Accounting Chapter 8 & 9 - Past Year MCQ

Which businesses do not prepare a trading account section of an income statement? 1 furniture store 2 insurance company 3 newsagent 4 toy shop 5 window-cleaner

• 1 and 2
• 2 and 5
• 3 and 4
• 3 and 5

A trader bought a machine for use in the business. He paid a part of the cost in cash and agreed to pay the remaining part in 15 months’ time. In addition to the non-current assets, which items in the statement of financial position will increase as a result of this transaction?

• Current Assets, Current Liabilities and Non-current Liabilities
• Current Assets and Non-current Liabilities
• Current Liabilities
• Non-current Liabilities

What is shown in the capital and liabilities section of a statement of financial position of a business?

• how the resources are being used by the business
• the working capital of the business
• total amounts owed by and to the business
• where the resources of the business have come from

John maintains a full set of accounting records. Why does he also prepare a statement of financial position?

• to calculate the profit for the year
• to check if assets equal capital plus liabilities
• to show the transactions which took place during the year
• to summarise what the business owns and what it owes

A sole trader paid off the business’s overdraft using his own personal funds. How did this affect the statement of financial position?

• capital - increase | assets - increase
• liabilities - decrease | capital - increase | assets - increase
• liabilities - decrease | capital - increase
• liabilities - decrease | assets - increase

Zaha is a consultant who receives fees from clients. How would Zaha calculate his profit for the year?

• fees received – cost of sales
• fees received – cost of sales + expenses
• fees received + expenses
• fees received – expenses

Businesses use financial records to prepare financial statements (final accounts). Which record is used in the preparation of the balance sheet?

• bank statement
• cash book
• purchases journal D
• sales journal

What is an income statement (profit and loss account)?

• A list of all the assets and liabilities of a business at a particular date.
• A list of all the balances in the ledger accounts of a business at a particular date.
• A statement of receipts and payments of a business during a particular period.
• A summary of income and expenditure of a business during a particular period.

A trader provides the following information for the year ended 31 August 2006. What are the expenses for the year ended 31 August 2006?

• $16 000
• $30 000
• $36 000
• $66 000

What is a Statement of Financial Position?

• a list of all the assets of a business at a particular date
• a list of all the balances in the ledger accounts at a particular date
• a statement of assets and liabilities of a business at a particular date
• a statement of profit and losses of a business at a particular date