1: introduction to accounting, limited companies and regulatory framework

Question 1

What does ALICE stand for?

Answer 1

Assets
Liabilities
Income
Capital
Expenses

Question 2

The best description of the primary purpose of providing accounting information is
A to alllow the preparation of a taxation return
B to calculate the bank account balance
C to assist users in making informed decisions
D to enable the financial statements to be prepared

Answer 2

C To assist users in making informed decisions

Question 3

What are some groups that are users of financial information?

Answer 3

• Managers
• Tax authorities
• Owners

Question 4

Which of the following report the ‘assets’ of the business?
Income statement
balance sheet
statement of changes in owners equity

Answer 4

Balance sheet

Question 5

Which accounting report is specifically designed to answer the question, “What profit was earned in a particular period?”
Income statement
balance sheet
statement of changes in owners equity

Answer 5

Income statement

Question 6

Which financial reports comprise the ‘final financial statements or accounts’?

Answer 6

Income statement, statement of financial position, statement of cash flows and statement of change in owners equity

Question 7

Which statement is true?
A The statement of cash flows explains the changes between the income statement and the statement of financial position
B The statement of financial position links two income statements
C The statement of cash flows summarises the movements in the cash over an accounting period

Answer 7

C The statement of cash flows summarises the movements in the cash over an accounting period

Question 8

The three most common types of structures used by businesses in Australia are:

Answer 8

sole proprietor, partnership, company

Question 9

The business most likely to operate as a sole proprietorship is:
A private hospital
B airline
C bank
D medical specialist

Answer 9

D medical specialist

Question 10

Which of the folowing is NOT an asset?
A Cash at bank
B Bank loan
C Machinery
D Furniture and fittings

Answer 10

B Bank loan

Question 11

Which of the following is part of the owners equity?
A repair expenses for office building
B Capital
C Office furniture

Answer 11

B Capital