Question 1

The life of a business is divided into equal periods to determine profit or loss for that period.What assumption/concept underlies this procedure?

Accepted Answer

A)  materiality 
B)  monetary 
C)  accounting period 
D)  accounting entity. 
A)  materiality 
B)  monetary 
C)  accounting period 
D)  accounting entity.

Question 2

Which of the following statements about accrual accounting is NOT true?

Accepted Answer

A)  The impact of transactions on the financial statements is recognised when the cash is received or paid. 
B)  The financial statements include estimates. 
C)  Judgements made by accountants affect profit. 
D)  Transactions are recognised at the time when revenue and expenses occur. 
A)  The impact of transactions on the financial statements is recognised when the cash is received or paid. 
B)  The financial statements include estimates. 
C)  Judgements made by accountants affect profit. 
D)  Transactions are recognised at the time when revenue and expenses occur.

Question 3

Assets are initially recorded at cost.What assumption/concept underlies this procedure?

Accepted Answer

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

Question 4

Which of the following statements about shareholders' equity is NOT true?

Accepted Answer

A)  Shareholders' equity is the excess of assets over liabilities. 
B)  Shareholders' equity consists of two main elements: share capital and retained profits. 
C)  Shareholders' equity is a residual claim of the shareholders on the assets of the organisation. 
D)  Shareholders' equity is the amount shareholders will receive in dividends in the future. 
A)  Shareholders' equity is the excess of assets over liabilities. 
B)  Shareholders' equity consists of two main elements: share capital and retained profits. 
C)  Shareholders' equity is a residual claim of the shareholders on the assets of the organisation. 
D)  Shareholders' equity is the amount shareholders will receive in dividends in the future.

Question 5

Which of the following is NOT an asset?

Accepted Answer

A)  marketable securities 
B)  accounts receivable 
C)  provisions for employee entitlements 
D)  inventory. 
A)  marketable securities 
B)  accounts receivable 
C)  provisions for employee entitlements 
D)  inventory.

Question 6

A user's main demand is for credible periodic reporting of an enterprise's financial position and performance.Credible means:

Accepted Answer

A)  100% accurate 
B)  easily understandable by users of financial statements 
C)  sufficiently trustworthy and competently prepared for it to be used to make decisions 
D)  relevant to the needs of decision-makers. 
A)  100% accurate 
B)  easily understandable by users of financial statements 
C)  sufficiently trustworthy and competently prepared for it to be used to make decisions 
D)  relevant to the needs of decision-makers.

Question 7

Which type of information would be of most interest to trade creditors?

Accepted Answer

A)  dividends declared 
B)  ability to pay debts 
C)  pollution of waterways adjacent to the firm's factory 
D)  continuity of orders for the firm's products. 
A)  dividends declared 
B)  ability to pay debts 
C)  pollution of waterways adjacent to the firm's factory 
D)  continuity of orders for the firm's products.

Question 8

Use the information given below to answer the following questions:
During 2012, a company makes credit sales of $600 000, of which $350 000 is collected at year-end. It pays $220 000 in expenses and owes $20 000 for electricity used during 2012.
-Profit according to accrual accounting is:

Accepted Answer

A)  $130 000 
B)  $380 000 
C)  $360 000 
D)  $710 000. 
A)  $130 000 
B)  $380 000 
C)  $360 000 
D)  $710 000.

Question 9

Which of the following may be a liability of a business enterprise?

Accepted Answer

A)  share capital 
B)  wages payable 
C)  retained profits 
D)  marketable security. 
A)  share capital 
B)  wages payable 
C)  retained profits 
D)  marketable security.

Question 10

Use the information given below to answer the following questions:
LPR is a company that commenced business on 1 January 2012. Below are the balances in the 30 June 2012 financial statements.
$$\begin{array} { l r } 
&\$\
\text { Cash } & 2000 \
\text { Share capital } & 12000 \
\text { Accounts receivable } & 6000 \
\text { Accounts payable } & 4000 \
\text { Loan payable } & 14000 \
\text { Land } & 20000 \
\text { Inventory } & 4000 \
\text { Cost of goods sold } & 3000 \
\text { Wages expense } & 5000 \
\text { Sales } & 10000
\end{array}$$

-What is the balance of liabilities?

Accepted Answer

A)  $18 000 
B)  $30 000 
C)  $20 000 
D)  $21 000. 
A)  $18 000 
B)  $30 000 
C)  $20 000 
D)  $21 000.

Question 11

Which type of information would be of most interest to shareholders?

Accepted Answer

A)  profitability 
B)  long-term financial stability 
C)  pollution of waterways adjacent to the firm's factory 
D)  continuity of orders for the firm's products. 
A)  profitability 
B)  long-term financial stability 
C)  pollution of waterways adjacent to the firm's factory 
D)  continuity of orders for the firm's products.

Question 12

Which of the following statements is NOT true?

Accepted Answer

A)  Judgements need to be made in determining profit. 
B)  Attempts are made to measure incomplete transactions. 
C)  The impact of transactions is recognised when cash is received or paid. 
D)  Estimates are made of certain balance sheet items. 
A)  Judgements need to be made in determining profit. 
B)  Attempts are made to measure incomplete transactions. 
C)  The impact of transactions is recognised when cash is received or paid. 
D)  Estimates are made of certain balance sheet items.

Question 13

The holders of bonds maturing in 15 years' time would be most interested in which type of information?

Accepted Answer

A)  proposed expansion of the business 
B)  long-term financial stability 
C)  liquidity 
D)  profitability. 
A)  proposed expansion of the business 
B)  long-term financial stability 
C)  liquidity 
D)  profitability.

Question 14

Which type of information would be of least interest to employees?

Accepted Answer

A)  proposed expansion of the business 
B)  long-term financial stability 
C)  dividends declared 
D)  profitability. 
A)  proposed expansion of the business 
B)  long-term financial stability 
C)  dividends declared 
D)  profitability.

Question 15

Which of the following statements about external company auditors is NOT true?

Accepted Answer

A)  External company auditors provide assurance that the financial statements audited by them contain no mistakes. 
B)  External company auditors cannot credibly audit statements they have prepared. 
C)  External company auditors must be independent. 
D)  All of the above statements are true. 
A)  External company auditors provide assurance that the financial statements audited by them contain no mistakes. 
B)  External company auditors cannot credibly audit statements they have prepared. 
C)  External company auditors must be independent. 
D)  All of the above statements are true.

Question 16

Which of the following statements about auditing is NOT true?

Accepted Answer

A)  Auditing arose because users demanded some assurance that managers' reports on their performance were reliable. 
B)  Auditors verify that the accounts have been prepared accurately. 
C)  The auditing function is usually restricted to members of recognised professional accounting bodies. 
D)  When professional accountants prepare financial statements,they are acting as auditors. 
A)  Auditing arose because users demanded some assurance that managers' reports on their performance were reliable. 
B)  Auditors verify that the accounts have been prepared accurately. 
C)  The auditing function is usually restricted to members of recognised professional accounting bodies. 
D)  When professional accountants prepare financial statements,they are acting as auditors.

Question 17

Use the information given below to answer the following questions:
$$\begin{array} { l r } 
&\$\
\text { Cash sales } & 20000 \
\text { Credit sales } & 60000 \
\text { Cash received from accounts receivable } & 42000 \
\text { Wages paid } & 10000 \
\text { Wages owing at year-end } & 8000
\end{array}$$
-What is the cash flow from operations for 2012?

Accepted Answer

A)  $52 000 
B)  $62 000 
C)  $70 000 
D)  $104 000. 
A)  $52 000 
B)  $62 000 
C)  $70 000 
D)  $104 000.

Question 18

Which financial statement assumption relates to the procedure where a $200 paper shredder with a 5-year useful life is treated as an expense?

Accepted Answer

A)  monetary 
B)  accounting period 
C)  materiality 
D)  historical cost. 
A)  monetary 
B)  accounting period 
C)  materiality 
D)  historical cost.

Question 19

Which statement about the financial statement assumptions is NOT true?

Accepted Answer

A)  Assets are originally recorded at cost. 
B)  Revenue is recorded when received and expenses are recorded when they are incurred. 
C)  Going concern means that financial statements are prepared on the basis that the business entity will continue operation in the foreseeable future. 
D)  The life of a business is divided into equal periods. 
A)  Assets are originally recorded at cost. 
B)  Revenue is recorded when received and expenses are recorded when they are incurred. 
C)  Going concern means that financial statements are prepared on the basis that the business entity will continue operation in the foreseeable future. 
D)  The life of a business is divided into equal periods.

Question 20

Which of the following statements about an income statement is true?

Accepted Answer

A)  An income statement provides information on an organisation's profitability at a certain point in time. 
B)  An income statement matches revenues earned during a period,against expenses incurred in earning the revenues. 
C)  The expenses may include depreciation. 
D)  For revenue to be included,it is not necessary for cash to have been received. 
A)  An income statement provides information on an organisation's profitability at a certain point in time. 
B)  An income statement matches revenues earned during a period,against expenses incurred in earning the revenues. 
C)  The expenses may include depreciation. 
D)  For revenue to be included,it is not necessary for cash to have been received.

The life of a business is divided into equal periods to determine profit or loss for that period.What assumption/concept underlies this procedure?

Which of the following statements about accrual accounting is NOT true?

Assets are initially recorded at cost.What assumption/concept underlies this procedure?

Which of the following statements about shareholders' equity is NOT true?

Which of the following is NOT an asset?

A user's main demand is for credible periodic reporting of an enterprise's financial position and performance.Credible means:

Which type of information would be of most interest to trade creditors?

Use the information given below to answer the following questions: During 2012, a company makes credit sales of $600 000, of which $350 000 is collected at year-end. It pays $220 000 in expenses and owes $20 000 for electricity used during 2012. -Profit according to accrual accounting is:

Which of the following may be a liability of a business enterprise?

Which type of information would be of most interest to shareholders?

Which of the following statements is NOT true?

The holders of bonds maturing in 15 years' time would be most interested in which type of information?

Which type of information would be of least interest to employees?

Which of the following statements about external company auditors is NOT true?

Which of the following statements about auditing is NOT true?

Use the information given below to answer the following questions: \ Cash sales 20000 Credit sales 60000 Cash received from accounts receivable 42000 Wages paid 10000 Wages owing at year-end 8000 -What is the cash flow from operations for 2012?

Which financial statement assumption relates to the procedure where a $200 paper shredder with a 5-year useful life is treated as an expense?

Which statement about the financial statement assumptions is NOT true?

Which of the following statements about an income statement is true?

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, accounting Standards and Auditing

Sustainability Reporting

Internal Control and Cash

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Appendix: Special Journals, subsidiary Ledgers and Control Accounts

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Exam 1: Introduction to Financial Accounting

The life of a business is divided into equal periods to determine profit or loss for that period.What assumption/concept underlies this procedure?

Which of the following statements about accrual accounting is NOT true?

Assets are initially recorded at cost.What assumption/concept underlies this procedure?

Which of the following statements about shareholders' equity is NOT true?

Which of the following is NOT an asset?

A user's main demand is for credible periodic reporting of an enterprise's financial position and performance.Credible means:

Which type of information would be of most interest to trade creditors?

Use the information given below to answer the following questions: During 2012, a company makes credit sales of $600 000, of which $350 000 is collected at year-end. It pays $220 000 in expenses and owes $20 000 for electricity used during 2012. -Profit according to accrual accounting is:

Which of the following may be a liability of a business enterprise?

Which type of information would be of most interest to shareholders?

Which of the following statements is NOT true?

The holders of bonds maturing in 15 years' time would be most interested in which type of information?

Which type of information would be of least interest to employees?

Which of the following statements about external company auditors is NOT true?

Which of the following statements about auditing is NOT true?

Use the information given below to answer the following questions: \ Cash sales 20000 Credit sales 60000 Cash received from accounts receivable 42000 Wages paid 10000 Wages owing at year-end 8000 -What is the cash flow from operations for 2012?

Which financial statement assumption relates to the procedure where a $200 paper shredder with a 5-year useful life is treated as an expense?

Which statement about the financial statement assumptions is NOT true?

Which of the following statements about an income statement is true?

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, accounting Standards and Auditing

Sustainability Reporting

Internal Control and Cash

Inventory

Noncurrent Assets

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Appendix: Special Journals, subsidiary Ledgers and Control Accounts

Filters