11 Accounting Multiple Choice Revision

There are three types of supplies for GST purposes:

• taxable, GST credits and GST free

• GST collected, GST credits received and GST free

• taxable, GST free and input taxed

• taxable, GST collected and GST free

The journal entry to record the cash purchase of inventories for $3,300 would be:

• debit inventory for $3,300 and credit cash at bank for $3,300

• debit inventory for $3000 and GST credits received for $300 and credit cash at bank for $3,300

• debit inventory for $3,300 and credit accounts payable for $3,300

• credit inventory for $3000 and GST credits received for $300 and debit cash at bank for $3,300

The journal entry to record the purchase of equipment from Office Works for $4,400 would be:

• debit equipment for $4,400 and credit accounts payable for $4,400

• credit equipment for $4,400 and debit accounts payable for $4,400

• credit equipment for $4,000 and GST credits received $400 and debit accounts payable for $4,400

• debit equipment for $4,000 and GST credits received $400 and credit accounts payable for $4,400

True or False: GST is not applicable for cash drawings

• True

• False

True or False: GST is not applicable for the drawings of inventories

• True

• False

The correct definition of a subsidiary ledger is:

• The main ledger of the business from which the trial balance is prepared

• A separate detailed ledger containing a group of accounts of a like nature that have been removed from the general ledger

• A ledger that must conform to double entry accounting principles

• A separate detailed ledger containing a group of accounts of a like nature that have been removed from the general ledger and replaced by a control account

The correct definition of inventories is:

• Goods that are held for sale in the ordinary course of the normal operations of the business

• Goods that are held for the use in the provision of services

• Goods that are held by a business for the owner's personal use

• Goods that are held by a business to help earn revenue but are not sold to customers

The FIFO method of inventory costing

• Allocates the cost of goods sold from the average value of inventories

• Allocates the cost of goods sold by matching the exact inventory sold with the inventory purchased

• Allocates the cost of goods sold from the first inventories purchased

• Allocates the cost of goods sold by performing a stocktake

The weighted average method of inventory costing

• Allocates the cost of goods sold from the average value of inventories

• Allocates the cost of goods sold by matching the exact inventory sold with the inventory purchased

• Allocates the cost of goods sold from the first inventories purchased

• Allocates the cost of goods sold by performing a stocktake

The correct definition for internal controls is:

• Those internal methods that ensure operational efficiency

• Those internal methods and measures that safeguard the assets of the business

• Those internal methods and measures that ensure there is no theft

• Those internal methods and measures that ensure the efficient management of the enterprise and achievement of planned objectives