Financial Statements
Recording Transactions
Adjusting Entries
Completing the Cycle
Accounting for Retailing
100
A function that is not part of the management decision process is a) Planning b) Financing c) Organising d) Controlling
What is b) Financing
100
Double-entry accounting refers to the process of recording transactions a)with equality of debit and credit entries b)in both the journal and the ledger c)by increasing at least one balance sheet item and one income statement item d)by entering and posting
What is a)with equality of debit and credit entries
100
A balance sheet is prepared a)for the (period) ended (date) b)as at (date) c)before the income statement d)before adjustments
What is b)as at (date)
100
In accounting for a partnership a)separate drawings and capital accounts are maintained for each partner b)investment by a partner is credited to his or her capital account c)salary paid to a partner is normally regarded as drawings by that partner d)all of the above
What is d)all of the above
100
A discount granted to certain customers appearing as a deduction in the price shown on the invoice but not recorded in the accounts is a)trade discount b)five-finger discount c)sale discount d)cash discount
What is a)trade discount
200
The assumption that a business entity will continue to exist for an undefined period of time is: a)The going concern assumption b) the accounting entity assumption c) The accrual basis assumption d) The period assumption
What is a)The going concern assumption
200
Which of the following statements is incorrect? a)assets have increases recorded as debits b)equity has increases recorded as credits c)income has decreases recorded as credits d)liabilities have decreases recorded as debits
What is c)income has decreases recorded as credits
200
Unearned revenue is the result of a)receiving cash from customers before the performance of services or delivery of goods b)the performance of services or the delivery of goods which have not yet been recorded c)the cancellation of a contract d)the performance of services or delivery of goods when the expenses have not been paid
What is a)receiving cash from customers before the performance of services or delivery of goods
200
Most business entities adjust and close the accounts a)monthly b)biannually c)at the end of the annual period d)all of the above
What is c)at the end of the annual period
200
Inventory with a price of $1000 is sold subject to a 30% trade discount (3/10, n/30). If the buyer takes all appropriate discounts, the seller should collect a)$679 b)$700 c)$970 d$1000
What is a)$679
300
At the end of an Accounting period Wagga Company had $21 000 in its bank account, other assets totalling $5000 and amounts owed to creditors totalling $11 000. The total equity in the company was: a)$15 000 b)$26 000 c)$37 000 d)$48 000
What is a)$15 000
300
A debit is used to record a)a decrease in an asset account b)a decrease in an expense account c)an increase in an income account d)an increase in the balance of the owner's withdrawals account
What is d)an increase in the balance of the owner's withdrawals account
300
The accumulated depreciation account represents a)funds set aside for asset replacement b)an expense item which is presented in the income statement c)a liability d)the portion of asset cost assigned to expenses and accumulated since the asset purchase date
What is d)the portion of asset cost assigned to expenses and accumulated since the asset purchase date
300
A post-closing trial balance is prepared to a)determine the new balance in the capital account b)verify the equality of debits and credits c)facilitate the preparation of reversing entries d)detect any errors made in entering adjustment data
What is b)verify the equality of debits and credits
300
In the income statement of Janson Ltd, gross profit is $60 000, ending inventory is $30 000 and beginning inventory is $40 000. If the gross profit percentage is 30%, what were the purchases? a)$110 000 b)$120 000 c)$150 000 d)$130 000
What is d)$130 000
400
The business entity of Book and Book has total assets of $80 000, equity of $30 000 and borrowings from the bank of $20 000. The entity has: a)Net assets of $50 000 b)Other liabilities of $30 000 c)Profit of $20 000 d) Income of $20 000
What is b)Other liabilities of $30 000
400
On 13 May, Joseph Ltd received a letter from Blake Ltd. Blake Ltd wishes to purchase $75 000 of merchandise over the next four years. Joseph Ltd should record this is a)DR Sales CR Accounts Payable b)DR Accounts Receivable CR Sales c)DR Cash CR Sales d)No entry is required
What is d)No entry is required
400
A contra account is a)an asset account b)a liability account c)an unexpired cost d)reported as a deduction from a related account
What is d)reported as a deduction from a related account
400
An important difference between sole traders and partnerships, and on the other hand companies is a)the way income tax is determined b)the calculation of depreciation c)the need for reversing entries d)the number of steps in the accounting cycle
What is a)the way income tax is determined
400
A perpetual inventory system is used and the inventory account has a DR balance of $25 000. A physical count of inventory reveals that goods costing $23 000 are on hand. Most likely a)$25 000 represents the beginning inventory b)physical count was not taken properly c)inventory shortage has occurred d)entity should use a periodic system
What is c)inventory shortage has occurred
500
Which of the following June transactions represents income to be recognised during the month of June? a)Collected cash of $3000 from an account receivable outstanding since April b)Borrowed $28 000 from ANZ repayable over 3 years c)Sold a tonne of herbicide for $15 000 on account, terms 60 days d)Collected $25 000 in advance as a first payment for computing services to be performed in July
What is c)Sold a tonne of herbicide for $15 000 on account, terms 60 days
500
Which of the following errors would cause the totals of a trial balance to be out of balance? a)the collection of a $500 account receivable journalised as DR $500 Acc. Rec. and CR $500 Cash b)the collection of a $500 account receivable journalised as DR $50 Cash and CR $50 Acc. Rec. c)the payment of a $329 account payable journalised as DR $239 to Acc. Pay and CR $239 Notes Payable d)sale of merchandise for $670 journalised as DR $670 Acc. Rec and CR $760 Sales
What is d)sale of merchandise for $670 journalised as DR $670 Acc. Rec and CR $760 Sales
500
If the adjustment for a prepaid expense is not taken into consideration at the end of an operating period a)profit will be overstated b)profit will be understated c)assets will be overstated d)there will be no effect on profit
What is b)profit will be understated
500
The equity section of a company balance sheet is separated into share capital and retained earnings True or False?
What is True
500
Which of the following entries would be required as the end of an accounting period under the periodic inventory system a)DR P & L Summary; CR Cost of Sales b)DR Inventory; CR P & L Summary c)DR Cost of Sales; CR P & L Summary d)DR Freight Inwards; CR P & L Summary
What is b)DR Inventory; CR P & L Summary
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