Sample MCQs Flashcards
what are the two fundamental qualities that influence the usefulness of accounting information
faithful representation
relevance
According to equations presented during lectures, which equation represents the Extended
Accounting Equation that captures the impact of trading activities, new capital investments (NCIs)
and withdrawal of profits in the form of Dividends of Drawings (D):
NCAs1 + CAs1 = E0 + NCIs1 + [Rev1 – Exp1] – D1 + NCLs1 + CLs1
Fred runs a general store and has the following statement of profit or loss balances in his books at 31
December 2020: opening inventory: €25,000, wages: €45,000, sales: €275,000, purchases: €130,000,
heat and light: €15,000, closing inventory: €28,700. What is Fred’s gross profit for the year ended 31
December 2020?
Sales 275,000
Less Cost of sales
Op. Inventory 25,000
+ purchases 130,000
-Closing invent 28,700
Total cost of sales (126,300)
Gross profit 148,700
Which of the following statements most accurately describes the quick (acid test) ratio?
An assessment of short-term liquidity which compares receivables and cash to current
liabilities.
What is a rights issue
An issue of shares at a discount to the current market price to existing shareholders.
Which of the following statements is incorrect?
(a) Directors select auditors
(b) Shareholders elect auditors
(c) Directors are accountable to shareholders
(d) Directors are responsible for a company’s financial statements
(a) Directors select auditors
- Which of the following statements are true? Please select all that apply.
(a) An asset represents a store of future economic benefits, the ability to use the asset to
generate cash and profit for a business.
(b) Non-current assets are held for short-term use within a business to produce goods or
services.
(a) is true
Which accounting concept dictates the inclusion of ‘provision for doubtful debts’ in the financial statements?
prudence concept
A debit balance in the bank statement indicates
bank overdraft
