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Financial Accounting Mid term Assignment

Total questions: 135

Worksheet time: 1hrs 10mins

Name
Class
Date
1.
The original cost of a plant asset minus accumulated depreciation.
a)
assessed value
b)
half-year convention
c)
current asset
d)
book value of a plant asset
2.
Cash and other assets expected to be exchanged for cash or consumed within a year.
a)
loss on plant asset
b)
current asset
c)
gain on plant asset
d)
modified half-year convention
3.
The decrease in the value of a plant asset because of the removal of a natural resource.
a)
salvage value
b)
loss on plant asset
c)
depletion
d)
gain on plant asset
4.
revenue that results when a plant asset is sold for more than book value.
a)
gain on plant asset
b)
loss on plant asset
c)
salvage value
d)
plant asset record
5.

Why does a business provide for depreciation on fixed assets?

a)

to retain cash in the business for replacement of the assets

b)

to charge the cost of fixed assets against profits in the year of purchase

c)

to ensure that the realisable value of assets is shown in the Balance Sheet

d)

to ensure that the matching principle is applied when preparing final accounts

6.

X buys a machine on 1 January 2000 for $10 000 and depreciates it by 20 % per annum using the

straight-line method.

X sells the machine on 1 January 2003 for $3000.

What is the profit or loss on disposal?

a)

$1000 loss

b)

$3000 loss

c)

$1000 profit

d)

$3000 profit

7.

A fixed asset costing $5000 is depreciated at the rate of 20 % per annum using the

diminishing balance method.

What is the total amount of depreciation for the first two years?

a)

$1000

b)

$1200

c)

$1800

d)

$2000

8.

What is the main purpose of charging depreciation on fixed assets?

a)

to provide funds for the replacement of assets

b)

to record the assets at their market value

c)

to reduce the cost of repairing assets

d)

to spread the cost of assets over their useful lives

9.

A machine was purchased on 1 January 2013 for $12 000. It has a working life of 8 years when it

will be sold for $2000. Depreciation is calculated using the straight line method.

What was the written down value at 31 December 2013?

a)

$10 000

b)

$10 500

c)

$10 750

d)

$12 000

10.

Machinery costing $25 000 is depreciated at 20 % per annum using the diminishing (reducing)

balance method.

It is sold at the start of year 3 for $12 000.

What is the profit or loss on disposal?

a)

loss $3000

b)

loss $4000

c)

profit $3000

d)

profit $4000

11.

How is the balance on the provision for depreciation of motors account shown in the final

accounts?

a)

It is added to the current liabilities in the Balance Sheet.

b)

It is deducted from the fixed assets in the Balance Sheet.

c)

It is credited in the Profit and Loss Account.

d)

It is debited in the Profit and Loss Account.

12.
The __________concept states that businesses should be treated as if they will continue to stay in business.
a)
going concern
b)
business entity
13.
The accounting principles that states companies and owners should be account for separately..
a)
Business entity concept
b)
Going concern concept
14.

Switching accounting principles every year would violate the

a)

money measurement principle

b)

consistency principle

15.

The cost of a small calculator is accounted as an expense and not shown as an asset in financial statement of a business entity due to…..

a)

materiality concept

b)

matching concept

c)

historic cost concept

d)

principle of full disclosure

16.

There's no difference between Accounting Concepts and Accounting Conventions.

a)

True

b)

False

17.

The cost of a tape dispenser has been charged to an expense account although it will still be in use in 10 years time.


Which accounting concept is being applied?

a)

materiality concept

b)

prudence concept

c)

going concern concept

d)

accrual concept

18.

A sole trader has sold his private house but has not recorded anything about it in the business records.


What accounting concept is being applied?

a)

confidentiality

b)

historical cost

c)

business entity

d)

prudence

19.

The cost of a tape dispenser has been charged to an expense account although it will still be in use in 10 years time.


Which accounting concept is being applied?

a)

materiality concept

b)

prudence concept

c)

going concern concept

d)

accrual concept

20.

A sole trader has sold his private house but has not recorded anything about it in the business records.


What accounting concept is being applied?

a)

confidentiality

b)

historical cost

c)

business entity

d)

prudence

21.

A debt has been written off as bad even if there is still a chance that debtor may eventually pay it.


What concept is being applied?

a)

prudence

b)

going concern

c)

materiality

d)

substance over form

22.

A machine has been bought for $5 000 and entered in the machine account at that amount even though it is worth $12 000.


What accounting concept is being applied?

a)

historical cost

b)

dual aspect

c)

prudence

d)

realisation

23.

An expert says that the value of the management team of the company is worth well over a million dollars yet nothing is entered for it in the books.


What accounting concept is being applied?

a)

money measurement

b)

materiality

c)

substance over form

d)

dual aspect

24.

A motor van broke down in December 2017. The repair bill was not paid until 2018, yet it was treated as a 2017 expense.


What accounting concept is being applied?

a)

accruals

b)

historical cost

c)

realisation

d)

materiality

25.

A customer saw a carpet in 2017 and said she might well buy it. She telephoned in 2018 and asked for the carpet to be delivered. The item was not treated as a sale in 2017 but was treated as a sale in 2018.


What accounting concept is being applied?

a)

realisation

b)

accruals

c)

prudence

d)

going concern

26.

The final day of the financial year saw the passing of a new law which rendered the goods that we sell illegal and the business would have to close down. The accountant says that the assets in the financial statements cannot be shown at cost.


What accounting concept is being applied?

a)

going concern

b)

historical cost

c)

realisation

d)

substance over form

27.

We have been told that we cannot show our asset of motor car at cost in one year and market value in the next year.


What accounting concept is being applied?

a)

consistency

b)

going concern

c)

historical cost

d)

prudence

28.

We have shown all items of machinery costing less than $100 as machinery operating expenses.


What accounting concept is being applied?

a)

materiality

b)

going concern

c)

prudence

d)

historical cost

29.

Electricity consumed during the accounting period is still unpaid at year end.


Name the accounting concept you should follow to deal with this.

(a)  

30.

The owner of the business has invested his private asset in the business.


Name the accounting concept that should be followed to deal with this.

(a)  

31.

The organisation has suffered large losses in the last financial year and is extremely uncertain whether it can continue to operate next year.


Name the accounting concept that should be followed.

(a)  

32.

Emily works for a firm of accountants and one of the clients is her parents' friend. Emily's father asked her how his friends business was doing and how much profit it made last year.


What accounting concept should Emily apply.

(a)  

33.

Identify the type of expenditure.


Purchase of a motor van

a)

Capital

b)

Revenue

34.

Identify the type of expenditure.


Cost of rebuilding warehouse wall which had fallen down

a)

Capital

b)

Revenue

35.

Identify the type of expenditure.


Building extension to warehouse

a)

Capital

b)

Revenue

36.

Identify the type of expenditure.


Painting extension to warehouse when it is first built.

a)

Capital

b)

Revenue

37.

Identify the type of expenditure.


Repainting extension to warehouse three days after

a)

Capital

b)

Revenue

38.

Identify the type of expenditure.


Transportation cost on materials for new warehouse

a)

Capital

b)

Revenue

39.

Identify the type of expenditure.


Transportation costs on purchases

a)

Capital

b)

Revenue

40.

Identify the type of expenditure.


Transportation costs on sales

a)

Capital

b)

Revenue

41.

Identify the type of expenditure.


Legal costs of collecting debts

a)

Capital

b)

Revenue

42.

Identify the type of expenditure.


Legal charges on acquiring new building for office

a)

Capital

b)

Revenue

43.

Identify the type of expenditure.


Cost of installing a new machine

a)

Capital

b)

Revenue

44.

A __________ is part of the annual financial statements and is used to calculate the cost of goods produced.

a)

Manufacturing account

b)

Prime cost

c)

Cost of production

d)

Work in progress

45.

Manufacturing Account is prepared to calculate

a)

Cost of capital

b)

Cost of sales

c)

Cost of goods sold

d)

Cost of production

46.

Which of the following are examples of indirect costs? (There are THREE correct answers to select!)

a)

Factory heat and light

b)

Factory manager salary

c)

Factory rent and rates

d)

Machine operator wages

47.

_______ is the total of the direct materials, direct labour and direct expenses. It is the cost of the essentials necessary for production.

a)

Manufacturing account

b)

Prime cost

c)

Cost of production

d)

Work in progress

48.

Which of these is not an example of a Factory Overhead?

a)

Depreciation of factory Machinery

b)

Factory Rates

c)

Factory Insurance

d)

Depreciation of office machinery

49.

A manufacturing account records the administrative expenses and the finance expenses of the business

a)

TRUE

b)

FALSE

50.

Manufacturing Account does not include

a)

Direct and Indirect cost

b)

Prime and Factory Overhead cost

c)

Administrative & Selling cost

d)

Direct & Indirect cost

51.

What is direct factory wages?

a)

Wages of the people employed in the factory making the goods.

b)

Wages of people employed in the factory but who are not involved in the actual production process

52.

__________ is the goods which are partly completed at the end of the financial year.

a)

Work in progress

b)

Cost of production

c)

Prime cost

d)

Manufacturing account

53.

Which of the following is a direct cost?

a)

A. Factory rent

b)

B. Production workers' wages

c)

C. Factory supervisor's salary

d)

D. Factory machine maintenance

54.

Which of the following is required when calculating prime cost?

a)

A. Office wages

b)

B. Manufacturing wages

c)

C. Depreciation of machinery

d)

D. Factory water charges

55.

Which of the following expenses would vary with the amount of goods produced?

a)

A. Wages paid to machine operators

b)

B. Works manager's salary

c)

C. Rent of factory production units

d)

D. Insurance premium on factory buildings

56.

Ignoring work in progress, which one of the following statements correctly defines factory cost of production?

a)

A. Raw materials purchased plus indirect costs.

b)

Prime cost plus factory overheads.

c)

C. Prime cost minus factory overheads.

d)

D. Prime costs plus direct costs.

57.

When preparing the final accounts of a manufacturing business, carriage inwards on raw materials should always be included in:

a)

A. the income statement

b)

B. the manufacturing account

c)

C. the trading account

d)

the appropriation account

58.

For the year ended 31 December 2018, the prime cost was $80 000, factory overheads totalled $120 000, work in progress 1 January 2018 was $20 000 and at 31 December 2018 was $30 000. What was the cost of production of finished goods?

a)

A. $190 000

b)

B. $200 000

c)

C. $210 000

d)

D. $220 000

59.

The following figures have been taken from the accounts of a manufacturing organization:

$

Cost of raw materials used 90 000

Direct wages 50 000

Indirect wages 30 000

Direct expenses 40 000

Indirect expenses 20 000


Which of the following figures represents the manufacturers' prime cost?

a)

A. $230 000

b)

B. $180 000

c)

C. $140 000

d)

D. $90 000

60.

P. Hawk has a manufacturing business. The cost of his raw materials is $1 900. Rates and rent total $2 000 and factory wages amount to $2 500. The number of units produced is 1 640. What is the cost of producing ONE unit?

a)

A. $ 4

b)

B, $ 6

c)

C. $10

d)

D, $13

61.

Which of the following may be used to calculate the cost of production?

a)

A. Prime cost + factory overheads - opening work in progress +

closing work in progress.

b)

B..Prime cost - factory overheads - opening work in progress +

closing work in progress.

c)

C. Prime cost + factory overheads - opening work in progress

- closing work in progress.

d)

D. Prime cost + factory overheads + opening work in progress

- closing work in progress.

62.

Which of the following should be charged to the manufacturing account?

a)

A. Office rent

b)

B. Carriage on sales

c)

C. Managing Director's salary

d)

D. Carriage on raw materials

63.

The production cost is the total of:

a)

A. prime cost + factory overhead expenses

b)

B. direct labour + direct materials + direct expenses

c)

C. administrative expenses + selling expenes

d)

None of the above

64.

Work in progress is the :

a)

A. sales less cost of goods sold

b)

B. sales plus cost of goods sold

c)

C. value of finished goods on hand

d)

D. value of partly finished goods

65.

The items, raw materials inventory, work in progress inventory and finished goods inventory are MOST like seen together on the balance sheet of a

a)

A. garage

b)

B. shoe factory

c)

C. supermarket

d)

D. bus company

66.

$

Work in progress as at January 1 1 600

Work in progress as at December 31 1 700

Cost of materials used 3 000

Indirect expenses 3 200

Factory wages 5 000


What is the cost of goods produced?

a)

A. $ 8 000

b)

B. $ 8 700

c)

C. $11 100

d)

D. $11 200

67.

P. Hack has a manufacturing business. The cost of his raw materials is $1,900. Rates and rent total $2,000 and factory wages amount to $2,500.

The number of units produced is 640, What is the cost of ONE unit?

a)

$4

b)

$6

c)

$10

d)

$13

68.

What is the cost of raw materials available for production?

a)

$800

b)

$,100

c)

$4,500

d)

$5,300

69.

Which of the following maybe used to calculate the cost of production?

a)

Prime Cost + Factory Overheads - Opening work in Progress + Closing Work in Progress

b)

Prime Cost-Factory Overheads-Opening Work in Progress +Closing Work in Progress

c)

Prime Cost + Factory Overheads-opening work in Progress- closing work in progress

d)

Prime Cost +Factory Overheads + Opening Working Progress - Closing work in progress

70.

How are royalties classified in a manufacturing firm?

a)

Direct expense

b)

Indirect expense

c)

Administrative expense

d)

Selling & distribution expense

71.

Item 19 refers to the following:


Factory workers' wages - $2 250

Direct materials - $3 200

Factory lighting - $550

Factory manager's salary - $2 400

Indirect materials - $625


What is the total value of direct expenses?

a)

$3 200

b)

$5 200

c)

$5 450

d)

$9 025

72.

Item 20 refers to the following:


Factory workers' wages - $2 250

Direct materials - $3 200

Factory lighting - $550

Factory manager's salary - $2 400

Indirect materials - $625


What is the total value of indirect expenses?

a)

$625

b)

$2 950

c)

$3 025

d)

$3 575

73.

Which of the following is NOT an example of a manufacturing firm?

a)

Grocery

b)

Bakery

c)

Garment factory

d)

Woodworking shop

74.

The items raw materials inventory, work-in-progress inventory and finished goods inventory are MOST likely seen together on the balance sheet of a

a)

garage

b)

supermarket

c)

shoe factory

d)

bus company

75.

______ is the discount given to the customers for prompt payment of their accounts

a)

Discount allowed

b)

Trade discount

c)

Discount received

d)

Legal tender

76.

_______ is the discount received from suppliers for prompt payment of our accounts

a)

Discount allowed

b)

Discount received

c)

Sales

d)

Creditor

77.

_____ is an extracted book of an account

a)

Balance sheet

b)

Bank reconciliation

c)

Trial balance

d)

Petty cash book

78.

In trial balance all these are credited except (a) (b)

(c) (d)

a)

Capital

b)

Sales

c)

Purchases

d)

Creditors

79.

All the following are reasons for disagreement between cash book and bank statement except

a)

Standing order

b)

Bank Errors

c)

Bank charges

d)

Overdraft

80.

All the following are reasons why trial balance may not balance except

a)

Error of posting

b)

Errors in addition

c)

Wrong figures in the ledger

d)

Error of omission

81.

_____ is a part of the profit distributable to shareholders of an organization

a)

Premium

b)

Dividend

c)

Shares

d)

Profit

82.

_______ occurs when a creditor is authorized to ask payment from the customer’s bank

a)

Discount

b)

Standing order

c)

Direct debit

d)

Dishonoured cheque

83.

The balance of the adjusted cash book is used in preparing ______

a)

Trading account

b)

Bank statement

c)

Bank reconciliation statement

d)

Trial balance

84.

Trial balance is used to prepare _____

a)

Control account

b)

Bank statement

c)

Cash book

d)

Trading, profit and loss account

85.

In petty cash book the credit side is for

a)

Creditors

b)

Debtors

c)

Analysis columns

d)

Payment

86.

The debit side of petty cash book is for

a)

Bank

b)

Receipts

c)

Debtors

d)

Creditors

87.

______ is the book of original or prime entry which is used for recording small disbursement or expenses (a) (b) (c) (d)

a)

Cash book

b)

Petty cash book

c)

Trial balance

d)

Bank statement

88.

Liabilities of the petty cashier can never _____ the imprest amount

a)

Exceed

b)

Equal

c)

Less to

d)

Reach

89.

Cash discount is classified into ______

a)

4

b)

3

c)

2

d)

1

90.

Accounting equation can be expressed as

a)

A= C + L

b)

C= L –A

c)

A= C – L

d)

L= A+C

91.

Which of the following is an asset?

a)

Creditor

b)

Loan

c)

Cash in hand

d)

Capital

92.

What is liability when asset is N4000, and capital is N2000?

a)

N6000

b)

N1000

c)

N20000

d)

N2000

93.

Bank statement is prepared by _____

a)

Bank

b)

Account holder

c)

Cashier

d)

Manager

94.

All the following are  added to balance as per bank statement except

a)

Standing order

b)

Bank charges

c)

Uncredited cheque

d)

Dividend

95.

Motor van, building, furniture are examples of _____

a)

Liabilities

b)

Capital

c)

Assets

d)

Equity

96.

______ is a book that combines cash, bank and discount accounts into a single book

a)

Bank statement

b)

Three column cash book

c)

Petty cash book

d)

Trial balance

97.

______ is the properties or resources of a business organization

 

a)

Assets

b)

Capital

c)

Long term

d)

Liability

98.

______ is the statement of the position of the business which shows the assets of a business and the sources of those assets

a)

Balance sheet

b)

Capital

c)

Assets

d)

Liabilities

99.

Which of this column is not included in trial balance?

a)

Folio

b)

Particulars

c)

Debit side

d)

Credit side

100.

All expenses must be recorded in _____ side of trial balance

a)

Debit

b)

Credit

c)

Particular

d)

Ledger

101.

All the following are branches of accounting except

a)

Balance sheet accounting

b)

Cost accounting

c)

Management accounting

d)

Financial accounting

102.

_____ are accounts in which income and expenditure are recorded

(a) (b) (c) (d)

a)

Real account

b)

Cost account

c)

Nominal account

d)

Personal account

103.

All the following are examples of personal account except

a)

Equipment

b)

Creditor

c)

Debtor

d)

All of the above

104.

Which of the following is not a source document?

a)

Money

b)

Invoice

c)

Receipt

d)

Credit note

105.

Financial records keeping were believed to have begun at about _____ years BC

a)

4000

b)

150

c)

400

d)

2400

106.

All the following are users of accounting information except

 

a)

Shareholders

b)

Management

c)

Government

d)

Debtors

107.

_____ is the process of allocating the cost of the natural resources to the units removed

a)

Appreciation

b)

Depreciation

c)

Depletion

d)

Amortization

108.

All the following are non manufacturing cost except

a)

Selling expenses

b)

Direct expenses

c)

Distribution expenses

d)

Administration expenses

109.

Where there is no agreement, the partners are to share their profit

a)

Equally

b)

2:3

c)

5%

d)

50% each

110.

______ is a document drawn up by the partners, which contains the rules and regulations guiding the business

a)

Partnership

b)

Account

c)

Document

d)

Deed of partnership

111.

All the following are features of partnership account except

a)

Balance sheet

b)

Appropriation account

c)

Current account

d)

Debtors account

112.

Which of the following is an evidence of payment

a)

Invoice

b)

Cheque

c)

Receipt

d)

Delivery note

113.

The total cash and credit sales during a period is called

a)

Turnover

b)

Sales

c)

Cost of goods sold

d)

Carriage Inward

114.

_____ is the cost of transportation charged on goods purchased

(a)

a)

Carriage Outwards

b)

Carriage Inwards

c)

Returns Outwards

d)

Returns Inwards

115.

Stock of goods is divided into _______

a)

3

b)

10

c)

4

d)

2

116.

Returns inwards is also known as ______

a)

Purchases returns

b)

Sales Returns

c)

Carriage Inward

d)

Carriage Outward

117.

Purchases returns is also known as _______

a)

Sales returns

b)

Return outwards

c)

Returns inwards

d)

Discount allowed

118.

Accrued income is added to ____ and it is treated as an ____

a)

Income, asset

b)

Income, liability

c)

Income, expense

d)

Expenses, asset

119.

Prepaid expense is deducted from _____ and it is treated as ____

a)

Asset, Liability

b)

Income, asset

c)

Expenses, asset

d)

Expenses, income

120.

The purpose of trading account is to ascertain ______

a)

Gross profit

b)

Gross loss

c)

Gross profit/loss

d)

Net profit/loss

121.

The balance of trading account is transferred to _____

a)

Balance sheet

b)

Profit and loss account

c)

Debtors account

d)

Sales account

122.

______ and _______ are the two methods of preparing trading, profit and loss account

a)

Vertical and horizontal

b)

Vertical and parallel

c)

T and vertical

d)

T and horizontal

123.

_____ are goods or cash withdrawn by the owner of a business at interval for his own use

a)

Contra entries

b)

Capital

c)

Income

d)

Drawing

124.

All the following accounts follow the principle of double entry except

a)

Trading account

b)

Balance sheet

c)

Cash book

d)

Sales account

125.

Mathematical expression of two financial items is known as

a)

Mathematical Analysis

b)

Mathematical expression

c)

Ratio analysis

d)

Ratio expression

126.

Efficiency ratios highlights:

a)

How well assets and liabilities are managed

b)

Measures how quickly assets can be converted to cash

c)

Share of ownership in a company

d)

A comparison of two amounts

127.

If working capital of a company is nil, what will be the current ratio?

a)

1:1

b)

0:1

c)

1:0

d)

2:1

128.

How do you calculate Gross Profit?

a)

Sales - COGS

b)

Sales - NP

c)

COGS - Expenses

d)

COGS - NP

129.

The current ratio is also known as the:

a)

Quick ratio

b)

Working capital ratio

c)

Cash flow ratio

d)

Capital structure ratio

130.
Financial ratios that tell how well a company can pay off its short-term debts and meet unexpected needs for cash.
a)
liquidity ratios
b)
efficiency ratios
c)
leverage ratios
d)
profitability ratios
131.

What is the formula for Gross Profit Margin

a)

Profit / Net sales revenue X 100

b)

Gross profit / Net sales revenue X 100

c)

Gross profit / Sales revenue X 100

d)

Profit / Cost of sales X 100

132.

When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as

a)

Accounting ratio

b)

Financial ratio

c)

Costing ratio

d)

None of the above

133.
Financial ratios that tell how much of each dollar of sales, assets, and owner's investments resulted in net profit.
a)
liquidity ratios
b)
efficiency ratios
c)
profitability ratios
d)
leverage ratios
134.

The relationship between two financial variables can be expressed in:

a)

Pure ratio

b)

Percentage

c)

Rate or time

d)

Either of the above

135.

Long term loans are :

a)

current liabilities

b)

non-current liabilities

c)

non-current assets

d)

current assets

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