WorksheetsFinancial Account preperation
Total questions: 20
Worksheet time: 1hrs 18mins
At January 1st, 2021, a business had prepaid insurance of $700. In July it paid an invoice for $9,300 and on December 31st, 2021, it transferred an expense of $9,000 to the income statement. The value and classification for insurance in the Statement of Financial Position at December, 2021, is:
$400 Current Liability
$400 Current Asset
$1,000 Current Asset
$1,000 Current Liability
What type of bond is issued at a discount, but no interest is paid on the bond?
Bond Yields
Zero Coupon Bonds
Deep Discount Bonds
Convertible Bonds
Which of the following is NOT a benefit of debt financing?
There are no interest payments in the first year
It is less expensive than issuing shares
It is readily available especially if the company has little or no existing debt finance
It provides tax relief on interest payment
The accruals concept state that:
Current assets are valued at market prices
Cash received is matched against cash paid in the period they occur
Non-current assets are valued at historical cost
Revenues are matched against expenses in the period they occur
A business has accounts receivable of $50,000 at the end of its current year and maintains an allowance for doubtful debts of 5% of it's accounts receivables. The allowance for doubts debts at the start of the year was $2,000. What will the ledger entries for the current year be, with the respect to the allowance
Debit profit and loss $500 and Credit allowance for doubtful debts $500
Debit allowance for doubtful debts $2,500 and Credit profit and loss $2,500
Debit profit and loss $2,500 and Credit allowance for doubtful debts $2,500
Debit the allowance for doubtful debts $500 and Credit the profit and loss $500
What is the meaning of debt financing?
Debt financing means a strategy for raising capital by offering companies
None of the items listed
All of the items listed
Debit financing means a strategy for raising capital by debentures or bonds of companies
The Allowance for doubtful debts is governed by which concept?
The Full Disclosure Concept
The Business Entity Concept
The Prudence Concept
The Historical Cost Concept
At 30 June 2022 a company's Allowance for Doubtful Debts was $39,000. At 30 June 2023 Accounts Receivables totaled $517,000. It was decided to write off debts totaling $37,000 and to adjust the Allowance for Doubtful Debts to the equivalent of 5% of existing Accounts Receivables. What figure should appear as allowance for receivables (doubtful debts) in the Statement of Financial Position as at 30 June 2023?
$23,850
$24,000
$22,000
$61,000
The entry to show an increase in the Allowance for doubtful debts is:
Debit the allowance for doubtful debts
Credit the accounts receivable account.
Debit the accounts receivable account
Credit the allowance for doubtful debts account
Which of the following is NOT an option for a sole
A line of credit
Issuing share to the general public
A bank overdraft
A credit card
During the year, Mary wrote off $1,400 receivable as irrecoverable. At the end of the year, she decides to reduce the receivables allowance from $3,000 to $2,700. What is the amount charged in the Income Statement in respect of irrecoverable debts?
$1700
$1,100
$300
$1,400
Rent prepaid at the beginning of the financial year was $8,000. The agreed monthly rent is $4,000. During the financial year the business paid $28,000 by cash. The balance of the Rent Account at the end of the financial year will be:
Rent Accrued $20,000
Rent Prepaid $4,000
Rent Prepaid $12,000
Rent Accrued $12,000
Electricity paid during the year ended 31 December 2021 is $14,000. There was an opening accrual b/d of $500. The closing accrual c/d was $600. What is the electricity charge in the income statement
$14,100
$13,900
$14,000
$14,400
A major source of short-term financing for a business is:
Issuing of bonds and debentures
The use of current accounts
Working capital management
A bank overdraft facility
On June 1st, 2023, John Brown paid his debt of $1,200 which had been written off as uncollectable in the books of HL Company at the end of December 2019. The entry in the books of HL Company to record the transaction on June 1st, 2023 is:
Debit John Brown's A/C, Credit Bad Debts Recovered; Credit John Brown A/C, Debit Cash
Debit Allowance for Doubtful Debts A/C , Credit John Brown A/C; Debit Bad Debts Expense, Credit Cash
Debit John Brown's A/C, Credit Allowance Doubtful Debts; Debit John Brown's A/C, Credit Cash
Credit John Brown's A/C, Debit Bad Debts Recovered; Credit John Brown's A/C, Debit Cash
A business would like to increase their allowance for doubtful debts to $33,000. At the beginning of the financial year on 1 April, 2020 the balance in the allowance for doubtful debts accounts was $5,000. What is the entry that must be recorded in the Allowance for doubtful debts account on 31 March 2021 to show the increase?
Debit $33,000
Credit $38,000
Debit $33,000
Credit $28,000
Entries are made into the Income Statement for amounts:
Paid for expenses during the year
Owing for expenses at the end of the year
Prepaid for expenses at the end year
Payable for expenses during the year
An interest rate which changes in relation to the economy is a:
Fixed interest rate
Coupon interest rate
Bond yield interest rate
Floating interest rate
Interest revenue received during the year ending May 31st, 2022, is $24,000. Interest revenue was in arrears on June 1st, 2021, by $1,500 and there was an accrual of $475 on 31st May, 2022. Interest revenue to be recorded in the Income Statement for the year ending 31st May, 2022 is:
$22,975
$25,015
$22,500
$24,000
A company estimates that $20,000 of it's $500,000 of Accounts Receivable as December 32st, 2022, will be uncollectible. Its Allowance for Doubtful Debts at January 1st, 2022 has a balance of $8,000. The adjusting entry for the year ended December 31st, 2022 will include a:
Debit of $28,000 to the Allowance of Doubtful Debts
Credit of $28,000 to the Allowance of Doubtful Debts
Credit of $12,000 to the Allowance of Doubtful Debts
Debit of $12,000 to the Allowance of Doubtful Debts
