Question 1

The accounting convention that means only those transactions that are capable of being expressed in monetary terms are recorded,is the:

Accepted Answer

A)  money measurement convention. 
B)  historical cost convention. 
C)  conservatism convention. 
D)  reliability convention. 
A)  money measurement convention. 
B)  historical cost convention. 
C)  conservatism convention. 
D)  reliability convention. A

Question 2

Application of the (prudence)conservatism assumption can produce:

Accepted Answer

A)  higher profits. 
B)  higher values for assets. 
C)  higher amounts for liabilities. 
D)  lower amounts for expenses. 
A)  higher profits. 
B)  higher values for assets. 
C)  higher amounts for liabilities. 
D)  lower amounts for expenses. C

Question 3

Which of the following statements in relation to non-current assets is untrue?

Accepted Answer

A)  They are held for sale or consumption. 
B)  They may be tangible or intangible. 
C)  May vary in classification according to the nature of the business. 
D)  They are generally held for generating wealth. 
A)  They are held for sale or consumption. 
B)  They may be tangible or intangible. 
C)  May vary in classification according to the nature of the business. 
D)  They are generally held for generating wealth. A

Question 4

What is the effect on the statement of financial position when the business buys a car for $25,000,paying a deposit of $5,000 and promising to pay the balance within 60 days?

Accepted Answer

A)  Increase asset vehicle by $5,000; decrease asset bank by $5,000. 
B)  Increase asset vehicle by $20,000; increase liability accounts payable by $20,000. 
C)  Increase asset vehicle by $25,000; decrease asset bank by $5,000; increase liability accounts payable by $20,000. 
D)  None of the above. 
A)  Increase asset vehicle by $5,000; decrease asset bank by $5,000. 
B)  Increase asset vehicle by $20,000; increase liability accounts payable by $20,000. 
C)  Increase asset vehicle by $25,000; decrease asset bank by $5,000; increase liability accounts payable by $20,000. 
D)  None of the above.

Question 5

If current assets are $15,200,current liabilities are $3,100,non-current liabilities are $45,000 and equity is $60,000,non-current assets are:

Accepted Answer

A)  $108,100 
B)  $48,100 
C)  $92,900 
D)  $105,000 
A)  $108,100 
B)  $48,100 
C)  $92,900 
D)  $105,000

Question 6

What are the possible approaches to presenting a narrative statement of financial position?

Accepted Answer

A)  Entity. 
B)  Proprietary. 
C)  Horizontal. 
D)  Both A and B. 
A)  Entity. 
B)  Proprietary. 
C)  Horizontal. 
D)  Both A and B.

Question 7

Despite the uncertainty in relation to the exact amount to be paid and the actual timing of the payment,which of the following is still regarded as a liability?

Accepted Answer

A)  Deposit on services received in advance. 
B)  Provision for employee bonuses. 
C)  Accounts payable. 
D)  Money borrowed from an associate company. 
A)  Deposit on services received in advance. 
B)  Provision for employee bonuses. 
C)  Accounts payable. 
D)  Money borrowed from an associate company.

Question 8

You are provided with the statement of financial position at the beginning of the period for a firm of accountants.You are also given four of the transactions that have occurred during the period.
REQUIRED:
a)Complete the table to show how each transaction affects the accounts shown.
b)Calculate the figures in the final column of the table from which the statement of financial position at the end of the period can be prepared.
 $\begin{array}{|l|l|l|l|l|l|l|}
\hline  &\text { Beginning balance}&\text { Transaction }1&\text { Transaction }2&\text { Transaction }3&\text { Transaction }4&\text { Ending balance}\&\text { Sheet }&&&&&\text { Sheet }\\hline \text { Assets } & \
\$ & \$& \$& \$& \$& \$ \\hline \text { Cash } & 10,000 \
\hline \text { accounts } & \
\text { receivable } & 5,500 \\hline \text { Plant \& } & \
\text { Equip } & \underline{50,000} \\hline &65,000\\hline \text { Liabilities } & \
\hline \text { accounts } & \
\text { payable } & 6,000 \\hline \text { Equity } & \underline{59,500} \
\hline & 65,500 \
\hline 
\end{array}$ 
Transactions for the period:
1.Collected $3,000 from debtors
2.Paid accounts payable $6,000
3.Owner paid in additional capital contribution of $10,000
4.Purchased on credit $2,000 of additional plant.

Accepted Answer

The answer of You are provided with the statement of...

Question 9

What is the effect on the statement of financial position when the business has cash sales of $12,000 of goods that were originally purchased for $8,000?

Accepted Answer

A)  Increase asset bank $12,000; increase equity $12,000. 
B)  Increase asset bank $12,000; decrease asset inventory $8,000; increase equity $4,000. 
C)  Increase asset bank $4,000; increase equity $4,000. 
D)  None of the above. 
A)  Increase asset bank $12,000; increase equity $12,000. 
B)  Increase asset bank $12,000; decrease asset inventory $8,000; increase equity $4,000. 
C)  Increase asset bank $4,000; increase equity $4,000. 
D)  None of the above.

Question 10

What is the effect on the statement of financial position when the business buys inventory on credit?

Accepted Answer

A)  Increase asset inventory; increase liability creditor. 
B)  Increase asset inventory; increase equity. 
C)  Decrease asset inventory; decrease liability creditor. 
D)  Decrease asset inventory; increase liability creditor. 
A)  Increase asset inventory; increase liability creditor. 
B)  Increase asset inventory; increase equity. 
C)  Decrease asset inventory; decrease liability creditor. 
D)  Decrease asset inventory; increase liability creditor.

Question 11

Calculate the profit for the year if capital at the beginning is $35,000,capital at the end is $40,000 and during the year the owner withdrew $15,000.

Accepted Answer

A)  $5,000. 
B)  $15,000. 
C)  $10,000. 
D)  $20,000. 
A)  $5,000. 
B)  $15,000. 
C)  $10,000. 
D)  $20,000.

Question 12

Non-current liabilities represent:

Accepted Answer

A)  amounts due to the owner of the business which are not payable within 12 months. 
B)  amounts due to outsiders which are not payable within 12 months. 
C)  amounts due and payable to outsiders within 12 months. 
D)  Both A and B. 
A)  amounts due to the owner of the business which are not payable within 12 months. 
B)  amounts due to outsiders which are not payable within 12 months. 
C)  amounts due and payable to outsiders within 12 months. 
D)  Both A and B.

Question 13

Calculate equity.Cash at bank $3,400; inventory $1,200; accounts receivable $2,500; accounts payable $1,700; loan from ABC bank $3,500.

Accepted Answer

A)  $8,900. 
B)  $5,300. 
C)  $1,900. 
D)  $12,300. 
A)  $8,900. 
B)  $5,300. 
C)  $1,900. 
D)  $12,300.

Question 14

Under the accounting standards,which alternative measure of value is not permitted to be used for valuing assets?

Accepted Answer

A)  Historical cost. 
B)  Net realisable value. 
C)  Fair value. 
D)  None of the above. i.e., all are permitted methods in some circumstances. 
A)  Historical cost. 
B)  Net realisable value. 
C)  Fair value. 
D)  None of the above. i.e., all are permitted methods in some circumstances.

Question 15

The accounting convention that states that every transaction has at least two effects on the accounting equation,so that after the transaction is processed,the equation remains in balance is the:

Accepted Answer

A)  going concern/continuity convention. 
B)  objectivity/reliability convention. 
C)  conservatism/prudence convention. 
D)  dual aspect convention. 
A)  going concern/continuity convention. 
B)  objectivity/reliability convention. 
C)  conservatism/prudence convention. 
D)  dual aspect convention.

Question 16

Published statement of financial positions in Australia are mostly presented in which format?

Accepted Answer

A)  Horizontal format. 
B)  Parallel format. 
C)  Vertical format. 
D)  'T' format. 
A)  Horizontal format. 
B)  Parallel format. 
C)  Vertical format. 
D)  'T' format.

Question 17

The accounting assumption that a business will continue to operate into the foreseeable future is the:

Accepted Answer

A)  entity assumption. 
B)  going concern assumption. 
C)  accounting period assumption. 
D)  historical cost assumption. 
A)  entity assumption. 
B)  going concern assumption. 
C)  accounting period assumption. 
D)  historical cost assumption.

Question 18

Identify the current liability.

Accepted Answer

A)  Wages owing. 
B)  Loan from B Buy (due in 4 months). 
C)  Bill payable (due in 2 years). 
D)  Both A and B. 
A)  Wages owing. 
B)  Loan from B Buy (due in 4 months). 
C)  Bill payable (due in 2 years). 
D)  Both A and B.

Question 19

Which of the following is regarded as a tangible asset?

Accepted Answer

A)  Franchise. 
B)  Goodwill. 
C)  Long-term investment. 
D)  Copyright. 
A)  Franchise. 
B)  Goodwill. 
C)  Long-term investment. 
D)  Copyright.

Question 20

'A present obligation of an entity arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits,' is the generally acceptable definition of:

Accepted Answer

A)  an asset. 
B)  equity. 
C)  a liability. 
D)  an expense. 
A)  an asset. 
B)  equity. 
C)  a liability. 
D)  an expense.

The accounting convention that means only those transactions that are capable of being expressed in monetary terms are recorded,is the:

Application of the (prudence)conservatism assumption can produce:

Which of the following statements in relation to non-current assets is untrue?

What is the effect on the statement of financial position when the business buys a car for $25,000,paying a deposit of $5,000 and promising to pay the balance within 60 days?

If current assets are $15,200,current liabilities are $3,100,non-current liabilities are $45,000 and equity is $60,000,non-current assets are:

What are the possible approaches to presenting a narrative statement of financial position?

Despite the uncertainty in relation to the exact amount to be paid and the actual timing of the payment,which of the following is still regarded as a liability?

What is the effect on the statement of financial position when the business has cash sales of $12,000 of goods that were originally purchased for $8,000?

What is the effect on the statement of financial position when the business buys inventory on credit?

Calculate the profit for the year if capital at the beginning is $35,000,capital at the end is $40,000 and during the year the owner withdrew $15,000.

Non-current liabilities represent:

Calculate equity.Cash at bank $3,400; inventory $1,200; accounts receivable $2,500; accounts payable $1,700; loan from ABC bank $3,500.

Under the accounting standards,which alternative measure of value is not permitted to be used for valuing assets?

The accounting convention that states that every transaction has at least two effects on the accounting equation,so that after the transaction is processed,the equation remains in balance is the:

Published statement of financial positions in Australia are mostly presented in which format?

The accounting assumption that a business will continue to operate into the foreseeable future is the:

Identify the current liability.

Which of the following is regarded as a tangible asset?

'A present obligation of an entity arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits,' is the generally acceptable definition of:

Introduction to Accounting

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

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Exam 2: Measuring and Reporting Financial Position

The accounting convention that means only those transactions that are capable of being expressed in monetary terms are recorded,is the:

Application of the (prudence)conservatism assumption can produce:

Which of the following statements in relation to non-current assets is untrue?

What is the effect on the statement of financial position when the business buys a car for $25,000,paying a deposit of $5,000 and promising to pay the balance within 60 days?

If current assets are $15,200,current liabilities are $3,100,non-current liabilities are $45,000 and equity is $60,000,non-current assets are:

What are the possible approaches to presenting a narrative statement of financial position?

Despite the uncertainty in relation to the exact amount to be paid and the actual timing of the payment,which of the following is still regarded as a liability?

What is the effect on the statement of financial position when the business has cash sales of $12,000 of goods that were originally purchased for $8,000?

What is the effect on the statement of financial position when the business buys inventory on credit?

Calculate the profit for the year if capital at the beginning is $35,000,capital at the end is $40,000 and during the year the owner withdrew $15,000.

Non-current liabilities represent:

Calculate equity.Cash at bank $3,400; inventory $1,200; accounts receivable $2,500; accounts payable $1,700; loan from ABC bank $3,500.

Under the accounting standards,which alternative measure of value is not permitted to be used for valuing assets?

The accounting convention that states that every transaction has at least two effects on the accounting equation,so that after the transaction is processed,the equation remains in balance is the:

Published statement of financial positions in Australia are mostly presented in which format?

The accounting assumption that a business will continue to operate into the foreseeable future is the:

Identify the current liability.

Which of the following is regarded as a tangible asset?

'A present obligation of an entity arising from past events,the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits,' is the generally acceptable definition of:

Introduction to Accounting

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters