F3 ACCA

The financial statement that reports assets, liabilities, and owner's equity is the:

• income statement.

• owner's equity statement.

• balance sheet.

• statement of cash flows.

On the last day of the period, Alan Cesska Company buys a $900 machine on credit. This transaction will affect the:

• income statement only.

• balance sheet only.

• income statement and owner's equity statement only.

• income statement, owner's equity statement, and balance sheet.

A trial balance:

• is a list of accounts with their balances at a given time.

• proves the journalized transactions are correct.

• will not balance if a correct journal entry is posted twice.

• proves that all transactions have been recorded.

A trial balance will not balance if:

• a correct journal entry is posted twice.

• the purchase of supplies on account is debited to Supplies and credited to Cash.

• a $100 cash drawing by the owner is debited to Owner's Drawings for $1,000 and credited to Cash for $100.

• a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

The principle or assumption dictating that efforts (expenses) be matched with accomplishments (revenues) is the:

• expense recognition principle.

• cost assumption.

• time period assumption.

• revenue recognition principle.

Adjusting entries are made to ensure that:

• expenses are recognized in the period in which they are incurred.

• revenues are recorded in the period in which services are performed.

• balance sheet and income statement accounts have correct balances at the end of an accounting period.

• All the responses above are correct.

The sales accounts that normally have a debit balance are:

• Sales Discounts.

• Sales Returns and Allowances.

• Both (a) and (b).

• Neither (a) nor (b).

A credit sale of $750 is made on June 13, terms 2/10, net/30. A return of $50 is granted on June 16. The amount received as payment in full on June 23 is:

• $700.

• $686.

• $685.

• $650.

Which of these would cause the inventory turnover to increase the most?

• Increasing the amount of inventory on hand.

• Keeping the amount of inventory on hand constant but increasing sales.

• Keeping the amount of inventory on hand constant but decreasing sales.

• Decreasing the amount of inventory on hand and increasing sales.

In periods of rising prices, LIFO will produce:

• higher net income than FIFO.

• the same net income as FIFO.

• lower net income than FIFO.

• higher net income than average-cost.