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Worksheets4B POA Term 3: Mixed Questions
Total questions: 104
Worksheet time: 1hrs 20mins
We are accruing wages for the year end. What is the entry in the Wage Expense account at December 31st, 2018?
Dr Accrued b/d
Cr. Accrued c/d
Dr. Accrued c/d
Cr. Accrued b/d
Which of the folowing are an example of accrrued expenses?
Bank
Wages
Rent Received
Accounts payable
The accounting concept which states that income is recognized when earned regardless of when collected and expense is recognized when incurred regardless of when paid, is called:
Matching Principle
Time Period
Accrual or Matching
Deferral
On October 1, 2017 the company paid $18,000 for a one-year insurance policy. Insurance Expense was debited and Cash was credited. The account to be debited and its amount to be recorded on Dec. 31, 2017 is
Insurance Expense - $13,500
Prepaid Insurance - $13,500
Insurance Expense - $4,500
Prepaid Insurance - $4,500
What type of accounts are Prepaid Insurance, Prepaid Advertising, and Prepaid Expenses?
Asset
Liability
Owner's Equity
Expense
Gross profit is calculated by...
Revenue - Total Costs
Revenue + Variable Costs
Revenue - Cost of Goods Sold
Revenue - Fixed Costs
Cost of Goods Sold is calculated by...
Opening stock + purchases - closing stock
Opening stock + purchases + closing stock
Adding up all of the stock bought during the year
Opening stock - closing stock
COGS stands for
cost of goods sales
cost of goods serviced
cost of goods sold
Revenue = $1000
Cost of Goods Sold = $200
Expenses = $300
Gross Profit = ?
$800
$500
$700
$300
Revenue = $1000
Cost of Goods Sold = $200
Expenses = $00
Net Profit = ?
$800
$500
$700
$300
Net Profit = $500
Revenue = $2000
Expenses = $1000
Cost of Goods Sold = ?
$1500
$1000
$3000
$500
What is the purpose of an income statement?
calculate the bank balance
calculate net assets
calculate sales
calculate net profit
When expenses are greater than income, the business is said to incur a/an?
expense
net loss
net income
net gain
Total profit made before all remaining expenses have been deducted:
Financial Ratios
Gross Profit
Net income
Operating Statement
What happens to the net profit in the income statement?
Transferred and added to capital in balance sheet
Transferred and added to liabilities in the balance sheet
Transferred and subtracted to capital in balance sheet
Transferred and subtracted to liabilities in balance sheet
Profitability is....
Revenue less expenses
When a business makes a profit
a comparison of profit earned with an investment made
when revenue is higher than expenses
The difference between sales and Gross profit is
cost of sales
cost of goods sold
adjusted gross profit
gross profit
A cost of delivering inventory to customers is
carriage inwards
carriage outwards
A cost incurred in bringing inventory into the business is
carriage outwards
carriage inwards
Examples of Liabilities include which of the following:
Loans, credit cards, and real property
Loans, mortgage, and credit cards
Loans, Art collection, and savings account
Mortgage, credit card, and real property
Current Assets are cash or other assets that are expected to be converted to cash within a year
True
False
Which one is right?
Asset = Owner's equity + Liability
Asset = Owner's equity - Liability
Asset + Owner's equity = Liability
Asset + Owner's equity = expense
Mr.W has current assets of $500 and total assets of $1500. ABC has current liabilities of $300 and total liabilities of $800. What is the amount of ABC's owner's equity
200
700
900
800
The third line of the balance sheet at the end of the year should begin with "For the Year Ended".
True
False
How do we calculate Total Assets?
Fixed Assets - Current Liabilities
Current Assets / Current Liabilities
Fixed Assets + Current Assets
Fixed Assets - Current Assets
Select the item which is a fixed asset
Select the item which is not a component of a balance sheet.
Fixed Assets
Current Assets
Current Liabilities
Expenses
Select which two items we use when we are calculating the Net Assets/ Working Capital
Total Assets
Financed by
Capital
Total Liabilities
Calculate the total assets?
Current Assets - $100
Fixed Assets - $200
Current Liabilities -$300
Capital - $100
300
400
500
200
Which item would represent a liability in a business?
Which item do we always begin the preparation of the balance sheet with?
The Capital
The name of the sole trader or company
The Date
The Assets
What is another name for Balance Sheet?
Income Statement
Trading and Profit and Loss Account
Statement of Financial Position
None of the Above
The Statement of Financial Position shows what a business owns and owes at a specific date.
True
False
The Statement of Financial Position consist of three main accounts which are :
Assets
Libilities
Capital
All of the Above
Assets are expected to last and to be used by the business for a long time are called_____________________.
Assets
Current Assets
Non-current Assets
Capital
Which of the following is not an example of Non-current Asset.
Building
Motor Vehicle
Office Equipment
Inventory
Assets that likely to change to change into cash in the near future are called____________________.
Assets
Current Assets
Non-current Assets
Capital
Which of the following is not an example of a current asset?
Inventory
Accounts Receivable
Fixture and Fittings
Cash in Bank
Monies owed and are due for repayment in the short term are categorized as:
current liabilities
non-current liabilities
current assets
capital
Which of the following is an example of current liability?
Cash
Accounts Receivable
Accounts Payable
Capital
Non-current liabilities can be defined as monies owed but NOT due for payment in the near future.
Which of the following is an example of non-current liability?
Bank Loan
Accounts Receivable
Accounts Payable
Capital
What is the name given to the owner's or proprietor's account in the business?
Assets
Liability
Capital
All of the Above
What is the name given to the account in which the owner withdraws money from the business for his own use?
Assets
Liability
Drawings
Capital
A person's account who owes money to the business for goods or services supplied is known as___________.
Assets
Accounts Receivable
Accounts Payable
Capital
A supplier's account to whom money is owed to for goods or services supplied is known as___________.
Assets
Accounts Receivable
Accounts Payable
Capital
Which of the following current assets should be listed last in the Statement of Financial Position?
Cash in Bank
Inventory
Cash
Accounts Receivable
Which of the following Non-current assets should be listed first in the Statement of Financial Position?
Land and Building
Fixture and Fittings
Machinery
Motor Vehicle
What is the acid test ratio?
Current assets/liabilities
Money owed by the business that should be paid within a year
Similar to the current ratio but excludes stocks from current assets
What are net assets?
Total assets - total liabilities
Current assets - current liabilities
Money left over after your bills are paid
What is working capital?
Capital available to spend
Capital you use to pay for fixed assets
Funds left over to meet day to day expenses
What are curent assets?
Fixed assets
Liquid assets
Variable assets
What is Trade or other payables often called
Credit
Trade Creditors
Trade Union
Liquidity is a measure of the extent to which company is able to convert its cash or equivalent to meet its current financial obligations. True or False?
True
False
A supply of goods held in a stock by a company.
property
equipment
inventory
accounts receivable
WORKING CAPITAL is...
earned profit but not spent
current assets minus current liabilities
expences not changing depending on sales
A balance sheet shows:
statement of financial condition
fundamental analysis
growth potential
The value of payments to be received from customers who have bought goods on credit.
Debtors
Creditors
Inventories
Intangible assets
Value of debts for goods bought on credit payable to suppliers.
Debtors
Creditors
Inventories
Intangible assets
Which liability would appear last on the balance sheet?
Accounts Payable
Bank Loan
Mortgage Payable
Car Loan
Owners equity just refer to the Capital of the owner
True
False
If Assets are $7,300 and Liabilities are $500, how much is Capital?
$7,800
$7,300
$6,800
If Capital is $31,400 and Liabilities are $15,500, how much are Assets?
$46,900
$15,500
$15,900
If Assets are $19,500 and Capital is $14,300, how much are Liabilities?
33,800
$5,200
$19,500
The expenses to sales ratios for a business improved over the years. Which one of the below action most probably done to achieve the above results?
Reduction in distribution costs
Tax rebates
Repayment of loans
None of the above
What is the optimum/maximum ratio suggested for current ratio?
1:1
1:2
4:1
2:1
The following are the advantages of ratio analysis except...
Simple and easy to understand by non accountants
Very cost effective
Can use user friendly tools such as Excel
The only and best method to analyse business performance
A Company’s Current Ratio Assets are $800 000 and its current liabilities are $400 000. Subsequently, it purchased goods for $1 000 000 on credit. The Current ratio will be……………….
(a) 2:1
(b) 2.25:1
(c) 1.28:1
(d) 1.6:1
A Company’s Quick Ratio is 1.5:1; Current Liabilities are
$200 000 and Inventory is $180 000. Current Ratio will be:
(a) 0.9:1
(b) 1.9:1
(c) 1.4:1
(d) 2.4:1
If a company’s Current Assets are $600 000 and Working Capital is $200 000, its Current Ratio will be:
(a) 3 : 1
(b) 1.5: 1
(c) 2 : 1
(d) 4 : 1
If average inventory is $50 000 and closing inventory is
$2 000 less than the opening inventory, then opening and closing inventory will respectively be:
(a) $52,000 and $50,000
(b) $50,000 and $48,000
(c) $48,000 and $46,000
(d) $51,000 and $49,000
Opening inventory $40 000
Purchases $ 400 000
Purchase Returns $12 000
What will be Inventory Turnover Ratio if Closing Inventory is less than opening Inventory by $8 000?
(a) 9 Times
(b) 10.78 Times
(c) 11 Times
(d) 8.82 Times
On the basis of following data, a Company’s Gross profit percentage will be:
Net Profit $40 000
Office Expenses $20 000
Selling Expenses $36 000
Total revenue from operations $600 000.
(a) 16%
(b) 20%
(c) 6.67%
(d) 12.5%
What will be the amount of Gross Profit, if revenue from operations are $600 000 and the Gross Profit Ratio is 20% of revenue from operations?
(a) $150 000
(b) $100 000
(c) $120 000
(d) $500 000
Cash Balance $15 000
Trade Receivables $35 000
Inventory $40 000
Trade Payables $24 000
Bank Overdraft is $6 000
Calculate the Current Ratio:
(a) 3.75:1
(b) 3:1
(c) 1:3
(d) 1:3.75
Two basic measures of liquidity are :
(A) Inventory turnover and Current ratio
(B) Current ratio and Quick ratio
(C) Gross Profit ratio and Operating ratio
(D) Current ratio and Average Collection period
How do you calculate the Net Profit Ratio (Net Profit %)?
Net Profit divided by Net Sales x 100
Net Sales divided by Net Profit x 100
Select all the answers which apply:
Which of the following are methods a business could implement to increase their revenue (there is more than one correct answer)?
Increase sale price of items (still within a competitive rage)
Look for alternate forms of advertising that may reach a wider or target audience at a reasonable price for example, using social media.
Offer a sale to get rid of old stock and introduce new ‘on trend’ stock items
Introduce other sources of revenue, for example offering a service rather than just selling products or renting out unused office space
What is the Gross Profit Margin for this business?
20%
30%
25%
40%
What is the Net Profit Percentage for this business?
17%
30%
22%
18%
A business hasCurrent assets of $8m ($4m is stock) & Current Liabilities of $2m. What is the Acid Test ratio?
1:2
4:1
2:1
1:4
What is the formula for Creditor Payback Ratio or Trade Payables Ratio (in days)?
Trade payables / Total Purchases x 365
(where Total Purchases = Cash Purchases + Credit Purchases)
Total Purchases / Trade Payables x 365
(where Total Purchases = Cash Purchases + Credit Purchases)
Trade Payables / Credit purchases x 365
Credit Purchases / Trade Payables x 365
Cost of Goods Sold/ Average Inventory will be equal to:
Inventory turnover (days)
Inventory turnover (times)
Closing Inventory
Opening Inventory
