Net Present Value Calculations
Quiz 11
The decision rule for net present value calculations is:
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1)
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to invest if the NPV is above a hurdle level.
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2)
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to invest in projects with the lowest discount rate.
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3)
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to invest in projects with the highest discount rate.
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4)
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to invest if the NPV is positive.
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Question 2
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0 / 1 point
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A major deficiency of the ARR method is:
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1)
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none of the options is a major deficiency of the ARR method
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2)
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it ignores the timing of cash flows and subsequent profits
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3)
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profits and costs are measured the same way
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4)
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it is too simplistic to calculate
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Question 3
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0 / 1 point
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The accounting rate of return (ARR) method of investment decision-making measures average profit over the period as a percentage of average
After an investment decision is made, the next step is:
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1)
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physically implementation of the project or investment
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2)
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to arrange finance for the project
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3)
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to start the planning process
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4)
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to analyse the data collected for decision making
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Question 5
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0 / 1 point
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The payback method of investment decision making is generally regarded as:
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4)
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too complex for normal use.
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Question 6
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0 / 1 point
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A typical feature of investments is:
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2)
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they often require large amounts of resources in relation to the asset base of the entity.
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3)
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normally a relatively large cash outlay is required initially, but returns are received over a short period of time.
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4)
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they rarely span long periods of time.
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Question 7
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0 / 1 point
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A likely investment to decrease costs for a manufacturing entity is:
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2)
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new plant and machinery
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Question 8
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0 / 1 point
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A company is evaluating an investment proposal using the payback method. Cash inflows are expected to be $16 000 in year 1, $12 000 in year 2 and $8000 in year 3. The initial investment required is $32 000. Assuming even cash inflows within each year the payback period is:
An advantage of the NPV method is that it takes into account:
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1)
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the timing of the expected cash flows
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2)
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all of the expected cash flows
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3)
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only cash flows so it is not affected by changes to accounting rules and standards
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4)
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all of the options are advantages of the NPV method
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Question 10
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0 / 1 point
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The statement concerned with the ARR and the payback methods that is not correct is:
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1)
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both methods are based on accounting profits
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2)
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if two projects have the same ARR the one with the lowest payback period would be preferred
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3)
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both methods are simplistic and may be useful for a quick analysis to sort out projects for further analysis
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4)
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both methods are quite easy for managers to understand
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Question 11
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0 / 1 point
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With the net present value method of capital investment analysis cash flows are assumed to occur
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1)
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at the start of the period.
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2)
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uniformly throughout the period.
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3)
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in the middle of the period.
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4)
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at the end of the period.
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Question 12
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0 / 1 point
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A retailer invests $1 million in a major computer network to streamline purchasing, inventory control, bill payments and income control. In which category of investment is this capital expenditure most likely to fit?
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1)
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replacement of old assets as they wear out
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2)
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new technology to decrease costs
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3)
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new investments to increase revenue
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4)
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the capital investment project does not fit any of the categories
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Quiz 10
Which of these is not a fixed cost?
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1)
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depreciation on buildings
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4)
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local government rates
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Question 2
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0 / 1 point
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A fixed cost is a cost that
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1)
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remains constant as the level of activity changes.
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2)
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varies inversely with changes in the level of activity.
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3)
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remains constant per unit as the level of activity changes.
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4)
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is a fixed proportion of profit.
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Question 3
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0 / 1 point
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The relevant range describes the
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1)
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level of activity where cost behaviour is assumed to be valid.
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2)
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level of activity where an entity will operate.
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3)
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level of activity where all costs can be predicted accurately.
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4)
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physical area where an entity plans to conduct its business.
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Question 4
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0 / 1 point
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If selling price is $18 per unit and variable costs are $13 per unit, contribution margin is:
If an entity increases its level of activity
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1)
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no costs will remain the same.
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2)
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some costs will vary, others will not.
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4)
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costs should remain the same.
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Question 6
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0 / 1 point
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Assuming the unit contribution margin is $1 and the break-even point is 4000 units sold, if there are 5000 units sold then profit will be:
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4)
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none of the options is correct
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Question 7
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0 / 1 point
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In a cost-volume-profit graph, the break-even point is where the
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1)
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total revenue line crosses the fixed cost line.
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2)
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total revenue line is above the total cost line.
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3)
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total revenue line crosses the variable cost line.
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4)
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total revenue line crosses the total cost line.
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Question 8
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0 / 1 point
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A change in which item would not affect the break-even point?
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2)
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the number of units sold
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3)
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the sales price per unit
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4)
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variable cost per unit
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Question 9
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0 / 1 point
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Contribution margin equals
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1)
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selling price less cost of sales.
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2)
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selling price less variable costs.
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3)
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selling price less fixed costs.
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4)
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selling price less gross profit.
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Question 10
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0 / 1 point
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A variable cost is a cost that
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1)
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may or may not be incurred depending on management's discretion.
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2)
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occurs at various times of the year.
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3)
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varies with changes in activity.
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4)
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all of the options are correct
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Question 11
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0 / 1 point
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The break-even point is where:
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1)
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total sales equals fixed costs plus profit
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2)
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total sales equals total variable costs
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3)
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total sales equals total costs
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4)
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total sales equals total variable costs minus profit
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Question 12
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0 / 1 point
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If a company's selling price is $5, variable cost is $3 and fixed costs are $100 000, the break-even sales point is
Quiz 9
The budget which deals with expenditure relating to long term investments is the:
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1)
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budgeted balance sheet
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Question 2
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0 / 1 point
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Which of these is not a commonly prepared budget?
Which budget is unlikely to be prepared by the government's Department of Foreign Affairs?
If the production budget shows that 300 bicycles are to be produced for the month, it takes 1.5 labour hours to produce a bike and labour is paid at $187.50 per 7 1/2 hour day, the budget cost of labour for the month is:
The key variable which is normally the starting point for the budget process and upon which many other items are based is:
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1)
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working hours of employees.
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Question 6
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0 / 1 point
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An interrelated set of budgets for a future period is known as:
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3)
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an assembly of budgets
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Question 7
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0 / 1 point
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The financial budgets include all of the following, except:
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1)
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budgeted income statement.
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2)
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budgeted balance sheet.
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Question 8
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0 / 1 point
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From the following list of budgets, select the budgets and the correct order in which they would be prepared as part of the development of the operating budget?
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1)
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sales budget, materials budget, production budget
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2)
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production budget, sales budget, materials budget
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3)
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production budget, sales budget, labour budget
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4)
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sales budget, production budget, materials budget
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Question 9
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0 / 1 point
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Which of the following is a way that budgeting and its associated planning can assist in decision making?
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1)
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setting targets for managers
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2)
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identifying resource constraints in the budget period
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3)
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planning labour and other inputs
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4)
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all the options are ways that budgeting and its associated planning can assist in decision making
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Question 10
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0 / 1 point
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The schedule of debtors receipts is prepared to provide information for the:
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4)
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budgeted income statement
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Question 11
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0 / 1 point
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Applicable budgets for a service business such as a fitness centre are unlikely to include:
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1)
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a budgeted income statement.
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4)
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a direct materials budget.
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Quiz8
Simon operates a kitchen manufacturing business. Which cost would not be classed as a direct cost of building a kitchen for a client?
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1)
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fittings for the kitchen cabinets
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3)
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depreciation of tools and equipment
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4)
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timber for the kitchen cabinets
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Question 2
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0 / 1 point
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Which of the following is NOT a characteristic of financial reports prepared for management?
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1)
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The financial reports can be both oriented to the past or to the future
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2)
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The financial reports are very heavily regulated.
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3)
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The financial reports are specific purpose reports.
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4)
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The financial reports are prepared whenever information is needed for decision making purposes.
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Question 3
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0 / 1 point
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Which of the following can be a cost object?
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4)
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all of the options can be cost objects
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Question 4
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0 / 1 point
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Which of the following is NOT a characteristic of an indirect cost?
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1)
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Cannot be traced directly to a cost object
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2)
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Costs incurred solely for the benefit of the department
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3)
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Sometimes called overheads
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4)
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They are essential to the business but not directly traceable to the individual departments
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Question 5
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0 / 1 point
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Which of the following could NOT be considered an aspect of planning and control?
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1)
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Deciding on the overall objectives of the business.
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2)
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comparing budgeted plans with actual results and taking corrective action.
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3)
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Providing financing information to a bank.
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4)
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Setting long term (strategic) plans.
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Question 6
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0 / 1 point
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The classification of a cost as either direct or indirect depends primarily on:
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2)
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The knowledge of the accountant
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3)
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The computer tracing system within the organisation
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4)
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The definition of the cost object
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Question 7
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0 / 1 point
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Which of the following is NOT a type of responsibility centre?
Departmental contribution margin is:
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1)
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Departmental net profit less depreciation expense.
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2)
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Departmental interest expense plus interest revenue.
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3)
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Departmental gross profit less direct costs.
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4)
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Departmental revenues less interest expense.
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Question 9
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0 / 1 point
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The system used to allocate costs to cost objects is known as:
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4)
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none of the options is a name for a system used to allocate costs to cost objects
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Question 10
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0 / 1 point
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Which of the following is NOT a recent development that would impact on management accounting?
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2)
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Just in time inventory management
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3)
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AASB 101 Presentation of Financial Statements
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4)
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Total Quality Management
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Quiz 7
Net working capital is:
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1)
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cash minus current liabilities
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2)
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current assets minus current liabilities
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3)
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the ability to meet short-term financial commitments
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4)
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cash plus currents assets
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Question 2
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0 / 1 point
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Which of the following is a characteristic of debentures?
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1)
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debentures are issued to raise debt funding
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2)
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debentures are secured by a fixed or floating charge over the issuing entity's assets
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3)
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debentures may be issued to the public via a prospectus
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4)
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all of the options are characteristics of debentures
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Question 3
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0 / 1 point
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A rights issue is:
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1)
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the issue of new shares to existing shareholders in proportion to their current holdings
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2)
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the right to subscribe to shares at a price and time that are predetermined
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3)
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an issue of shares where the shareholder has the right to decide whether the shares are classified as debt or equity
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4)
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none of the options is true
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Question 4
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0 / 1 point
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Temporary assets should be financed with:
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1)
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temporary, permanent or spontaneous sources of funding.
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2)
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temporary sources of funding
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3)
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spontaneous sources of funding only
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4)
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spontaneous and permanent sources of funding
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Question 5
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0 / 1 point
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A change in the debtor's turnover period from 31 days to 25 days means that:
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1)
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debtors are paying their accounts faster
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2)
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debtors are taking longer to pay their accounts
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3)
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debtors are buying less on credit
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4)
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sales on credit are increasing
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Question 6
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0 / 1 point
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How do entities ensure that customers are able to honour credit sales?
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1)
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get them to fill in a credit-scoring questionnaire before extending credit
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2)
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have their directors give a personal guarantee for the amount owing
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3)
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limit the size of credit a customer can build up
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4)
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all of the options are true
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Question 7
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0 / 1 point
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Which of the following is not a source of long term financing?
Which of the following businesses would be most likely to have the greatest proportion of working capital held as inventory?
Forms of funding include
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4)
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all of the options are forms of funding
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Question 10
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0 / 1 point
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Which of the following is a way that entities can raise debt from the Australian market?
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4)
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all the options are methods of raising debt from the Australian market
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Quiz 6
The gross profit margin ratio is calculated by dividing
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1)
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profit by sales revenue
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2)
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profit by shareholder's equity.
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3)
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gross profit by sales revenue.
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4)
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sales revenue by cost of sales
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Question 2
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0 / 1 point
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In a vertical analysis of an income statement, the 100% figure would be
Horizontal analysis of financial statements includes the
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1)
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calculation of liquidity ratios.
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2)
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calculation of profitability ratios.
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3)
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calculation of percentage changes from the previous year.
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4)
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evaluation of data relative to a base year.
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Question 4
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0 / 1 point
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Westbury Pty Ltd has a current ratio of 2 to 1 and current liabilities of $22 000. If Westbury Pty Ltd has $10 000 of inventory, the quick asset ratio is:
Profit is $109 000, after deducting interest of $11 000 and average total assets are $650 000. Return on assets to assess profitability from a management view point is:
One ratio result on its own is meaningless unless it can be compared to an appropriate yardstick or benchmark. An appropriate benchmark would be
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1)
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all the options are appropriate benchmarks
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3)
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other entities in the same industry
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4)
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the entity's ratios over time
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Question 7
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0 / 1 point
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Liquidity ratios measure the ability of an entity to:
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1)
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survive in the long-term
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2)
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meet its short term obligations and unexpected cash needs
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4)
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all of the options are correct
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Question 8
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0 / 1 point
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With ratio analysis, when an income or statement of cash flows item is compared to a balance sheet item:
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1)
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the year-end balance of the balance sheet item should be used
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2)
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the average of the beginning and ending year values should be taken for the balance sheet item rather than just using the year-end value.
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3)
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the beginning balance of the balance sheet item should be used
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4)
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none of the options is correct
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Question 9
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0 / 1 point
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The current ratio is also known as the:
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4)
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capital structure ratio
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Question 10
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0 / 1 point
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The asset turnover ratio is calculated by dividing
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1)
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average total assets by sales revenue.
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2)
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average total assets by profit.
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3)
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profit by average total assets.
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4)
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sales revenue by average total assets
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Question 11
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0 / 1 point
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A change in the inventory turnover period from 47 days to 51 days indicates:
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1)
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inventory is being sold faster
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2)
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it is taking longer to sell inventory
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3)
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the inventory turnover ratio is too high
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4)
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the inventory turnover ratio is too low
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Question 12
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0 / 1 point
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The return on assets is a profitability ratio that measures the:
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1)
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profit that the entity has generated specifically for its owners
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2)
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ability of an entity to generate income from its asset investments
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3)
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the relative amount of cash flow generated by each sales revenue dollar
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4)
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none of the options is correct
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Question 13
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0 / 1 point
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All of these are efficiency ratios, except:
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2)
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times interest cover ratio.
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4)
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times debtors turnover.
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Question 14
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0 / 1 point
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What information would a financial institution contemplating giving a loan to an entity be most interested in?
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3)
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none of the options is correct
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Question 15
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0 / 1 point
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If the debtors turnover ratio changes from 45 days to 40 days this indicates that:
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1)
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it is taking longer to collect money from trade debtors.
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2)
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the time taken to collect money from trade debtors is decreasing
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3)
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the time taken to sell inventory is increasing
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4)
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none of the options is correct
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Quiz 5
Which of the following is not an advantage of the company form of business?
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1)
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It has a unlimited life.
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2)
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It has limited liability.
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3)
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It has the ability to raise large amounts of capital.
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4)
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It must comply with the Corporations Act 2001 and other legislation.
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Question 2
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0 / 1 point
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Which of the following would be a disadvantage of a private company going public?
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1)
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increased disclosure requirements
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2)
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costs associated with running IPOs
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3)
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potential loss of control
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4)
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all options are disadvantages
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Question 3
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0 / 1 point
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Dividends paid:
| |
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4)
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decrease retained earnings.
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Question 4
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0 / 1 point
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One of the main attributes of a company that enables companies to raise equity finance is:
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1)
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it is a separate legal entity
|
|
| |
|
| |
3)
|
limited liability of shareholders
|
|
| |
4)
|
it is listed on the securities exchange
|
|
Question 5
| |
0 / 1 point
|
| | | | | |
In which of the following financial statements would a retained earnings account be found?
| |
|
| |
|
| |
|
| |
4)
|
None of the options shown would contain a retained earnings account
|
|
Question 6
| |
0 / 1 point
|
| | | | | |
Nearly all companies issue ordinary shares:
| |
1)
|
all of the options are true
|
|
| |
2)
|
but not all companies issue preference shares.
|
|
| |
3)
|
but not all companies issue options
|
|
| |
4)
|
but not all companies issue rights issues
|
|
Question 7
| |
0 / 1 point
|
| | | | | |
Retained earnings at the end of the period is equal to:
| |
1)
|
assets plus liabilities.
|
|
| |
2)
|
profit earned for the period plus retained earnings at the start of the period.
|
|
| |
3)
|
retained earnings at the beginning of the period plus profit earned for the period minus dividends.
|
|
| |
4)
|
retained earnings at the beginning of the period plus profit earned for the period minus liabilities.
|
|
Question 8
| |
0 / 1 point
|
| | | | | |
A company has which of these sets of characteristics?
| |
1)
|
Harder to raise funds and gives the owner full control
|
|
| |
2)
|
Shared control, tax advantages for family members, limited life
|
|
| |
3)
|
Simple to set up and control will always remain with the founder
|
|
| |
4)
|
Easier to transfer ownership and raise funds, and limited liability
|
|
Question 9
| |
0 / 1 point
|
| | | | | |
An expense in a company's income statement that would not appear in a partnership income statement is:
Which of these is the most numerous type of company registered in Australia?
| |
1)
|
A proprietary company limited by shares
|
|
| |
2)
|
A public company limited by shares
|
|
| |
3)
|
A public company limited by guarantee
|
|
| |
4)
|
A public No-liability company
|
|
Question 11
| |
0 / 1 point
|
| | | | | |
ABC Restaurant Pty Ltd started the year with total assets of $90 000 and total liabilities of $40 000. During the year the business earned $100 000 in income and incurred $55 000 in expenses. Dividends paid were $10 000. Equity at the end of the period was:
Limited liability for a company applies to:
| |
|
| |
2)
|
the board of directors collectively
|
|
| |
3)
|
the individual directors
|
|
| |
|
Quiz 4
An accounting period that is one year in length is called:
| |
1)
|
the time period assumption.
|
|
| |
|
| |
|
| |
|
Question 2
| |
0 / 1 point
|
| | | | | |
Which of these will be recorded as income?
| |
1)
|
A loan is received from a bank
|
|
| |
2)
|
Money is collected from a customer owing from goods sold last week
|
|
| |
3)
|
A sale is made on credit
|
|
| |
4)
|
Additional capital is contributed by the owner
|
|
Question 3
| |
0 / 1 point
|
| | | | | |
The income statement
| |
1)
|
presents the income and expenses of an entity for a specific period of time.
|
|
| |
2)
|
reports the changes in assets, liabilities and equity over a period of time.
|
|
| |
3)
|
reports the assets, liabilities and equity at a specific point in time.
|
|
| |
4)
|
summarises the change in retained earnings over a specific period of time.
|
|
Question 4
| |
0 / 1 point
|
| | | | | |
Which of the following statements about gross profit is not true?
| |
1)
|
Gross profit is equal to sales less cost of sales
|
|
| |
2)
|
An entity cannot be sustainable unless the gross profit is positive
|
|
| |
3)
|
Gross profit is applicable to manufacturing and retail businesses
|
|
| |
4)
|
Gross profit is equal to total income minus total expenses
|
|
Question 5
| |
0 / 1 point
|
| | | | | |
If income earned is not accrued at the end of the accounting period, the result will be an
| |
1)
|
Understatement in liabilities and an overstatement in profit
|
|
| |
2)
|
Overstatement in liabilities and an understatement in profit
|
|
| |
3)
|
Overstatement in assets and profit
|
|
| |
4)
|
Understatement in assets and profit
|
|
Question 6
| |
0 / 1 point
|
| | | | | |
Which of these is not an income type item?
Which is correct?
| |
1)
|
The income statement, the balance sheet and the statement of cash flows are all cash based
|
|
| |
2)
|
The income statement and the statement of cash flows are cash based and the balance sheet is accrual based
|
|
| |
3)
|
The income statement and the balance sheet are accrual based and the statement of cash flows is cash based
|
|
| |
4)
|
The income statement, the balance sheet and the statement of cash flows are all accrual based
|
|
Question 8
| |
0 / 1 point
|
| | | | | |
Office supplies purchased in bulk are initially charged to an asset account and are used on a daily basis. An expense will normally be recorded when:
| |
|
| |
2)
|
supplies are paid for.
|
|
| |
3)
|
at the end of the accounting period when a balance day adjustment is prepared for supplies used.
|
|
| |
|
Question 9
| |
0 / 1 point
|
| | | | | |
Equity is increased by
If a car is serviced on 31 May and an invoice is issued, the owner picks up the car on 31 May, the owner sends a cheque to the servicing firm on 4 June, and the firm banks the cheque on 7 June, income is recognised by the servicing firm on
If sales = $45 000, purchases = $25 000, beginning inventory = $10 000 and ending inventory = $8000 cost of sales is:
If an expense is paid for in cash, then
| |
1)
|
liabilities will decrease.
|
|
| |
|
| |
|
| |
|
Question 13
| |
0 / 1 point
|
| | | | | |
A test for distinguishing between an asset and an expense is
| |
1)
|
whether the item will be turned into cash by the end of the accounting period.
|
|
| |
2)
|
whether the benefit extends into the next accounting period.
|
|
| |
3)
|
whether the payment is made in cash.
|
|
| |
4)
|
the amount of the transaction.
|
|
Question 14
| |
0 / 1 point
|
| | | | | |
A machine is purchased for $130 000. It is estimated that it has a useful life of 8 years and will then be sold for $10 000. Using the straight-line method the balance in the accumulated depreciation account at the end of the third year of the machine's useful life is:
If a legitimate expense is not accrued at the end of the accounting period, the result will be an
| |
1)
|
understatement in liabilities and an overstatement in profit.
|
|
| |
2)
|
overstatement in liabilities and an understatement in profit.
|
|
| |
3)
|
overstatement in assets and profit.
|
|
| |
4)
|
understatement in assets and profit.
|
|
Quiz 3
Which of the following items would not appear in a statement of cash flows?
| |
|
| |
|
| |
|
| |
4)
|
all of the items would appear on a statement of cash flows
|
|
Question 2
| |
0 / 1 point
|
| | | | | |
Cash receipts from interest and dividends are classified as which activity in the statement of cash flows?
| |
|
| |
|
| |
|
| |
4)
|
Financing or investing
|
|
Question 3
| |
0 / 1 point
|
| | | | | |
The section of the statement of cash flows that is generally considered to be the best measure of a company's ability to continue as a going concern is
| |
1)
|
Cash flows from financing activities
|
|
| |
2)
|
Cash flows from investing activities
|
|
| |
3)
|
Cash flows from operating activities
|
|
| |
4)
|
Each gives an equal estimation
|
|
Question 4
| |
0 / 1 point
|
| | | | | |
Reliance on the statement of cash flows by the investment community has increased because:
| |
1)
|
of the relative difficulty in manipulating the statement of cash flows compared with manipulating the income statement
|
|
| |
2)
|
all the options are correct
|
|
| |
3)
|
the comparison of profit or loss to the cash flow from operating activities can highlight how an entity is managing its working capital requirements
|
|
| |
4)
|
lenders can use the statement of cash flows to ascertain management efficiency and the ability of the entity to generate cash flow
|
|
Question 5
| |
0 / 1 point
|
| | | | | |
Which of these is an early warning sign indicating problems with cash flows?
| |
1)
|
Cash from operating activities is higher than profit
|
|
| |
2)
|
Dividends paid are greater than cash flow from operations
|
|
| |
3)
|
A large amount has been spent on the acquisition of fixed assets
|
|
| |
4)
|
Proceeds from financing activities are used to finance investment activities
|
|
Question 6
| |
0 / 1 point
|
| | | | | |
In which section of the statement of cash flows would the payment of a dividend by a company to its shareholders be included?
| |
1)
|
cash flows from operating activities
|
|
| |
2)
|
cash flows from investing activities
|
|
| |
3)
|
cash flows from financing activities
|
|
| |
4)
|
payment of dividends would not be included in the statement of cash flows
|
|
Question 7
| |
0 / 1 point
|
| | | | | |
Which of the following statements is true?
| |
1)
|
For an entity to survive, the net cash flow from operating activities should be positive.
|
|
| |
2)
|
For an entity to survive, the net cash flow from investing activities should be positive.
|
|
| |
3)
|
For an entity to survive, the net cash flow from financing activities should be positive.
|
|
| |
4)
|
For an entity to survive, the net cash flow from operating activities should be negative.
|
|
Question 8
| |
0 / 1 point
|
| | | | | |
Which of the following items would be classified as financing activities in a statement of cash flows?
| |
1)
|
repayment of borrowings
|
|
| |
2)
|
proceeds from borrowings
|
|
| |
3)
|
proceeds from the issue of shares
|
|
| |
4)
|
all the item would be classified as financing activities
|
|
Question 9
| |
0 / 1 point
|
| | | | | |
The format followed in the preparation of the statement of cash flows is:
| |
1)
|
cash flows from financing activities, cash flows from operating activities, cash flows from investing activities
|
|
| |
2)
|
cash flows from operating activities, cash flows from investing activities, cash flows from financing activities
|
|
| |
3)
|
cash flows from investing activities, cash flows from financing activities, cash flows from operating activities
|
|
| |
4)
|
cash flows from investing activities, cash flows from operating activities, cash flows from financing activities
|
|
Question 10
| |
0 / 1 point
|
| | | | | |
Which is correct?
| |
1)
|
The income statement, the balance sheet and the statement of cash flows are all cash based
|
|
| |
2)
|
The income statement and the statement of cash flows are cash based and the balance sheet is accrual based
|
|
| |
3)
|
The income statement and the balance sheet are accrual based and the statement of cash flows is cash based
|
|
| |
4)
|
The income statement, the balance sheet and the statement of cash flows are all accrual based
|
|
Question 11
| |
0 / 1 point
|
| | | | | |
Cash inflows from financing activities include
| |
|
| |
2)
|
receipts from the issue of shares.
|
|
| |
3)
|
receipts from the sale of investments.
|
|
| |
|
Question 12
| |
0 / 1 point
|
| | | | | |
Changes in the balance sheet items making up non-current liabilities and equity appear in the statement of cash flows under:
| |
|
| |
|
| |
|
| |
4)
|
the reconciliation of profit with cash flow from operating activities
|
|
Question 13
| |
0 / 1 point
|
| | | | | |
A net cash outflow from investing activities:
| |
1)
|
indicates problems in an entity's management of its non-current assets
|
|
| |
2)
|
may indicate a healthy growing business which needs to replace its assets as they wear out and purchase new assets to increase its future profits
|
|
| |
3)
|
is always an indicator that an entity is well managed
|
|
| |
4)
|
all the options are true
|
|
Question 14
| |
0 / 1 point
|
| | | | | |
Which of the following would not be classified as a cash flow from investing activities?
| |
1)
|
proceeds from repayment of loans to other parties
|
|
| |
2)
|
proceeds from the sale of plant and equipment
|
|
| |
3)
|
proceeds from a loan to the entity
|
|
| |
4)
|
payment for plant and equipment
|
|
Question 15
| |
0 / 1 point
|
| | | | | |
The primary purpose of the statement of cash flows is to
| |
1)
|
show the deficit of cash during the period.
|
|
| |
2)
|
show the cash balance at the end of the period.
|
|
| |
3)
|
provide information about the profit or loss during the accounting period.
|
|
| |
4)
|
provide information about the cash receipts and cash payments made during the accounting period.
|
|
Quiz 2
The effect on the accounting equation of the business banking $1000 of cash received from a debtor paying his account for an amount owing is:
| |
1)
|
increase the asset cash; increase profit and loss to record income
|
|
| |
2)
|
increase the asset cash; decrease the liability debtors
|
|
| |
3)
|
increase the asset cash; decrease the asset debtors
|
|
| |
4)
|
decrease the asset cash; decrease the profit and loss
|
|
Question 2
| |
0 / 1 point
|
| | | | | |
The income statement
| |
1)
|
presents the income and expenses of an entity for a specific period of time.
|
|
| |
2)
|
reports the changes in assets, liabilities and equity over a period of time.
|
|
| |
3)
|
reports the assets, liabilities and equity at a specific point in time.
|
|
| |
4)
|
summarises the change in retained earnings over a specific period of time.
|
|
Question 3
| |
0 / 1 point
|
| | | | | |
Which of these is not a current liability?
Which of the following is not a business transaction?
| |
1)
|
providing services on credit
|
|
| |
2)
|
purchasing inventory on credit
|
|
| |
3)
|
signing a contract to hire a new employee
|
|
| |
4)
|
withdrawal of cash by the owner from the business bank account
|
|
Question 5
| |
0 / 1 point
|
| | | | | |
The statement regarding equity that is true is:
| |
1)
|
It is decreased by profit
|
|
| |
2)
|
It is fixed at the amount initially contributed by the owners
|
|
| |
3)
|
It is the owners' claim on the net assets of the entity
|
|
| |
4)
|
It arises solely from the retained earnings of the entity
|
|
Question 6
| |
0 / 1 point
|
| | | | | |
The order in which the income statement and balance sheet are normally completed is:
| |
|
| |
2)
|
income statement first.
|
|
| |
|
| |
4)
|
both done simultaneously.
|
|
Question 7
| |
0 / 1 point
|
| | | | | |
If total assets equal $145 000, total liabilities are $90 000 and total equity equals $55 000 then net assets equals
Equity is increased by
The duality concept requires that each transaction must be recorded:
| |
1)
|
in at least two different accounts.
|
|
| |
2)
|
in a journal and a ledger.
|
|
| |
|
| |
4)
|
first as income than as an expense.
|
|
Question 10
| |
0 / 1 point
|
| | | | | |
Some of ABC's transactions for the month of October are as follows. Which transaction, if any, is an expense for the month of October?
| |
1)
|
Purchased $50 worth of petrol on credit, to be paid for in November
|
|
| |
2)
|
Paid $1000 off a loan obtained during July
|
|
| |
3)
|
Paid a mechanic $250 for repair work carried out in September
|
|
| |
4)
|
Purchased a photocopier for $15 000
|
|
Question 11
| |
0 / 1 point
|
| | | | | |
The correct statement is:
| |
1)
|
The income statement prepared for internal use is similar to one prepared for external use
|
|
| |
2)
|
The income statement prepared for internal use is more summarised than one prepared for external use
|
|
| |
3)
|
The accounting standards govern the presentation of income statements prepared for both internal and external use
|
|
| |
4)
|
While the two income statements have common elements the statement prepared for external use is more aggregated than the one prepared for internal users
|
|
Question 12
| |
0 / 1 point
|
| | | | | |
On 14 May, Green Pty Ltd sells goods to Gold Pty Ltd with payment to follow within 60 days. On Green's balance sheet the amount owed by Gold should be recorded as:
| |
1)
|
a customer advance payment.
|
|
| |
|
| |
3)
|
an account receivable.
|
|
| |
|
Question 13
| |
0 / 1 point
|
| | | | | |
All these statements about the balance sheet are true, except
| |
1)
|
assets are listed in order of liquidity.
|
|
| |
2)
|
it shows the cash received and cash paid for the period.
|
|
| |
3)
|
it reflects the accounting equation.
|
|
| |
4)
|
the total of the assets must equal the total of the liabilities plus equity.
|
|
Question 14
| |
0 / 1 point
|
| | | | | |
If assets are $560 000 and equity is $270 000 liabilities must be:
A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits is the definition of:
The effect on the accounting equation of the business purchasing a new motor vehicle on credit for $35 500 is:
| |
1)
|
an increase in the asset Motor Vehicles of $35 500 and a decrease in the asset cash of $35 500.
|
|
| |
2)
|
an increase in the asset Motor Vehicles of $35 500 and a decrease in the liability accounts payable of $35 500
|
|
| |
3)
|
a decrease in the asset Motor Vehicles of $35 500 and an increase in the liability accounts payable $35 500
|
|
| |
4)
|
an increase in the asset Motor Vehicle of $35 500 and an increase in the liability accounts payable $35 500
|
|
Question 17
| |
0 / 1 point
|
| | | | | |
The balance sheet of an entity:
| |
1)
|
lists the assets, liabilities and equity at a point in time.
|
|
| |
2)
|
lists all assets and liabilities at present values.
|
|
| |
3)
|
gives all of the facts regarding financial position.
|
|
| |
4)
|
is the most important financial statement
|
|
Question 18
| |
0 / 1 point
|
| | | | | |
Which of the following statements about gross profit is not true?
| |
1)
|
Gross profit is equal to sales less cost of sales
|
|
| |
2)
|
An entity cannot be sustainable unless the gross profit is positive
|
|
| |
3)
|
Gross profit is applicable to manufacturing and retail businesses
|
|
| |
4)
|
Gross profit is equal to total income minus total expenses
|
|
Question 19
| |
0 / 1 point
|
| | | | | |
Liabilities + equity should always be:
| |
|
| |
|
| |
|
| |
4)
|
greater than or equal to assets
|
|
Question 20
| |
0 / 1 point
|
| | | | | |
The accounts land, accounts receivable, sales revenue and accounts payable should be classified as follows:
| |
1)
|
land - asset, accounts receivable - liability, sales revenue - income, accounts payable - asset
|
|
| |
2)
|
land - asset, accounts receivable - asset, sales revenue - liability, accounts payable - liability
|
|
| |
3)
|
land - asset, accounts receivable - liability, sales revenue - liability, accounts payable - liability
|
|
| |
4)
|
land - asset, accounts receivable - asset, sales revenue - income, accounts payable - liability
|
|
Quiz 1
Private companies in Australia must have
| |
1)
|
at least one shareholder
|
|
| |
2)
|
at least two shareholders
|
|
| |
3)
|
at least three shareholders
|
|
| |
4)
|
more than fifty shareholders
|
|
Question 2
| |
0 / 1 point
|
| | | | | |
A business which is a separate legal entity can be a:
| |
|
| |
|
| |
|
| |
4)
|
all options are businesses which are separate legal entities
|
|
Question 3
| |
0 / 1 point
|
| | | | | |
The information that would be of most interest to an organisation's production manager is:
| |
1)
|
ability to pay off debts as they fall due
|
|
| |
2)
|
continuity of orders for the factory.
|
|
| |
|
| |
|
Question 4
| |
0 / 1 point
|
| | | | | |
Compared to the sole trader, the advantage of the partnership form of business is:
| |
|
| |
|
| |
|
| |
4)
|
greater access to skills and resources
|
|
Question 5
| |
0 / 1 point
|
| | | | | |
The profit for a partnership must be split:
| |
|
| |
2)
|
according to the contribution of each partner
|
|
| |
3)
|
according to the capital contributions of each partner
|
|
| |
4)
|
according to the partnership agreement
|
|
Question 6
| |
0 / 1 point
|
| | | | | |
Limited liability for a company applies to:
| |
|
| |
the board of directors collectively
|
|
| |
|
| |
|
Question 7
| |
0 / 1 point
|
| | | | |
Management accounting reports are prepared:
| |
1)
|
based on GAAP and IASB accounting standards
|
|
| |
2)
|
to provide information for a wide range of stakeholders
|
|
| |
3)
|
to provide up to date information to managers for decision making
|
|
| |
4)
|
based only on historical figures
|
|
Question 8
| |
0 / 1 point
|
| | | | | |
Which of these is the most numerous type of company registered in Australia?
| |
1)
|
A proprietary company limited by shares
|
|
| |
2)
|
A public company limited by shares
|
|
| |
3)
|
A public company limited by guarantee
|
|
| |
4)
|
A public No-liability company
|
|
Question 9
| |
0 / 1 point
|
| | | | | |
The term 'general-purpose financial statements' refers to the fact that the information conveyed is:
| |
1)
|
generally reliable but not perfect.
|
|
| |
2)
|
useful for general purposes but not for making specific decisions.
|
|
| |
3)
|
potentially valuable for a number of users.
|
|
| |
4)
|
average information from several accounting periods.
|
|
Question 10
| |
0 / 1 point
|
| | | | | |
Resources controlled by the entity as a result of past transactions or events and from which future economic benefits are expected to flow to the entity is the definition of:
A company has which of these sets of characteristics?
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1)
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Harder to raise funds and gives the owner full control
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2)
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Shared control, tax advantages for family members, limited life
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3)
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Simple to set up and control will always remain with the founder
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4)
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Easier to transfer ownership and raise funds, and limited liability
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Question 12
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0 / 1 point
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Which of the following is an advantage of being a sole trader?
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1)
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the owner has total autonomy over business decisions
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2)
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the owner has unlimited liability
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3)
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the business has limited life
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4)
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the business is not a separate legal entity
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Question 13
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0 / 1 point
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"A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits" is the definition of:
Under the Framework, the qualitative characteristic of relevance is described as:
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1)
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information that is of value to users in decision making.
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2)
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information that is understandable
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3)
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information that can be recorded in accounting reports.
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4)
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information that can be reliably measured.
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Question 15
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0 / 1 point
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Which of the following is not a limitation of accounting information?
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2)
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its subjective nature.
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3)
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the use of historical data to predict future events.
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4)
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the time delay from when events take place and their reporting.
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Question 16
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0 / 1 point
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A disadvantage of operating as a sole trader is:
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2)
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having a business that is inexpensive to start up and wind down
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3)
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having very little government regulation
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4)
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having total control of business decisions
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Question 17
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0 / 1 point
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The sole trader form of business organisation:
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1)
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is classified as a separate legal entity.
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2)
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combines the records of the business with the personal records of the owner.
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3)
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must apply for an Australian Business Number.
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4)
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must have at least two owners.
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Question 18
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0 / 1 point
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The external user of accounting information is the:
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2)
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Director of Research and Development.
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Question 19
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0 / 1 point
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Under the Framework the four principle qualitative characteristics for General Purpose Financial Statements are:
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1)
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relevance, reliability, materiality, conservatism
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2)
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relevance, reliability, comparability, understandability
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3)
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uniformity, consistency, prudence, readability
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4)
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comparability, verifiability, timeliness, understandability
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Question 20
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0 / 1 point
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Which of the following is not a business transaction?
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1)
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incurring interest on a business loan
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2)
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purchasing office supplies
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3)
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receiving fees for services
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