Question 1

When an organisation purchases a machine for cash, which of the following is true?

Accepted Answer

A)  Total assets increase. 
B)  Total liabilities decrease. 
C)  Total expenses increase. 
D)  Total equity stays the same. 
A)  Total assets increase. 
B)  Total liabilities decrease. 
C)  Total expenses increase. 
D)  Total equity stays the same. D

Question 2

During an accounting period, a transaction occurred involving the purchase of equipment for $9000. On reviewing the worksheet, it was discovered that the transaction had not been recorded. The most likely reason that the omission was picked up is:

Accepted Answer

A)  the worksheet did not balance by $9000. 
B)  the imbalance was divisible by 9. 
C)  the omission was picked up by a diligent bookkeeper. 
D)  the worksheet did not balance by $4500. 
A)  the worksheet did not balance by $9000. 
B)  the imbalance was divisible by 9. 
C)  the omission was picked up by a diligent bookkeeper. 
D)  the worksheet did not balance by $4500. C

Question 3

The historical cost assumption requires that an asset that is used for personal use and not for business use should be recorded at cost in the business balance sheet.

Accepted Answer

A) True 
 B)False  False

Question 4

An entity's owners' equity is one-third of its total liabilities. Its assets total $200 000. What is the amount of its owners' equity?

Accepted Answer

A)  $50 000 
B)  $66 667 
C)  $150 000 
D)  $300 000 
A)  $50 000 
B)  $66 667 
C)  $150 000 
D)  $300 000

Question 5

Which of the following statements is incorrect?

Accepted Answer

A)  A balance sheet reports assets, liabilities and equity at a point in time. 
B)  The exclusion of an asset from the business balance sheet because it is for private use is due to the going concern assumption. 
C)  The average period between the purchase of merchandise and the conversion of this merchandise back into cash is the operating cycle. 
D)  In order for a resource to be classified as an asset of the entity, the benefits must accrue to the entity. 
A)  A balance sheet reports assets, liabilities and equity at a point in time. 
B)  The exclusion of an asset from the business balance sheet because it is for private use is due to the going concern assumption. 
C)  The average period between the purchase of merchandise and the conversion of this merchandise back into cash is the operating cycle. 
D)  In order for a resource to be classified as an asset of the entity, the benefits must accrue to the entity.

Question 6

A double-entry error will cause an imbalance in the worksheet which is twice the amount recorded.

Accepted Answer

A) True 
 B)False

Question 7

What role does the business entity principle play in accounting for the transactions, assets and liabilities of an entity?

Accepted Answer

The business entity principle holds that

Question 8

In June 2002 WorldCom, a US telecommunications firm, announced that it had misreported financial information in previous accounting periods - to the sum of USD $3.9 billion - by recording routine operating expenses as capital expenditure.
Discuss

Accepted Answer

The answer of In June 2002 WorldCom, a US telecommunications...

Question 9

The purchase of an asset for cash will:

Accepted Answer

A)  not affect total assets, liabilities, and owners' equity. 
B)  increase total assets and increase total liabilities. 
C)  increase total assets and increase total owners' equity. 
D)  increase total assets. 
A)  not affect total assets, liabilities, and owners' equity. 
B)  increase total assets and increase total liabilities. 
C)  increase total assets and increase total owners' equity. 
D)  increase total assets.

Question 10

The balance sheet includes information on the resources, financial structure, solvency and adaptability of a reporting entity. Discuss.

Accepted Answer

Issues for discussion
Balance

Question 11

Which one of the following statements is generally true regarding the relationship between the items mentioned?

Accepted Answer

A)  An increase in assets will always cause an increase in owners' equity. 
B)  A decrease in assets will always cause a decrease in liabilities. 
C)  An increase in revenues normally increases owners' equity. 
D)  Expenses decrease revenues. 
A)  An increase in assets will always cause an increase in owners' equity. 
B)  A decrease in assets will always cause a decrease in liabilities. 
C)  An increase in revenues normally increases owners' equity. 
D)  Expenses decrease revenues.

Question 12

What are the three components of the balance sheet? Briefly discuss each.

Accepted Answer

The three components of the balance shee

Question 13

The business entity assumption requires that an asset that is used for personal use and not for business use should not be recorded in the business balance sheet.

Accepted Answer

A) True 
 B)False

Question 14

The accounting records of Margo Catering show the following balances at 31 December:   Total assets as of 31 December are:

Accepted Answer

A)  $3000 
B)  $3400 
C)  $4400 
D)  $5300 
A)  $3000 
B)  $3400 
C)  $4400 
D)  $5300

Question 15

The future benefits of a non-current asset are difficult to determine, due to the uncertainty of measuring the unexpired benefit.

Accepted Answer

A) True 
 B)False

Question 16

The worksheet illustrates the basics underlying double-entry bookkeeping.

Accepted Answer

A) True 
 B)False

Question 17

A balance sheet is a statement that shows the resources controlled and the obligations owed by an entity:

Accepted Answer

A)  in the previous financial year. 
B)  for the financial year. 
C)  for the accounting period. 
D)  at a point in time. 
A)  in the previous financial year. 
B)  for the financial year. 
C)  for the accounting period. 
D)  at a point in time.

Question 18

Which of the following is classified as a liability?

Accepted Answer

A)  Wages expense 
B)  Accounts payable 
C)  Owners' drawings 
D)  Retained profits 
A)  Wages expense 
B)  Accounts payable 
C)  Owners' drawings 
D)  Retained profits

Question 19

The 'net assets' of a business is equal to current assets plus current liabilities.

Accepted Answer

A) True 
 B)False

Question 20

Identify the impact of the following events on the balance sheet equation.
a. The owner pays $3000 into the business bank account.
b. The business acquires equipment for $8000, paying a $3000 deposit, with the balance payable in 90 days.
c. The business provides services for $850 cash.
d. Paid salaries and wages $2300.
e. The business provides a potential customer with a quote of $900 for the provision of services.
f. The business purchases supplies for $385 cash.

Accepted Answer

a: increase assets (cash); increases own

When an organisation purchases a machine for cash, which of the following is true?

During an accounting period, a transaction occurred involving the purchase of equipment for $9000. On reviewing the worksheet, it was discovered that the transaction had not been recorded. The most likely reason that the omission was picked up is:

The historical cost assumption requires that an asset that is used for personal use and not for business use should be recorded at cost in the business balance sheet.

An entity's owners' equity is one-third of its total liabilities. Its assets total $200 000. What is the amount of its owners' equity?

Which of the following statements is incorrect?

A double-entry error will cause an imbalance in the worksheet which is twice the amount recorded.

What role does the business entity principle play in accounting for the transactions, assets and liabilities of an entity?

In June 2002 WorldCom, a US telecommunications firm, announced that it had misreported financial information in previous accounting periods - to the sum of USD $3.9 billion - by recording routine operating expenses as capital expenditure. Discuss

The purchase of an asset for cash will:

The balance sheet includes information on the resources, financial structure, solvency and adaptability of a reporting entity. Discuss.

Which one of the following statements is generally true regarding the relationship between the items mentioned?

What are the three components of the balance sheet? Briefly discuss each.

The business entity assumption requires that an asset that is used for personal use and not for business use should not be recorded in the business balance sheet.

The accounting records of Margo Catering show the following balances at 31 December: Total assets as of 31 December are:

The future benefits of a non-current asset are difficult to determine, due to the uncertainty of measuring the unexpired benefit.

The worksheet illustrates the basics underlying double-entry bookkeeping.

A balance sheet is a statement that shows the resources controlled and the obligations owed by an entity:

Which of the following is classified as a liability?

The 'net assets' of a business is equal to current assets plus current liabilities.

Introduction to Accounting

Types of Organisations and the Financial Reporting Framework

Ethics and Corporate Governance

Wealth and the Measurement of Profit

Presentation of Financial Performance 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 5: Presentation of Financial Position and the Worksheet

When an organisation purchases a machine for cash, which of the following is true?

During an accounting period, a transaction occurred involving the purchase of equipment for $9000. On reviewing the worksheet, it was discovered that the transaction had not been recorded. The most likely reason that the omission was picked up is:

The historical cost assumption requires that an asset that is used for personal use and not for business use should be recorded at cost in the business balance sheet.

An entity's owners' equity is one-third of its total liabilities. Its assets total $200 000. What is the amount of its owners' equity?

Which of the following statements is incorrect?

A double-entry error will cause an imbalance in the worksheet which is twice the amount recorded.

What role does the business entity principle play in accounting for the transactions, assets and liabilities of an entity?

In June 2002 WorldCom, a US telecommunications firm, announced that it had misreported financial information in previous accounting periods - to the sum of USD $3.9 billion - by recording routine operating expenses as capital expenditure. Discuss

The purchase of an asset for cash will:

The balance sheet includes information on the resources, financial structure, solvency and adaptability of a reporting entity. Discuss.

Which one of the following statements is generally true regarding the relationship between the items mentioned?

What are the three components of the balance sheet? Briefly discuss each.

The business entity assumption requires that an asset that is used for personal use and not for business use should not be recorded in the business balance sheet.

The accounting records of Margo Catering show the following balances at 31 December: Total assets as of 31 December are:

The future benefits of a non-current asset are difficult to determine, due to the uncertainty of measuring the unexpired benefit.

The worksheet illustrates the basics underlying double-entry bookkeeping.

A balance sheet is a statement that shows the resources controlled and the obligations owed by an entity:

Which of the following is classified as a liability?

The 'net assets' of a business is equal to current assets plus current liabilities.

Introduction to Accounting

Types of Organisations and the Financial Reporting Framework

Ethics and Corporate Governance

Wealth and the Measurement of Profit

Presentation of Financial Performance 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