Question 1

A balance sheet:

Accepted Answer

A)  reports the financial position of an entity. 
B)  is in the format of Assets = Liabilities + Equity. 
C)  is reported as at a specific date. 
D)  All of these options. 
A)  reports the financial position of an entity. 
B)  is in the format of Assets = Liabilities + Equity. 
C)  is reported as at a specific date. 
D)  All of these options.

Question 2

Lindy Jones withdrew $500 from her business bank account for personal use. The effect of this transaction on the accounting equation is:

Accepted Answer

A)  Assets decrease by $500; Equity decreases by $500. 
B)  Assets decrease by $500; Equity increases by$500. 
C)  Assets decrease by $500; Liabilities decrease by $500. 
D)  Assets decrease by $500; Assets increase by $500. 
A)  Assets decrease by $500; Equity decreases by $500. 
B)  Assets decrease by $500; Equity increases by$500. 
C)  Assets decrease by $500; Liabilities decrease by $500. 
D)  Assets decrease by $500; Assets increase by $500.

Question 3

The basis upon which the personal assets of the owner are excluded from the business's balance sheet is referred to as which assumption?

Accepted Answer

A)  Materiality 
B)  Accounting entity 
C)  Accrual basis 
D)  Going concern 
A)  Materiality 
B)  Accounting entity 
C)  Accrual basis 
D)  Going concern

Question 4

A financial statement headed 'for the year ended 30 June 2018' would be:

Accepted Answer

A)  the balance sheet. 
B)  the income statement. 
C)  the statement of changes in equity. 
D)  either the income statement or the statement of changes in equity. 
A)  the balance sheet. 
B)  the income statement. 
C)  the statement of changes in equity. 
D)  either the income statement or the statement of changes in equity.

Question 5

Jacob's opening capital at 1 July 2017 was $75 000, his profit for the year was
$22 000 and his drawings were $8 000. What is the final balance of his capital at the end of the year?

Accepted Answer

A)  $89 000 
B)  $105 000 
C)  $53 000 
D)  $45 000 
A)  $89 000 
B)  $105 000 
C)  $53 000 
D)  $45 000

Question 6

Which of the following statements is correct?

Accepted Answer

A)  A shareholder's liability to contribute to the debts of an insolvent company is limited. 
B)  The owner of a sole proprietorship is not legally liable for its debts. 
C)  Special legal requirements must be met when forming a partnership. 
D)  A partnership is a separate legal entity. 
A)  A shareholder's liability to contribute to the debts of an insolvent company is limited. 
B)  The owner of a sole proprietorship is not legally liable for its debts. 
C)  Special legal requirements must be met when forming a partnership. 
D)  A partnership is a separate legal entity.

Question 7

Henry is an accountant operating as a sole proprietor. On 10 April he performs work for a client to the value of $400 on credit. The effect of this transaction on the accounting equation is:

Accepted Answer

A)  Cash at bank increases by $400; Accounts payable decreases by$400. 
B)  Equity increases by $400; Accounts payable increases by $400. 
C)  Accounts receivable increases by $400; Equity increases by $400. 
D)  Cash at bank increases by$400; Equity decreases by $400. 
A)  Cash at bank increases by $400; Accounts payable decreases by$400. 
B)  Equity increases by $400; Accounts payable increases by $400. 
C)  Accounts receivable increases by $400; Equity increases by $400. 
D)  Cash at bank increases by$400; Equity decreases by $400.

Question 8

An income statement can also be referred to as a(an):

Accepted Answer

A)  Profit report 
B)  Profit and loss statement 
C)  All of these options 
D)  Operating statement 
A)  Profit report 
B)  Profit and loss statement 
C)  All of these options 
D)  Operating statement

Question 9

__________ is/are obligations of an entity arising from past events, the settlement of which is expected to result in an outflow of economic benefits.

Accepted Answer

A)  Assets 
B)  Liabilities 
C)  Equity 
D)  Income 
A)  Assets 
B)  Liabilities 
C)  Equity 
D)  Income

Question 10

An entity's ______________________ is represented by its control over economic resources, financial structure, capacity for adaptation and solvency.

Accepted Answer

A)  financial performance 
B)  financial position 
C)  equity 
D)  accounting equation 
A)  financial performance 
B)  financial position 
C)  equity 
D)  accounting equation

Question 11

Bright Electronics divides their economic activities into time-frames of three months and prepares their financial statements for interested parties at the end of each time-frame. The accounting assumption being applied by Bright Electronics is:

Accepted Answer

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

Question 12

Which of these is not recognised as income?

Accepted Answer

A)  Provision of services. 
B)  Interest received. 
C)  Capital contributed by the owner. 
D)  Sale of goods. 
A)  Provision of services. 
B)  Interest received. 
C)  Capital contributed by the owner. 
D)  Sale of goods.

Question 13

The four enhancing qualitative characteristics of accounting information are:

Accepted Answer

A)  comparability, verifiability, timeliness and understandability. 
B)  consistency, timeliness, relevance and understandability. 
C)  materiality, comparability, economic substance and verifiability. 
D)  reliability, comparability, materiality, and timeliness. 
A)  comparability, verifiability, timeliness and understandability. 
B)  consistency, timeliness, relevance and understandability. 
C)  materiality, comparability, economic substance and verifiability. 
D)  reliability, comparability, materiality, and timeliness.

Question 14

From the point of view of a business entity, a person or business from which a debt is owing is known as a:

Accepted Answer

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

Question 15

On 14 February Mark pays $850 wages in cash to his receptionist for work performed during the first half of the month. The effect of this transaction on the accounting equation is:

Accepted Answer

A)  Decrease in cash at bank $850; decrease in liability accounts payable $850. 
B)  Decrease in cash at bank $850; increase in liability accounts payable $850. 
C)  Decrease in cash at bank $850; increase in equity $850. 
D)  Decrease in cash at bank $850; decrease in equity $850. 
A)  Decrease in cash at bank $850; decrease in liability accounts payable $850. 
B)  Decrease in cash at bank $850; increase in liability accounts payable $850. 
C)  Decrease in cash at bank $850; increase in equity $850. 
D)  Decrease in cash at bank $850; decrease in equity $850.

Question 16

On 2 May 2018 Viva Corp sells goods to Nashi and requests payment be made within 30 days. On the balance sheet for Viva Corp at 2 May 2018 the amount owing from Nashi would be reported as:

Accepted Answer

A)  an overdue customer account. 
B)  accounts receivable. 
C)  accounts payable. 
D)  an expense. 
A)  an overdue customer account. 
B)  accounts receivable. 
C)  accounts payable. 
D)  an expense.

Question 17

Which of the following statements is not true?

Accepted Answer

A)  The profit of an entity is calculated as income less expenses. 
B)  A withdrawal of cash for private use by the owner is shown as a reduction of equity in the balance sheet. 
C)  Equity can be thought of as the owner's claim to the income of the entity after deducting all liabilities. 
D)  Income can be measured not only be cash, but by receipt of other assets. 
A)  The profit of an entity is calculated as income less expenses. 
B)  A withdrawal of cash for private use by the owner is shown as a reduction of equity in the balance sheet. 
C)  Equity can be thought of as the owner's claim to the income of the entity after deducting all liabilities. 
D)  Income can be measured not only be cash, but by receipt of other assets.

Question 18

An entity's financial performance is represented by which financial statement?

Accepted Answer

A)  balance sheet. 
B)  income statement. 
C)  statement of changes in equity. 
D)  statement of cash flows. 
A)  balance sheet. 
B)  income statement. 
C)  statement of changes in equity. 
D)  statement of cash flows.

Question 19

If the loss for the period is $38 000 and total expenses are $110 000, total income for the period is:

Accepted Answer

A)  $ 72 000. 
B)  $138 000. 
C)  $148 000. 
D)  $ 62 000. 
A)  $ 72 000. 
B)  $138 000. 
C)  $148 000. 
D)  $ 62 000.

Question 20

In January Mark purchases new furniture worth $1750 for his consulting office. The furniture is purchased on credit. The effect of this transaction on the accounting equation is?

Accepted Answer

A)  Increase in the asset furniture $1750; increase in the liability accounts payable $1750. 
B)  Increase in the asset furniture $1750; decrease in the asset accounts receivable $1750. 
C)  Increase in the asset furniture $1750; increase in equity $1750. 
D)  Increase in the asset furniture $1750; increase in the asset accounts receivable $1750. 
A)  Increase in the asset furniture $1750; increase in the liability accounts payable $1750. 
B)  Increase in the asset furniture $1750; decrease in the asset accounts receivable $1750. 
C)  Increase in the asset furniture $1750; increase in equity $1750. 
D)  Increase in the asset furniture $1750; increase in the asset accounts receivable $1750.

Exam 2: Financial Statements for Decision Making

A balance sheet:

Lindy Jones withdrew $500 from her business bank account for personal use. The effect of this transaction on the accounting equation is:

The basis upon which the personal assets of the owner are excluded from the business's balance sheet is referred to as which assumption?

A financial statement headed 'for the year ended 30 June 2018' would be:

Jacob's opening capital at 1 July 2017 was $75 000, his profit for the year was $22 000 and his drawings were $8 000. What is the final balance of his capital at the end of the year?

Which of the following statements is correct?

Henry is an accountant operating as a sole proprietor. On 10 April he performs work for a client to the value of $400 on credit. The effect of this transaction on the accounting equation is:

An income statement can also be referred to as a(an):

__________ is/are obligations of an entity arising from past events, the settlement of which is expected to result in an outflow of economic benefits.

An entity's ______________________ is represented by its control over economic resources, financial structure, capacity for adaptation and solvency.

Bright Electronics divides their economic activities into time-frames of three months and prepares their financial statements for interested parties at the end of each time-frame. The accounting assumption being applied by Bright Electronics is:

Which of these is not recognised as income?

The four enhancing qualitative characteristics of accounting information are:

From the point of view of a business entity, a person or business from which a debt is owing is known as a:

On 14 February Mark pays $850 wages in cash to his receptionist for work performed during the first half of the month. The effect of this transaction on the accounting equation is:

On 2 May 2018 Viva Corp sells goods to Nashi and requests payment be made within 30 days. On the balance sheet for Viva Corp at 2 May 2018 the amount owing from Nashi would be reported as:

Which of the following statements is not true?

An entity's financial performance is represented by which financial statement?

If the loss for the period is $38 000 and total expenses are $110 000, total income for the period is:

In January Mark purchases new furniture worth $1750 for his consulting office. The furniture is purchased on credit. The effect of this transaction on the accounting equation is?

Decision Making and the Role of Accounting

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Partnerships: Formation, Operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Cash Management and Control

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation, Disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Accounting for Manufacturing

Cost Accounting Systems

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Performance Evaluation for Managers

Differential Analysis, Profitability Analysis and Capital Budgeting

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