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Fundamentals of financial accounting

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Total Questions : 393

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Question # 1

Refer to the exhibit.

A company has the following equity balances at the beginning of the year

During the year the company made a bonus issue of 1 for 4 shares

What are the equity balances after this issue?

Options:

A.  

A

B.  

B

C.  

C

D.  

D

Discussion 0
Question # 2

Which of the following would be a good method of segregating the duties of staff?

Options:

A.  

Employing separate persons to maintain the sales and purchase ledgers

B.  

Employing a wages specialist to calculate and deal with the payment of wages

C.  

Employing an experienced cashier to deal with all bank transactions

D.  

Employing a separate person to maintain and reconcile control accounts

Discussion 0
Question # 3

CDE, an entity registered for sales tax, purchases a piece of equipment for cash on 31 December 20X6 for $30,000 including sales tax. The sales tax rate is 20%. What is the journal entry required to record this transaction in the nominal ledger?

Place the labels in the corresponding position in the table below:

Options:

Discussion 0
Question # 4

Accounting codes have proven to be very useful when recording business transactions.

Which THREE of the following does a coding system help to do?

Options:

A.  

Reduce the number of transactions recorded

B.  

Improve the quality of reports

C.  

Reduce time taken to analyze transaction

D.  

Take away the need for books of prime entry

E.  

Combine roles for the receivables and payables ledger

F.  

Extract balances for suppliers and customers

Discussion 0
Question # 5

The trial balance shows the debit total as $200 less than the credit total.

This could be due to:

Options:

A.  

Entering $100 received from a customer on the debit side of the trade receivable's account

B.  

Entering $100 received from a customer on the credit side of the trade receivable's account

C.  

Under casting the sales daybook by $200

D.  

Under casting the purchases daybook by $200

Discussion 0
Question # 6

Which one of the following statements is true?

Options:

A.  

Internal auditors are employed by the management

B.  

External auditors are employed by the management

C.  

Internal auditors are employed by the stakeholders

D.  

External auditors are employed by the stakeholders

Discussion 0
Question # 7

Published accounts must include the following statements:

Options:

A.  

Income statement, statement of financial position and statement of cash flows

B.  

Manufacturing account, income statement, statement of financial position and statement of cash flows

C.  

Income statement and statement of financial position

D.  

Trading account, income statement and statement of financial position

Discussion 0
Question # 8

The record of how the profit or loss of a company has been allocated to distributions and reserves is found in the:

Options:

A.  

Reserves account

B.  

Appropriation account

C.  

Capital account

D.  

Retained profit account

Discussion 0
Question # 9

Andrew is valuing the closing inventory at the lower of cost and net realizable value.

Which of the following concepts dictates his choice?

Options:

A.  

Materiality concept

B.  

Money measurement concept

C.  

Accrual concept

D.  

Prudence concept

Discussion 0
Question # 10

Which of the following is an example of where the materiality convention should be applied?

Options:

A.  

Sales to a customer in September, but for which the cash was not received until October.

B.  

Inventory of stationery items remaining at the year end.

C.  

A proposed change in the method of depreciation of non-current assets.

D.  

A two-year construction contract.

Discussion 0
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