Question 1

Which type of information would be of most interest to shareholders?

Accepted Answer

A)   Profitability
B)   Long-term financial stability
C)   Proposed expansion of the company
D)   Continuity of orders for the firm's products A

Question 2

A balance sheet:

Accepted Answer

A)   lists the assets and liabilities at present replacement cost.
B)   shows how the resources of an entity change during a period of time.
C)   shows all facts affecting the financial position of the entity.
D)   lists the assets, liabilities and shareholders' equity at a specific point in time. D

Question 3

Which of the following is NOT an example of a liability?

Accepted Answer

A)   Provisions for employee entitlements
B)   Share capital
C)   Accounts payable
D)   Loans B

Question 4

Which type of information would be of most interest to trade creditors?

Accepted Answer

A)   Dividends paid
B)   Total revenues
C)   Ability to pay debts
D)   Continuity of orders for the firm's products

Question 5

During 2018 a company makes cash sales of $900 000. It pays $300 000 in expenses and owes $90 000 for services it received in 2018 but are payable in 2019. It pays $170 000 in dividends. What is the profit for 2018?

Accepted Answer

A)   $340 000
B)   $510 000
C)   $600 000
D)   None of the above

Question 6

During 2019, a company makes credit sales of $600 000, of which $475 000 is collected at year-end. It pays $175 000 in expenses and owes $50 000 for electricity used during 2019. Accrual profit is:

Accepted Answer

A)   $250 000
B)   $275 000
C)   $375 000
D)   None of the above

Question 7

The practice by Woolworths Ltd of presenting their financial statements in millions of dollars is an application of the concept of:

Accepted Answer

A)   relevance.
B)   materiality.
C)   understandability.
D)   disclosure.

Question 8

Which of the following use accounting information? i. Shareholders
Ii) Banks
Iii) Employees

Accepted Answer

A)   i and ii only
B)   ii and iii only
C)   i and iii only
D)   i, ii and iii

Question 9

ABC is a company that commenced business on 1 January 2019. Below are the balances in the 30 June 2019 financial statements.  What is the balance of assets?

Accepted Answer

A)   $8 000
B)   $10 000
C)   $16 000
D)   None of the above

Question 10

Which of the following is NOT an asset?

Accepted Answer

A)   Equipment
B)   Accounts receivable
C)   Accounts payable
D)   Inventory

Question 11

Which accounting concept is involved in the requirement that financial statements contain information that is useful to those who are making decisions?

Accepted Answer

A)   Consistency
B)   Comparability
C)   Faithful representation
D)   Relevance

Question 12

Use the information given below at 30 June 2019 to answer the following question.  What is the balance of total assets at 30 June 2019?

Accepted Answer

A)   $400 000
B)   $420 000
C)   $580 000
D)   None of the above.

Question 13

Which of the following involve measuring economic performance? i. Estimates
Ii) Adjustments
Iii) Judgements

Accepted Answer

A)   i and ii only
B)   i and iii only
C)   ii and iii only
D)   i, ii and iii

Question 14

During 2019, a company makes credit sales of $600 000, of which $475 000 is collected at year-end. It pays $175 000 in expenses and owes $50 000 for electricity used during 2019. What would the profit be if cash accounting rather than accrual accounting was used?

Accepted Answer

A)   $150 000
B)   $225 000
C)   $300 000
D)   $375 000

Question 15

The preparation of financial statements in a similar form to those of other companies facilitates:

Accepted Answer

A)   comparability.
B)   materiality.
C)   faithful representation.
D)   understandability.

Question 16

Which of the following is NOT shown in the heading of the balance sheet?

Accepted Answer

A)   The period covered by the report
B)   The title of the report
C)   The name of the company
D)   All of the answers are shown

Question 17

Use the information given below to answer the following question.  What is the net profit for 2019?

Accepted Answer

A)   $62 000
B)   $70 000
C)   $104 000
D)   None of the above)

Question 18

ABC is a company that commenced business on 1 January 2019. Below are the balances in the 30 June 2019 financial statements.  What is the balance of liabilities?

Accepted Answer

A)   $7 000
B)   $9 000
C)   $15 000
D)   None of the above

Question 19

Which of the following statements about external company auditors is NOT true?

Accepted Answer

A)   There is substantial judgement in the audit process.
B)   External company auditors cannot credibly audit statements they have prepared.
C)   External company auditors must be independent.
D)   External company auditors provide assurance that the financial statements audited by them contain no mistakes.

Question 20

Mike's Mulching (MM) had the following assets and liabilities:  What would shareholders' equity be?

Accepted Answer

A)   $2 300
B)   $13 300
C)   $31 000
D)   None of the above

Exam 1: Introduction to Financial Accounting

Which type of information would be of most interest to shareholders?

A balance sheet:

Which of the following is NOT an example of a liability?

Which type of information would be of most interest to trade creditors?

During 2018 a company makes cash sales of $900 000. It pays $300 000 in expenses and owes $90 000 for services it received in 2018 but are payable in 2019. It pays $170 000 in dividends. What is the profit for 2018?

During 2019, a company makes credit sales of $600 000, of which $475 000 is collected at year-end. It pays $175 000 in expenses and owes $50 000 for electricity used during 2019. Accrual profit is:

The practice by Woolworths Ltd of presenting their financial statements in millions of dollars is an application of the concept of:

Which of the following use accounting information? i. Shareholders Ii) Banks Iii) Employees

ABC is a company that commenced business on 1 January 2019. Below are the balances in the 30 June 2019 financial statements. What is the balance of assets?

Which of the following is NOT an asset?

Which accounting concept is involved in the requirement that financial statements contain information that is useful to those who are making decisions?

Use the information given below at 30 June 2019 to answer the following question. What is the balance of total assets at 30 June 2019?

Which of the following involve measuring economic performance? i. Estimates Ii) Adjustments Iii) Judgements

During 2019, a company makes credit sales of $600 000, of which $475 000 is collected at year-end. It pays $175 000 in expenses and owes $50 000 for electricity used during 2019. What would the profit be if cash accounting rather than accrual accounting was used?

The preparation of financial statements in a similar form to those of other companies facilitates:

Which of the following is NOT shown in the heading of the balance sheet?

Use the information given below to answer the following question. What is the net profit for 2019?

ABC is a company that commenced business on 1 January 2019. Below are the balances in the 30 June 2019 financial statements. What is the balance of liabilities?

Which of the following statements about external company auditors is NOT true?

Mike's Mulching (MM) had the following assets and liabilities: What would shareholders' equity be?