Question 1

1 out of 1 points
On which financial statement would you find an item called Wages Expense?
Answer
Correct Answer:

b.
Income Statement

Question 2
1 out of 1 points
During 2009 a company makes credit sales of $200,000 of which $150,000 was collected
at year end. It pays $80,000 in cash expenses and owes $10,000 for electricity used
during 2009. What is accrual profit?
Answer
Correct Answer:

d
.
$110,000

Question 3
1 out of 1 points
A valid variation of the accounting equation is:
Answer
Correct Answer:

a.
Assets - Liabiities = Equity

Question 4
1 out of 1 points
The letters GAAP stand for:
Answer
Correct Answer:

a.
Generally accepted accounting principles

Question 5
1 out of 1 points
The connecting link between the Balance Sheet and the Income Statement is:
Answer
Correct Answer:

b.
Net profit after tax

Question 6
1 out of 1 points
The professional code of ethics of an accountant involves:
1 - Behaving in a professional manner
2 - Maintaining a level of expertise required in order to perform skillfully
3 - Following procedures that will ensure that high standards of work are met
4 - Ensuring that clients do not break the law
Answer
Correct Answer:

d.
1, 2, and 3 only

Question 7
1 out of 1 points
Which of the following statements best describes a Statement of Cash Flows?
Answer
Correct Answer:

b.
It provides details on the movement in cash balances during the
year.

Question 8
1 out of 1 points
Which of the following is not a function of financial accounting?
Answer

Correct Answer:

d.
To provide budgets for future accounting periods.

Question 9
0 out of 1 points
The following information is at 30 June 2009 for Bush Limited:
Share Capital: $100,000
Equipment: $150,000
Inventory: $30,000
Accounts Receivable: $20,000
Accounts Payable: $30,000
Retained Profits: $80,000
Cash: $10,000
What is the balance of total assets at 30 June 2009?
Answer
Correct Answer:

c
.
$210,000

Question 10
1 out of 1 points
Which of the following statements about financial accounting is true?
Answer
Correct Answer:

d.
Financial statements

Question 1
0 out of 1 points
Kramer Limited ships goods to Sykes Company on consignment. When the goods are

delivered to Sykes, Kramer should record:

Answer
Correct Answer: b.
Sale of Inventory: No; Revenue: No

Question 2
1 out of 1 points

At the end of the financial year, the usual adjusting entry for accrued salaries owed to
employees was omitted. Which of the following statements is true?
Answer
Correct Answer: a.
Net profit for the year was overstated.

Question 3
0 out of 1 points

Able Limited operates on a 5 day working week. Employees are paid on Thursday for
work completed to Wednesday. The weekly wages bill is $40,000. If the year end fell on
a Tuesday, what would be the adjusting journal entry?
Answer
Correct Answer: a.
Dr Wages Expense $8,000; Cr Wages Payable $8,000

Question 4
1 out of 1 points
What is the journal entry to record depreciation expense for the year on motor vehicles?
Answer

Correct Answer: c.
Dr Depreciation Expense; Cr Accumulated Depreciation

Question 5
1 out of 1 points

Supplies purchased on account were incorrectly recorded as Office Equipment. The

correcting entry would be:
Answer
Correct Answer: e.
Dr Supplies; Cr Office Equipment

Question 6
1 out of 1 points
Segregation of duties involves:
Answer

Correct Answer: e.
Separating record-keeping from handling of assets.

Question 7
1 out of 1 points

In preparing the monthly bank reconciliation, Jon Ltd ascertains that there is a note
collected by the bank for $500 and an interest on overdraft charge of $760. Outstanding
cheques total $9,400 and there is a deposit in transit for $2,900. It will be necessary to
make journal entries for:
Answer
Correct Answer: c.
The note collected and the interest charge.

Question 8
0 out of 1 points
Bird Ltd made a sale of $800 to a customer on terms of '2.5/10, n/30' on 1 July. The

account was paid on 8 July. Bird Ltd would make which of the following postings to the
ledger on 8 July?
Answer
Correct Answer: e.
Dr Discount Expense, $20

Question 9
1 out of 1 points

When preparing the current month's bank reconciliation, the accountant identifies that a
cheque outstanding at the end of last month has not been presented this month. When
preparing this month's bank reconciliation, the accountant will:
Answer
Correct
Answer:

e.
Not record a journal entry and continue to include the unpresented
cheque as a reconciling item in the current month's reconciliation.

Question 10
1 out of 1 points

Which of the following statements accurately describes posting of entries entered in the
cash payments journal?
Answer
Correct
Answer:

a.
Entries in the cash at bank column are totalled and posted to the general
ledger at the end of the month

Question 1
0 out of 1 points
A used machine with a purchase price of $75,000, requiring an overhaul costing $8,000,

installation costs of $4,000 and testing costs of $2,000, would have a cost of:
Answer
Correct Answer:
e.
$89,000

Question 2
0 out of 1 points
The choice of depreciation method should be primarily driven by:
Answer

Correct Answer: e.
the use patern of assets

Question 3
0 out of 1 points

Speedy Ltd purchased a delivery truck on 1 July 2007 for $450,000. It had an estimated
salvage value of $150,000. The estimated number of kilometers to be driven was
150,000. The truck was depreciated using the units-of-production method. Speedy Ltd's
financial period ends on 31 December. The truck was driven the following distances:
During the 6 months to 31 December 2007: 25,000km
During the 12 months to 31 December 2008: 75,000km
During the 12 months to 31 December 2009: 40,000km
What was the depreciation expense for the year ended 31 December 2008?
Answer
Correct Answer:

d
.
$150,000

Question 4
0 out of 1 points

Squires Ltd purchased equipment for $90,000 on 1 July 2008. It had an estimated useful
life of 3 years and no scrap value. The machine was depreciated using the sum-of-theyear's-digits method. The financial period of Squires Ltd ends on 30 June. What was the
depreciation expense for the year ended 30 June 2010?
Answer
Correct Answer:
c.
$30,000

Question 5
0 out of 1 points

A motor vehicle was acquired by Jones Limited. Jones Limited gave the vendor 1,000
shares in AZB Limited (c company whose shares are actively traded on the Australian
Stock Exchange) in consideration for the purchase of the new vehicle. The shares in AZB
Limited cost Jones Limited $25,000 when they were acquired 5 years ago. The market
value of the shares at the date the motor vehicle was purchased was $30,000. The market
value of the motor vehicle at the time of acquisition was reliably determined to be
$32,000.
The cost of the motor vehicle was:
Answer
Correct Answer:
d.
$30,000

Question 6
0 out of 1 points

Aspore Limited purchased 40% of the issued capital of Morane Limited on 1 January
2010 for $1,000,000. Aspore Limited accounts for its investment in Morane Limted
using the equity method. During the year ended 31 December 2010, Morane Limited
reported a net profit after tax of $200,000 and declared dividends totalling $80,000. What
will be the carrying amount of the investment in Morane Limited in the Balance Sheet of
Aspore Limited as at 31 December 2010?
Answer
Correct Answer: c.

$1,048,000

Question 7
0 out of 1 points
Which of the following assets can be revalued upwards?
Answer

Correct Answer:

b
.
buildings

Question 8
0 out of 1 points

X buys Y for $1,200,000. The fair value of the identifiable purchased items are: Property
plant and equipment $800,000; Accounts receivable $160,000; Loan from the bank
$60,000; and Provision for employee entitlements $80,000. The value of goodwill is:
Answer
Correct Answer:

d
.
$380,000

Question 9
0 out of 1 points

Where there is an asset revaluation increment that does not reverse a previous decrement,
the amount of the increment is credited to:
Answer
Correct Answer: d.
Revaluation Surplus

Question 10
0 out of 1 points
Which of the following statements about intangible assets is true?
Answer

Correct Answer: c.
Indefinite useful life intangible assets are not amortised.

Question 1
0 out of 1 points

Jones Limited issued a $1,000 6 month 12% Note to Smith Ltd for a
$1,000 overdue account. When the note matures and Smith Ltd pays Jones
Limited the amount owing, the journal entry Jones Limited records will
include:
Answer
Correct Answer:

b.
Cr Note
$1,000

Receivable

Question 2
0 out of 1 points

The directors of Walter Limited resolve to issue 100,000 shares to Mr

Castle at an issue price of $2 each to be paid in cash. The journal
entry to record the issue of these shares would include:
Answer
Correct Answer:

d.
Cr
Share
$200,000

Capital

Question 3
1 out of 1 points

LMN Ltd declared an interim dividend on 12 February 2009 of 5 cents per

share (500,000 issued shares) and paid it on 3 March 2009. The journal
entry on 12 February 2009 would include:
Answer
Correct Answer:

b.
Cr Interim
$25,000

Dividend

Payable

Question 4
1 out of 1 points

The entry to create a general reserve is usually:

Answer
Correct Answer:

c.
Dr Retained Profits
Reserve

Cr General

Question 5
0 out of 1 points

A debit balance in the Retained Profits account indicates that the

company:
Answer
Correct Answer:

b.
has made a loss in at least one
period

Question 6
1 out of 1 points

The opening balance of retained profits as at 1 Janury 2010 for

Belamine Limited was $35,900 (credit). During the year ended 31
December 2010, an amount of $8,700 was transferred from general reserve
to retained profits and a cash dividend of $10,000 paid out of retained
profits. A $5,000 bonus dividend was paid out of the revaluation
surplus account. The closing balance of retained profits (after all
closing entries had been made) was $62,000 (credit).
The profit after tax of Belamine Limited for the year ended 31 December
2010 was:
Answer
Correct Answer:

c.
$27,400

Question 7
0 out of 1 points

Purlay Limited's main product is sold with a warranty. Sales of this

product for the year ended 31 December 2010 totalled $540,000. The
opening balance of the 'Provision for Warranty Claims' account as at 1
January 2010 was $14,800. During the year ended 31 December 2010,
Purlay Limited recorded warrranty expenses of $42,000 and paid warranty
claims totalling $38,000. What is the balance of the 'Provision for
Warranty Claims' account as at 31 December 2010?
Answer
Correct Answer:

b.
$18,800

Question 8

1 out of 1 points

Which of the following is not a liability?

Answer
Correct Answer:

a.
Allowance
Debts

for

Doubtful

Question 9
0 out of 1 points

Use the following information to answer the next two questions:

For the year ended 31 December 2010, Parly Limited made a net profit
after tax of $1,000,000. 350,000 ordinary shares were on issue at the
beginning of the year and a further 100,000 ordinary shares were issued
on 1 July 2010. 5% convertible debt of $3,000,000 is outstanding for
the entire year. The debt is convertible into one ordinary share for
every $50 of debt outstanding. The tax rate is 40%.
What is the basic earnings per share for Parly Limited for the year
ended 31 December 2010?
Answer
Correct Answer:

d.
$2.50
share

per

Question 10
0 out of 1 points

What is the diluted earnings per share for Parly Limited for the year
ended 31 December 2010?
Answer

Correct Answer:

c.
$2.37
share

per

Friday, 11 October 2013 14:44:47 o'clock EST

Question 1
1 out of 1 points

Which of the following is classified as an operating activity cash flow

when preparing a Statement of Cash Flows?
Answer
Correct Answer:

c.
Cash payment of income
tax.

Question 2
1 out of 1 points

The net operating profit of Patrick Ltd was $31,000. Depreciation

expense was $10,000 and loss on sale of equipment was $2,000. Accounts
receivable increased by $15,000 and inventory decreased by $7,000.
Accounts payable decreased by $8,000. What was the cash flow from
operating activities?
Answer
Correct Answer:

c.
$27,000

Question 3
1 out of 1 points

During the year, Pealte Ltd received $50,000 from its customers, $5,000
for the sale of a motor vehicle and $20,000 for the issue of shares. It
paid $27,000 to suppliers and employees, $3,000 for income tax and
$50,000 for new machinery. In addition, it paid out $12,000 to redeem
bonds. Its cash balance at the commencement of the year was $22,000.
What was the cash flow from financing activities for Pealte Ltd?
Answer
Correct Answer:
b.
$8,000

Question 4
1 out of 1 points

Interest revenue was $120,000 for the year. At the beginning of the
year, the interest receivable account balance was $13,000. At the end
of the year, the interest receivable account was $17,000. What was the
cash received for interest during the year?
Answer
Correct Answer:

a.
$116,000

Question 5
1 out of 1 points
$11,500 at the beginning of the year and $9,500 at the end of the year.
Accounts payable were $5,000 at the beginning of the year and $4,000 at
the end of the year. Using the direct method of reporting cash flows
from operating activities, what was the cash paid for the purchase of
inventory?
Answer

Correct Answer:

c.
$49,000

Question 6
1 out of 1 points

During the year, Penso Ltd received $50,000 from its customers, $5,000
for the sale of a motor vehicle and $20,000 for the issue of shares. It
paid $27,000 to suppliers and employees, $3,000 for income tax and
$50,000 for new machinery. In addition, it paid out $12,000 to redeem
bonds. Its cash balance at the commencement of the year was $22,000.
What was the cash flow from operating activities for Penso Ltd?
Answer
Correct Answer:

c.
$20,000

Question 7
0 out of 1 points

The balance sheets of Crow Ltd showed the following balances:

30 June 2012

30 June 2011
Land

$650,000

$400,000
Revaluation Surplus
$120,000
Borrowings
$270,000
$300,000
Share Capital
$1,000,000
$900,000
Land is the only class of property plant and equipment for which the
revaluation model is applied. There was a cash issue of shares in the
amount of $100,000 on 31 March 2012. What was the value of land

purchased for cash during the year ended 30 June 2012?

Answer
Correct Answer:

c.
$130,000

Question 8
1 out of 1 points

A summary of the entries in the cash ledger account of Sertoy Ltd for
the month of January was as follows:
$
Opening balance
50,000
Cash from accounts receivable
40,000
Cash sales
25,000
Dividends received
10,000
Cash from the issue of shares
60,000
Payments to accounts payable
30,000
Payments for wages
15,000
Purchase of land
20,000
Payment of dividends
20,000
Purchase of plant and equipment
45,000
Payment of taxes
25,000
Payment of interest
10,000
Closing balance
20,000

What were the payments to suppliers and employees of Sertoy Ltd?

Answer
Correct Answer:

e.
$45,000

Question 9
1 out of 1 points

Which of the following is classified as an investing activity cash flow

when preparing a Statement of Cash Flows?
Answer
Correct Answer:

d.
Cash purchase of government bonds by the
company.

Question 10
1 out of 1 points

The prepaid insurance account showed an opening balance of $22,000 and

a closing balance of $25,000. Insurance expense was $67,000. What was
the cash payment for insurance during the year?
Answer
Correct Answer:

d.
$70,000

Question 1
1 out of 1 points

Which of the following transactions involves a cash flow?

Answer
Correct Answer:

b.
Receive
advance

revenue

in

Question 2
0 out of 1 points

Shippers Ltd made a net operating loss of $42,000. Depreciation expense

was $80,000 and loss on sale of vessels was $170,000. Accounts
receivable increased by $65,000 and inventory decreased by $18,000.
Accounts payable increased by $160,000 and expenses payable decreased
by $1,000. What was the cash flow from operating activities?
Answer
Correct Answer:

b.
$320,000

Question 3
1 out of 1 points

Using the following information, what is the amount of cash paid to

suppliers during the year?
$
Inventory 1 January
$20,000
Inventory 31 December
$30,000
Accounts payable 1 January
$38,000
Accounts payable 31 December
$47,000

Cost of goods sold

$500,000
Cost of inventory purchased
$510,000
Discounts received
$3,500
Answer
Correct Answer:

b.
$497,500

Question 4
1 out of 1 points

The prepaid insurance account showed an opening balance of $22,000 and

a closing balance of $25,000. Insurance expense was $67,000. What was
the cash payment for insurance during the year?
Answer
Correct Answer:

d.
$70,000

Question 5
1 out of 1 points

Which of the following statements about the indirect method of presenting cash fl
operations is false?
Answer
Correct Answer:

Question 6

b.
Increases in dividends payable are added to operating profit
indirect method.

1 out of 1 points

During the year, Penso Ltd received $50,000 from its customers, $5,000
for the sale of a motor vehicle and $20,000 for the issue of shares. It
paid $27,000 to suppliers and employees, $3,000 for income tax and
$50,000 for new machinery. In addition, it paid out $12,000 to redeem
bonds. Its cash balance at the commencement of the year was $22,000.
What was the cash flow from operating activities for Penso Ltd?
Answer
Correct Answer:

c.
$20,000

Question 7
1 out of 1 points

Based on the following data, what is the cash received from customers
on account during July?
Accounts receivable account balance, July 1
$16,100
Accounts receivable account balance, July 31
$14,000
Allowance for doubtful debts account balance,
July 1
$3,700
Allowance for doubtful debts account balance,
July 31
$3,200
Bad debts written off
$500
Credit sales during July
$40,000
Answer
Correct Answer:

c.
$41,600

Question 8

0 out of 1 points

The cost of goods sold during the year was $50,000. Inventories were
$11,500 at the beginning of the year and $9,500 at the end of the year.
Accounts payable were $5,000 at the beginning of the year and $4,000 at
the end of the year. Using the direct method of reporting cash flows
from operating activities, what was the cash paid for the purchase of
inventory?
Answer
Correct Answer:

c.
$49,000

Question 9
1 out of 1 points

The wages payable account showed an opening balance of $27,000 and a

closing balance of $42,000. Wages expense was $590,000. What was the
cash payment for wages during the year?
Answer
Correct Answer:

b.
$575,000

Question 10
1 out of 1 points

Which of the following is classified as a financing activity cash flow

when preparing a Statement of Cash Flows?
Answer
Correct Answer:

b.
Cash

issue

of

shares

by

the

company.

Question 1
1 out of 1 points

The retained profits of Franko Ltd at the beginning of the year were
$270,000 (Cr) and at the end of the year were $320,000 (Cr). Net profit
after tax for the year was $510,000. During the year, $100,000 was
transferred to the general reserve. What were the dividends paid in
cash during the year?
Answer
Correct Answer:

b.
$360,000

Question 2
1 out of 1 points

During the year, Penso Ltd received $50,000 from its customers, $5,000
for the sale of a motor vehicle and $20,000 for the issue of shares. It
paid $27,000 to suppliers and employees, $3,000 for income tax and
$50,000 for new machinery. In addition, it paid out $12,000 to redeem
bonds. Its cash balance at the commencement of the year was $22,000.
What was the cash flow from operating activities for Penso Ltd?
Answer
Correct Answer:

c.
$20,000

Question 3
1 out of 1 points

Which of the following statements about the indirect method of presenting cash fl
operations is false?
Answer
Correct Answer:

b.
Increases in dividends payable are added to operating profit
indirect method.

Question 4
1 out of 1 points

Interest revenue was $120,000 for the year. At the beginning of the
year, the interest receivable account balance was $13,000. At the end
of the year, the interest receivable account was $17,000. What was the
cash received for interest during the year?
Answer
Correct Answer:

a.
$116,000

Question 5
1 out of 1 points

Shippers Ltd made a net operating loss of $42,000. Depreciation expense

was $80,000 and loss on sale of vessels was $170,000. Accounts
receivable increased by $65,000 and inventory decreased by $18,000.
Accounts payable increased by $160,000 and expenses payable decreased
by $1,000. What was the cash flow from operating activities?
Answer
Correct Answer:

b.
$320,000

Question 6
1 out of 1 points

Interest expense was $300,000 for the year. At the beginning of the
year, the interest payable account balance was $27,000. At the end of
the year, the interest payable account balance was $21,000. What was
the cash paid for interest during the year?
Answer
Correct Answer:

c.
$306,000

Question 7
0 out of 1 points

Using the following information, what is the amount of inventory

purchased during the year?
Inventory 1 January
$20,000
Inventory 31 December
$30,000
Accounts payable 1 January
$38,000
Accounts payable 31 December
$47,000
Cost of goods sold
$500,000
Inventory writedown expense
$2,000
Answer
Correct Answer:

e.
$512,000

Question 8

1 out of 1 points

A statement of cash flows would be useful in answering which of the

following questions?
Answer
Correct Answer:

d.
By how much is growth being funded from internal
sources?

Question 9
1 out of 1 points

The cost of goods sold during the year was $50,000. Inventories were
$11,500 at the beginning of the year and $9,500 at the end of the year.
Accounts payable were $5,000 at the beginning of the year and $4,000 at
the end of the year. Using the direct method of reporting cash flows
from operating activities, what was the cash paid for the purchase of
inventory?
Answer
Correct Answer:

c.
$49,000

Question 10
1 out of 1 points

The following information concerns Rion Ltd.

$
Cash sales
3,000
Cash collected from accounts
receivable

2,500
Dividends paid

1,100
Cash paid to accounts payable
2,900
Proceeds from sale of
investments

3,300
Issue of shares

4,500
Issue of debentures
3,600
Tax paid
4,700
Wages paid to employees
4,100
Share buybacks
3,800
Purchase of property, plant and
equipment
1,200
What is the cash flow from investing activities for Rion Ltd.?
Answer
Correct Answer:
a.
$2,100

Which of the following is/are an essential requirement for an asset to

exist for accounting purposes?
1. The entity must be able to control the future economic benefits
associated with the item.
2. The entity must be the legal owner of the item.
3. The entity must have purchased the item.
4. The entity must be able to sell the item for a price that is
reliably measured.
Answer
Correct Answer:
a.

1 only

Question 2
0 out of 1 points

The purpose of ledgers is to:

Answer
Correct Answer:

b.
Accumulate the large number of transactions affecting each a
in one place.

Question 3
1 out of 1 points

Manery Limited uses the balance sheet approach for the calculation of
Allowance for Doubtful Debts. The opening balance of the Allowance for
Doubtful Debts was $19,000 (Credit) and the closing balance was $16,000
(credit). The Income Statement reveals that Bad Debts Expense for the
year was $21,000. The value of debts written off as uncolectable during
the year was:
Answer
Correct Answer:

e.
$24,000

Question 4
1 out of 1 points

In preparing the monthly bank reconciliation, Jon Ltd ascertains that

there is a note collected by the bank for $500 and an interest on
overdraft charge of $760. Outstanding cheques total $9,400 and there is
a deposit in transit for $2,900. It will be necessary to make journal

entries for:
Answer
Correct Answer:

c.
The note collected and the interest
charge.

Question 5
1 out of 1 points

The following information relates to Moderate Ltd:

Net Sales: $345,000
Beginning Inventory: $60,000
Ending Inventory: $36,000
Cost of Goods Sold: $210,000
What were the purchases for the period?
Answer
Correct Answer:

b.
$186,000

Question 6
0 out of 1 points

Which method of calculating depreciation can result in

depreciation expense going up and down from period to period?
Answer
Correct Answer:

d.
Units
production

of

annual

Question 7
1 out of 1 points

Consider the following transactions:

(i) Sale of equipment with a book value of $100,000 for $130,000 cash.
(ii) Revaluation upwards of land from $1,000,000 to $1,500,000. The
land has not previously been revalued downwards.
Answer
Correct Answer:

a.
(i) increases profit and (ii) has no effect on
profit

Question 8
0 out of 1 points

A debit balance in the Retained Profits account indicates that the

company:
Answer
Correct Answer:

b.
has made a loss in at least one
period

Question 9
1 out of 1 points

During the year, Polter Ltd received $50,000 from its customers, $5,000
for the sale of a motor vehicle and $20,000 for the issue of shares. It
paid $27,000 to suppliers and employees, $3,000 for income tax and
$50,000 for new machinery. In addition, it paid out $12,000 to redeem

bonds. Its cash balance at the commencement of the year was $22,000.
What was the cash flow from investing activities for Polter Ltd?
Answer
Correct Answer:

c.
($45,000)

Question 10
0 out of 1 points

Which of the following would affect return on equity?

Answer
Correct Answer:

c.
Initial upward revaluation of
lan