ii) assets, or (iii) none of the above? Give reasons for your answers.

Accepted Answer

Dividends to shareholders (item (i)) are

Question 10

Distinguish between the concepts income and revenue. Support your answer by using an example to demonstrate the difference.

Accepted Answer

Income involves increases in economic be

Question 11

Which of the following statements relating to expenses is not true?

Accepted Answer

A)  Expenses result in an increase in owners' equity. 
B)  Expenses may arise through immediate cash payments or through promises to pay cash in the future for services received. 
C)  Expenses result from costs incurred normally to earn revenue. 
D)  Cash may be paid out before expenses are incurred. 
A)  Expenses result in an increase in owners' equity. 
B)  Expenses may arise through immediate cash payments or through promises to pay cash in the future for services received. 
C)  Expenses result from costs incurred normally to earn revenue. 
D)  Cash may be paid out before expenses are incurred.

Question 12

A company sells inventory on credit for $10 000 which originally cost $4000. Which of the following would not be a result of recording this transaction in the worksheet?

Accepted Answer

A)  An increase in total assets and revenue 
B)  An increase in total assets, revenue and expenses 
C)  An increase in revenue and expenses, but no effect on total assets 
D)  An increase in profit 
A)  An increase in total assets and revenue 
B)  An increase in total assets, revenue and expenses 
C)  An increase in revenue and expenses, but no effect on total assets 
D)  An increase in profit

Question 13

An item that is a cash payment in the current period and an expense of the next period is:

Accepted Answer

A)  a prepayment. 
B)  not adjusted. 
C)  an accrued expense. 
D)  part expense, part accrued expense. 
A)  a prepayment. 
B)  not adjusted. 
C)  an accrued expense. 
D)  part expense, part accrued expense.

Question 14

Distinguish between the concepts expense and asset. Support your answer by using an example to demonstrate the difference.

Accepted Answer

Assets represent future economic benefit

Question 15

Net profit is:

Accepted Answer

A)  the excess of income over expenses that a business records during a period. 
B)  the excess of expenses over revenues that a business records during a period. 
C)  the amount of revenue that a business reports during a period. 
D)  the amount of resources created by a business during a period. 
A)  the excess of income over expenses that a business records during a period. 
B)  the excess of expenses over revenues that a business records during a period. 
C)  the amount of revenue that a business reports during a period. 
D)  the amount of resources created by a business during a period.

Question 16

Which of the following items do not appear in the statement of changes in equity?

Accepted Answer

A)  Dividends paid to shareholders 
B)  Total comprehensive income 
C)  Fair value changes of cash flow hedges 
D)  Shares issued during the period 
A)  Dividends paid to shareholders 
B)  Total comprehensive income 
C)  Fair value changes of cash flow hedges 
D)  Shares issued during the period

Question 17

A single statement of comprehensive income:

Accepted Answer

A)  measures comprehensive income. 
B)  reports net profit or loss for the period. 
C)  is used by external decision makers. 
D)  does all of the above. 
A)  measures comprehensive income. 
B)  reports net profit or loss for the period. 
C)  is used by external decision makers. 
D)  does all of the above.

Question 18

A single statement of comprehensive income reports which of the following?

Accepted Answer

A)  Assets and liabilities 
B)  Cash inflows and cash outflows 
C)  Income and expenses 
D)  Retained earnings and dividends 
A)  Assets and liabilities 
B)  Cash inflows and cash outflows 
C)  Income and expenses 
D)  Retained earnings and dividends

Question 19

You are inspecting the statement of comprehensive income of a company. It reports a profit of $75 800. From this information, you can conclude that:

Accepted Answer

A)  the owners have a rather small investment in the firm. 
B)  the company is a merchandising firm. 
C)  there have been financing and investing activities during the period but no operating activities. 
D)  the value of resources received from sales exceeds the value of resources consumed. 
A)  the owners have a rather small investment in the firm. 
B)  the company is a merchandising firm. 
C)  there have been financing and investing activities during the period but no operating activities. 
D)  the value of resources received from sales exceeds the value of resources consumed.

Question 20

At the end of an accounting period, the amount of net profit earned by a company is transferred to the balance sheet and reported under which one of the following categories?

Accepted Answer

A)  Assets 
B)  Liabilities 
C)  Shareholders' equity 
D)  The amount of net profit is not transferred to the balance sheet. 
A)  Assets 
B)  Liabilities 
C)  Shareholders' equity 
D)  The amount of net profit is not transferred to the balance sheet.

Which of the following transactions for July represents an expense for the month?

The net profit figure is often referred to as the 'bottom line' and is the residual of income after deducting expenses for the period.

What effect do revenues and expenses eventually have on Owners' Investment? Revenues Expenses

At year end, Elliott counted the office supplies on hand, which amounted to $1500. The firm had $900 of supplies on hand at the start of the year, and had purchased $6000 of supplies during the year. What was the total office supplies expense for the year?

The Flying High Company recorded a net profit for the year but paid no dividends. Comparing the balance sheet at the end of the year with the one at the beginning of the year, which of the following must be true?

The Stealth Company reports the following information for the start of this year: Assume that owners invested $3000 during this year and that withdrawals were $12 000. Net profit for the year must have been:

What information does a statement of comprehensive income not show?

Greenmango Ltd recorded payments made for the following items during the year ended 30 June: Would the expenditure on the foregoing items meet the definition of (i) expenses, (ii) assets, or (iii) none of the above? Give reasons for your answers.

Distinguish between the concepts income and revenue. Support your answer by using an example to demonstrate the difference.

Which of the following statements relating to expenses is not true?

A company sells inventory on credit for $10 000 which originally cost $4000. Which of the following would not be a result of recording this transaction in the worksheet?

An item that is a cash payment in the current period and an expense of the next period is:

Distinguish between the concepts expense and asset. Support your answer by using an example to demonstrate the difference.

Net profit is:

Which of the following items do not appear in the statement of changes in equity?

A single statement of comprehensive income:

A single statement of comprehensive income reports which of the following?

You are inspecting the statement of comprehensive income of a company. It reports a profit of $75 800. From this information, you can conclude that:

At the end of an accounting period, the amount of net profit earned by a company is transferred to the balance sheet and reported under which one of the following categories?

Introduction to Accounting

Types of Organisations and the Financial Reporting Framework

Ethics and Corporate Governance

Wealth and the Measurement of Profit

Presentation of Financial Position and the Worksheet

Presentation of Cash Flows

Accounting for Selected Assets

Liabilities and Sources of Financing

Financial Statement Analysis

Worksheet to Debits and Credits

An Introduction to Management Accounting: a Strategic Perspective

Performance Measurement and the Balanced Scorecard

Costs and Cost Behaviour

Budgets

Cost-Volume-Profit Analysis

Accounting for Decision Making: With and Without Resource Constraints

Capital Investment Decisions

Filters

Exam 6: Presentation of Financial Performance and the Worksheet

Which of the following transactions for July represents an expense for the month?

The net profit figure is often referred to as the 'bottom line' and is the residual of income after deducting expenses for the period.

What effect do revenues and expenses eventually have on Owners' Investment? Revenues Expenses

At year end, Elliott counted the office supplies on hand, which amounted to $1500. The firm had $900 of supplies on hand at the start of the year, and had purchased $6000 of supplies during the year. What was the total office supplies expense for the year?

The Flying High Company recorded a net profit for the year but paid no dividends. Comparing the balance sheet at the end of the year with the one at the beginning of the year, which of the following must be true?

The Stealth Company reports the following information for the start of this year: Assume that owners invested $3000 during this year and that withdrawals were $12 000. Net profit for the year must have been:

What information does a statement of comprehensive income not show?

Greenmango Ltd recorded payments made for the following items during the year ended 30 June: Would the expenditure on the foregoing items meet the definition of (i) expenses, (ii) assets, or (iii) none of the above? Give reasons for your answers.

Distinguish between the concepts income and revenue. Support your answer by using an example to demonstrate the difference.

Which of the following statements relating to expenses is not true?

A company sells inventory on credit for $10 000 which originally cost $4000. Which of the following would not be a result of recording this transaction in the worksheet?

An item that is a cash payment in the current period and an expense of the next period is:

Distinguish between the concepts expense and asset. Support your answer by using an example to demonstrate the difference.

Net profit is:

Which of the following items do not appear in the statement of changes in equity?

A single statement of comprehensive income:

A single statement of comprehensive income reports which of the following?

You are inspecting the statement of comprehensive income of a company. It reports a profit of $75 800. From this information, you can conclude that:

At the end of an accounting period, the amount of net profit earned by a company is transferred to the balance sheet and reported under which one of the following categories?

Introduction to Accounting

Types of Organisations and the Financial Reporting Framework

Ethics and Corporate Governance

Wealth and the Measurement of Profit

Presentation of Financial Position and the Worksheet

Presentation of Cash Flows

Accounting for Selected Assets

Liabilities and Sources of Financing

Financial Statement Analysis

Worksheet to Debits and Credits

An Introduction to Management Accounting: a Strategic Perspective

Performance Measurement and the Balanced Scorecard

Costs and Cost Behaviour

Budgets

Cost-Volume-Profit Analysis

Accounting for Decision Making: With and Without Resource Constraints

Capital Investment Decisions

Filters