Accounting for Decision Making
Mock Exam
Course Introduction
Accounting for Decision Making explores the use of accounting information to support effective business decisions. Emphasizing both financial and managerial accounting concepts, the course teaches students how to analyze and interpret corporate financial statements, evaluate business performance, and apply various accounting tools for planning, controlling, and decision-making purposes. Through real-world examples and case studies, students gain practical skills in budgeting, cost analysis, performance measurement, and relevant cost assessment, preparing them to make informed, data-driven decisions in managerial roles.
Recommended Textbook
Financial Accounting An Integrated Approach 6th Australia Edition by Trotman
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17 Chapters
777 Verified Questions
777 Flashcards
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Page 2
Chapter 1: Introduction to Financial Accounting
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Sample Questions
Q1) Which financial statement assumption relates to the procedure where a $200 paper shredder with a five-year useful life is treated as an expense?
A) Monetary
B) Accounting period
C) Materiality
D) Historical cost
Answer: C
Q2) Which of the following may be a liability of a business enterprise?
A) Share capital
B) Wages payable
C) Retained profits
D) Marketable security
Answer: B
Q3) Which of the following is NOT shown in the heading of the balance sheet?
A) The name of the enterprise
B) The title of the report
C) The period covered by the report
D) All of the answers are shown in the heading
Answer: C
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Page 3
Chapter 2: Measuring and Evaluating Financial Position and Financial Performance
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Sample Questions
Q1) What is James's owners' equity?
A) $110
B) $2590
C) $2810
D) $7810
Answer: C
Q2) What was the gross profit of Grasso Ltd for the year?
A) $60 000
B) $16 000
C) $11 000
D) $5000
Answer: B
Q3) A company buys 100 televisions for $500 each.It sells 60 televisions for $900 each.What is the 'cost of goods sold' expense?
A) $50 000
B) $24 000
C) $54 000
D) $30 000
Answer: D
Page 4
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Chapter 3: The Double-Entry System
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Sample Questions
Q1) Identify the journal entry required to correctly record the following transaction. Depreciation expense on motor vehicles for the year incurred.
A) Dr Motor vehicles
Cr Accumulated depreciation
B) Dr Accumulated depreciation
Cr Depreciation expense
C) Dr Depreciation expense
Cr Motor vehicles
D) Dr Depreciation expense
Cr Accumulated depreciation
Answer: D
Q2) During the year,the liabilities of a company decreased by $32 034 and the assets decreased by $16 035.Consequently the shareholders' equity must have:
A) decreased by $15 999.
B) increased by $15 999.
C) increased by $48 069.
D) decreased by $48 069.
Answer: B
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Chapter 4: Record-Keeping
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Sample Questions
Q1) Which transaction represents payment for an expense item?
A) (4)
B) (5)
C) (10)
D) (8)
Q2) Which of the following errors will be detectable by a trial balance?
A) A revenue incorrectly posted to the ledger as a liability.
B) Failure to record a journal entry.
C) A purchase of inventory posted twice to the general ledger.
D) An addition error in a ledger account.
Q3) A chart of accounts is:
A) a means of ensuring that the debits equal the credits.
B) a chronological record of all transactions.
C) a list of the titles of all accounts in the ledger,together with an appropriate numbering system for the accounts.
D) a trial balance.
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Chapter 5: Accrual Accounting Adjustments
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Sample Questions
Q1) Equipment with a cost of $15 000 and accumulated depreciation of $12 500 was sold for $1700.The journal entry to record the disposal would include:
A) Cr Cash $1700.
B) Cr Loss on sale $800.
C) Dr Accumulated depreciation $12 500.
D) none of the answers provided.
Q2) A payment for insurance on 1 June for $120 000,covering the period 1 June 2015 to 31 May 2016,was recorded as a prepayment.No adjusting entry was made at 30 June 2016.As a result:
A) profit and total assets were understated by $10 000.
B) profit and total assets were understated by $110 000.
C) profit was overstated by $10 000 and assets understated by $10 000.
D) none of the answers provided.
Q3) What was the depreciation expense for year ended 31 December 2016?
A) $10 500
B) $9250
C) $8500
D) $8000
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Chapter 6: Financial Reporting Principles, accounting
Standards and Auditing
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Sample Questions
Q1) Identify the accounting concept or principle that relates to the statement in the following question: If a particular item is,by reason of its nature or its size,significant to a proper understanding of the situation,it should be separately stated.
A) Relevance
B) Faithful representation
C) Materiality
D) Comparability
Q2) Which of the following statements about agency theory is NOT true?
A) Agency theory tends to focus on the stewardship role of accounting information.
B) Agency theory develops ideas about how the agent can be induced to act properly.
C) Something to be eliminated before a contract can be finalised.
D) For the agent,effort is costly and therefore to be minimised.
Q3) Use of the same accounting methods over time facilitates:
A) disclosure.
B) relevance.
C) comparability.
D) faithful representation.
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Page 8
Chapter 7: Internal Control and Cash
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Sample Questions
Q1) In preparing the monthly bank reconciliation,Fur Ltd ascertains that there is a $750 cheque from Hunt Traders for merchandise that is marked NSF.The journal entry to record this in Fur Ltd's books is:
A) Dr Accounts receivable$750\(\quad \)\(\quad \)Cr Cash$750
B) Dr Accounts receivable$750\(\quad \)\(\quad \)Cr Inventory$750
C) Dr Accounts payable$750\(\quad \)\(\quad \)\(\quad \)Cr Cash$750
D) Cr Accounts receivable$750\(\quad \)\(\quad \)Dr Cash$750
Q2) In preparing the monthly bank reconciliation,Jon Ltd ascertains that there is a direct credit from a customer for $500 and an interest on overdraft charge of $760.Outstanding cheques total $9400 and there is a deposit in transit for $2900.It will be necessary to make journal entries for:
A) the outstanding cheques of $9400 and the deposit in transit of $2900.
B) the direct credit for $500 and the interest charge of $760.
C) only the interest on overdraft charge of $760.
D) the direct credit for $500,the interest charge of $760 and outstanding cheques of $9400.
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Chapter 8: Accounts Receivable and Further
Record-Keeping
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Sample Questions
Q1) What was the balance of the debtors control account at 31 January 2016?
A) $8400
B) $4100
C) $3900
D) $4400
Q2) What was the balance of the creditors control account at 30 June 2016?
A) $11 500
B) $6500
C) $5500
D) $6000
Q3) Which of these items is the source document for the purchase journal?
A) Purchase order
B) Invoice from supplier
C) Duplicate of invoice sent to customer
D) Copy of receipt sent to customer
Q4) A credit balance in a customer's account in the debtors' ledger could be due to:
A) increased credit sales in the period.
B) an overpayment by the customer.
C) a bad debt.
D) return of goods purchased by the customer.
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Chapter 9: Inventory
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Sample Questions
Q1) Which of the following statements about the use of the LIFO assumption is true?
A) The LIFO assumption assigns older costs to the cost of goods sold expense account.
B) The LIFO assumption produces inventory asset values that are close to current costs.
C) The LIFO assumption produces a lower inventory asset value and the highest cost of goods sold.
D) None of the answers provided.
Q2) The entry to record a credit sale when the perpetual inventory method is employed will include a debit to:
A) cost of goods sold.
B) sales.
C) purchases.
D) inventory.
Q3) The entry to record a credit purchase when the periodic inventory method is employed will include a:
A) debit to inventory.
B) credit to purchases.
C) debit to purchases.
D) debit to cost of goods sold.
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11
Chapter 10: Noncurrent Assets
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Sample Questions
Q1) What was the accumulated depreciation at 31 December 2017?
A) $21 000
B) $31 500
C) $42 000
D) $52 500
Q2) Assuming Norman Ltd used the reducing balance method of depreciation and a rate of 40 per cent,the balance of the accumulated depreciation account at 30 June 2017 was:
A) $28 800.
B) $18 000.
C) $10 800.
D) none of the answers provided.
Q3) Which of the following would NOT be included in property,plant and equipment?
A) Land
B) Buildings
C) Furniture
D) Inventory
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Chapter 11: Liabilities
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Sample Questions
Q1) Which of the following would be part of the journal entry on 1 January 2016?
A) Dr Discount on bonds $11 471
B) Dr Premium on bonds $11 471
C) Cr Discount on bonds $11 471
D) Cr Premium on bonds $11 471
Q2) XYZ Ltd provides a service on credit,charging $2000 + $200 GST.The journal entry would include:
A) Dr Accounts receivable $2000.
B) Cr Sales $2000.
C) Dr GST Payable $200.
D) Cr Sales $2200.
Q3) Jones Ltd sold a machine on credit for $11 000 including GST of 10 per cent.The journal entry to record this transaction would include:
A) Dr Accounts receivable $11 000.
B) Cr Sales $11 000.
C) Dr GST Payable $1000.
D) Dr Accounts receivable $10 000.
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13
Chapter 12: Completing the Balance Sheet
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Sample Questions
Q1) If Yu Ltd used the cost basis,what would be the balance sheet value of its investment in Ping Ltd at 31 December 2016?
A) $900 000
B) $1 100 000
C) $1 170 000
D) $1 250 000
Q2) If Yu Ltd used the equity method,what would have been the impact of Ping Ltd's 31 December 2016 earnings announcement?
A) Investment in Ping Ltd would have increased by $150 000.
B) Dividend revenue would have increased by $150 000.
C) Investment in Ping Ltd would have increased by $150 000 and dividend revenue would have increased by $150 000.
D) There would be no impact.
Q3) Share splits increase:
A) total assets.
B) total liabilities.
C) total shareholders' equity.
D) the number of shares on issue.
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14
Chapter 13: Revenue and Expense Recognition: Additional Concepts
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Sample Questions
Q1) At what point would you expect revenue from sales of software by a computer store to be recognised?
A) During production
B) On completion of production
C) At point of sale or delivery
D) When cash is received
Q2) Although revenue may be recognised at various points in the revenue generation sequence,it is normally recognised when:
A) customers forward a firm order.
B) the product is delivered to customer.
C) the customer pays for the goods.
D) the warranty period expires.
Q3) Using the percentage of completion method,what profit would Romulus Ltd report in 2016?
A) $2 000 000
B) $3,200 000
C) $6 000 000
D) $7 000 000
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Chapter 14: The Statement of Cash Flows
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Sample Questions
Q1) What were the total dividends paid during the year?
A) $250 000
B) $460 000
C) $480 000
D) $230 000
Q2) Income tax expense was $200 000 for the year.Income tax payable was $20 000 at the beginning and $30 000 at the end of the year.Cash payment for income tax reported on the cash flow statement using the direct method is:
A) $200 000.
B) $190 000.
C) $220 000.
D) $230 000.
Q3) What was the cash flow from financing activities of Staple Ltd?
A) $60 000
B) $40 000
C) ($20 000)
D) $20 000
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) What was the number of days' sales in receivables?
A) 60.8 days
B) 90 days
C) 120 days
D) 8 times
Q2) Tomlin Ltd's accounts receivable for year ended 31 December 2016 was $200 000.The number of days in receivables was 146 days.What were the credit sales for the year?
A) $500 000
B) $300 000
C) $80 000
D) This cannot be determined from the information provided.
Q3) What is the effect of the loan on the debt-to-equity ratio?
A) There is an increase.
B) There is a decrease.
C) There is no effect.
D) It cannot be determined from the information provided.
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Chapter 16: Accounting Policy Choices
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Sample Questions
Q1) What would be the effect on the net book value of assets if the reducing balance method were used rather than the straight-line method?
A) There would be a $375 000 reduction.
B) There would be a $262 500 reduction.
C) There would be a $150 000 reduction.
D) There would be no effect.
Q2) Which of the following is NOT an accounting method that would increase the current ratio (currently 1.5:1)?
A) Understating the allowance for doubtful debts
B) Recognising unearned revenue as revenue
C) Not recognising accrued wages
D) Changing the method of depreciation
Q3) which of the following is NOT affected?
A) net profit.
B) cash flow from operations.
C) income tax liability.
D) amortisation expense.
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Chapter 17: Sustainability Reporting
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Sample Questions
Q1) Which of the following is NOT an example of capital that reflects on an organisation's impact and wealth?
A) Human capital
B) Working capital
C) Social capital
D) Natural capital
Q2) The Global Reporting Initiative sets out:
A) guidelines of how to reduce carbon emissions.
B) principles to measure and report measures used to reduce carbon emissions.
C) principles to measure and report economic,environmental and social performance.
D) how organisations should behave ethically in regards to carbon emissions.
Q3) The stakeholder engagement process does NOT involve:
A) engaging stakeholders to identify and understand sustainability issues.
B) determining the relevance of sustainability issues.
C) stakeholders in identifying and evaluating sustainability issues.
D) reporting sustainability issues to shareholders.
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19