Question 1

Which of the following statements regarding trade receivables is NOT true?

Accepted Answer

A)  Trade receivables owe money to the business. 
B)  Trade receivables have supplied goods to the business. 
C)  Trade receivables are customers of the business who owe for the goods they have received. 
D)  Trade receivables are treated as current assets. 
A)  Trade receivables owe money to the business. 
B)  Trade receivables have supplied goods to the business. 
C)  Trade receivables are customers of the business who owe for the goods they have received. 
D)  Trade receivables are treated as current assets. B

Question 2

Which of the following is not a revenue expense?

Accepted Answer

A)  Drawings 
B)  Rent and rates. 
C)  Salaries. 
D)  Advertising. 
A)  Drawings 
B)  Rent and rates. 
C)  Salaries. 
D)  Advertising. A

Question 3

Which of the following payments is capital expenditure?

Accepted Answer

A)  Money put into the business by the owner. 
B)  Purchase of a motor van. 
C)  Cost of servicing the motor van. 
D)  Cost of hiring a motor van. 
A)  Money put into the business by the owner. 
B)  Purchase of a motor van. 
C)  Cost of servicing the motor van. 
D)  Cost of hiring a motor van. B

Question 4

Ben started trading on 1 January. His trial balance at 31 December, the end of his first year of trading is given below.
  If the closing inventory at 31 December was £5,000 and depreciation is to be ignored, which one of the following is true?

Accepted Answer

A)  The gross profit will be £31,500 and the net profit will be £25,000. 
B)  The gross profit will be £36,000 and the net profit will be £9,000. 
C)  The gross profit will be £31,000 and the net profit will be £3,000. 
D)  The gross profit will be £36,000 and the net profit will be £3,000. 
A)  The gross profit will be £31,500 and the net profit will be £25,000. 
B)  The gross profit will be £36,000 and the net profit will be £9,000. 
C)  The gross profit will be £31,000 and the net profit will be £3,000. 
D)  The gross profit will be £36,000 and the net profit will be £3,000.

Question 5

Kate sells candles at £5 each and each one costs her £2. During June she bought 300 candles and sold 220 candles. Her expenses amounted to £130 for the month. Kate's profit for June was:

Accepted Answer

A)  £930. 
B)  £660. 
C)  £770. 
D)  £530. 
A)  £930. 
B)  £660. 
C)  £770. 
D)  £530.

Question 6

If the purchase of shop fitting for £25,000 is included in the cost of sales, then:

Accepted Answer

A)  Gross profit ONLY will be understated by £25,000. 
B)  Gross profit ONLY will be overstated by £25,000. 
C)  Net profit ONLY will be understated by £25,000. 
D)  Both gross profit and net profit will be understated by £25,000. 
A)  Gross profit ONLY will be understated by £25,000. 
B)  Gross profit ONLY will be overstated by £25,000. 
C)  Net profit ONLY will be understated by £25,000. 
D)  Both gross profit and net profit will be understated by £25,000.

Question 7

In accounting what is meant by the term 'purchases'?

Accepted Answer

A)  All items bought. 
B)  All good purchased and paid for. 
C)  All good bought for re-sale. 
D)  All goods held in inventory. 
A)  All items bought. 
B)  All good purchased and paid for. 
C)  All good bought for re-sale. 
D)  All goods held in inventory.

Question 8

Which of the following is prepared to determine a business's net profit or net loss for the year?

Accepted Answer

A)  A trial balance. 
B)  A statement of financial position. 
C)  A statement of cash flows. 
D)  A statement of profit or loss. 
A)  A trial balance. 
B)  A statement of financial position. 
C)  A statement of cash flows. 
D)  A statement of profit or loss.

Question 9

Shirley has made the following predictions for her business for the first six months of trading to 30 June:
Sales in Jan, Feb and March = £30,000 per month.
Sales in Apr, May and June = £45,000 per month.
Sales will be on one month's credit.
The trade receivables figure as of 30 June will be:

Accepted Answer

A)  £NIL 
B)  £30,000. 
C)  £45,000. 
D)  £90,000. 
A)  £NIL 
B)  £30,000. 
C)  £45,000. 
D)  £90,000.

Question 10

During the year ended 31 December, the business made sales of £35,000 and purchases of £20,000. Inventory at the beginning of the year was valued at £6,000 and, at 31 December, inventory was valued at £3,500. The gross profit for the year was:

Accepted Answer

A)  £17,500. 
B)  £24,500. 
C)  £12,500. 
D)  £5,500. 
A)  £17,500. 
B)  £24,500. 
C)  £12,500. 
D)  £5,500.

Which of the following statements regarding trade receivables is NOT true?

Which of the following is not a revenue expense?

Which of the following payments is capital expenditure?

Ben started trading on 1 January. His trial balance at 31 December, the end of his first year of trading is given below. If the closing inventory at 31 December was £5,000 and depreciation is to be ignored, which one of the following is true?

Kate sells candles at £5 each and each one costs her £2. During June she bought 300 candles and sold 220 candles. Her expenses amounted to £130 for the month. Kate's profit for June was:

If the purchase of shop fitting for £25,000 is included in the cost of sales, then:

In accounting what is meant by the term 'purchases'?

Which of the following is prepared to determine a business's net profit or net loss for the year?

Shirley has made the following predictions for her business for the first six months of trading to 30 June: Sales in Jan, Feb and March = £30,000 per month. Sales in Apr, May and June = £45,000 per month. Sales will be on one month's credit. The trade receivables figure as of 30 June will be:

During the year ended 31 December, the business made sales of £35,000 and purchases of £20,000. Inventory at the beginning of the year was valued at £6,000 and, at 31 December, inventory was valued at £3,500. The gross profit for the year was:

The Cash Budget

Balancing the Basics

Accounting for Depreciation and Bad Debts

Company Finance

Company Accounts

The Statement of Cash Flows

Interpreting Financial Statements

Capital Structure and Investment Ratios

Costs and Break-Even Analysis

Absorption and Activity-Based Costing

Budgeting

Pricing and Costs

Short-Term Decision Making

Investment Appraisal Techniques

Measuring and Reporting Performance

Double-Entry Bookkeeping I

Double-Entry Bookkeeping II

Filters

Exam 2: Introduction to the Statement of Profit or Loss

Which of the following statements regarding trade receivables is NOT true?

Which of the following is not a revenue expense?

Which of the following payments is capital expenditure?

Ben started trading on 1 January. His trial balance at 31 December, the end of his first year of trading is given below. If the closing inventory at 31 December was £5,000 and depreciation is to be ignored, which one of the following is true?

Kate sells candles at £5 each and each one costs her £2. During June she bought 300 candles and sold 220 candles. Her expenses amounted to £130 for the month. Kate's profit for June was:

If the purchase of shop fitting for £25,000 is included in the cost of sales, then:

In accounting what is meant by the term 'purchases'?

Which of the following is prepared to determine a business's net profit or net loss for the year?

Shirley has made the following predictions for her business for the first six months of trading to 30 June: Sales in Jan, Feb and March = £30,000 per month. Sales in Apr, May and June = £45,000 per month. Sales will be on one month's credit. The trade receivables figure as of 30 June will be:

During the year ended 31 December, the business made sales of £35,000 and purchases of £20,000. Inventory at the beginning of the year was valued at £6,000 and, at 31 December, inventory was valued at £3,500. The gross profit for the year was:

The Cash Budget

Balancing the Basics

Accounting for Depreciation and Bad Debts

Company Finance

Company Accounts

The Statement of Cash Flows

Interpreting Financial Statements

Capital Structure and Investment Ratios

Costs and Break-Even Analysis

Absorption and Activity-Based Costing

Budgeting

Pricing and Costs

Short-Term Decision Making

Investment Appraisal Techniques

Measuring and Reporting Performance

Double-Entry Bookkeeping I

Double-Entry Bookkeeping II

Filters