Question 1

Under the accounting standards which of these is not included in finance costs?

Accepted Answer

A) interest costs 
B) lease finance charges 
C) amortisation of discounts related to borrowing 
D) depreciation expense 
A) interest costs 
B) lease finance charges 
C) amortisation of discounts related to borrowing 
D) depreciation expense D

Question 2

Which of the following must exist before income can be recognised?

Accepted Answer

A) the increase in future economic benefits related to an increase in an asset or a decrease in a liability must have arisen. 
B) the increase in future economic benefits must be able to be measured reliably 
C) all option must exist 
D) income recognition must occur at the same time as the recognition of increases in assets or reductions in liabilities. 
A) the increase in future economic benefits related to an increase in an asset or a decrease in a liability must have arisen. 
B) the increase in future economic benefits must be able to be measured reliably 
C) all option must exist 
D) income recognition must occur at the same time as the recognition of increases in assets or reductions in liabilities. C

Question 3

If a legitimate expense is not accrued at the end of the accounting period,the result will be an

Accepted Answer

A) understatement in liabilities and an overstatement in profit. 
B) overstatement in liabilities and an understatement in profit. 
C) overstatement in assets and profit. 
D) understatement in assets and profit. 
A) understatement in liabilities and an overstatement in profit. 
B) overstatement in liabilities and an understatement in profit. 
C) overstatement in assets and profit. 
D) understatement in assets and profit. A

Question 4

If sales = $45 000,purchases = $25 000,beginning inventory = $10 000 and ending inventory = $8000 gross profit is:

Accepted Answer

A) $18 000 
B) $27 000 
C) $7000 
D) $20 000 
A) $18 000 
B) $27 000 
C) $7000 
D) $20 000

Question 5

The cost of sales is calculated as follows:

Accepted Answer

A) ending inventory + purchases - beginning inventory 
B) purchases - ending inventory - beginning inventory 
C) beginning inventory + purchases - ending inventory 
D) beginning inventory - purchases + ending inventory 
A) ending inventory + purchases - beginning inventory 
B) purchases - ending inventory - beginning inventory 
C) beginning inventory + purchases - ending inventory 
D) beginning inventory - purchases + ending inventory

Question 6

As the accountant of Curtains Pty Ltd,you are preparing the financial statements for the month of August 2013.The assistant accountant gives you the following information regarding some transactions that he thinks may have an impact on the financial statements:
A.On 1st August 2013,Curtains paid $2000 for a 2-month building insurance policy covering the months of August and September
B.The next payment date for employee wages and salaries is 3rd September 2013.
C.Curtains Pty Ltd earned $300 interest income for the month of August that has not been received in cash.
D.The company depreciates its $25 000 equipment over 5 years using the straight-line method.
E.One of the clients paid an $8000 deposit to Curtains on 15 August for some works that will commence in September.The rest of the invoice amounting to $12 000 is paid on 28 September.
F.At the beginning of August,Curtains Pty Ltd paid $6000 for 6 months rent in advance.
$\underline{Required}$
a.As Curtains is using accrual accounting system,determine if the transactions above are accrued income,income received in advance,accrued expense,or prepaid expense.
b.You are trying to explain the difference between cash and accrual accounting to the assistant accountant.Compare how transaction no.1 and 5 above are recorded under cash and accrual accounting during August and September 2013,and show how profits are calculated under both accounting systems.

Accepted Answer

a.Transaction 1 = prepaid expense.
Trans

Question 7

If income earned is not accrued at the end of the accounting period,the result will be an

Accepted Answer

A) Understatement in liabilities and an overstatement in profit 
B) Overstatement in liabilities and an understatement in profit 
C) Overstatement in assets and profit 
D) Understatement in assets and profit 
A) Understatement in liabilities and an overstatement in profit 
B) Overstatement in liabilities and an understatement in profit 
C) Overstatement in assets and profit 
D) Understatement in assets and profit

Question 8

Which of the following is $\bold{not}$ an administrative expense?

Accepted Answer

A) motor vehicle lease payments 
B) salaries and wages 
C) rent 
D) utilities charges and supplies 
A) motor vehicle lease payments 
B) salaries and wages 
C) rent 
D) utilities charges and supplies

Question 9

The income statement

Accepted Answer

A) presents the income and expenses of an entity for a specific period of time. 
B) reports the changes in assets,liabilities and equity over a period of time. 
C) reports the assets,liabilities and equity at a specific point in time. 
D) summarises the change in retained earnings over a specific period of time. 
A) presents the income and expenses of an entity for a specific period of time. 
B) reports the changes in assets,liabilities and equity over a period of time. 
C) reports the assets,liabilities and equity at a specific point in time. 
D) summarises the change in retained earnings over a specific period of time.

Question 10

The statement of __________ in equity is an additional statement to the income statement and the balance sheet that is required to be prepared under the accounting standards.

Accepted Answer

The answer of The statement of __________ in equity is...

Question 11

______________ _____________ _____________ _____________ (GAAP)are acceptable accounting practices which have become documented in the accounting standards.

Accepted Answer

generally

Question 12

A machine is purchased for $130 000.It is estimated that it has a useful life of 8 years and will then be sold for $10 000.Using the straight-line method calculate the amount of depreciation to be charged for each year of useful life.

Accepted Answer

A) $1625 
B) $10 000 
C) $16 250 
D) $15 000 
A) $1625 
B) $10 000 
C) $16 250 
D) $15 000

Question 13

The definition and recognition criteria for income and expenses are specified in the _________________ _________________ For a transaction to be recognised in the income statement the elements must satisfy both the definition and recognition criteria of an income or expense.

Accepted Answer

Conceptual

Question 14

A machine is purchased for $100 000.It is to be depreciated on a reducing balance basis using a rate of 20%.How much will be charged for depreciation expense for year 2 of the machine's life?

Accepted Answer

A) $16 000 
B) $20 000 
C) $15 000 
D) $12 800 
A) $16 000 
B) $20 000 
C) $15 000 
D) $12 800

Question 15

The statement concerning a company's income tax expense that is correct is:

Accepted Answer

A) Income tax expense often differs from the amount of tax paid to the ATO (Australian Taxation Office) 
B) Income tax expense will be the same as the amount of tax paid to the ATO 
C) Income tax expense will only rarely differ from the amount of tax paid to the ATO 
D) Income tax expense is calculated as pre-tax accounting profit multiplied by the company tax rate 
A) Income tax expense often differs from the amount of tax paid to the ATO (Australian Taxation Office) 
B) Income tax expense will be the same as the amount of tax paid to the ATO 
C) Income tax expense will only rarely differ from the amount of tax paid to the ATO 
D) Income tax expense is calculated as pre-tax accounting profit multiplied by the company tax rate

Question 16

An accounting period that is one year in length is called:

Accepted Answer

A) the time period assumption. 
B) a financial year. 
C) an interim period. 
D) an economic year 
A) the time period assumption. 
B) a financial year. 
C) an interim period. 
D) an economic year

Question 17

A transaction recording income earned

Accepted Answer

A) leaves total assets unchanged. 
B) increases assets and decreases equity. 
C) increases assets and equity. 
D) increase assets and liabilities. 
A) leaves total assets unchanged. 
B) increases assets and decreases equity. 
C) increases assets and equity. 
D) increase assets and liabilities.

Question 18

A machine is purchased for $120 000.It is estimated that it has a useful life of 4 years and will then be sold for $8000.Using the straight-line method the carrying value of the machine at the end of the third year of the machine's useful life is:

Accepted Answer

A) $28 000 
B) $42 000 
C) $36 000 
D) $60 000 
A) $28 000 
B) $42 000 
C) $36 000 
D) $60 000

Question 19

If an expense is paid for in cash,then

Accepted Answer

A) liabilities will decrease. 
B) assets will decrease. 
C) assets will increase. 
D) equity will increase. 
A) liabilities will decrease. 
B) assets will decrease. 
C) assets will increase. 
D) equity will increase.

Question 20

If profit after tax and interest is $200 000,interest expense is $25 000 and taxation is $62 000,profit before interest and tax is:

Accepted Answer

A) $67 000 
B) $292 000 
C) $113 000 
D) $287 000 
A) $67 000 
B) $292 000 
C) $113 000 
D) $287 000

Under the accounting standards which of these is not included in finance costs?

Which of the following must exist before income can be recognised?

If a legitimate expense is not accrued at the end of the accounting period,the result will be an

If sales = $45 000,purchases = $25 000,beginning inventory = $10 000 and ending inventory = $8000 gross profit is:

The cost of sales is calculated as follows:

If income earned is not accrued at the end of the accounting period,the result will be an

Which of the following is $\bold{not}$ an administrative expense?

The income statement

The statement of __________ in equity is an additional statement to the income statement and the balance sheet that is required to be prepared under the accounting standards.

________ _ _ _______ (GAAP)are acceptable accounting practices which have become documented in the accounting standards.

A machine is purchased for $130 000.It is estimated that it has a useful life of 8 years and will then be sold for $10 000.Using the straight-line method calculate the amount of depreciation to be charged for each year of useful life.

The definition and recognition criteria for income and expenses are specified in the _ _ For a transaction to be recognised in the income statement the elements must satisfy both the definition and recognition criteria of an income or expense.

A machine is purchased for $100 000.It is to be depreciated on a reducing balance basis using a rate of 20%.How much will be charged for depreciation expense for year 2 of the machine's life?

The statement concerning a company's income tax expense that is correct is:

An accounting period that is one year in length is called:

A transaction recording income earned

A machine is purchased for $120 000.It is estimated that it has a useful life of 4 years and will then be sold for $8000.Using the straight-line method the carrying value of the machine at the end of the third year of the machine's useful life is:

If an expense is paid for in cash,then

If profit after tax and interest is $200 000,interest expense is $25 000 and taxation is $62 000,profit before interest and tax is:

Introduction to Accounting

Business Sustainability

Business Structures

Business Transactions

Balance Sheet

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Budgeting

Cost-Volume-Profit Analysis

Costing and Pricing in an Entity

Capital Investment

Financing the Business

Performance Measurement

Filters

Exam 6: Income Statement and Statement of Changes in Equity

Under the accounting standards which of these is not included in finance costs?

Which of the following must exist before income can be recognised?

If a legitimate expense is not accrued at the end of the accounting period,the result will be an

If sales = $45 000,purchases = $25 000,beginning inventory = $10 000 and ending inventory = $8000 gross profit is:

The cost of sales is calculated as follows:

If income earned is not accrued at the end of the accounting period,the result will be an

Which of the following is not\bold{not}not an administrative expense?

The income statement

The statement of __________ in equity is an additional statement to the income statement and the balance sheet that is required to be prepared under the accounting standards.

______________ _____________ _____________ _____________ (GAAP)are acceptable accounting practices which have become documented in the accounting standards.

A machine is purchased for $130 000.It is estimated that it has a useful life of 8 years and will then be sold for $10 000.Using the straight-line method calculate the amount of depreciation to be charged for each year of useful life.

The definition and recognition criteria for income and expenses are specified in the _________________ _________________ For a transaction to be recognised in the income statement the elements must satisfy both the definition and recognition criteria of an income or expense.

A machine is purchased for $100 000.It is to be depreciated on a reducing balance basis using a rate of 20%.How much will be charged for depreciation expense for year 2 of the machine's life?

The statement concerning a company's income tax expense that is correct is:

An accounting period that is one year in length is called:

A transaction recording income earned

A machine is purchased for $120 000.It is estimated that it has a useful life of 4 years and will then be sold for $8000.Using the straight-line method the carrying value of the machine at the end of the third year of the machine's useful life is:

If an expense is paid for in cash,then

If profit after tax and interest is $200 000,interest expense is $25 000 and taxation is $62 000,profit before interest and tax is:

Introduction to Accounting

Business Sustainability

Business Structures

Business Transactions

Balance Sheet

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Budgeting

Cost-Volume-Profit Analysis

Costing and Pricing in an Entity

Capital Investment

Financing the Business

Performance Measurement

Filters

Which of the following is $\bold{not}$ an administrative expense?

________ _ _ _______ (GAAP)are acceptable accounting practices which have become documented in the accounting standards.

The definition and recognition criteria for income and expenses are specified in the _ _ For a transaction to be recognised in the income statement the elements must satisfy both the definition and recognition criteria of an income or expense.