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Accounting
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Questions in this quiz (107)
1Which of the following is not included in current assets?
- AReceivables
- BInventory
- CCash at Bank
- DBank Overdraft
2Operating profit is defined as:
- ASales revenue less cost of sales.
- BSales revenue less cost of sales less overheads.
- CProfit after interest and tax plus tax.
- DProfit after interest and tax plus interest plus tax
3Select the ones that relate to the assets of an organisation.
- ALand
- BCash
- CInventory
- DLoan
- EPlant and Machinery
- FOverdraft
45. What is an accounting period?
- Aa) a) A calendar year.
- Bb) Twelve months ending exactly on the anniversary of commencing business
- Cc) A period of one year.
- Dd) Any regular period, usually of 12 months’ duration, selected by a business for reporting accounting information.
54. Which of the following is a liability?
- Aa) Land
- Bb) Stationary
- Cc) Bank Loan
- Dd) Sales
66. Which of the following is known as the accounting equation?
- ALiabilities = assets + owner’s capital
- B) Assets = liabilities − owner’s capital
- Cc) Assets − liabilities = owner’s capital
- Dd) Owner’s capital = assets + liabilities
77. If, as at the year-end, the total assets of a business were £189,000 and business liabilities were £126,000, what would be the owner’s capital as at that date?
- Aa) £63,000
- Bb) £126,000
- Cc) £189,000
- Dd) £315,000
88. Another name for the balance sheet is
- Aa) Income Statement.
- Bb) Statement of Financial Position.
- Cc) Cash Flow Statement.
- Dd) Statement of the Balance Sheet Position.
99. Another name for the income statement is
- Aa) Revenue and Expenses Account
- Bb) Profit and Loss Account
- Cc) Cash Flow Statement
- Dd) Income Flow statement
1010. Which of the following is a category or element of the balance sheet?
- Aa) Expenses
- Bb) Gains
- Cc) Liability
- Dd) Losses
1111. The balance sheet heading will specify a
- Aa) A point in time
- Bb) A period of time
- Cc) A normal Period
- Dd) A yearly period
1212. ABC Co. has current assets of £50,000 and total assets of £150,000. ABC has current liabilities of £30,000 and total liabilities of £80,000. What is the amount of ABC's owner's equity?
- Aa) £20,000
- Bb) £30,000
- Cc) £70,000
- Dd) £120,000
1313. The third line of the balance sheet at the end of the year should begin with "For the Year Ended".
- ATrue
- BFalse
1414. The profit of a business during an accounting period is equal to
- Aa) Total cash receipts less total cash payments
- Bb) Total revenues less total expenses
- Cc) Total cash receipts less total expenses
- Dd) Total revenues less total cash payments
1515. The income statement shows
- Aa) The financial performance and the financial position of the business
- Bb) The cash flow of the business
- Cc) The financial performance of the business
- Dd) The financial position of the business
161. A holding company is best defined as one which:
- Aa) holds most of the net assets of another company
- Bb) holds most of the shares in another company
- Cc) holds both shares and debentures in another company
- Dd) holds the reserves of another company on behalf of that company
172. A Ltd pays £340,000 for 80% of the shares of B Ltd when B's share capital is £200,000 and its reserves are £120,000. What is the goodwill arising on this acquisition?
- Aa) £20,000
- Bb) £140,000
- Cc) £180,000
- Dd) £84,000
183. Which of the following companies would qualify to be regarded as subsidiaries of Alpha?
i. Beta in which Alpha has 15% votes and a place on the board of directors
ii. Delta in which Alpha has 52% votes but no place on the board of directors
iii. Gamma in which Alpha has 25% shares and two places on the board of directors
iv. Theta in which Alpha holds 100% votes and all places on the board of directors- Aa) ii &iii
- Bb) i. & iii
- Cc) i. & ii
- Dd) ii & iv
194. Which of the following would qualify a company to be regarded as a parent of another?
- Aa) A parent should own majority shares in the subsidiary
- Bb) A parent and the subsidiary should both have the same persons as their directors
- Cc) A parent it and its subsidiary must both be in the same line of business
- Dd) A parent should control the majority of the votes at the subsidiary’s shareholders’ meetings
205. Which of the following statement(s) is / are correct with regard to the preparation of the consolidated financial Statement?
i. To be a subsidiary a parent should hold 100% of its equity shares
ii. Consolidation merely addition together of two Statements of financial position
iii. In consolidation a subsidiary and an associate are treated identically
iv. Consolidated balance sheet excludes assets not owned by the group- Aa) None
- Bb) ii & iii
- Cc) i & iv
- Dd) i & ii
216. A non-controlling interest is best defined as:
- Aa) The debt stake in a subsidiary, as opposed to the equity stake
- Bb) The equity stake in the subsidiary held by the holding company, less reserves
- Cc) The equity stake in the subsidiary not held by the holding company
- Dd) The total of the debt and equity stakes in the subsidiary
227. The group's share of the pre-acquisition reserves of a subsidiary form part of:
- Aa) The goodwill calculation
- Bb) The group's revenue reserves
- Cc) The group's capital reserves
- Dd) The group's share capital
238. F Ltd has share capital of £100,000 and reserves of £160,000. G Ltd acquired 75% of F Ltd two years ago, when the share capital was the same, but the reserves were £120,000. At what amount should the non-controlling interest be shown in the current group statement of financial position?
- Aa) £55,000
- Bb) £70,000
- Cc) £195,000
- Dd) £65,000
249. K Ltd owns 90% of L Ltd. Last year K made total sales of £600,000, including £80,000 to L Ltd. L Ltd made total sales of £540,000, none of which were to K Ltd. What figure should be shown for sales in the group statement of comprehensive income?
- Aa) £1,060,000
- Bb) £1,080,000
- Cc) £1,040,000
- Dd) £1,026,000
253. The Income Statement is also known as
- Aa) Profit & Loss Account
- Bb) Balance Sheet
- CStatement of Income and Loss Account
- DProfitability Statement Account
262. Income Statement reports on business performance (i.e. profitability) over a period of time.
- ATrue
- BFalse
271. The Income Statement comprises of income and expenses of a business.
- ATrue
- BFalse
284. The income statement heading will specify which of the following?
- Aa) A POINT In Time
- Bb) A PERIOD Of Time
295. Amounts earned by a company from its main operating activities are
- A) Revenue
- BGains
- CProfit
- DMoney
306. A company disposes of equipment that it no longer uses in its business. The amount received by the company is more than the amount the asset is carried at in the accounting records. The company will report a(n)
- AExpense
- BGain
- CLoss
- DRevenue
317. Profit is income less expenses
- ATrue
- BFalse
328. An accrual is:
- AAn expense relating to the current year and paid within the current year.
- BAn expense relating to next year and already paid in the current year.
- CAn expense relating to the current year but not paid in current year.
- DAn expense relating to next year but not paid in current year.
339. Which of the following is not true?
- Aa) An accrual is a liability; a prepayment is a non-current asset.
- Bb) An accrual is a current liability; a prepayment is a current asset.
- Cc) An accrual is an amount owing at the end of a period; a prepayment is an amount paid in advance.
- Dd) An accrual is a liability; a prepayment is an asset.
3410. The straight-line method of depreciation is the only method that:
- APermits the asset to be recorded in the statement of financial position at its net book value.
- BReflects the economic reality of asset use.
- CCharges equal amounts over the useful life of the asset.
- DReflects the usage of the asset in achieving revenues.
3511. Which of the following non-current asset is not normally required to be depreciated?
- Aa) Building
- Bb) Machinery
- Cc) Freehold Land
- Dd) Leasehold building
3612. Who is most likely to be concerned about a business with "a very low quality profit"
- Aa) Operating Profit
- Bb) Gross Profit
- Cc) Retained Profit
- Dd) Net Profit
3714. Operating profit would include which ONE of the following items?
- Aa) Dividends
- Bb) Corporation Tax
- Cc) Insurance costs
- Dd) Interest costs
3815. Which of these would appear in an income statement?
- Aa) Intangible assets
- Bb) Share Capital
- Cc) Long Term Liabilities
- Dd) Net Finance Cost
3916. One of these statements about the income statement is correct?
- Aa) It helps measure the success of a busniess
- Bb) It measures the net cash flow of a business
- Cc) It shows the assets and liabilities at a point in time
- Dd) It provides evidence about a firm's liquidity
4017. Which item would be included in the calculation of gross profit?
- Aa) Salaries of the Board of Directors
- Bb) Interest charges on a long-term loan
- Cc) Rent & council tax on the office buildings
- Dd) Amounts charged by raw material suppliers
4118. Which of these is not an acceptable inventory costing method under IFRS?
- Aa) FIFO
- Bb) LIFO
- Cc) Weighted Average method
4219. ABC Co. has current assets of £50,000 and total assets of £150,000. ABC has current liabilities of £30,000 and total liabilities of £80,000. What is the amount of ABC's owner's equity?
- Aa) £20,000
- Bb) £30,000
- Cc) £70,000
- D120,000
4320. The profit of a business during an accounting period is equal to?
- Aa) Total cash receipts less total cash payments
- Bb) Total revenues less total expenses
- Cc) Total cash receipts less total expenses
- Dd) Total revenues less total cash payments
441. What does FIFO mean?
- Aa) Finished stock In Finished stock out
- Bb) Fabrications Inward Fabrications Outward
- Cc) Final Input Final Output
- Dd) First In First Out
452. Regardless of how long it takes to produce and sell inventory, inventory is always considered to be a?
- Aa) Current asset
- Bb) Current liability
- Cc) Long-term asset
- Dd) Stockholder's equity
464. The inventory costing method that is based on the assumption that cost should be charged against revenue in the order in which they were incurred.
- Aa) FIFO
- Bb) LIFO
- Cc) Average Cost
473. LIFO is an acceptable inventory valuation method in the UK?
- ATrue
- BFalse
485. The inventory costing method that charges the most recent costs incurred against revenue is
- Aa) FIFO
- Bb) LIFO
- Cc) Average Cost
496. If the merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income is:
- Aa) FIFO
- Bb) LIFO
- Cc) Average Cost
50Beginning inventory 10 units @ $10 per unit
First purchase 35 units @ $11 per unit
Second purchase 40 units @ $12 per unit
Third purchase 15 units @ $13 per unit
If 83 units are sold, the value of the ending inventory under periodic FIFO would be- Aa) $177
- Bb) $905
- Cc) $219
- Dd) $204
51Beginning inventory 10 units @ $10 per unit
First purchase 35 units @ $11 per unit
First sale 20 units
Second purchase 40 units @ $12 per unit
Second sale 35 units
Third purchase 15 units @ $13 per unit
The value of the ending inventory using a perpetual inventory system with the LIFO valuation method is- Aa) $555
- Bb) $485
- Cc) $520
- Dd) $540
529. An inventory, which consists of partially worked goods is called
- Aa) direct materials inventory
- Bb) work in progress inventory
- Cc) finished goods inventory
- Dd) indirect material inventory
5310. Inventory of final goods that are not yet sold is called
- Aa) finished goods inventory
- Bb) indirect material inventory
- Cc) direct materials inventory
- Dd) work in progress inventory
5411. An inventory which consists of stock waiting to be used in the process of manufacturing is known as
- Aa) finished goods inventory
- Bb) indirect material inventory
- Cc) direct materials inventory
- Dd) work in process inventory
5512. In cost accounting, types of inventory do not include
- Aa) direct materials inventory
- Bb) work in process inventory
- Cc) finished goods inventory
- Dd) indirect material inventory
5613. One of the following is not an acceptable method of inventory valuation in the UK
- Aa) FIFO – First In First Out
- Bb) Weighted Average method
- Cc) LIFO – Last In First Out
5714. Which of the following is not a method of inventory valuation?
- AFIFO – First In First Out
- Bb) Weighted Average method
- Cc) LIFO – Last In First Out
- Dd) FILO – First In Last Out
58A company makes a profit of £5,000 before tax and after all interest totalling £1,200 has been charged. The capital of the company is made up of £35,000 ordinary shares, £35,000 preference shares, £25,000 debentures and £30,000 reserves. The return on capital employed for this company before tax is:
- A6.2%
- B4.0%
- C4.96%
- D6.5%
59Using the information in question 1, what is the interest cover of the company?
- A5.17 times
- B5.17%
- C4.17 times
- D4.17%
60Given inventory of £24,000, other current assets of £12,000 and current liabilities of £20,000, the acid test (quick ratio) will be:
- A0.6:1
- B1.8:1
- C1.2:1
- D1.6:1
61Which best describes the gross margin ratio?
- ALeverage Ratio
- BLiquidity Ratio
- CCoverage ratio
- DProfitability Ratio
62A ratio that compares investors’ and creditors’ stake in a company.
- ADebt Ratio
- BDebt to Equity Ratio
- CEquity Ratio
- DInvestor Creditor Ratio
63What is its average stock turnover (in days to the nearest whole day) for the year?
£
Sales (90% credit)
990
Opening stock at 1 January
80
Purchases (all on credit)
525
Closing stock at 31 December
67
Trade receivables (debtors)
151
Prepaid expenses
18
Cash in hand
10
Bank overdraft
14
Trade payables (creditors)
81
Accrued expenses
22
Operating Profit
168- A133 days
- B50 days
- C20 days
- D23 days
64What is its debtor collection period (in days to the nearest whole day) for the year?
Sales (90% credit)
990
Opening stock at 1 January
80
Purchases (all on credit)
525
Closing stock at 31 December
67
Trade receivables (debtors)
151
Prepaid expenses
18
Cash in hand
10
Bank overdraft
14
Trade payables (creditors)
81
Accrued expenses
22
Operating Profit
168- A51 days
- B42 days
- C62 days
- D46 days
65Sales (90% credit)
990
Opening stock at 1 January
80
Purchases (all on credit)
525
Closing stock at 31 December
67
Trade receivables (debtors)
151
Prepaid expenses
18
Cash in hand
10
Bank overdraft
14
Trade payables (creditors)
81
Accrued expenses
22
Operating Profit
168
What is its creditor payment period (in days to the nearest whole day) for the year?- A56 days
- B50 days
- C46 days
- D44 days
66What is the current ratio at the year-end?
Sales (90% credit)
990
Opening stock at 1 January
80
Purchases (all on credit)
525
Closing stock at 31 December
67
Trade receivables (debtors)
151
Prepaid expenses
18
Cash in hand
10
Bank overdraft
14
Trade payables (creditors)
81
Accrued expenses
22
Operating Profit
168- A2.1:1
- B2.2:1
- C1.5:1
- D2.4:1
67Sales (90% credit)
990
Opening stock at 1 January
80
Purchases (all on credit)
525
Closing stock at 31 December
67
Trade receivables (debtors)
151
Prepaid expenses
18
Cash in hand
10
Bank overdraft
14
Trade payables (creditors)
81
Accrued expenses
22
Operating Profit
168
What is the quick ratio at the year-end?- A1.5:1
- B1.8:1
- C2.4:1
- D0.8:1
681. Which of the following is an asset?
- Aa) Capital
- Bb) Cash
- Cc) Sales
- Dd) Salaries
691. Which of the following is not a financial asset?
- Aa) Cash
- Bb) An equity instrument of another entity
- Cc) A contractual obligation to deliver cash
- Dd) A contract right to receive cash
702. A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
- ATrue
- BFalse
713. A financial liability is any liability that is a contractual obligation to deliver cash
- ATrue
- BFalse
724. Which Accounting standard deals with financial instruments
- Aa) IAS 32
- Bb) IAS 2
- Cc) IAS 13
- Dd) IAS 34
735. Under FRS 102, financial assets and financial liabilities should initially be measured at the transaction price.
- ATrue
- BFalse
746. A financial instrument is an equity instrument only if the instrument:
i. Includes no contracted obligation to deliver cash or another financial asset to another entity.
ii. Will or may be settled in the issuer’s own equity instrument.- Aa) i. only
- Bb) I and ii
- Cc) ii only
- Dd) None of the above
757. A fair value hedge is essentially a hedge of the exposure to changes in fair value of a recognised asset or liability.
- ATrue
- BFalse
768. A financial instrument is:
- Aa) A type of asset
- Bb) A type of contract
- Cc) A type of asset or liability
- Dd) A type of liability
779. Redeemable preference shares should be classified (from the issuing company's point of view) as:
- Aa) An equity instrument
- Bb) A compound financial instrument
- Cc) A financial asset
- Dd) A financial liability
7810. The accounting principle applied by standard IAS32 when distinguishing between liabilities and equity is:
- Aa) Prudence
- Bb) Substance over form
- Cc) Neutrality
- Dd) Consistency
7911. A company which complies with IFRS9 holds a financial asset which gives rise on specified dates to cash flows that are solely payments of principal and interest. The company's only objective in holding this asset is to collect these cash flows.
This financial asset should be measured at:- Aa) Original cost
- Bb) Amortised cost
- Cc) Fair value or amortized cost
- Dd) Fair value
8012. Assumptions in preparing financial statements Which of the following is a key assumption underlying the preparation of financial statements?
- Aa) The going concern basis of accounting
- Bb) The matching principle
- Cc) The prudence principle
- Dd) The historical cost measurement basis
8113. IFRS 9 uses a mixed model approach to measurement. Which of the following measurement methods are acceptable under IFRS 9?
- Aa) Amortised cost, fair value, and net realizable value
- Bb) Amortised cost and fair value
- Cc) Amortised cost, fair value, and depreciated replacement cost
- Dd) Amortised cost, fair value, and replacement cost
8214. What was the primary aim of the revision of IAS 39?
- Aa) IAS 39 was out of date
- Bb) To stop management of earnings
- Cc) It was a response to the credit crisis
- Dd) To remove inconsistencies between US GAAP and IFRS in accounting for financial instruments
8315. Which of the following is a financial liability?
- Aa) Cash
- Bb) An equity instrument of another entity
- Cc) A contractual obligation to deliver cash
- Dd) A contract right to receive cash
842. Which of the following accounts reports an asset?
- Aa) Bank loan account
- Bb) Bank account
- Cc) Sales account
- Dd) Capital account
853. Which of the following statements describes a liability?
- Aa) The amount by which expenses exceed the income of a business
- Bb) Amounts which have to be repaid within the accounting period
- Cc) Amounts owed
- Dd) Amounts payable within one year after the end of the accounting period
864. According to the accrual concept of accounting, financial or business transaction is recorded
- Aa) When Cash is received or paid
- Bb) When transaction occurs
- Cc) When Profit is computed
- Dd) When balance sheet is prepared
875. Accounting for tangible non-current assets normally involves which of the following?
i. An annual charge to the income statement;
ii. An annual reduction in the net book value of the asset;
iii. Annual cash flow in the cash flow statement.- Aa) (i) only.
- Bb) (i) and (ii) only.
- Cc) (ii) and (iii) only.
- Dd) (i), (ii) and (iii)
886. The total equity of a business is equal to
- Aa) The total liabilities of the business
- Bb) The total assets less the total liabilities of the business
- Cc) The total assets of the business
- Dd) The total assets less the current liabilities of the business
897. The balance sheet shows
- Aa) The cash flow of the business
- Bb) The financial performance of the business
- Cc) The financial position of the business
- Dd) The financial performance and the financial position of the business
908. The shareholders’ equity is
- Aa) £12,500
- Bb) £8,650
- Cc) £20,150
- Dd) £4,000
919. The current liabilities are
- Aa) £7,650
- Bb) £7,000
- Cc) £8,850
- Dd) £7,200
9210. The current assets are
- Aa) £5,000
- Bb) £8,000
- Cc) £10,000
- Dd) £9,500
9311. The total liabilities are
- Aa) £11,500
- Bb) £9,850
- Cc) £8,850
- Dd) £20,150
9412. The total assets are
- Aa) £10,000
- Bb) £20,150
- Cc) £29,000
- Dd) £30,000
9513. The net assets are
- Aa) £21,150
- Bb) £20,150
- Cc) £30,000
- Dd) £29,000
96A company acquires a machine for 50,000 with an expected economic life of four years and an expected residual value of £2,000. Using the straight-line method of depreciation, what would the net book value of the asset be after three years?
- Aa) £14,000
- Bb) £36,000
- Cc) £40,000
- Dd) £50,000
9715. The main object of providing depreciation is
- Aa) To calculate net profit
- Bb) To show the previous profit
- Cc) To satisfy the tax department
- Dd) To reduce tax
9816. Depreciation arises because of
- Aa) Wear and tear
- Bb) Decrease in the value of assets
- Cc) Increase in the value of liability
- Dd) Decrease in capital
9917. Depreciation is a process of
- Aa) Allocation
- Bb) Valuation
- Cc) Apportionment
- Dd) Provision
10018. Under the straight line method of providing depreciation it
- Aa) Increase every year
- Bb) Decreases every year
- Cc) Remain constant every year
- Dd) None of above
10119. Depreciation of machinery is debited to
- Aa) Profit loss a/c
- Bb) Machinery a/c
- Cc) Depreciation a/c
- Dd) Expenses and loss a/c
10220. Depreciation is necessary to calculate
- Aa) Net Profit
- Bb) Net financial position
- Cc) Tax
- Dd) None of them
10321. The John Marketing Company provides advertising services to an investment company in year A but receives advertising fee in year B. The John Marketing Company recognizes this revenue in year A. This action of John Marketing Company is justified by:
- Aa) Business entity concept
- Bb) Revenue recognition principle
- Cc) Economic entity concept
- Dd) Going concern concept
104company is a going concern if:
- Aa) Its balance sheet shows a strong financial position
- Bb) Its income statement for the current year shows a huge profit
- Cc) there is no evidence that it will or will have to cease operations within the foreseeable future.
- Dd) it is a public limited company
10523. Which accounting concept or principle states that the transactions of a business must be recorded separately from those of its owners or other businesses?
- Aa) materiality concept of accounting
- Bb) time period concept of accounting
- Cc) matching principle of accounting
- Dd) business or economic entity concept of accounting
10624. The business or economic entity concept is applicable to:
- Aa) sole proprietorship form of business
- Bb) partnership form of business
- Cc) corporate form of business
- Dd) all of the above
10725. Which of the following states that a transaction is not recorded in the books of accounts unless it is measurable in terms of money?
- Aa) Matching principle
- Bb) Revenue recognition principle
- Cc) Monetary unit assumption
- Dd) Time period assumption
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- Business/Economics Quiz on Accounting, created by LUKASZ KOZLOWSKI on 02/01/2021.
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