Exam 3: Measuring and Reporting Financial Performance

If inventory item X has a cost of $49 000 and a net realisable value of $60 000 while inventory item Y has a cost of $2 000 and a net realisable value of $500, closing inventory will be valued at:

A company pays some cash and takes a loan for the rest of the money that is needed to purchase a delivery vehicle. What is the result of this transaction?

Bad debts:

Under accrual accounting, profit is measured as:

The owners' contribution of capital to open the business bank account will result in which of the following?

What type of account is accumulated depreciation?

The accounting principle underpinning the inventory valuation rule 'the lower of cost and net realisable value' is:

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

Where the amount of cash paid for office expenses during the year is less than the amount of office expenses recognised in the statement of financial performance under the accrual accounting approach, the difference is recorded in the statement of financial position as:

If equity at the beginning of the period is $100 000 and at the end of the period is $100 000 and additional capital of $20 000 is paid into the business by the owner during the period, profit or loss is:

If a business decided to classify its expenses under the headings 'Selling and Distribution', 'General and Administrative' and 'Financial' into which groupings would 1. depreciation of sales staff's motor vehicles and 2. bad debts written off, fall?

On 31 December 2016, a new machine with a useful life of 6 years and an estimated residual value of zero was purchased by a business at a cost of $36 000. The amount of depreciation expense charged for the year ended 31 December 2018, using the reducing-balance method at a rate of 30% per annum, is:

Calculate gross profit if sales are $90 000, inventory at beginning is $5 600, purchases of inventory are $30 500 and inventory at end is $4 900.

A forklift had a purchase price of $18 000, delivery costs of $2 000, a physical life of 6 years and a useful life of 4 years. Estimated residual value is zero. The annual depreciation charge using the straight-line method is:

The recognition criteria that must be satisfied under the Conceptual Framework for income to be included in the profit report is:

On 31 December 2017, a new motor vehicle with a useful life of five years and an estimated residual value of $5 000 was purchased by a business at a cost of $35 000. The amount of depreciation expense charged for the six months ended 30 June 2018, using the straight-line method, is:

If doubtful debts are overestimated:

Which statement best describes the straight-line method of deprecation?

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

When is income considered to have been earned?