Chapter 4- KTQT

1 : A ledger:

• A. contains only asset and liability accounts

• B. should show accounts in alphabetical order

• C. is a collection of the entire group of accounts maintained by a company

• D. is a book of original entry

2 : Posting:

• A. normally occurs before journalizing

• B. transfers ledger transaction data to the journal

• C. is an optional step in the recording process

• D. transfers journal entries to ledger accounts

Which of the following statements about a journal is false?

• A. It is not a book of original entry

• B. It provides a chronological record of transactions

• C. It helps to locate errors because the debit and credit amounts for each entry can be readily compared

• D. It discloses in one place the complete effect of a transaction

4 : Which of the following is NOT an example of intangible assets?

• A. Franchise rights

• B. Goodwill

• C. Patents

• D. Land

5 : What is the accumulated deprecation?

• A. Sum of all depreciation expenses of a fixed asset

• B. Depreciation expenses

• C. Cost of depletion of assets

• D. Future value of fixed asset

6 : Which of the following is a double entry for depreciation expenses?

• A. Accumulated depreciation debit and depreciation expenses Credit

• B. Depreciation expenses Debit and accumulated depreciation Credit

• C. Cash Debit and depreciation expenses Credit

• D. Depreciation expenses Debit and cash Credit

7 : The purchase price of a software that will be used for more than 12 months should be regarded as:

• A. a revenue expenditure

• B. a capital expenditure

• C. a long term expense

• D. an accounting period expense

8 : XYZ firm has imported a machine from abroad. Which of the following is NOT the element of machine’s cost?

• A. Purchase price of machine

• B. Import duty

• C. Demurrage charges

• D. Refundable tax

9 : Under which method of depreciation the amount of depreciation expenses remains constant throughout the useful life of a fixed asset?

• A. Reducing balance method

• B. Unit of activity method

• C. Straight line method

• D. None of these

10 : W Co bought a new printing machine from abroad. The cost of the machine was $80,000. The installation costs were $5,000 and the employees received training on how to use the machine, at a cost of $2,000. Before using the machine to print customers' orders, preproduction safety testing was undertaken at a cost of $1,000.

What should be the cost of the machine in W Co’s statement of financial position?

• A. $85,000

• B. $86,000

• C. $82,000

• D. $81,000