Financial Accounting for Agribusiness: AGB-212
Date: 25th April, 2018
BABM II, QUIZ
Time allowed: 45 Minutes
Marks: 10
Instructions
1. Write your name and computer number on your answer sheet
2. Answer all the questions by marking or circling only one correct answer
1. In most cases, a partnership business form has limited liability
True
False
2. The main purpose of a control account is to:
a)
b)
c)
d)
Determine profit of an agribusiness firm
Help locate errors
Help value the business inventory
Complete the double entry in the ledgers
3. At the formation stage of a partnership business, initial investment of each partner should be valued
using
a)
b)
c)
d)
The cost valuation method
The lower of cost method
The fair market value method
The weighted average method
4. Business internal controls are policies and procedures aimed at making sure that the double entry is
followed in the books of accounts.
True
False
5. The debit memoranda on the bank statement issued to an agribusiness firm by its bank shows
a)
b)
c)
d)
The interest the agribusiness has earned
The amounts which increases the agribusiness’s bank account
The cash the agribusiness has paid to its suppliers in the current accounting period
Charges against the agribusiness’ bank account
6. In a cash basis of accounting, all sales of an agribusiness in a particular accounting period are
recognized.
True
False
7. To account for depreciation of a fixed asset (e.g. a tractor) of an agribusiness firm, the double entry
required is to
a)
b)
c)
d)
Credit profit and loss account and debit tractor account
Debit trading account and credit profit and loss account
Debit provision for depreciation account and credit profit and loss account
Debit profit and loss account and credit provision for depreciation
8. At liquidation of a partnership business any losses on realization are allocated to the partners based on
their income sharing ratios and then the remaining cash is distributed to partners based on their capital
balances.
True
False
9. Adjustments to final accounts of an agribusiness firm are necessary before preparing financial
statements at the end of the accounting period in order to
a)
b)
c)
d)
Maintain the double entry system
Meet the requirement of the accrual basis of accounting
Reflect the correct profit made by the business in for that accounting period
Reflect the correct balance sheet at the balance sheet date
10. When a business receives a prepayment from its customers for products to be supplied later, what sort
of account relationship is created?
a)
b)
c)
d)
Asset – capital account relationship
Liability – expense relationship
Liability – revenue relationship
Asset – expense relationship
11. When a business receives a prepayment from its customers for products to be supplied later, the
necessary double entry is to debit the cash account and credit the sales account.
True
False
12. Using the market basis of the tables provided in the quiz, the Debt – Equity Ratio, Working Capital
and the Current Ratio are
a)
b)
c)
d)
Debt – Equity Ratio
Working Capital
3.27
1.90
0.99
0.12
$ 35,200
$ 26,700
$ 23,640
$ 23,450
13. If the Debt – Equity Ratio increases, the Debt – Asset Ratio will also increase
True
False
Current Ratio
1.38:1
2.34:1
1.27:1
3.14:1