Exam 3: Measuring and Reporting Financial Performance

The accounting statement which is specifically designed to measure and report on how much profit an entity has made is:

The accounting principle that requires the same depreciation method or inventory valuation method to be used over consecutive accounting periods is:

The amount of interest paid in cash for the period May to August is $1,000.However,the financial reports show interest expense for the period as $750.The difference is recorded in the statement of financial position as:

At year-end,it was forgotten to accrue a $2,000 expense.This will result in an:

Cost of sales is a major expense for a retailer.Cost of sales is:

LTT had stock on hand on the 1st January 2014 of 100 heaters valued at $50 each. The following transactions occurred during January: Jan 7 $\quad$ bought 110 heaters at $\$ 52$ each 15 $\quad$$\quad$ sold 60 heaters at $\$ 80$ each (selling price) 30 $\quad$$\quad$ sold 70 heaters at $\$ 80$ each (selling price) REQUIRED: a)Calculate cost of sales and closing stock at the end of the month from the above information using: i)the FIFO method of valuation, ii)the LIFO method of valuation,and iii)the average cost method of valuation. b)Prepare a statement of comprehensive income for the month ended 31 January under each method assuming no stock loss (use a columnar approach). c)i)Which method produces the most favourable profit result for LTT? ii)Comment on why the differences in profit have occurred under the 3 methods.

Which statement is not correct?

Which type of business would call its main source of income sales?

Under the accrual accounting approach,at which stage of the operating cycle would income be recognised by a timber yard from the sale of timber on credit?

In relation to the recognition and realisation of income,which statement is correct?

Which depreciation method best matches the pattern by which 1.a building and 2.a motor vehicle,contribute to income?

Under accrual accounting,income is:

If equity at the beginning of the period is $35,000 and at the end of the period is $56,000 and $20,000 is withdrawn by the owner during the period,calculate profit.(Use the stock approach.)

Under accrual accounting,profit is measured as:

In practice,under accrual accounting,most income is recognised:

The cost associated with the purchase of a new machine that will be included in the cost of the machine is:

How are accrued expenses classified in the statement of financial position?

To allow for debts that might prove bad in the future,a business will recognise as an expense in the income statement:

In calculating depreciation,the life of an asset refers to its:

The major purpose of charging depreciation is: