VCE Accounting Exam Revision Unit 3

Which accounting assumption states that reports are prepared for a specific period (e.g. monthly or yearly)?

• Entity

• Period

• Accrual

• Going Concern

Which qualitative characteristic requires reports to be free from bias?

• Relevance

• Faithful Representation

• Timeliness

• Comparability

Which of the following is a source document for a credit purchase of inventory?

• Sales Invoice

• Purchase Invoice

• Credit Note

• Receipt

Which element is best described as “a present economic resource controlled by the entity”?

• Liability

• Asset

• Revenue

• Expense

Which of the following is a non-current liability?

• Accounts Payable

• Bank Overdraft

• Loan (5-year term)

• GST Clearing

Which statement about the General Ledger is correct?

• It only records revenues and expenses

• It shows all accounts in T-form

• It replaces the General Journal

• It is used only at balance day

The GST Clearing account is classified as:

• Asset

• Liability

• Revenue

• Owner’s Equity

If a business purchases inventory on credit, what is the effect on the accounting equation?

• Assets increase, Liabilities increase

• Assets increase, Equity decreases

• Liabilities decrease, Equity increases

• Assets decrease, Liabilities increase

Inventory used for advertising is recorded as:

• Asset

• Expense

• Liability

• Revenue

If the owner contributes equipment at fair value, which accounts are affected?

• Equipment ↑, Capital ↑

• Bank ↑, Capital ↑

• Equipment ↑, Drawings ↑

• Revenue ↑, Equipment ↑