Accounting for Business Final
Exam Questions
Course Introduction
Accounting for Business introduces students to the foundational principles and practices of accounting with a focus on their application within modern business environments. This course covers essential topics such as financial statement preparation, analysis of accounting information, and the role of accounting in decision-making processes. Students will learn how to record, classify, and summarize business transactions, interpret financial data, and utilize accounting tools for planning and control. Emphasis is placed on ethical considerations and the impact of accounting on various business stakeholders, preparing students to understand and effectively use accounting information in real-world business settings.
Recommended Textbook
Atrills Accounting for Business Students 1st Australian Edition by Atrill McLaney
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14 Chapters
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893 Flashcards
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Chapter 1: Introduction to Accounting
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Sample Questions
Q1) Standards are written from the perspective of:
A)the accounting profession.
B)the taxation authority.
C)securities regulators.
D)corporation law.
Answer: A
Q2) Advantages of operating as a sole proprietor are:
A)total control by the owner over all decisions.
B)low start-up costs.
C)limited liability.
D)Both A and B
Answer: D
Q3) What is another name commonly used for the balance sheet?
A)Profit and loss statement
B)Statement of financial performance
C)Statement of financial position
D)Statement of change in owners' equity
Answer: C
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Chapter 2: Measuring and Reporting Financial Position
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Sample Questions
Q1) If liabilities are $55 000 and assets are $123 600, equity is:
A)$178 400
B)$68 600
C)$178 600
D)$68 400
Answer: B
Q2) The statement of financial position assists users in terms of:
A)assessing the value of a business.
B)determining the liquidity of a business.
C)the effectiveness of wealth generation.
D)All of the above.
Answer: D
Q3) If liabilities are $45 000 and equity is $68 900, assets are:
A)$23 100
B)$23 900
C)$113 900
D)$113 100
Answer: C
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4
Chapter 3: Measuring and Reporting Financial Performance
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Sample Questions
Q1) The accounting principle that requires the same depreciation method or inventory valuation method to be used over consecutive accounting periods is:
A)conservatism.
B)consistency.
C)reliability.
D)historical cost.
Answer: B
Q2) A forklift had a purchase price of $18 000, delivery costs of $2 000, a physical life of 6 years and a useful life of 4 years. Estimated residual value is zero. The annual depreciation charge using the straight-line method is:
A)$1 667
B)$3 000
C)$2 500
D)$5 000
Answer: D
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Chapter 4: Recording Transactionsthe Journal and Ledger Accounts
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Sample Questions
Q1) Deferred revenue account is a/an ________ account.
A)asset
B)liability
C)equity
D)sales
Q2) If, at the end of the accounting period, non-current assets total $800 000 and depreciation is calculated based on 8% per annum straight line, depreciation expense would total:
A)$64 000
B)$46 000
C)$800 000
D)$10 000
Q3) In the trial balance of a firm's accounting records, Inventory has a balance of $40 000 and Purchases has a balance of $1 000 000. The count of ending inventory is $50 000. Cost of sales is:
A)$1 040 000
B)$1 050 000
C)$ 990 000
D)$ 910 000
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Chapter 5: Accounting Systems and Internal Control
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Sample Questions
Q1) Which of the following is a subsidiary record?
A)Two-column cash book
B)Three-column cash book
C)A cash account in a separate ledger
D)A cash journal
Q2) While, in practice, most transactions are recorded in a subsidiary record, any transaction could be posted in the general journal.
A)True
B)False
Q3) Determining the difference between the balance on the bank statement and the balance in the cash account is:
A)reconciling the bank statement.
B)auditing the cash account.
C)preparing the trial balance.
D)running a spot check.
Q4) Which of the following is not an advantage of using subsidiary records?
A)The actual posting can be done later by a different person.
B)Every transaction will be recorded prior to being entered into the ledger.
C)They can only be used in computerised accounting systems.
D)Totals can be posted when it is appropriate to do so.
Page 7
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Chapter 6: Introduction to Limited Companies
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Sample Questions
Q1) Sovereign Ltd has an issued capital of 300 000 000 shares sold at $2 each. Aman holds 9 000 shares. If Sovereign Ltd makes a 1 for 3 bonus issue, how many bonus shares will Aman acquire?
A)3 000 shares
B)1 800 shares
C)2 000 shares
D)9 000 shares
Q2) Why is a company required to retain a specific part of its capital?
A)Protect the company's creditors
B)Enable the payment of future dividends
C)Facilitate a non-current asset replacement plan
D)Use as security for future loans
Q3) If operating profit is $131 000, tax expense is $39 000 and profit for the year is $82 000, what is the interest expense?
A)$43 000
B)$49 000
C)$10 000
D)Unable to be calculated
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8
Chapter 7: Regulatory Framework for Companies
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Sample Questions
Q1) A set of principles designed to guide the development of financial statements is:
A)International Financial Reporting Standards (IFRS).
B)the conceptual framework.
C)generally accepted accounting principles.
D)Australian Accounting Standards Board.
Q2) The price at which one operating segment of a business sells goods to another operating segment of the same business is the:
A)segment price.
B)trading price.
C)transfer price.
D)inter-segment price.
Q3) Which of the following may be voluntarily disclosed in the annual report?
A)Human resource strategies
B)Environmental initiatives
C)Community contributions
D)All of the above
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Chapter 8: Measuring and Reporting Cash Flows
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Sample Questions
Q1) If prepaid interest at the beginning of the period was zero and at the end of the period was $4 000 and interest expense appears in the statement of comprehensive income for the year as $17 300, how much was paid out in cash for interest during the year?
A)$13 300
B)$21 300
C)$17 300
D)$4 000
Q2) State the effect on profit and cash of depreciating a non-current asset.
A)Decrease in profit and decrease in cash
B)No effect on profit and decrease in cash
C)No effect on profit and no effect on cash
D)Decrease in profit and no effect on cash
Q3) Which of the following would not appear in a statement of cash flows?
A)The creation of an allowance for doubtful debts
B)The upward revaluation of an asset
C)A bonus issue of shares
D)All of the above
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10
Chapter 9: Corporate Social Responsibility and Sustainability Accounting
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Sample Questions
Q1) Aspects of corporate social responsibility are:
A)impact on employment and job creation.
B)health and safety.
C)pollution.
D)All of the above
Q2) What is the essence of triple bottom line reporting?
A)Pollution control
B)Social responsibility
C)Sustainable development
D)Wealth creation
Q3) Which of the following is a reason that a business might engage in activities that are less profitable to itself but which are beneficial to society?
A)Because of expectations of future legislation
B)Because of enlightened self-interest
C)To publish the results and put pressure on competitors
D)All of the above
Q4) Briefly outline the essence of the balance scorecard approach.
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Chapter 10: Analysis and Interpretation of Financial Statements
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Sample Questions
Q1) Success Ltd has a price-earnings ratio of 5 and earnings per share of 22 cents. Its issued capital consists of 2 000 000 $1 ordinary shares. The market price per share is:
A)$1.10
B)$1.00
C)$4.40
D)None of the above
Q2) Which of these is not an advantage of using borrowed funds to finance a business?
A)Interest on borrowings is tax deductible.
B)Borrowing can be used to boost returns to owners, as long as the return on the funds exceeds the cost of interest.
C)Lenders do not dilute ownership interest in the business.
D)Interest on borrowing is a legal commitment that must be met.
Q3) On what does the adequacy of the gross profit margin depend?
A)Selling price
B)Buying price
C)Total expenses
D)Both A and B
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Page 12
Chapter 11: Costvolumeprofit Analysis and Relevant Costing
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Sample Questions
Q1) A break-even spreadsheet is most useful when how many levels of output are specified?
A)As many as exist within the relevant range
B)One
C)Two
D)Three
Q2) As output increases, variable costs per unit are:
A)semi-fixed.
B)constant.
C)variable.
D)proportional to total costs.
Q3) Which of these is a limitation in applying break-even analysis?
A)Stepped fixed costs
B)The possibility of non-linear relationships
C)Multi-product businesses
D)All of the above
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13
Chapter 12: Full Costing
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Sample Questions
Q1) Which of these is not a use of full cost information?
A)Pricing
B)Income measurement
C)Short-term decision-making
D)None of the above, i.e., all are a use of full cost information
Q2) The approach to overhead costs under activity-based costing is that:
A)overheads provide service to cost objects.
B)overheads are caused by activities.
C)overheads happen.
D)overheads can be traced to cost objects.
Q3) What does full cost represent?
A)Only semi-variable costs
B)Variable costs
C)Both fixed and variable costs
D)Fixed costs
Q4) All of the statements regarding activity-based costing are correct except:
A)it provides better information for decision-making.
B)it provides more accurate product costs.
C)it is used by the majority of businesses in Australia.
D)it is costlier than alternative systems.
Page 14
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Chapter 13: Planning and Budgeting
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Sample Questions
Q1) Prepare a flexible cost budget for 8 000, 9 000 and 10 000 units of output, given the following data:
Variable costs:
Direct materials\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)$5
Direct labour\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)\(\quad\)4
Variable manufacturing overhead\(\quad\)8 Budgeted fixed manufacturing overhead $90 000.
Q2) Which statement about the uses of budgets is not true?
A)They can assist in identifying short-term problems.
B)They can provide a system of authorisation for managers to spend up to a particular limit.
C)They are mainly used to set prices.
D)None of the above, i.e., all are true statements
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) Which of the following does the Net Present Value method of investment appraisal not address?
A)The whole of the relevant cash flows
B)Qualitative factors
C)The timing of the cash flows
D)None of the above, i.e., all matters are addressed
Q2) The decision rule for the accounting rate of return method of assessing investment projects is to accept all projects with:
A)a positive return.
B)the highest return.
C)the highest return subject to a minimum required return.
D)none of the above.
Q3) The potential benefits forgone by rejecting one alternative while accepting another is known as a/an:
A)past cost.
B)cost/benefit cost.
C)opportunity cost.
D)deprivation cost.
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