Question 1

Which of the following statements is correct? For a business that buys raw materials and manufactures a product:

Accepted Answer

A)  "Revenue" or "Turnover" or "Sales" is all money that comes into the business, including items such as bank interest received. 
B)  "Revenue" or "Turnover" or "Sales" is money that is left over once the cost of the raw materials is taken off. 
C)  "Revenue" or "Turnover" or "Sales" is the money that has actually been received from people buying goods. 
D)  "Revenue" or "Turnover" or "Sales" is the sales value of the goods that have been sold in the financial year. 
A)  "Revenue" or "Turnover" or "Sales" is all money that comes into the business, including items such as bank interest received. 
B)  "Revenue" or "Turnover" or "Sales" is money that is left over once the cost of the raw materials is taken off. 
C)  "Revenue" or "Turnover" or "Sales" is the money that has actually been received from people buying goods. 
D)  "Revenue" or "Turnover" or "Sales" is the sales value of the goods that have been sold in the financial year. D

Question 2

If a company purchases a machine for £60,000 and charges depreciation at 10% on a diminishing balance basis,what is the depreciation charge in the forth year?

Accepted Answer

A)  £5,042 
B)  £4,374 
C)  £6,000 
D)  £4,860 
A)  £5,042 
B)  £4,374 
C)  £6,000 
D)  £4,860 B

Question 3

Which of the following statements is correct?

Accepted Answer

A)  Buying new premises is a revenue expenditure 
B)  Buying a new car is capital expenditure 
C)  The cost of using a car is a capital expenditure 
D)  Statements A and B are both correct 
A)  Buying new premises is a revenue expenditure 
B)  Buying a new car is capital expenditure 
C)  The cost of using a car is a capital expenditure 
D)  Statements A and B are both correct B

Question 4

Operating profit is:

Accepted Answer

A)  Sales - cost of sales + operating expenses 
B)  Sales + cost of sales + operating expenses 
C)  Sales - cost of sales - operating expenses 
D)  Sales + cost of sales - operating expenses 
A)  Sales - cost of sales + operating expenses 
B)  Sales + cost of sales + operating expenses 
C)  Sales - cost of sales - operating expenses 
D)  Sales + cost of sales - operating expenses

Question 5

Revenue is:

Accepted Answer

A)  The amount received from borrowing 
B)  The amount of cash received from sales 
C)  The amount of cash received from sales and the disposals of fixed assets 
D)  The amount of sales that have been made during a period 
A)  The amount received from borrowing 
B)  The amount of cash received from sales 
C)  The amount of cash received from sales and the disposals of fixed assets 
D)  The amount of sales that have been made during a period

Question 6

A company buys a new piece of machinery for £55,000 cash.It is expected to last for 8 years and will have a scrap value of £7,000 The company uses straight line depreciation

Accepted Answer

A)  In the year of purchase, there is a cash movement of £55,000 and a depreciation charge and therefore a reduction in profit of £6,000. 
B)  In the year of purchase, there is a cash movement of £49,000 which is £55,000 paid for the machine and £6,000 depreciation charge. 
C)  In the year of purchase, there is a cash movement of £6,875 which is the depreciation charge. 
D)  In the year of purchase, there is a net cash movement of £48,125. This is the £55,000 paid for the machine and £6,875 depreciation charge. 
A)  In the year of purchase, there is a cash movement of £55,000 and a depreciation charge and therefore a reduction in profit of £6,000. 
B)  In the year of purchase, there is a cash movement of £49,000 which is £55,000 paid for the machine and £6,000 depreciation charge. 
C)  In the year of purchase, there is a cash movement of £6,875 which is the depreciation charge. 
D)  In the year of purchase, there is a net cash movement of £48,125. This is the £55,000 paid for the machine and £6,875 depreciation charge.

Question 7

Which of the following statements is false?

Accepted Answer

A)  The "equity" component of the statement of financial position is increased by the amount of profit earned during the year 
B)  The "equity" component of the statement of financial position is decreased by the amount of profit earned during the year 
C)  The "equity" component of the statement of financial position is reduced by the amount of dividend to be paid for the year 
D)  The "equity" component of the statement of financial position may change as the result of a revaluation of assets 
A)  The "equity" component of the statement of financial position is increased by the amount of profit earned during the year 
B)  The "equity" component of the statement of financial position is decreased by the amount of profit earned during the year 
C)  The "equity" component of the statement of financial position is reduced by the amount of dividend to be paid for the year 
D)  The "equity" component of the statement of financial position may change as the result of a revaluation of assets

Question 8

The part of a company's group accounts that reports income from a small investment in another company,of which it has little influence,is known as:

Accepted Answer

A)  Dividends receivable 
B)  Minority interest 
C)  Exceptional item 
D)  Segmental disclosure 
A)  Dividends receivable 
B)  Minority interest 
C)  Exceptional item 
D)  Segmental disclosure

Question 9

If a company buys a machine for £12,000 with an estimated useful life of 4 years and a residual value of £4,000,what is the annual depreciation charge if calculated on a straight line basis?

Accepted Answer

A)  £2,000 
B)  £4,000 
C)  £1,000 
D)  £3,000 
A)  £2,000 
B)  £4,000 
C)  £1,000 
D)  £3,000

Question 10

In a company's group accounts,the part of the groups profits that belongs to shareholders outside the group (for example,shareholders of a subsidiary)is known as:

Accepted Answer

A)  Dividends receivable 
B)  Minority interest 
C)  Exceptional item 
D)  Segmental disclosure 
A)  Dividends receivable 
B)  Minority interest 
C)  Exceptional item 
D)  Segmental disclosure

Question 11

Depreciation is not a process of valuing assets

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is correct?

Accepted Answer

A)  Capital expenditure appears on the income statement, not the statement of financial position 
B)  Revenue expenditure appears on the income statement, not the statement of financial position 
C)  Revenue expenditure does not appear on the income statement 
D)  Capital expenditure is not associated with depreciation 
A)  Capital expenditure appears on the income statement, not the statement of financial position 
B)  Revenue expenditure appears on the income statement, not the statement of financial position 
C)  Revenue expenditure does not appear on the income statement 
D)  Capital expenditure is not associated with depreciation

Question 13

Profit = revenue + expenses

Accepted Answer

A) True 
 B)False

Question 14

Which version of profit is used as the basis for determining the amount of dividend paid to shareholders?

Accepted Answer

A)  Gross profit 
B)  Profit after taxation 
C)  Profit before taxation 
D)  Operating profit 
A)  Gross profit 
B)  Profit after taxation 
C)  Profit before taxation 
D)  Operating profit

Question 15

If opening stock is £3,000,purchases for the year £15,000 and the cost of goods sold is £14,000,what is the value of closing stock?

Accepted Answer

A)  £2,000 
B)  £4,000 
C)  £3,000 
D)  £5,000 
A)  £2,000 
B)  £4,000 
C)  £3,000 
D)  £5,000

Question 16

Expenses are the amount paid out in cash during an accounting period

Accepted Answer

A) True 
 B)False

Question 17

Gross profit is the difference between sales and the cost of goods sold

Accepted Answer

A) True 
 B)False

Question 18

Profit before tax:

Accepted Answer

A)  Operating profit + interest receivable - interest payable 
B)  Operating profit + interest receivable + interest payable 
C)  Operating profit - interest receivable - interest payable 
D)  Operating profit - tax 
A)  Operating profit + interest receivable - interest payable 
B)  Operating profit + interest receivable + interest payable 
C)  Operating profit - interest receivable - interest payable 
D)  Operating profit - tax

Question 19

Revenue is the amount received in cash during an accounting period

Accepted Answer

A) True 
 B)False

Question 20

A company buys in a unit at a cost of £2 per unit.The selling price is £3 per unit.Which of the following statements is correct?

Accepted Answer

A)  Mark up is 67%; Margin is 150%. 
B)  Mark up is 150%; Margin is 67% 
C)  Mark-up is 50%; Margin is 33% 
D)  Mark-up is 33%; Margin is 50% 
A)  Mark up is 67%; Margin is 150%. 
B)  Mark up is 150%; Margin is 67% 
C)  Mark-up is 50%; Margin is 33% 
D)  Mark-up is 33%; Margin is 50%

Which of the following statements is correct? For a business that buys raw materials and manufactures a product:

If a company purchases a machine for £60,000 and charges depreciation at 10% on a diminishing balance basis,what is the depreciation charge in the forth year?

Which of the following statements is correct?

Operating profit is:

Revenue is:

A company buys a new piece of machinery for £55,000 cash.It is expected to last for 8 years and will have a scrap value of £7,000 The company uses straight line depreciation

Which of the following statements is false?

The part of a company's group accounts that reports income from a small investment in another company,of which it has little influence,is known as:

If a company buys a machine for £12,000 with an estimated useful life of 4 years and a residual value of £4,000,what is the annual depreciation charge if calculated on a straight line basis?

In a company's group accounts,the part of the groups profits that belongs to shareholders outside the group (for example,shareholders of a subsidiary)is known as:

Depreciation is not a process of valuing assets

Which of the following statements is correct?

Profit = revenue + expenses

Which version of profit is used as the basis for determining the amount of dividend paid to shareholders?

If opening stock is £3,000,purchases for the year £15,000 and the cost of goods sold is £14,000,what is the value of closing stock?

Expenses are the amount paid out in cash during an accounting period

Gross profit is the difference between sales and the cost of goods sold

Profit before tax:

Revenue is the amount received in cash during an accounting period

A company buys in a unit at a cost of £2 per unit.The selling price is £3 per unit.Which of the following statements is correct?

The Statement of Financial Position Balance Sheetand What It Tells Us

The Development of Financial Reporting

Ratios and Interpretation: a Straightforward Introduction

How the Stock Market Assesses Company Performance

Cash Flow Statements: Understanding and Preparation

Advanced Interpretation of Company and Group Accounts

Current Issues in Financial Reporting

Bookkeeping to Trial Balance

Trial Balance to Final Accounts

Financing a Business

Management of Working Capital

Introduction to Management Accounting

Investment Appraisal

Budgetary Planning and Control

Absorption Costing

Marginal Costing and Decision-Making

Standard Costing and Variance Analysis

Incomplete Records

Filters

Exam 2: The Income Statement Profit and Loss Account

Which of the following statements is correct? For a business that buys raw materials and manufactures a product:

If a company purchases a machine for £60,000 and charges depreciation at 10% on a diminishing balance basis,what is the depreciation charge in the forth year?

Which of the following statements is correct?

Operating profit is:

Revenue is:

A company buys a new piece of machinery for £55,000 cash.It is expected to last for 8 years and will have a scrap value of £7,000 The company uses straight line depreciation

Which of the following statements is false?

The part of a company's group accounts that reports income from a small investment in another company,of which it has little influence,is known as:

If a company buys a machine for £12,000 with an estimated useful life of 4 years and a residual value of £4,000,what is the annual depreciation charge if calculated on a straight line basis?

In a company's group accounts,the part of the groups profits that belongs to shareholders outside the group (for example,shareholders of a subsidiary)is known as:

Depreciation is not a process of valuing assets

Which of the following statements is correct?

Profit = revenue + expenses

Which version of profit is used as the basis for determining the amount of dividend paid to shareholders?

If opening stock is £3,000,purchases for the year £15,000 and the cost of goods sold is £14,000,what is the value of closing stock?

Expenses are the amount paid out in cash during an accounting period

Gross profit is the difference between sales and the cost of goods sold

Profit before tax:

Revenue is the amount received in cash during an accounting period

A company buys in a unit at a cost of £2 per unit.The selling price is £3 per unit.Which of the following statements is correct?

The Statement of Financial Position Balance Sheetand What It Tells Us

The Development of Financial Reporting

Ratios and Interpretation: a Straightforward Introduction

How the Stock Market Assesses Company Performance

Cash Flow Statements: Understanding and Preparation

Advanced Interpretation of Company and Group Accounts

Current Issues in Financial Reporting

Bookkeeping to Trial Balance

Trial Balance to Final Accounts

Financing a Business

Management of Working Capital

Introduction to Management Accounting

Investment Appraisal

Budgetary Planning and Control

Absorption Costing

Marginal Costing and Decision-Making

Standard Costing and Variance Analysis

Incomplete Records

Filters