TQ1-Chapter1 :Bookkeeping, controls and accounting

An effective accounting system should provide information

• A-on sales, cost of goods sold and profitability of the business

• B-for customers’ feedback and requirements.

• C-on internal and external reporting for managers and third parties.

• D-on new products and methods

The term “accounting period” is used to refer to the

• A-time span during which taxes are paid to the tax authorities.

• B-budget period, usually one year, relied on by the accountant.

• C-time span, usually one year, covered by the financial statements.

• D-period within which debtors are expected to settle accounts

Which of the following is a capital receipt?

• A-Interest received on fixed deposit account

• B-Commission received

• C-Premium on shares

• D-Dividend received on shares

Which of the following should be classified as capital expenditure?

• A-The annual depreciation of property

• B-Computer repairs and maintenance cost

• C-Solicitors’ fees in connection with the purchase of property

• D-The wages of the machine operators

An expense is classified as revenue expenditure if it

• A-Contributes to the operating income of the business

• B-Adds to or reduces the capital of the business

• C-Necessitates the injection of an additional capital

• D-Adds to or improves the value of non-current assets

The accounting concept that says every debit entry must have a corresponding

credit entry is

• A-Going concern

• B-Duality concept

• C-Historical cost concept

• D-Consistency concept

  1.7

Which of the following best defines “the concept of accounting”?

• A-An activity performed by accountants

• B-A system comprising several interrelated and interdependent parts

• C-A technique of managements

• D-A process of handling information of economic nature, which is useful and

  adaptive to varying situations

Which of the following is NOT a financial statement?

• A-Statement of changes in equity

• B-Statement of profit or loss

• C-Statement of financial position

• D-Statement of corporate governance

  1.9

Which of the following is NOT an external user of accounting information?

• A-Customer

• B-Manager

• C-Competitor

• D-Government

  1.10

Which of the following best explains the term capital expenditure?

• A-Expenditure relating to the issue of share capital

• B-Expenditure on expensive assets

• C-Expenditure relating to the acquisition or improvement of non-current

  assets

• D-Expenditure on non-current assets including repairs and maintenance