Question 1

From the point of view of an entity,a person or business entity to whom a debt is owed is known as a:

Accepted Answer

A) debtor 
B) creditor 
C) debitor 
D) bank 
A) debtor 
B) creditor 
C) debitor 
D) bank B

Question 2

In order to prepare financial information for interested parties Chambers Company divides the economic activity of the firm into three-month segments and prepares financial statements at the end of each segment.Which accounting assumption is Chambers applying?

Accepted Answer

A) Accounting period 
B) Materiality 
C) Accounting entity 
D) Going concern 
A) Accounting period 
B) Materiality 
C) Accounting entity 
D) Going concern A

Question 3

A balance sheet:

Accepted Answer

A) Is classified into operating,investing and financing activities 
B) Must always be prepared in the account or 'T' format 
C) Shows how profit was determined 
D) Lists assets,liabilities and equity at a specific point in time 
A) Is classified into operating,investing and financing activities 
B) Must always be prepared in the account or 'T' format 
C) Shows how profit was determined 
D) Lists assets,liabilities and equity at a specific point in time D

Question 4

Jane is an osteopath operating as a sole proprietor.On 1 February she treats a patient who pays her $120 in cash.The effect of this transaction on the accounting equation is:

Accepted Answer

A) Increase in cash at bank $120,decrease in liability accounts payable $120 
B) Increase in cash at bank $120,increase in liability accounts payable $120 
C) Increase in cash at bank $120,increase in asset accounts receivable $120 
D) Increase in cash at bank $120,increase in equity $120 
A) Increase in cash at bank $120,decrease in liability accounts payable $120 
B) Increase in cash at bank $120,increase in liability accounts payable $120 
C) Increase in cash at bank $120,increase in asset accounts receivable $120 
D) Increase in cash at bank $120,increase in equity $120

Question 5

The statement concerning the income statement that is not true is:

Accepted Answer

A) The heading must indicate the length of time the report covers 
B) It shows the change in the entity's cash balance for the period 
C) If expenses exceed income than a loss has been incurred for the period 
D) An alternative name is the statement of financial performance 
A) The heading must indicate the length of time the report covers 
B) It shows the change in the entity's cash balance for the period 
C) If expenses exceed income than a loss has been incurred for the period 
D) An alternative name is the statement of financial performance

Question 6

The present obligations of an entity arising from past events the settlement of which is expected to result in an outflow of resources embodying economic benefits are known as ______________

Accepted Answer

The answer of The present obligations of an entity arising...

Question 7

The statement of cash flows reports separately on operating,__________ and financing cash flows.

Accepted Answer

The answer of The statement of cash flows reports separately...

Question 8

The income statement reports:

Accepted Answer

A) the financial position of an entity at a specific period of time 
B) the financial performance of an entity over a specified period of time 
C) the financial position of an entity over a specified period of time 
D) the financial performance of an entity at a specific period of time 
A) the financial position of an entity at a specific period of time 
B) the financial performance of an entity over a specified period of time 
C) the financial position of an entity over a specified period of time 
D) the financial performance of an entity at a specific period of time

Question 9

A business transaction creating an inflow of net assets resulting from the sale of goods or services is an):

Accepted Answer

A) Expense transaction 
B) Income transaction 
C) Cash disbursement 
D) Capital transaction 
A) Expense transaction 
B) Income transaction 
C) Cash disbursement 
D) Capital transaction

Question 10

The sum of the assets of an entity is always equal to the sum of its _________ plus equity.

Accepted Answer

The answer of The sum of the assets of an...

Question 11

These balances were taken from the accounts of P Enterprises $$\begin{array} { l r r } 
& 31 \text { Dec } 2010 & 31 \text { Dec } 2011 \
\text { Assets } & \$ 220,000 & \$ 460,000 \
\text { Liabilities } & 100,000 & 130,000
\end{array}$$ Assuming there were no drawings or contributions of capital,profit for 2011 must have been:

Accepted Answer

A) $240 000 
B) $120 000 
C) $330 000 
D) $210 000 
A) $240 000 
B) $120 000 
C) $330 000 
D) $210 000

Question 12

Jane is an osteopath operating as a sole proprietor.On 1 February she treats a patient on credit who she invoices for $120.The effect of this transaction on the accounting equation is:

Accepted Answer

A) Increase in cash at bank $120,decrease in liability accounts payable $120 
B) Increase in equity $120,increase in liability accounts payable $120 
C) Increase in asset accounts receivable $120,increase in equity$120 
D) Increase in cash at bank $120,increase in equity $120 
A) Increase in cash at bank $120,decrease in liability accounts payable $120 
B) Increase in equity $120,increase in liability accounts payable $120 
C) Increase in asset accounts receivable $120,increase in equity$120 
D) Increase in cash at bank $120,increase in equity $120

Question 13

Which of these is not an alternative term for equity?

Accepted Answer

A) Proprietorship 
B) Shareholder's funds 
C) Bank account balance 
D) Capital 
A) Proprietorship 
B) Shareholder's funds 
C) Bank account balance 
D) Capital

Question 14

The assets of Quinn's business increased by $40 000 and the liabilities increased by $5000 during the current year.If the profit for this period was $25 000,what additional contribution or withdrawal was made by the owner? Assume only a withdrawal or a contribution was made.

Accepted Answer

A) Drawings $10 000 
B) Contribution $10 000 
C) Contribution $5000 
D) Drawings $5000 
A) Drawings $10 000 
B) Contribution $10 000 
C) Contribution $5000 
D) Drawings $5000

Question 15

The statement concerning the cash flow statement that is correct is:

Accepted Answer

A) It summarises the cash flows into and out of an entity 
B) It provides the connecting link between the income statement and the balance sheet 
C) An alternative name is the statement of changes in equity 
D) It includes cash and non-cash items 
A) It summarises the cash flows into and out of an entity 
B) It provides the connecting link between the income statement and the balance sheet 
C) An alternative name is the statement of changes in equity 
D) It includes cash and non-cash items

Question 16

Z Company reports the following balance sheet information for 2011: $$\begin{array} { l c c } 
& \text { 1 January 2011 } & \text { 31 December 2011 } \
\text { Assets } & \$ 60,000 & \$ 70,000 \
\text { Liabilities } & \$ 12,000 & \$ 14,000
\end{array}$$ Assuming the capital contribution made by the owners during 2011 was $3000 and withdrawals were $12 000,profit for 2011 must have been:

Accepted Answer

A) $17 000 
B) $14 000 
C) $16 000 
D) $12,000 
A) $17 000 
B) $14 000 
C) $16 000 
D) $12,000

Question 17

The statement concerning equity that is true is:

Accepted Answer

A) It is the owner's claim to the assets of the entity after deducting liabilities 
B) It is fixed at the amount initially contributed when the business was established 
C) It is decreased by profit 
D) Assets + liabilities = equity 
A) It is the owner's claim to the assets of the entity after deducting liabilities 
B) It is fixed at the amount initially contributed when the business was established 
C) It is decreased by profit 
D) Assets + liabilities = equity

Question 18

Which assumption is the basis upon which the personal assets of the owner are excluded from the businesses balance sheet?

Accepted Answer

A) Going concern 
B) Accounting entity 
C) Limited liability 
D) Accrual basis 
A) Going concern 
B) Accounting entity 
C) Limited liability 
D) Accrual basis

Question 19

The purchase of a vehicle by a business for $20 000 decreases the asset cash at bank and increases the ___________ motor vehicles.

Accepted Answer

The answer of The purchase of a vehicle by a...

Question 20

Accountants divide the life of the business into arbitrary time periods of equal length:

Accepted Answer

A) In order to prepare a balance sheet 
B) In order to calculate comparable profit results 
C) In order to prepare an income statement 
D) Because of the accounting entity assumption 
A) In order to prepare a balance sheet 
B) In order to calculate comparable profit results 
C) In order to prepare an income statement 
D) Because of the accounting entity assumption

Exam 2: Financial Statements for Decision Making

From the point of view of an entity,a person or business entity to whom a debt is owed is known as a:

In order to prepare financial information for interested parties Chambers Company divides the economic activity of the firm into three-month segments and prepares financial statements at the end of each segment.Which accounting assumption is Chambers applying?

A balance sheet:

Jane is an osteopath operating as a sole proprietor.On 1 February she treats a patient who pays her $120 in cash.The effect of this transaction on the accounting equation is:

The statement concerning the income statement that is not true is:

The present obligations of an entity arising from past events the settlement of which is expected to result in an outflow of resources embodying economic benefits are known as ______________

The statement of cash flows reports separately on operating,__________ and financing cash flows.

The income statement reports:

A business transaction creating an inflow of net assets resulting from the sale of goods or services is an):

The sum of the assets of an entity is always equal to the sum of its _________ plus equity.

These balances were taken from the accounts of P Enterprises 31 Dec 2010 31 Dec 2011 Assets \ 220,000 \ 460,000 Liabilities 100,000 130,000 Assuming there were no drawings or contributions of capital,profit for 2011 must have been:

Jane is an osteopath operating as a sole proprietor.On 1 February she treats a patient on credit who she invoices for $120.The effect of this transaction on the accounting equation is:

Which of these is not an alternative term for equity?

The assets of Quinn's business increased by $40 000 and the liabilities increased by $5000 during the current year.If the profit for this period was $25 000,what additional contribution or withdrawal was made by the owner? Assume only a withdrawal or a contribution was made.

The statement concerning the cash flow statement that is correct is:

Z Company reports the following balance sheet information for 2011: 1 January 2011 31 December 2011 Assets \ 60,000 \ 70,000 Liabilities \ 12,000 \ 14,000 Assuming the capital contribution made by the owners during 2011 was $3000 and withdrawals were $12 000,profit for 2011 must have been:

The statement concerning equity that is true is:

Which assumption is the basis upon which the personal assets of the owner are excluded from the businesses balance sheet?

The purchase of a vehicle by a business for $20 000 decreases the asset cash at bank and increases the ___________ motor vehicles.

Accountants divide the life of the business into arbitrary time periods of equal length:

Decision Making and the Role of Accounting

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Retailing

Accounting for Systems

Accounting for Manufacturing

Cost Accounting Systems

Cash Management and Internal Control

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis,profitability Analysis and Capital Budgeting

Partnerships: Formation,operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation,disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Liabilities

Analysis and Interpretation of Financial Statements

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