Multiple Choice Accounting

Which one of the following conventions says the business and the owner(s) are separate for accounting purposes? a) Business entity b) Money measurement c) Going concern d) Historic cost

Business entity

The tailoring of an accounting report the needs of a specific decision maker is more characteristic of financial accounting reports than of management accounting reports A. True B. False

False

Inventory, trade receivables and cash are classified as: a) Current liabilities b) Non-current assets c) Current assets d) Long-term liabilities

Current assets

Which one of the following is the convention that assumes that the business will continue operations for the foreseeable future. a) Going concern b) Conservatism or prudence c) Historic cost d) Money measurement

Going concern

Which one of the following is the convention that says that assets are usually shown at the acquisition cost rather than their current value a) Going concern b) Conservatism or prudence c) Historic cost d) Money measurement

Historic cost

Which of the following statements is prepared as of a particular point in time? a) Income statement b) Statement of cash flows c) Statement of stockholders' equity d) Statement of financial position

Income statement

An example of a current asset is: a) Equipment b) Retained profits c) Inventory d) Owner's equity

Inventory

An example of a long-term liability is: a) Current taxation payable b) Mortgage c) Bank overdraft d) Accumulated depreciation

Mortgage

Which ONE of the following is the accounting equation? a) Owner's Equity + Liabilities = Assets b) Owner's Equity − Assets = Liabilities c) Owner's Equity − Liabilities = Assets d) Assets + Owner's Equity = Liabilities

Owner's Equity + Liabilities = Assets

Which ONE of the following qualities is most concerned with influencing users' decisions concerning the prediction of future events and the confirmation of past events? A. Relevance B. Faithful representation C. Understandability D. Verifiability

Relevance

An asset that has physical substance is said to be a __________ one. a) non-current b) real c) tangible d) valuable

Tangible

Revenue is: a) The amount received from borrowing b) The amount of cash received from sales c) The amount of cash received from sales and the disposals of fixed assets d) The amount of sales that have been made during a period

The amount of sales that have been made during a period

Accounting for depreciation is concerned with __________ the expense of owning the asset. a) maximising b) minimising c) reducing d) allocating

allocating

Which of the following are the fundamental qualitative characteristics that make accounting information useful A. comparability and relevance B. comparability and faithful representation C. relevance and faithful representation D. comparability, relevance and faithful representation

relevance and faithful representation

Accounting information is _____________ when various independent experts are able to reach a consensus that it provides a faithful portrayal A. relevant B. understandable C. verifiable D. comparable

verifiable

The following information relates to the activities of TAAH Retailers for the year ended 30 April 2017: - Gross profit was £ 28,050 - Salaries and wages for the year £ 10,400 - Rent and rates expenses were £ 5,000 - Depreciation expense was £ 1,500 *What amount of operating profit* will be reported on an income statement for the year ended 30 April 2017? a) £ 28,050 b) £ 11,150 c) £ 12,650 d) £16,150

£ 11,150

JK Builders Co purchases a new excavator costing 40,000. Its expected useful life is ten years, at which point it is anticipated that the excavator will have a residual value of 8,000. If the *reducing balance method of depreciation is used*, applying an annual depreciation rate of 15%, what is the annual depreciation charge in a *Year 2*? a) £ 6,000 b) £ 5,100 c) £ 3,400 d) £ 4,335

£ 5,100

The account balances of Miriam Bell's DVD Store at 31 May, 2015, are presented below. *_______________________________* [ Equipment | 20,000] *|* [Sales revenue | 30,000] *|* [Inventory | 9,000] *|* [Accounts receivable | 18,000] *|* [Long term Loan | 30000 ] *|* [Accounts payable | 9,000 ] *|* [Property | 15,000 ] *|* [Bank overdraft | 30,000] *|* [Cash | 50,000] *|* [Prepaid insurance | 8,000] *|* [Trademark | 100,000] *________________________________* What is the value of fixed assets? a) $35,000 b) $44,000 c) $85,000 d) $135,000

$135,000

The account balances of Miriam Bell's DVD Store at 31 May, 2015, are presented below. *_______________________________* [ Equipment | 20,000] *|* [Sales revenue | 30,000] *|* [Inventory | 9,000] *|* [Accounts receivable | 18,000] *|* [Long term Loan | 30000 ] *|* [Accounts payable | 9,000 ] *|* [Property | 15,000 ] *|* [Bank overdraft | 30,000] *|* [Cash | 50,000] *|* [Prepaid insurance | 8,000] *|* [Trademark | 100,000] *________________________________* What is the value of current liabilities? a) $30,000 b) $39,000 c) $42,000 d) $44,000

$39,000

Kye started a business with £190,000 capital invested. During the year, he withdrew £40,000 in cash & goods for his own use. At the end of the first year he had a capital balance of £170,000. What was the profit/loss for the year? a) Loss £60,000 b) Loss £50,000 c) Profit £20,000 d) Loss £20,000

Profit £20,000

Which ONE of the following qualities is the concept of freedom from error most closely associated? A. Comparability B. Faithful representation C. Understandability D. Relevance

Faithful representation

Financial accounting is predominantly forward looking and includes forecast and plans, while management accounting is about recording past events A. True B. False

False

Internal users of accounting information include lenders, shareholders, brokers and managers A. True B. False

False

Management account is primarily concerned with producing financial statements for shareholders and creditors. A. True B. False

False

Profit = revenue + expenses a) True b) False

False

Public financial statements are produced specifically in order to satisfy the requirements of HM Revenue and Customs A. True B. False

False

Which one of the following is NOT true? Financial accounting when compared with management accounting is: A. Intended mainly for shareholders, creditors and others outside the business. B. More accurate and verifiable C. Mainly concerned with providing information to managers D. A legal requirement

Mainly concerned with providing information to managers

Which one of the following is an internal user of financial information? A. Suppliers B. Lenders C. Tax authorities D. Management

Management

The area of accounting aimed at serving the decision making needs of internal users is: A. Financial accounting B. Managerial accounting C. Tax accounting D. Government accounting

Managerial Accounting

Which user group usually has most control over the range and content of information it receives? A. Suppliers B. Lenders C. Managers D. Investment analysts

Managers

Consider the overall effects on Prendegast from selling handmade furniture on account for £54,000 and incurring expenses that total £37,000. *What is Prendegast's net profit or net loss?* a) Net profit of £17 000 b) Net profit of £54 000 c) Net loss of £17 000 d) Cannot determine from the data given

Net profit of £17 000

Which ONE of the following cannot be a current liability? a) Trade payables b) A loan repayable in 6 months' time c) Trade receivables d) Bank overdraft

Trade receivables

Companies are not legally required to produce management accounting information: A. True B. False

True

External users of accounting information have a financial interest in an entity but are not involved with the day-to-day operations of the interprise A. True B. False

True

Astoria Co. had the following transactions during the month of August: - Cash received from bank loans was $20,000 - Dividends of $9,500 were paid to stockholders in cash - Revenues earned and received in cash amounted to $33,500 - Expenses incurred and paid were $26,000 *What amount of net income will be reported on an income statement for the month of August?* a) $20,000. b) $7,500. c) $0. d) $33,500

$7,500

The account balances of Miriam Bell's DVD Store at 31 May, 2015, are presented below. *_______________________________* [ Equipment | 20,000] *|* [Sales revenue | 30,000] *|* [Inventory | 9,000] *|* [Accounts receivable | 18,000] *|* [Long term Loan | 30000 ] *|* [Accounts payable | 9,000 ] *|* [Property | 15,000 ] *|* [Bank overdraft | 30,000] *|* [Cash | 50,000] *|* [Prepaid insurance | 8,000] *|* [Trademark | 100,000] *________________________________* What is the value of current assets? a) $50,000 b) $58,000 c) $85,000 d) $115,000

$85,000

A business begins the year with opening inventories of 14,560. During the year it purchases goods for 73,820 and sells goods for 89,630. The business makes a uniform gross profit of 20 per cent on sales. *What is the closing inventories figure for the year?* a) 12,444 b) 19,176 c) 2,116 d) 16,676

16,676

At the year end, the total assets of a business were £189,000 and total liabilities were £126,000. The business began the year with total assets of £180,000 and total liabilities of £112,000. During the year, the owner withdrew £1,000. What is the profit (loss) for the year? a) 4,000 (profit) b) 5,000 (profit) c) 4,000 (loss) d) 5,000 (loss)

4,000 (loss)

Platt Co reported the following: - Sales revenue for the current year of £306,000 - Opening inventories £140,000. - Gross profit for the year £116,000. - Purchases for the year were 74 percent of the cost of goods sold figure. *What were the closing inventories for the current year?* a) 80,600 b) 90,600 c) 90,000 d) 60,900

90,600

Which one of the following would be recognised as an expense in the current financial period? A. An invoice received for gas used in the last quarter of the current financial period, but which is not paid until the next financial period. B. A payment made in the current financial period to buy a machine that will be used for several years. C. A cash payment made during the current financial period, but relating to the first three months' rent due for the next financial period. D. An invoice for printing, owing at the end of the previous financial period, but paid in the current financial period.

An invoice received for gas used in the last quarter of the current financial period, but which is not paid until the next financial period.

Which of the following statements is correct? a) Assets are future cash outflows b) Liabilities are future cash inflows c) Assets are the sum of liabilities and owner's equity d) Assets are the difference between liabilities and owner's equity

Assets are the sum of liabilities and owner's equity

Which one of the following is the convention that says financial statements should not give an unduly optimistic view of the business's finances? a) Going concern b) Money measurement c) Historic cost d) Conservatism or prudence

Conservatism or prudence

Which one of the following is the convention that says that accountants should neither be optimistic nor pessimistic when deciding valuations. a) Going concern b) Conservatism or prudence c) Historic cost d) Money measurement

Conservatism or prudence

Inventory would be reported on the balance sheet as a(n): a) Plant asset b) Investment c) Current asset d) Intangible asset

Current asset

Prepaid Insurance would generally be reported on the balance sheet as a(n): a) Plant asset b) Investment c) Current asset d) Intangible asset

Current asset

Accounts Payable would be reported on the balance sheet as a(n): a) Long-term liability b) Current liability c) Non-current asset d) Current asset

Current liability

Which of the following statements is correct? A. Financial Accounting is a legal requirement. It is concerned with producing the accounts of an entity, and is produced for stakeholders. Management accounting is not a legal requirement and is for use within the company. B. Financial Accounting is a legal requirement. It is concerned with the financing of the entity. Management accounting is also a legal requirement and together they are used to produce the accounts of the entity. C. Financial Accounting is not a legal requirement. It is concerned with the cash flow of entity, and is produced for stakeholders. Management accounting is a legal requirement and this is used produce the accounts of the entity. D. Financial Accounting is not a legal requirement. It is concerned with the financing of the entity. Management accounting is also not a legal required and is for use within the company.

Financial Accounting is legal requirement. It is concerned with producing the accounts of an entity, and is produced for stakeholders. Management accounting is not a legal requirement and is for use within the company.

Which of the following is true? Management accounting when compared with financial accounting is: A. More subject to regulation B. Regulation C. Focused more on the future D. Distributed more widely to shareholders

Focused more on the future

If liabilities increase £3,000 during a given period and owner's equity decreases £1,000 during the same period, the assets must have: a) Increased by £3,000 b) Increased by £2,000 c) Decreased by £3,000 d) Decreased by £2,000

Increased by £2,000

Which of the following is not one of the four sequential stages of an accounting information systems? A. Information analysis B. Information recording C. Information identification D. Information correcting

Information correcting

Goodwill would be reported on the balance sheet as a(n): a) Intangible asset b) Current asset c) Investment d) Tangible asset

Intangible assets

The main purpose of financial accounting information is to: A. Provide financial information for taxation purposes B. Provide financial information to managers C. Provide financial information for external users, such as shareholders and creditors D. Provide financial information to customers

Provide financial information for external users, such as shareholders and creditors

Which one of the following is the convention that assumes that the value of money does not change over time. a) Business entity b) Conservatism or prudence c) Stable monetary unit d) Money measurement

Stable monetary unit

Which ONE of the following describes the depreciation method where each year's expense over the life of the asset is the same? a) Straight line method b) Depreciable amount method c) Reducing balance method d) Residual value method

Straight line method

Which one of the following statements best describes the purpose of a statement of financial position [balance sheet]? a) The resources owned by the business and who contributed those resources b) The current value of the business c) The assets of, and the claims against, the business d) The value of the owner's investment in the business

The assets of, and the claims against, the business

Which one of the following is the correct definition of the profit, or loss, for a period? a) The difference between Income and Expenses b) The difference between Income and Payments c) The difference between Receipts and Payments d) The difference between Receipts and Expenses

The difference between Income and Expenses

Which of the following is not characteristic of financial accounting? A. Information used in financial statements is prepared in conformity with generally accepted accounting principles. B. The information is confidential and is intended for use only by company management. C. The information is used in a wide variety of business decisions. D. The information is developed primarily by "private accountants" that is, accountants employed by business organizations.

The information is confidential and is intended for use only by company management.

*Which ONE of the following is not* one of the four components needed to calculate depreciation of a newly acquired non-current (fixed) asset? a) The original cost (or fair value) of the asset b) The useful life of the asset c) The estimated residual (disposal) value d) The value of the asset it has replaced e) The depreciation method to be used

The value of the asset it has replaced

Which ONE of the following is a quality that, if present, will enhance the usefulness of accounting information that is already considered useful? A. Completeness B. Timeliness C. Predictive value D. Relevance

Timeliness

Gross profit is the difference between sales and the cost of goods sold a) True b) False

True

Non-current liabilities include long-term borrowings such as mortgages a) True b) False

True

Published financial statements are aimed at a variety of users, including customers, the public and employees A. True B. False

True

If opening stock is £2,000, purchases for the year £12,000 and closing inventory £3,000, *what is the cost of goods sold?* a) £13,000 b) £7,000 c) £11,000 d) £17,000

£11,000

If opening stock for the year is £8,000, closing stock £5,000 and cost of goods sold £19,000, *what is the value of purchases for the year?* a) £6,000 b) £9,000 c) £16,000 d) £3,000

£16,000

If a company buys a machine for £12,000 with an estimated useful life of 4 years and a residual value of £4,000, *what is the annual depreciation charge if calculated on a straight line basis?* a) £2,000 b) £4,000 c) £1,000 d) £3,000

£2,000

Given non-current assets of £250,000, current assets of £70,000, current liabilities of £10,000, and non-current liabilities of £50,000, owner's equity will be: a) £240,000 b) £260,000 c) £120,000 d) £270,000

£260,000

A business buys a machine for £ 18,204 and estimates its residual value at £1,942. It is depreciating the asset over a nine-year period by the *straight-line method. What is the total depreciation charge after three years have elapsed from the purchase date?* a) £6,715 b) £5,421 c) £6,068 d) £1,807

£5,421