Lecture 1 Group A

Accounting is a profession that has evolved in response to society’s need for economic information to help people make

• products

• progress

• decisions

• money

Assuming there were no drawings or contributions of capital, profit for 2014 is _.

• $160,000

• $120,000

• $300,000

• $220,000

The assets of Frank’s business increased by $40 000 and the liabilities increased by $10 000 during the current year. If the profit for this period was $25 000, what additional contribution or withdrawal was made by the owner? (Assume only a withdrawal or a contribution was made.)

• Drawings $10,000

• Contributions $10,000

• Contributions $5,000

• Drawings $5,000

On 2 January 2014 Fife Corp buys goods from O’Brien and agrees to pay for them within 60 days. On the balance sheet for Fife Corp at 2 January 2014 the amount owing to O’Brien would be reported as _.

• advance payment by a customer

• accounts receivable

• accounts payable

• prepaid expenses

If an entity has assets of $168 900 and liabilities of $70 000 its equity is:

• $238,900

• $238,990

• $98,990

• $98,900

_ is/are resources controlled by the entity as a result of past events and from which

future economic benefits are expected to flow to the entity.

• Liabilities

• Assets

• Equity

• Income

If income is $180 000, rent expense is $120 000 and advertising expense is $10 500, profit or loss is

_.

• $300,900 profit

• $49,500 profit

• $49,500 loss

• $300,500 loss

If the loss for the period is $15 000 and total income is $115 000, total expenses for the period are _:

• $100,000

• $130,000

• $115,000

• $145,000

From the point of view of a business entity, a person or business to whom a debt is owed is known as a _.

• Debtor

• Creditor

• Customer

• Shareholder

Julio’s opening capital at 1 July 2011 was $50 000, his profit for the year was $18 000 and his drawings were $15 000.  What is the final balance of his capital at the end of the year?

• $68,000

• $50,000

• $83,000

• $53,000