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Total questions: 159
Worksheet time: 1hrs 20mins
Which of the following statements best defines a statement of financial position?
It is a summary of income and expenditure for an accounting period
It is a summary of cash receipts and payments made during an accounting period
It is a summary of assets, liabilities and equity at a specified date
It is a summary of assets and expenses at a specified date
Performing services on account will have the following effects on the components of the basic accounting equation:
Increase assets and decrease owner’s equity.
Increase assets and increase owner’s equity.
Increase assets and increase liabilities.
Increase liabilities and increase owner’s equity.
Which one of the following user groups is likely to require the most detailed financial information?
The management
Investors and potential investors
Government agencies
Employees
Which of the following statements are true?
(1) Accounting can be described as the recording and summarising of transactions.
(2) Financial accounting describes the production of a statement of financial position and statement of profit or loss for internal use.
(1) only
(2) only
Both (1) and (2)
None
What is the main purpose of financial accounting?
To record all transactions in the books of account
To provide management with detailed analyses of costs
To enable preparation of financial statements that provides information about an entity’s financial performance and position
To calculate profit or loss for an accounting period
Which of the following is not a step in the accounting process?
Analyzing
Verification
Recording
Summarizing
Which of the following statements about users of accounting information is
INCORRECT?
Management is an internal user
Taxing authorities are external users.
Present creditors are external users
Regulatory authorities are internal users
Which of the following events is not recorded in the accounting records?
Equipment is purchased on account
An employee is terminated
A cash investment is made into the business
The owner withdraws cash for personal use
Which of the following statements is FALSE?
A statement of cash flows summarizes information about the cash inflows (receipts) and outflows (payments) for a specific period of time
A statement of financial position reports the assets, liabilities, and owner’s equity at a specific date.
An income statement presents the revenues, expenses,changes in owner’s equity, and resulting net income or net loss for a specific period of time.
An statement of changes in equity summarizes the changes in owner’s equity for a specific period of time.
The financial statement that reports assets, liabilities, and owner’s equity is the
Income statement
Statement of changes in equity
Statement of financial position
Statement of cash flows.
Which accounting concept should be considered if the owner of a business takes goods from inventory for his own personal use?
The fair presentation concept
The accruals concept
The going concern concept
The business entity concept
Sales revenue should be recognised when goods and services have been supplied; costs are incurred when goods and services have been received.
Which accounting concept governs the above?
The business entity concept
The materiality concept
The accruals concept
The duality concept
Which accounting concept states that omitting or misstating this information could influence users of the financial statements?
The consistency concept
The accruals concept
The materiality concept
The going concern concept
Which of the following accounting concepts means that similar items should receive a similar accounting treatment?
Going concern
Accruals
Matching
Consistency
Which ONE of the following statements describes faithful representation, a qualitative characteristic of faithful representation?
Revenue earned must be matched against the expenditure incurred in earning it.
Revenue earned must be matched against the expenditure incurred in earning it
The presentation and classification of items in the financial statements should stay the same from one period to the next.
Financial information should be complete, neutral and free from error
Which one of the following statements best defines a liability?
A liability is an obligation arising from a past transaction or event.
A liability is a legally binding amount owed to a third party.
A liability is an obligation arising from a past transaction or event which is expected to be settled by an outflow of economic benefits.
A liability is anything which results in an outflow of economic benefits from an entity.
Which one of the following statements best defines an expense?
An expense is any outflow of economic benefits in an accounting period
An expense is an outflow of economic benefits resulting from the purchase of resources in an accounting period.
An expense is an outflow of economic benefits resulting from a claim by a third party.
An expense is an outflow of economic benefits in an accounting period as a result of the using up of resources or a fall in the value of an asset.
Which one of the following statements best defines an asset?
An asset is a resource owned by the entity with a financial value.
An asset is a resource controlled by an entity from which future economic benefits are expected to be generated.
An asset is a resource controlled by an entity as a result of past events.
An asset is a resource controlled by an entity as a result of past events from which future economic benefits are expected to be generated.
Which of the following is an example of a liability?
Inventory
Receivables
Plant and equipment
Loan
Which of the following statements defines the business entity concept?
The business will continue to operate for the foreseeable future.
A business is always a separate legal entity, distinct from those who own or manage that business.
A business is never a separate legal entity from those who own or manage that business.
Financial transactions are recorded and presented from the perspective of the
business, rather than from the perspective of the owners or managers of that business.
Which accounting concept or principle which, in times of rising prices, tends to understate asset values and overstate profit?
The historical cost principle
The going concern
The prudence concept
The materiality concept
As of December 31, 2012, Stone Company has assets of $3,500 and owner’s equity of $2,000.
What are the liabilities for Stone Company as of December 31, 2012?
$1,500.
$1,000
$2,500.
$2,000.
During 2012, H Company’s assets decreased $50,000 and its liabilities decreased $90,000. Its owner’s equity therefore:
Increased $40,000
Decreased $140,000.
Decreased $40,000
Increased $140,000.
On the last day of the period, ABC Company buys a $900 machine on credit. This transaction will affect the:
Income statement only.
Statement of financial position only
Income statement and statement of changes in equity only.
Income statement, statement of changes in equity, and statement of financial position
Summarized operations for ABC Co. for the month of July, 2012 are as follows:
- Revenues earned: for cash $20,000; on account $70,000.
- Expenses incurred: for cash $26,000; on account $40,000.
Indicate for ABC Co the total revenues?
$20,000
$70,000
$90,000
$50,000
Presented below is selected information related to Lance Company at December 31, 2012. Lance reports financial information monthly.
Accounts Payable $ 3,000
Salaries and Wages Expense $16,500
Cash 4,500
Notes Payable 25,000
Advertising Expense 6,000
Rent Expense 10,500
Service Revenue 51,500
Accounts Receivable 13,500
Equipment 29,000
Owner’s Drawings 7,500
Determine the total assets of Lance Company at December 31, 2012?
$47,000
$33,500
$4,500
$29,000
Which of the following items are liabilities of Minh Stores?
(a) Cash. (d) Accounts receivable
(b) Accounts payable. (e) Supplies.
(c) Owner’s drawings. (f) Equipment.
(g) Salaries and wages payable. (i) Rent expense.
(h) Service revenue.
a, b, g, h
b, g
d, e
i, h
Which of the following items are assets of Minh Stores?
(a) Cash. (d) Accounts receivable.
(b) Accounts payable. (e) Supplies.
(c) Owner’s drawings. (f) Equipment.
(g) Salaries and wages payable. (i) Rent expense.
(h) Service revenue.
a, b, d
b, g
a, d, e, f
g, h
Indicate the effects INCREASE in the accounting equation from the following transactions:
a. Owner invested cash in the business.
b. Performed services for cash.
c. Purchased equipment by signing a note payable.
(a)
(a), (b)
(b), (c)
(a), (b), (c)
During 2013, H Company’s assets increased $70,000 and its liabilities decreased $40,000. Its owner’s equity therefore:
Increased $30,000
Decreased $110,000
Decreased $30,000
Increased $110,000
Which of the following are books of prime entry?
Sales day book and trial balance
Petty cash book and accounts receivables ledger
Petty cash book and journal
Purchase day book and accounts payable ledger
In which book of prime entry would a business record the part-exchange value received for a vehicle traded in when purchasing a new vehicle?
The sales daybook
The cash payments book
The journal
The non-current asset register
Which one of the following best describes the purpose of a purchase invoice?
It is issued by a supplier as a request for payment
It is sent to supplier as a request for a supply
It is issued by supplier listing details of recent transactions
It is sent to the supplier as notification of payment
In which book of prime entry would discounts received be recorded?
Cash received book
Cash payments book
Sales day book
Purchases day book
A business can make a profit and yet have a reduction in its bank balance. Which ONE of the following might cause this to happen?
The sale of non-current assets at a loss
The charging of depreciation in the statement of profit or loss
The lengthening of the period of credit given to customers
The lengthening of the period of credit taken from suppliers
Which of the following documents should accompany a return of goods to a supplier?
Debit note
Remittance advice
Purchase invoice
Credit note
Which of the following are books of prime entry?
1 Sales day book
2 Cash book
3 Journal
4 Purchase ledger
1 and 2 only
1, 2 and 3 only
1 only
All of them
In which book of prime entry will a business record debit notes in respect of goods which have been sent back to suppliers? (???)
The sales returns day book
The cash book
The purchase returns day book
The purchase day book
Which of the following would be recorded in the sales day book?
Discounts allowed
Sales invoices
Credit notes received
Trade discounts
Which of the following statements is true?
A debit records an increase in liabilities
A debit records a decrease in assets
A credit records an increase in liabilities
A credit records an decrease in capital
Which one of the following provides evidence that an item of expenditure on petty cash has been approved or authorised?
Petty cash voucher
Record of the transaction in the petty cash book
Receipt for the expense
Transfer of cash from the bank account into petty cash
Which one of the following provides evidence that an item of expenditure on petty cash has been approved or authorised?
Petty cash voucher
Record of the transaction in the petty cash book
Receipt for the expense
Transfer of cash from the bank account into petty cash
How is the total of the sales day book recorded in the nominal ledger?
Debit Credit
Receivables Ledger/ Receivables Control Account
Receivables Control Account/ Receivables Ledger
Sales/ Receivables Control Account
Receivables Control Account/ Sales
Are the following statements about debit entries true or false?
1 A debit entry in the cash book will increase an overdraft in the accounts.
2 A debit entry in the cash book will increase a bank balance in the accounts.
Both true
Both false
1 true and 2 false
1 false and 2 true
Are the following statements about debit entries true or false?
1 A debit entry in the cash book will increase an overdraft in the accounts.
2 A debit entry in the cash book will increase a bank balance in the accounts.
Both true
Both false
1 true and 2 false
1 false and 2 true
A trial balance is made up of a list of debit balances and credit balances.
Which of the following statements is correct?
Every debit balance represents an expense
Assets are represented by debit balances
Liabilities are represented by debit balances
Income is included in the list of debit balances
Which of the following statements is/are TRUE or FALSE?
1 Cash purchases are recorded in the purchases day book.
2 The sales day books is used to keep a list of invoices received from suppliers
Both statements are TRUE
Both statements are FALSE
Statement 1 is TRUE and statement 2 is FALSE
Statement 1 is FALSE and statement 2 is TRUE
Which of the following statements is/are TRUE or FALSE?
1 Cash purchases are recorded in the purchases day book.
2 The sales day books is used to keep a list of invoices received from suppliers
Both statements are TRUE
Both statements are FALSE
Statement 1 is TRUE and statement 2 is FALSE
Statement 1 is FALSE and statement 2 is TRUE
Which pair of the following items would appear on the same side of the trial balance?
Drawings and accruals
Carriage outwards and prepayments
Carriage inwards and rental income
Opening inventory and purchase returns
The double-entry system of bookkeeping normally results in which of the following balances on the ledger accounts?
Debit balances: Credit balances:
Assets and revenues/ Liabilities, capital and expenses
Revenues, capital and liabilities/ Assets and expenses
Assets and expenses/ Liabilities, capital and revenues
Assets, expenses and capital/ Liabilities and revenues
Which one of the following statements best describes the purpose of a purchase order?
It is issued to a supplier to request supply of goods from them on terms specified within the order
It is issued to a customer to confirm the supply of goods to them on terms specified in the order
It is issued to a supplier as notification of payment
It confirms the price that will be charged by a supplier for goods supplied
Which one of the following statements best describes the purpose of a goods despatched note (delivery note)?
It is issued by a customer returning faulty goods to their supplier
It is issued by a customer to their supplier and specifies the quantity and type of goods they require to be despatched
It is issued by a supplier to their customer and specifies the quantity and type of goods delivered to that customer
It is issued by a supplier to their customer and specifies what goods will be provided to them at a specified future date
An invoice is best defined by which one of the following statements?
An invoice is raised by a business and confirms only the amount due to be paid for goods and services provided
An invoice is raised by business and issued to a supplier as recognition of goods and services received from that supplier
An invoice is raised by a business and issued to a customer to confirm amounts not yet paid
An invoice is raised by a business and issued to a customer to request payment for goods and services provided
Which one of the following explains the imprest system of operating petty cash?
Weekly expenditure cannot exceed a set amount
The exact amount of expenditure is reimbursed at intervals to maintain a fixed float
All expenditure out of the petty cash must be properly authorised
Regular equal amounts of cash are transferred into petty cash at intervals
Jones Co has the following transactions:
1 Payment of $400 to J Bloggs for a cash purchase
2 Payment of $250 to J Doe in respect of an invoice for goods purchased last month
What are the correct ledger entries to record these transactions?
Dr Cash $650/ Cr Purchases $650
Dr Purchases $650/ Cr Cash $650
Dr Purchases $400/ Dr Trade Payables $250/ Cr Cash $650
Dr Cash $650/ Cr Trade Payables $250/ Cr Purchases $400
Smith Co has the following transactions:
1 Purchase of goods on credit from T Rader: $450
2 Return of goods purchased on credit last month to T Rader: $700
What are the correct ledger entries to record these transactions?
Dr Purchases $450 Dr Purchase Returns $700 Cr Cash $450 Cr Trade Payables $700
Dr Purchases $450 Dr Trade Payables $700 Cr Purchase Returns $1,150
Dr Purchases $450 Dr Trade Payables $250 Cr Purchase Returns $700
Dr Purchase Returns $700 Dr Purchases $450 Cr Trade Payables $1,150
Mew Ling has the following transactions:
1 Receipt of cash from R Singh in respect of an invoice for goods sold three weeks ago
2 Receipt of cash from S Kalu for cash sales
What are the correct ledger entries to record these transactions?
Dr Cash Cr Sales
Dr Cash Cr Sales Cr Trade Receivables
Dr Sales Cr Cash
Dr Trade Receivables Dr Sales Cr Cash
A business sells $100 worth of goods to a customer, the customer pays $50 in cash immediately and will pay the remaining $50 in 30 days' time.
What is the double entry to record the purchase in the customer’s accounting records?
Debit cash $50, credit payables $50, credit purchases $50
Debit payables $50, debit cash $50, credit purchases $100
Debit purchases $100, credit payables $50, credit cash $50
Debit purchases $100, credit cash $100
Tin Co purchases $250 worth of metal from Steel Co. Tin Co agrees to pay Steel Co in 60 days time.
What is the double entry to record the purchase in Steel Co’s books?
Debit sales $250, credit receivables $250
Debit purchases $250, credit payables $250
Debit receivables $250, credit sales $250
Debit payables $250, credit purchases $250
Oscar runs a sole trader business selling computers. On 12 January 20X7, he employed his daughter as an administrator for the business and took a computer from the store room for her to use in the office.
What is the double entry for this transaction?
Dr Drawings Cr Cost of sales
Dr Non-current assets Cr Cost of sales
Dr Cost of sales Cr Drawings
Dr Cost of sales Cr Non-current assets
Andrea started a taxi business by transferring her car, at a value of $5,000, into the business.
What accounting entries are required to record this transaction?
Dr Capital $5,000, Cr Car $5,000
Dr Car $5,000, Cr Drawings $5,000
Dr Car $5,000, Cr Capital $5,000
Dr Drawing $5,000 Cr Car $5,000
Which one of the following statements is true in relation to the non-current asset register?
It is an alternative name for the non-current asset ledger account
It is a list of the physical non-current assets rather than their financial cost
It is a schedule of planned maintenance of non-current assets for use by the plant engineer
It is a schedule of the cost and other information about each individual non-current asset
How should the balance on the payables ledger control account be reported in the final financial statements?
As an expense account
As a non-current liability
As a current asset
As a current liability
Before posting a payment of $5,000, the Accounts Payable of Senator Company had a normal balance of $16,000. The balance after posting this transaction was:
$21,000
$11,000
$5,000
Cannot be determined
The trial balance of Clooney Company had accounts with the following normal balances:
Cash $5,000, Service Revenue $85,000, Salaries and Wages Payable $4,000, Salaries and Wages
Expense $40,000, Rent Expense $10,000, Owner’s Capital $42,000; Owner’s Drawings $15,000;
Equipment $61,000. In preparing a trial balance, the total in the debit column is:
$131,000
$216,000
$91,000
$116,000
The purchase of supplies on account should result in:
a debit to Supplies Expense and a credit to Cash.
a debit to Supplies Expense and a credit to Accounts Payable
a debit to Supplies and a credit to Accounts Payable
a debit to Supplies and a credit to Accounts Receivable
Which one of the following items should be accounted for as capital expenditure?
The cost of painting a building
The replacement of broken windows in a building
The purchase of a car by a car dealer for re-sale
Legal fees incurred on the purchase of a building
What is the correct accounting treatment for an intangible asset with an indefinite useful life?
It is recognised at cost for as long as the entity has the intangible asset
It is recognised at cost and is subject to an annual impairment review
It is recognised at cost and the entity must make an estimate of estimated useful life so that it can be amortised
It cannot be recognised as an intangible asset as it would not be possible to calculate an annual amortisation charge
Debits:
Increase both assets and liabilities
Decrease both assets and liabilities
Increase assets and decrease liabilities
Decrease assets and increase liabilities
A revenue account:
is increased by debits
is decreased by credits
has a normal balance of a debit
is increased by credits
Depreciation is a process of
valuation.
cost allocation
cash accumulation
appraisal
What is the purpose of charging depreciation in financial statements?
To allocate the cost of a non-current asset over the accounting periods expected to benefit from its use
To ensure that funds are available for the eventual replacement of the asset
To reduce the cost of the asset in the statement of financial position to its estimated market value
To account for the 'wearing-out' of the asset over its life
Additions to plant assets are:
revenue expenditures
debited to the Maintenance and Repairs Expense account.
debited to the Purchases account
capital expenditures
Which of the following statements is false?
If an intangible asset has a finite life, it should be amonized
The amortization period of an intangible asset can exceed 20 years.
Goodwill is recorded only when a business is purchased.
Research and development costs are expensed when incurred, except when the research and development expenditures result in a successful patent.
Which one of the following statements correctly defines non-current assets?
Assets that are held for use in the production of goods or services and are expected to be used during more than one accounting period
Assets which are intended to be used by the business on a continuing basis, including both tangible and intangible assets that do not meet the IASB definition of a current asset
Non-monetary assets without physical substance that are controlled by the entity and from which future benefits are expected to flow
Assets in the form of materials or supplies to be consumed in the production process
What are the correct ledger entries to record an acquisition of a non-current asset on credit?
Debit Non-current asset - Cost/ Credit Receivables
Debit Payables/ Credit Non-current asset - Cost
Debit Non-current asset - Cost/ Credit Payables
Debit Non-current asset - Cost/ Credit Revaluation Surplus
Which of the following best explains what is meant by 'capital expenditure?
Expenditure on non-current assets, including repairs and maintenance
Expenditure on expensive assets
Expenditure relating to the issue of share capital
Expenditure relating to the acquisition or improvement of non-current assets
Expenditure relating to the acquisition or improvement of non-current assets
A replacement for a broken window
Repainting the restaurant
An illuminated sign advertising the business name
Cleaning of the kitchen floors
Which one of the following costs would be classified as revenue expenditure on the invoice for a new company car?
Road lax
Number plates
Fitted stereo radio
Delivery costs
Which one of the following assets may be classified as a non-current asset in the financial statements of a business?
A tax refund due next year
A motor vehicle held for resale
A computer used in the office
Cleaning products used to clean the office floors
Which one of the following assets may be classified as a receivable in the financial statements of a business?
A tax refund due next year
A motor vehicle held for resale
A computer used in the office
Cleaning products used to clean the office noors
Which one of the following assets may be classified as inventory in the financial statements of a business?
A tax refund due next year
A motor vehicle
A computer used in the office
Cleaning products used to clean the office floors
Which of the following items should be included in current assets?
(i) Assets which are not intended to be converted into cash
(ii) Assets which will be converted into cash in the long term
(iii) Assets which will be converted into cash in the near future
(i) only
(ii) only
(iii) only
(ii) and (iii)
Which of the following statements describes current assets?
Assets which are currently located on the business premises
Assets which are used to conduct the organisation's current business
Assets which are expected to be converted into cash in the short-term
Assets which are not expected to be converted into cash in the short-term
According to IAS 38 Intangible assets, which of the following statements are correct?
(1) Research expenditure should not be capitalised.
(2) Intangible assets are never amortised.
(3) Development expenditure must be capitalised if certain conditions are met.
1 and 3 only
1 and 2 only
2 and 3 only
All three statements are correct
What is the purpose of amortisation?
To allocate the cost of an intangible non-current asset over its useful life
To ensure that funds are available for the eventual purchase of a replacement non-current asset
To reduce the cost of an intangible non-current asset in the statement of financial position to its estimated market value
To account for the risk associated with intangible assets
Which of the following statements about the treatment of inventory and work in progress in financial statements are correct?
(1) Inventory should be valued at the lower of cost, net realisable value and replacement cost.
(2) In valuing work in progress, materials costs, labour costs and variable and fixed production overheads must be included.
(3) Inventory items can be valued using either fust in, first out (FIFO) or weighted average cost.
(4) An entity's financial statements must disclose the accounting policies used in measuring inventories
All four statements are correct
(1), (2) and (3) only are correct
(2), (3) and (4) only are correct
(1) and (4) only are correct
What journal entry is required to record goods taken from inventory by the owner of a business for personal use?
Dr Drawings Cr Purchases
Dr Sales / Cr Drawings
Dr Drawings Cr Inventory
Dr Inventory Cr Drawings
If an entity uses the periodic weighted average cost method to value closing inventory, which of the following statements is true?
Unit average cost is recalculated each time there is a purchase of inventory
Unit average cost is recalculated each time there is a sale of goods
Unit average cost is calculated once only at the end of an accounting period
Unit average cost is recalculated each time there is a purchase or a sale
Which one of the following items should be accounted for as capital expenditure?
The cost of painting a building
The replacement of broken windows in a building
The purchase of a car by a car dealer for re-sale
Legal fees incurred on the purchase of a building
Which of the following statements best describes depreciation?
It is a means of spreading the payment for non-current assets over a period of years
It is a decline in the market value of the assets.
It is a means of spreading the net cost of non-current assets over their estimated useful life
It is a means of estimating the amount of money needed to replace the assets.
Câu 22: The reducing balance method of depreciating non-current assets is more appropriate than the straight-line method when:
there is no expected residual value for the asset
the expected life of the asset is not capable of being estimated
the asset is expected to be replaced in a short period of time
the asset decreases in value less in later years than in the early years of use
Inventories are assets:
(1) Held for sale in the ordinary course of business;
(2) In the process of production for such sale
(3) In the form of materials or supplies to be consumed in the production process or in the rendering of services.
(1)
(2), (3)
(1), (3)
(1), (2), (3)
Which one of the following statements best defines an intangible asset?
An intangible asset is an asset with no physical substance
An intangible asset is always generated internally by a business
An intangible asset is an asset which cannot be sold
An intangible asset is a purchased asset which has no physical substance
Erin Danielle Company purchased equipment and incurred the following costs.
Cash price $24,000
Sales taxes 1,200
Insurance during transit 200
Installation and testing 400
Total costs $25,800
What amount should be recorded as the cost of the equipment?
$24,000
$25,200.
$25,400
$25,800.
ABC Company purchased equipment on January 1, 2012, at a total invoice cost of $400,000. The equipment has an estimated residual value of $10,000 and an estimated useful life of 5 years. The amount of accumulated depreciation at December 31, 2013, if the straight-line method of depreciation is used, is:
$80,000
$160,000.
$78,000
$156,000.
ABC company purchased a truck for $11,000 on January 1, 2012. The truck will have an estimated residual value of $1,000 at the end of 5 years. Using the production units method, the balance in accumulated depreciation at December 31, 2013, can be computed by the following formula:
($11,000: Total estimated production) x Units of production for 2013.
($10,000: Total estimated production) x Units of production for 2013
($11,000: Total estimated production) x Units of production for 2012 and 2013.
($10,000: Total estimated production) x Units of production for 2012 and 2013
Company purchased a piece of equipment on January 1, 2012. The equipment cost $60,000 and has an estimated life of 8 years and a salvage value of $8,000. What was the depreciation expense for the asset for 2013 under the reducing balance method with the depreciation rate of 50%?
$6,500
$11,250.
$15,000
$6,562
Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30, 2012. The machine was purchased for $80,000 on January 1, 2008, and was depreciated on a straight-line basis for 10 years assuming no residual value. If the machine was sold for $26,000, what was the amount of the gain or loss recorded at the time of the sale?
$18,000
$54,000
$22.000
$46.000
Maggie Sharrer Company expects to extract 20 million tons of coal from a mine that cost $12 million. If no residual value is expected and 2 million tons are mined and sold in the first year, the entry to record depletion will include a:
debit to Accumulated Depletion of $2,000,000
credit to Depletion Expense of $1,200,000
debit to Depletion Expense of $1,200,000
credit to Accumulated Depletion of $2,000,000
Martha Beyerlein Company incurred $150,000 of research and development costs in its laboratory to develop a patent granted on January 2, 2012. On July 31, 2012, Beyerlein paid $35,000 for legal fees in a successful defense of the patent. The total amount debited to Patents through July 31, 2012, should be:
$150,000
$35,000
$185,000
$170,000
Schopenhauer Company exchanged an old machine, with a book value of $39,000 and a fair value of $35,000, and paid $10,000 cash for a similar new machine. The transaction has commercial substance. At what amount should the machine acquired in the exchange be recorded on Schopenhauer's books?
$45,000
$46,000
$49,000
$50,000
The closing inventory at cost of a company at 31 January 20X3 amounted to $284,700. The following items were included at cost in the total:
(1) 400 coats, which had cost $80 each and normally sold for $150 each. Owing to a defect in manufacture, they were all sold after the reporting date at 50% of their normal price. Selling expenses amounted to 5% of the proceeds.
(2) 800 skirts, which had cost $20 each. These too were found to be defective. Remedial work in February 20X3 cost $5 per skirt, and selling expenses for the batch totalled $800. They were sold for $28 each.
What should the inventory value be according to IAS 2 Inventories after considering the above kems?
$281,200
$282,800
$329,200
None of these
You are preparing the financial statements for a business. The cost of the items in closing inventory is $41,875. This includes some items which cost $1,960 and which were damaged in transit. You have estimated that it will cost $360 to repair the items, and they can then be sold for $1,200.
What is the correct inventory valuation for inclusion in the financial statements?
$39,915
$40,755
$41,515
$42,995
February 1 50 units in stock at a cost of $40 per unit
7 100 units purchased at a cost of $45 per unit
14 80 units sold
21 50 units purchased at a cost of $50 per unit
28 60 units sold
What is the value of inventory at 28 February using the FIFO method?
$2,450
$2,700
$2,950
$3,000
In preparing its financial statements for the current year, a company's closing inventory was understated by $300,000.
What will be the effect of this error if it remains uncorrected?
The current year's profit will be overstated and next year's profit will be understated
The current year's profit will be understated but there will be no effect on next year's profit
The current year's profit will be understated and next year's profit will be overstated
The current year's profit will be overstated but there will be no effect on next year's profit.
Which of the following statements about the valuation of inventory are correct, according to IAS 2
Inventories?
(1) Inventory items are normally to be valued at the higher of cost and net realisable value
(2) The cost of goods manufactured by an entity will include materials and labour only. Overhead costs cannot be included.
(3) LIFO (last in, first out) cannot be used to value inventory.
(4) Selling price less estimated profit margin may be used to arrive at cost if this gives a reasonable approximation to actual cost.
1, 3 and 4 only
1 and 2 only
3 and 4 only
None of the statements are correct
The inventory value for the financial statements of Global Co for the year ended 30 June 20X3 was based on a inventory count on 7 July 20X3, which gave a total inventory value of $950,000.
Between 30 June and 7 July 20X6, the following transactions took place.
Purchase of goods 11,750
Sale of goods (mark up on cost at 15%) 14,950
Goods returned by Global Co to supplier 1,500
What figure should be included in the financial statements for inventories at 30 June 20X3?
$952,750
$949,750
$926,750
$958,950
he financial year of Mitex Co ended on 31 December 20XI. An inventory count on January 4 20X2 gave a total inventory value of $527,300.
The following transactions occurred between January I and January 4
Purchases of goods 7,900
Sales of goods (gross profit margin 40% on sales) 15,000
Goods returned to a supplier 800
What inventory value should be included in Mitex Co's financial statements at 31 December 20X1?
$525,400
$527,600
$529,200
$535,200
The information below relates to inventory item Z.
March 1 50 units held in opening inventory at a cost of $40 per unit
17 50 units purchased at a cost of $50 per unit
31 60 units sold at a selling price of $100 per unit
Under AVCO, what is the value of inventory held for item Z at the end of March 31?
(Câu này đáp trùng test nhân phẩm^_^)
$4,000
$1,800
$2,000
$2,000
A ledger:
contains only asset and liability accounts
should show accounts in alphabetical order
is a collection of the entire group of accounts maintained by a company
is a book of original entry
Posting:
normally occurs before journalizing
transfers ledger transaction data to the journal
is an optional step in the recording process
transfers journal entries to ledger accounts
Which of the following statements about a journal is false?
It is not a book of original entry
It provides a chronological record of transactions
It helps to locate errors because the debit and credit amounts for each entry can be readily compared
It discloses in one place the complete effect of a transaction
We can say that the business is in profit, when:
Assets exceed Expenditure
Income exceeds Liabilities
Income exceeds Expenditure
Income exceeds Liabilities
When a Liability is reduced or decreased, it is recorded on the:
Left or credit side of the account
Right or debit side of the account
Right or credit side of the account
Left or debit side of the account
Which of the following is NOT an example of intangible assets?
Franchise rights
Goodwill
Patents
Land
Which of the following is an example of business liability?
Building
Cash
Creditors
Land
What is depreciation?
Cost of a fixed asset
Cost of a fixed asset's repair
The residual value of a fixed asset
Portion of a fixed asset's cost consumed during the current accounting period
Under which depreciation method the amount of depreciation expenses remains same throughout the useful life of a fixed asset?
Straight line method
Reducing balance method
Number of units produced method
Machine hours method
What is the accumulated deprecation?
Sum of all depreciation expenses of a fixed asset
Depreciation expenses
Cost of depletion of assets
Future value of fixed asset
Which of the following is a double entry for depreciation expenses?
Accumulated depreciation debit and depreciation expenses Credit
Depreciation expenses Debit and accumulated depreciation Credit
Cash Debit and depreciation expenses Credit
Depreciation expenses Debit and cash Credit
Cost of a fixed asset - Accumulated depreciation expenses of the fixed asset=?
Book value of a fixed asset
Market value of a fixed asset
Historical cost of a fixed asset
Recoverable amount of a fixed asset
The purchase price of a software that will be used for more than 12 months should be regarded as:
a revenue expenditure
a capital expenditure
a long term expense
an accounting period expense
XYZ firm has imported a machine from abroad. Which of the following is NOT the element of machine's cost?
Purchase price of machine
Import duty
Demurrage charges
Refundable tax
Which of the following fixed assets is not depreciated in the ordinary circumstances?
Plant and machinery
Building
Land
Equipments
Under which method of depreciation the amount of depreciation expenses remains constant throughout the useful life of a fixed asset?
Reducing balance method
Unit of activity method
Straight line method
None of these
Which of the following is a biological asset?
Environment
Building
Land
Living plants and animals
W Co bought a new printing machine from abroad. The cost of the machine was $80,000. The installation costs were $5,000 and the employees received training on how to use the machine, at a cost of $2,000. Before using the machine to print customers' orders, preproduction safety testing was undertaken at a cost of $1,000.
What should be the cost of the machine in W Co's statement of financial position?
$85,000
$86,000
$82,000
$81,000
At the end of its financial year, Tanner Co had the following non-current assets:
Land and buildings at cost $10 4 million
Land and buildings: accumulated depreciation SO 12 million
Tanner Co decided to revalue its land and buildings at the year-end to $15 million.
(chưa có đáp)
$4.70 million
$4.71 million
$4.72 million
$4.73 million
A company purchased a vehicle for $6000. I will be used for 5 years and its residual value is expected to be $1000. What is the annual amount of deprecation using straight line method of depreciation?
$1,000
$52,000
$3,000
$3,300
A fixed asset was bought for $5000. Its accumulated depreciation is $3000 and rate of depreciation is 20% Calculate its depreciation expenses for the current accounting period using reducing balance method?
$600
$2,000
$300
$400
A company purchased a new machine for $500,000 and machine's test run was started to make sure that machine works properly. There was expense of $5000 incurred on test run, however the sale proceeds of test production were $2000. You are required to find out the total cost of machine?
$500,000
$505,000
$503,000
$495,000
A car was purchased for $5500. Its residual value was estimated to be $500 while its monthly depreciation expenses are $100 using straight line method. Which of the following is the annual rate of depreciation?
20%
24%
21%
25%
A fixed asset having book value of $2000 was sold for $1500. Which of the following is the gain or loss on the sale of fixed asset?
$500 gain
$1500 loss
$500 loss
$1000 gain
Book value of a fixed asset equals to market value or sale proceeds of a fixed asset if:
Gain on sale=0
Loss on sale=0
Gain or loss on sale=0
Gain loss on sale
At the end of XYZ firm's accounting period, the closing stock was found to be $10,000. However, it was realized that a fixed asset of cost $1000 was included in the stock count. Which of the following is the correct amount of ending inventory or stock?
$10,000
$11,000
$9,000
$8,000
NRV or net realizable value of inventory is the expected selling price or market value less:
Carry value of the inventory
Expenses necessary to complete sale
Cost of the stock
Replacement cost
Cost of an item in the closing inventory is $100 whereas the net realizable value is $85. At which one of following amounts the item should be shown in the financial statement?
$100
$115
$85
$185
An item of inventory was purchased for $100 It can be sold for $125 and company can replace the item with the new one at the cost of $105. Which of the following is the historical cost of that item?
$105
$115
$100
$185
Financial statements are prepared mainly for:
Internal users of financial information
External users of financial informaiton
Creditors of the business
Managers of the business
Identify the external user of financial information or financial statements
Management of the business
CFO of the business
Employees of the business
Investors of the business
A statement or report that records the fluctuation in business's capital is referred as
Balance sheet
Income statement
Cash flow statement
Statement of changes in equity
Financial statements mainly help in
Assumption of economic events
Anticipation of economic events
Recording of economic events
Communication of economic events
Which of the following financial statements shows the financial position of a business at a specific date?
Balance sheet
Income statement
Cash flow statement
Statement of changes in equity
Which of the following financial reports shows the profitable of a business?
Balance sheet
Income statement
Cash flow statement
Statement of changes in equity
Which of the following financial statements shows the movement of cash and cash equivalents in during an accounting period?
Balance sheet
Income statement
Cash flow statement
Statement of changes in equity
Which of the following does not appear in Balance sheet?
Building
Cash
Rent expense
Goodwill
The expenses related to the main operations of business are referred as:
Administration expense
Non-administration expense
Selling expenses
Operating expenses
Assets minus liabilities equal to
Goodwill
Working capital
Net income
Capital
Which of the following statements are correct?
(1) Only tangible assets (ie, those with physical substance) are recognised in the financial statements.
(2) Faithful representation means that the commercial effect of a transaction must always be shown in the financial statements even if this differs from legal form.
(3) Businesses only report transactions, events and balances that are material to users of the financial statements.
All of them
1 and 2 only
2 only
2 and 3 only
Which one of the following statements best explains the sales account?
It is credited with the total of sales made, including sales tax
It is credited with the total of sales made, excluding sales tax
It is credited with the total purchases made, including sales tax
It is credited with the total expenses, excluding sales tax
Which one of the following statements is correct?
Carriage inwards and carriage outwards are both accounted for as an expense in the statement of profit or loss.
Carriage inwards and carriage outwards are both accounted for as income in the statement of profit or loss.
Carriage inwards is treated as an expense and carriage outwards is treated as income in the statement of profit or loss.
Carriage inwards is treated as income and carriage outwards is treated as an expense in the statement of profit or loss.
Which of the following might appear as an item in a company's statement of changes equity?
1 Profit on disposal of properties
2 Surplus on revaluation of properties
3 Equity dividends proposed after the reporting date
4 Issue of share capital
1, 3 and 4 only
2 and 4 only
1 and 2 only
3 and 4 only
Which of the following are required as disclosures by IAS 2 Inventories?
1 The amount of write-downs of inventories in the period that have been recognised as an expense
2 The original cost of inventories that are carried at net realisable value
3 The carrying amount of inventories classified by type (for example, raw materials, work in progress)
1 and 2 only
1 and 3 only
2 and 3 only
1, 2 and 3
Where, in a set of financial statements complied in accordance with international accounting standards, would you expect to find dividends paid?
(1) Statement of profit or loss and other comprehensive income
(2) Statement of financial position
(3) Statement of cash flows.
(4) Statement of changes in equity.
(1) and (3)
(2) and (3)
(1) and (4)
(3) and (4)
Which of the following would be a suitable accounting policy note for disclosure in the financial statements relating to inventory?
Inventory is valued at the lower of total cost and total net realisable value.
Inventory is valued at the lower of cost and net realisable value for each separate product or item.
Inventory is valued at the higher of cost and net realisable value for each separate product or item
Inventory is valued at cost for each separate product or item.
In relation to non-current assets, which of the following items should be disclosed in the notes to the financial statements?
(1) Reconciliation of carrying amounts of non-current assets at the beginning and end of
(2) Useful lives of assets or depreciation rates used period
(3) Increases in asset values as a result of revaluations in the period.
(4) Depreciation expense for the period.
(1) and (2) only
(1) and (3) only
(2), (3) and (4) only
(1), (2), (3) and (4)
How are intangible assets disclosed in the statement of financial position?
Cost only without any recognition of amortisation or impairment
Cost or valuation-amortisation - impairment Carrying amount
The amortisation amount only
At the disposal proceeds value
Which one of the following statements is true in relation to disclosure requirements?
Disclosure requirements consist only of monetary disclosures
Disclosure requirements consist only of narrative disclosures
Disclosure requirements consist of both monetary and narrative disclosures
Disclosure notes do not form part of the annual financial statements
