Question 1

Use the information given below to answer the following questions:
James has a business mowing lawns. On 31 December 2012, he has a utility truck worth $7000, a mower worth $250 and an edger worth $110. Fuel on hand cost $70. Customers owe him $360 and he owes his fuel supplier $90. He owes his sister $5000, which is a long-term loan, and he has $110 in his business bank account.
-What is James's owners' equity?

Accepted Answer

A)   $7810
B)   $2810
C)   $110
D)   $2590.E) A) and D)
F) A) and C)

Question 2

The purpose of dividing assets and liabilities into current and noncurrent classes is to help the reader of the balance sheet to determine:

Accepted Answer

A)   the short-term financial position of the firm
B)   the long-term financial position of the firm
C)   the likely future financial performance of the firm
D)   none of the above.E) None of the above
F) B) and C)

Question 3

Which of the following statements about assets is NOT true?

Accepted Answer

A)   Assets provide future economic benefits.
B)   Assets are economic resources controlled by an organisation.
C)   Assets result from past transactions or other events.
D)   Assets are items which can be physically identified.E) A) and B)
F) B) and D)

Question 4

Which of the following is NOT an expense?

Accepted Answer

A)   dividends declared
B)   amount owed to electrician to be paid in the next period
C)   cost of goods sold
D)   wages.E) B) and D)
F) All of the above

Question 5

If a business pays a 12-month insurance premium of $600 on 1 February 2012,at 30 June 2012 the prepayment will be equal to:

Accepted Answer

A)   $600
B)   $350
C)   $300
D)   $250.E) All of the above
F) A) and D)

Question 6

Gross profit is the difference between:

Accepted Answer

A)   sales revenue and operating expenses
B)   sales revenue and cost of goods sold
C)   operating profit before tax and income tax expense
D)   sales and sales returns.E) A) and C)
F) A) and B)

Question 7

The connecting link between the balance sheet and the income statement is:

Accepted Answer

A)   dividends paid to shareholders
B)   the opening balance of retained profits
C)   total shareholders' equity
D)   net profit after tax.E) A) and D)
F) B) and C)

Question 8

Which of the following is NOT a revenue of a company?

Accepted Answer

A)   sale of goods
B)   dividends received on shares
C)   obtaining a loan from the bank
D)   rent from premises.E) All of the above
F) A) and C)

Question 9

Which of the following is NOT a revenue of a company?

Accepted Answer

A)   cash sales
B)   credit sales
C)   interest on investments
D)   borrowing from a bank.E) A) and C)
F) All of the above

Question 10

Consider the following transactions: 
(i) repayment of a loan in June 2012
(ii) depreciation of equipment in June 2012
(iii) payment of accounts payable in June 2012
(iv) payment of an insurance bill in June 2012,which covers 1 July 2012 to 30 June 2013.
Which of the above transactions increase June 2012 expenses?

Accepted Answer

A)   (ii) only
B)   (i) and (ii) only
C)   (i) ,(ii) and (iii) only
D)   (i) ,(ii) and (iv) only
E)   (ii) ,(iii) and (iv) only.F) A) and E)
G) A) and C)

Question 11

Use the information given below to answer the following questions:
During 2012, Avion Ltd incurred expenses of $250 and earned a net profit of $50. Retained profits at 1 January 2012 stood at $70 and dividends declared and paid totalled $30. At 31 December 2012, liabilities were $200 and share capital $110. There were no transfers to reserves during 2012.
-What were the revenues of Avion Ltd during 2012?

Accepted Answer

A)   $200
B)   $250
C)   $300
D)   $330.E) C) and D)
F) None of the above

Question 12

Which of the following CANNOT be classified as a current liability?

Accepted Answer

A)   accounts payable
B)   provision for long service leave
C)   loans
D)   wages owing.E) C) and D)
F) A) and D)

Question 13

Which of the following statements about a balance sheet is NOT true?

Accepted Answer

A)   A balance sheet is included in the annual report of a company.
B)   A balance sheet lists the set of resources and sources of the enterprise.
C)   A balance sheet relates to a particular point in time.
D)   A balance sheet indicates exactly which source produced which assets.E) B) and D)
F) A) and D)

Question 14

The balance sheet of Hemp Ltd at 30 June 2012 showed: noncurrent assets $500 000; noncurrent liabilities $320 000; total liabilities $400 000; and shareholders' equity $300 000.What was the working capital of Hemp Ltd at 30 June 2012?

Accepted Answer

A)   $300 000
B)   $120 000
C)   $200 000
D)   $180 000.E) A) and B)
F) None of the above

Question 15

Use the information given below to answer the following questions:
During the year, Grasso Ltd sold 2000 items at $30 each. The cost price of the items was $22 each. Operating expenses totalled $7000 and income tax expense was $4000.
-What was the gross profit of Grasso Ltd for the year?

Accepted Answer

A)   $60 000
B)   $16 000
C)   $11 000
D)   $5000.E) B) and C)
F) C) and D)

Question 16

Use the information given below to answer the following questions:
James has a business mowing lawns. On 31 December 2012, he has a utility truck worth $7000, a mower worth $250 and an edger worth $110. Fuel on hand cost $70. Customers owe him $360 and he owes his fuel supplier $90. He owes his sister $5000, which is a long-term loan, and he has $110 in his business bank account.
-What is James's current ratio?

Accepted Answer

A)   6:1
B)   5:1
C)   4.2:1
D)   4.7:1.E) A) and B)
F) A) and C)

Question 17

During 2009,Hillary Ltd earned revenue of $1000 and a net profit of $200.Retained profits at 31 December 2009 were $540 and dividends declared and paid totalled $160.At the same date,liabilities were $260 and assets $1800.There were no transfers to reserves during 2009.What was the balance of Hillary Ltd's retained profits at 1 January 2009?

Accepted Answer

A)   $540
B)   $580
C)   $400
D)   the balance cannot be determined from the above information.E) A) and C)
F) B) and C)

Question 18

Use the information given below to answer the following questions:
James has a business mowing lawns. On 31 December 2012, he has a utility truck worth $7000, a mower worth $250 and an edger worth $110. Fuel on hand cost $70. Customers owe him $360 and he owes his fuel supplier $90. He owes his sister $5000, which is a long-term loan, and he has $110 in his business bank account.
-What is James's working capital?

Accepted Answer

A)   $2810
B)   $450
C)   $380
D)   $430.E) A) and B)
F) A) and C)

Question 19

Use the information given below to answer the following questions:
On 30 June 2011, Easter Ltd declared a final dividend. During the year ended 30 June 2012, Easter Ltd earned revenues of $1200 and incurred expenses of $800. Retained profits at 1 July 2011 were $700, and at 30 June 2012, $850. At 30 June 2012, assets totalled $2800 and share capital $1500. There were no transfers to reserves during the year ended 30 June 2012.
-What was the dividend declared by Easter Ltd during the year?

Accepted Answer

A)   $150
B)   $250
C)   $550
D)   this cannot be determined from the above information.E) A) and D)
F) A) and C)

Question 20

Which of the following statements about accumulated depreciation is true?

Accepted Answer

A)   Accumulated depreciation is the amount of depreciation recognised at the date of disposal of the asset.
B)   Cost less accumulated depreciation gives net book value.
C)   Accumulated depreciation represents the depreciation charge for the current period.
D)   Accumulated depreciation is ignored when an asset is sold.E) B) and D)
F) A) and B)

Exam 2: Measuring and Evaluating Financial Position and Financial Performance

Which of the following statements about a balance sheet is NOT true?

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The connecting link between the balance sheet and the income statement is:

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Use the information given below to answer the following questions: During the year, Grasso Ltd sold 2000 items at $30 each. The cost price of the items was $22 each. Operating expenses totalled $7000 and income tax expense was $4000. -What was the gross profit of Grasso Ltd for the year?

Correct Answer
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Which of the following statements about accumulated depreciation is true?

Correct Answer
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Which of the following is NOT a revenue of a company?

Correct Answer
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If a business pays a 12-month insurance premium of $600 on 1 February 2012,at 30 June 2012 the prepayment will be equal to:

Correct Answer
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Gross profit is the difference between:

Correct Answer
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Which of the following is NOT an expense?

Correct Answer
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Which of the following is NOT a revenue of a company?

Correct Answer
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Which of the following CANNOT be classified as a current liability?

Correct Answer
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The balance sheet of Hemp Ltd at 30 June 2012 showed: noncurrent assets $500 000; noncurrent liabilities $320 000; total liabilities $400 000; and shareholders' equity $300 000.What was the working capital of Hemp Ltd at 30 June 2012?

Correct Answer
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The purpose of dividing assets and liabilities into current and noncurrent classes is to help the reader of the balance sheet to determine:

Correct Answer
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Which of the following statements about assets is NOT true?

Correct Answer
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Exam 2: Measuring and Evaluating Financial Position and Financial Performance

Which of the following statements about a balance sheet is NOT true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The connecting link between the balance sheet and the income statement is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the information given below to answer the following questions: During the year, Grasso Ltd sold 2000 items at $30 each. The cost price of the items was $22 each. Operating expenses totalled $7000 and income tax expense was $4000. -What was the gross profit of Grasso Ltd for the year?

Correct AnswerverifiedShow Answer

Which of the following statements about accumulated depreciation is true?

Correct AnswerverifiedShow Answer

Which of the following is NOT a revenue of a company?

Correct AnswerverifiedShow Answer

If a business pays a 12-month insurance premium of $600 on 1 February 2012,at 30 June 2012 the prepayment will be equal to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Gross profit is the difference between:

Correct AnswerverifiedShow Answer

Which of the following is NOT an expense?

Correct AnswerverifiedShow Answer

Which of the following is NOT a revenue of a company?

Correct AnswerverifiedShow Answer

Which of the following CANNOT be classified as a current liability?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The balance sheet of Hemp Ltd at 30 June 2012 showed: noncurrent assets $500 000; noncurrent liabilities $320 000; total liabilities $400 000; and shareholders' equity $300 000.What was the working capital of Hemp Ltd at 30 June 2012?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The purpose of dividing assets and liabilities into current and noncurrent classes is to help the reader of the balance sheet to determine:

Correct AnswerverifiedShow Answer

Which of the following statements about assets is NOT true?

Correct AnswerverifiedShow Answer

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