Question 1

The ____________ concept is useful in ensuring that users of financial reports are not overwhelmed with too much detail.

Accepted Answer

A) Materiality 
B) Going concern 
C) Relevance 
D) Understandability 
A) Materiality 
B) Going concern 
C) Relevance 
D) Understandability

Question 2

The qualitative characteristic that assures the user that the information in the financial reports represents faithfully without undue bias or error the underlying transactions and events of the entity is r______________.

Accepted Answer

The answer of The qualitative characteristic that assures the user...

Question 3

For accounting purposes the life of an entity is divided into arbitrary time intervals of equal length,which are called:

Accepted Answer

A) years 
B) months 
C) accounting periods 
D) accounting entities 
A) years 
B) months 
C) accounting periods 
D) accounting entities

Question 4

A ________ _________statement is an additional accounting report that complements the information in the income statement,balance sheet and statement of changes in equity.

Accepted Answer

The answer of A ________ _________statement is an additional accounting...

Question 5

Income less expenses = p____________.

Accepted Answer

The answer of Income less expenses = p____________....

Question 6

Junction Plants had the following transactions during August.Which transaction represents an expense for August under the accrual basis of accounting?

Accepted Answer

A) Purchased a computer for $3000 cash 
B) Paid $3300 in settlement of a loan obtained three months earlier 
C) Paid a service station $500 for repair work performed on its delivery truck in June 
D) Purchased $30 of petrol on credit for the delivery truck.The account will be paid during September 
A) Purchased a computer for $3000 cash 
B) Paid $3300 in settlement of a loan obtained three months earlier 
C) Paid a service station $500 for repair work performed on its delivery truck in June 
D) Purchased $30 of petrol on credit for the delivery truck.The account will be paid during September

Question 7

The _________________ __________________ assumption assumes that an existing business will continue to operate in the future.

Accepted Answer

The answer of The _________________ __________________ assumption assumes that an...

Question 8

The assumption which requires transactions to be recognised in the accounting reports when they occur and not when the cash is received or paid is:

Accepted Answer

A) Accrual basis 
B) Accounting entity 
C) Materiality 
D) Accounting period 
A) Accrual basis 
B) Accounting entity 
C) Materiality 
D) Accounting period

Question 9

I____________________ is an increase in equity normally resulting from the sale of goods or the performance of services.

Accepted Answer

The answer of I____________________ is an increase in equity normally...

Question 10

Jane is an osteopath operating as a sole proprietor.In January she purchases for $540 some new furniture for her waiting room.The purchase is made on credit.The effect of this transaction on the accounting equation is:

Accepted Answer

A) Increase in the asset furniture $540 increase in the liability accounts payable $540 
B) Increase in the asset furniture $540 decrease in the asset accounts receivable $540 
C) Increase in the asset furniture $540 increase in equity $540 
D) Increase in the asset furniture $540 increase in the asset accounts receivable $540 
A) Increase in the asset furniture $540 increase in the liability accounts payable $540 
B) Increase in the asset furniture $540 decrease in the asset accounts receivable $540 
C) Increase in the asset furniture $540 increase in equity $540 
D) Increase in the asset furniture $540 increase in the asset accounts receivable $540

Question 11

Which of these effects of a single transaction on the accounting equation is not possible?

Accepted Answer

A) Increase in assets at the same time as an equal increase in equity 
B) Decrease in assets at the same time as an equal decrease in liabilities 
C) Increase in liabilities at the same time as an equal decrease in liabilities 
D) Decrease in liabilities and at the same time an equal decrease in equity 
A) Increase in assets at the same time as an equal increase in equity 
B) Decrease in assets at the same time as an equal decrease in liabilities 
C) Increase in liabilities at the same time as an equal decrease in liabilities 
D) Decrease in liabilities and at the same time an equal decrease in equity

Question 12

On 2 January 2011 Fife Corp sells goods to O'Brien who agrees to pay for them within 60 days.On the balance sheet for Fife Corp at 2 January 2011 the amount owing by O'Brien would be reported as the asset:

Accepted Answer

A) Accounts payable 
B) Accounts receivable 
C) Advance payment by a customer 
D) Cash at bank 
A) Accounts payable 
B) Accounts receivable 
C) Advance payment by a customer 
D) Cash at bank

Question 13

AK Distributors had these assets and liabilities: Equity is: $\begin{array}{lr}&\$\
\text { Cash in hand } & 4000 \
\text { Bank overdraft } & 11000 \
\text { Sundry creditors } & 3000 \
\text { Inventory } & 2700\
\text { Sundry debtors } & 8100 \
\text { Office furniture } & 4500 \
\text { Loan from P \& S Ltd } & 15000 \
\text { Motor vehicles } & 12000
\end{array}$

Accepted Answer

A) $2 300 
B) $31 000 
C) $5 300 
D) $13 300 
A) $2 300 
B) $31 000 
C) $5 300 
D) $13 300

Question 14

Assume you are examining a financial statement headed 'As at the 31 December 2011'.The heading indicates the statement is the:

Accepted Answer

A) Balance sheet 
B) Income statement 
C) Statement of changes in equity 
D) Cash flow statement 
A) Balance sheet 
B) Income statement 
C) Statement of changes in equity 
D) Cash flow statement

Question 15

Jane is an osteopath operating as a sole proprietor.On 1 February she treats a patient on credit whom she invoices for $120.On 10th of February the patient pays his account and Jane banks the $120.The effect of the receipt of cash transaction on the accounting equation for Jane's practice is:

Accepted Answer

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

Question 16

Liz,after qualifying at university and having several years experience decides to set up her own dental practice..On 1 March she deposits $25,000 into a bank account she has opened for the practice.The effect of this transaction on the accounting equation is:

Accepted Answer

A) Increase in assets of $ 25 000; increase in equity of $ 25 000. 
B) Increase in assets of $25 000; decrease in equity of $25 000. 
C) Increase in assets of $25 000; increase in liabilities of $25 000. 
D) Decrease in assets of $25 000; increase in equity of $25 000. 
A) Increase in assets of $ 25 000; increase in equity of $ 25 000. 
B) Increase in assets of $25 000; decrease in equity of $25 000. 
C) Increase in assets of $25 000; increase in liabilities of $25 000. 
D) Decrease in assets of $25 000; increase in equity of $25 000.

Question 17

The assumption which assumes that the entity will not be liquidated in the near future is the:

Accepted Answer

A) Accounting entity 
B) Going concern 
C) Economic substance 
D) Accounting period 
A) Accounting entity 
B) Going concern 
C) Economic substance 
D) Accounting period

Question 18

Which statement is not correct?

Accepted Answer

A) Information in the cash flow statement is useful in assessing the ability of an entity to pay its debts as they fall due 
B) A comparison of the cash flow statement and the income statement can indicate to what extent the profit is represented by cash inflows 
C) The cash flow statement classifies cash flows into operating investing and financing groupings 
D) Operating activities is concerned with activities involving the sales and purchases of fixed assets. 
A) Information in the cash flow statement is useful in assessing the ability of an entity to pay its debts as they fall due 
B) A comparison of the cash flow statement and the income statement can indicate to what extent the profit is represented by cash inflows 
C) The cash flow statement classifies cash flows into operating investing and financing groupings 
D) Operating activities is concerned with activities involving the sales and purchases of fixed assets.

Question 19

The statement of changes in equity

Accepted Answer

A) Indicates the ability of the entity to generate cash flow 
B) Shows the selling price of the entity's assets 
C) Shows how profit was determined 
D) Serves as a connecting link between the income statement and the balance sheet. 
A) Indicates the ability of the entity to generate cash flow 
B) Shows the selling price of the entity's assets 
C) Shows how profit was determined 
D) Serves as a connecting link between the income statement and the balance sheet.

Question 20

The system where every transaction affects at least two components of the accounting equation is known as:

Accepted Answer

A) historical cost accounting 
B) the going concern system 
C) the accounting entity system 
D) double-entry accounting 
A) historical cost accounting 
B) the going concern system 
C) the accounting entity system 
D) double-entry accounting

Exam 2: Financial Statements for Decision Making

The ____________ concept is useful in ensuring that users of financial reports are not overwhelmed with too much detail.

The qualitative characteristic that assures the user that the information in the financial reports represents faithfully without undue bias or error the underlying transactions and events of the entity is r______________.

For accounting purposes the life of an entity is divided into arbitrary time intervals of equal length,which are called:

A ________ _________statement is an additional accounting report that complements the information in the income statement,balance sheet and statement of changes in equity.

Income less expenses = p____________.

Junction Plants had the following transactions during August.Which transaction represents an expense for August under the accrual basis of accounting?

The _________________ __________________ assumption assumes that an existing business will continue to operate in the future.

The assumption which requires transactions to be recognised in the accounting reports when they occur and not when the cash is received or paid is:

I____________________ is an increase in equity normally resulting from the sale of goods or the performance of services.

Jane is an osteopath operating as a sole proprietor.In January she purchases for $540 some new furniture for her waiting room.The purchase is made on credit.The effect of this transaction on the accounting equation is:

Which of these effects of a single transaction on the accounting equation is not possible?

On 2 January 2011 Fife Corp sells goods to O'Brien who agrees to pay for them within 60 days.On the balance sheet for Fife Corp at 2 January 2011 the amount owing by O'Brien would be reported as the asset:

AK Distributors had these assets and liabilities: Equity is: \ Cash in hand 4000 Bank overdraft 11000 Sundry creditors 3000 Inventory 2700 Sundry debtors 8100 Office furniture 4500 Loan from P \& S Ltd 15000 Motor vehicles 12000

Assume you are examining a financial statement headed 'As at the 31 December 2011'.The heading indicates the statement is the:

Jane is an osteopath operating as a sole proprietor.On 1 February she treats a patient on credit whom she invoices for $120.On 10th of February the patient pays his account and Jane banks the $120.The effect of the receipt of cash transaction on the accounting equation for Jane's practice is:

Liz,after qualifying at university and having several years experience decides to set up her own dental practice..On 1 March she deposits $25,000 into a bank account she has opened for the practice.The effect of this transaction on the accounting equation is:

The assumption which assumes that the entity will not be liquidated in the near future is the:

Which statement is not correct?

The statement of changes in equity

The system where every transaction affects at least two components of the accounting equation is known as:

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

Filters

A _statement is an additional accounting report that complements the information in the income statement,balance sheet and statement of changes in equity.

The _ __ assumption assumes that an existing business will continue to operate in the future.

Jane is an osteopath operating as a sole proprietor.On 1 February she treats a patient on credit whom she invoices for $120.On 10^th of February the patient pays his account and Jane banks the $120.The effect of the receipt of cash transaction on the accounting equation for Jane's practice is: