Accounts payable refer to the current
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a. Liability a business or an organization.
b. Asset of a business or an organization.
c. Expense of a business or an organization.
d. Income of a business or an organization.
The perpetual inventory method has the advantage over the periodic system in that:
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a. There are lower operational costs
b. A physical count is not required
c. Inventory shortages are eliminated
d. Details relating to the number of items on hand are readily available
Of the following account types, which would be increased by a debit ?
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a. Liabilities and Exoense.
b. Assets and Owne’s Equity.
c. Assets and Expense.
d. Equity and revenues.
Cost of goods sold = Opening stock + Net purchases + Expenses on Purchases – Sales. Which
part of formula is wrong ?
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a. Opening stock.
b. Net purchases.
c. Expense on Purchases.
d. Sales.
Sales are equal to:
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a. Cost of goods sold + gross profit
b. Cost of goods sold – gross profit
c. Gross profit – Cost of goods sold
d. None of the above
The product cost includes
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a. Direct material cost, direct labour cost, overhead cost, selling expenses, administration expenses
b. Direct material cost, direct labour cost, overhead cost, selling expenses
c. Direct material cost, direct labour cost, overhead cost
d. Direct material cost, direct labour cost, overhead cost, administration expenses
Assume that you are examining financial statement(s) which are headed ‘For the
year ended 31 December 20xx’. The heading indicates the statement(s) is/are the:
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a. Income statement
b. Balance sheet and income statement
c. Balance sheet
d. None of the above
Which financial statement represents the accounting equation
ASSESTS = LIABILITIES + OWNER’S EQUITY
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a. Income Statement
b. Cash Flow Statement
c. Balance Sheet
d. Fund Flow Statement
Net Sales minus the Cost of Goods Sold equals
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a. Net Income
b. Income From Operations
c. Other Income
d. Gross Profit
A set of accounts is called a:
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a. Trial balance
b. Spreadsheet
c. Balance sheet
d. General ledger
Which of the following is not an asset?
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a. Cash
b. Accounts receivable
c. Equipment
d. Owner’s capital
The formula of ROA is
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a. Net profit before tax/ Average Assets
b. Net profit after tax/ General Assets
c. Net profit after tax/ Average Assets
d. Net profit before tax/ General Assets
The Combination of Selling Expenses and Administrative Expenses is referred to as
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a. Operating Expenses
b. General Expenses
c. Total Expenses
d. Other Expenses
The inventory costing method selected by a company can affect:
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a. The balance sheet
b. The income statement
c. Both statements
d. Neither statement
Assets are recorded at their original purchase price according to the:
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a. Historical cost principle
b. Matching principle
c. Consistency principle
d. Materiality principle
A list of the accounts is called
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a. Ledger
b. Chart of accounts
c. T -Account
d. Debit
Which of the following is not considered to be a liability ?
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a. Wages Payable
b. Accounts Receivable
c. Unearned Revenues
d. Accounts Payable
Which of the following statement is not true about liabilities ?
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a. Liabilities are debts owed to outsiders
b. Accounts titles of liabilities often include the term “ payable ”
c. Cash received before a service is performed creates a liability
d. Liabilities do not include wages owed to employees of the company
Which of the following is not a liability?
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a. Share Capital
b. Borrowings and Finance Lease Liabilities
c. Accounts Payable
d. Wages Payable
Which financial statement would you analyze to assess a firm’s operating performance for
the past year ?
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a. Balance Sheet
b. Statement of Retained Earnings
c. Income Statement
d. Statement of public Accounting
The combination of Selling Expenses and Administrative Expenses is referred to as:
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a. Other Expenses
b. General Expenses
c. Total Expenses
d. Operating Expenses
Owner’s Equity stands for
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a. Fixed Assets Less Fixed Liabilities
b. Fixed Assets Less Current Liaabilities
c. Current Assets Less Fixed Liabilities
d. Total Assets Less Liabilities
Which of the following does not appear in a cash flow statement?
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a. Wage paid in cash
b. Cash sales
c. Cash received from accounts receivable
d. Credit sales
Which of the following is not a liability of a business enterprise ?
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a. Wages and salaries payable
b. Other payable
c. Borrowings and finace lease liabilities
d. None is correct
The periodic inventory method of accounting for inventory movements has which of
the following advantages?
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a. A continuous record is available of inventory on hand
b. Timely information is available for management decision-making
c. Losses from shoplifting are easily detected
d. It is inexpensive to maintain
If ending inventory was overstated and a periodic inventory system was being used, the
effect on net profit would be:
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a. An overstatement
b. The effect would be noted in the next period
c. No effect
d. An understatement
Which of the following are not expenses?
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a. Dividends paid
b. Interest on a loan
c. Wages earned but yet to be paid
d. Cost of goods sold
What accounting assumption underlies the following procedure: Land purchased for $2m
four years ago with a present market value of $3m is recorded in the balance sheet at $2m?
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a. Accounting period
b. Monetary
c. Accrual base
d. Historical cost
Which of the following items would decrease profit for the year ?
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a. Purchase of equipment for cash
b. Payment of a dividend
c. Repayment of a loan
d. None of the bove
Cash Purchases:
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a. Increases assets.
b. Results in no change in the total
c. Decreases assets
d. Increases liability