Corporate Accounting Test
Bank
Course Introduction
Corporate Accounting explores the principles, procedures, and regulatory requirements involved in the preparation and analysis of financial statements for corporations. Topics include accounting for share capital, reserves, debentures, company final accounts, amalgamations, and liquidation. The course familiarizes students with relevant accounting standards, statutory disclosures, and the treatment of various corporate transactions. Emphasis is placed on analytical skills and the application of accounting concepts to real-world corporate scenarios, equipping students with the knowledge needed to interpret and communicate financial information for decision-making.
Recommended Textbook
Accounting Business Reporting for Decision Making 4th Edition by Jacqueline Birt
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14 Chapters
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Page 2
Chapter 1: Introduction to Accounting
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Sample Questions
Q1) Which of these is an asset?
A)Income tax payable
B)Revaluation reserve
C)Interest earned on investments
D)Investments
Answer: D
Q2) Under the Framework,the qualitative characteristic of relevance is described as:
A)information that is of value to users in decision making.
B)information that is understandable
C)information that can be recorded in accounting reports.
D)information that can be reliably measured.
Answer: A
Q3) Which of these is not likely to be the responsibility of a bookkeeper?
A)calculating and paying wages
B)checking a customer's credit rating
C)preparing the bank reconciliations
D)selecting an accounting package to the used by the entity
Answer: D
Q4) The _________________ Reporting Council was established to oversee the AASB.
Answer: Financial
3
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Chapter 2: Business Sustainability
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Sample Questions
Q1) Kantian philosophy is grounded in the notion:
A)that people should be treated as a mean's to other people's ends.
B)of respect for the individual
C)the need for individuals to maximise their utility
D)of maximising the utility of society
Answer: B
Q2) Ultimate legal responsibility for the financial statements of a company rests with the:
A)Accounting firm employed to produce the reports.
B)Board of directors.
C)CEO.
D)ASX.
Answer: B
Q3) The statement relating to ethics that is not true is:
A)A high standard of ethical behaviour is in the long-term interests of an organisation.
B)Ethical decisions are always easy to make.
C)Ethics is concerned with whether human actions are proper or improper.
D)Stakeholders deserve ethical behaviour from a firm's management.
Answer: D
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4
Chapter 3: Business Structures
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Sample Questions
Q1) Private companies in Australia must have
A)at least one shareholder
B)at least two shareholders
C)at least three shareholders
D)more than fifty shareholders
Answer: A
Q2) _____________ __________ is that part of a company's equity representing profits that have been retained in the business and not paid out as dividends.
Answer: Retained earnings
Q3) If the partnership agreement does not contain profit sharing arrangements,then the Partnership Act states that profits must be shared:
A)according to the amount of time invested by each partner
B)in proportion to the capital contribution of each partner
C)equally between all partners
D)based on capital contributions and time invested
Answer: C
Q4) The accounting report that lists assets,liabilities and equity is the
Answer: balance sheet
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Chapter 4: Business Transactions
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Sample Questions
Q1) For the accounting equation to balance each transaction must:
A)always affect two accounts.
B)affect the same number of asset and liability accounts.
C)affect two or more accounts.
D)affect two or less accounts
Q2) A transposition of figures is easy to find as the error on the worksheet will be divisible by ____________________.
Q3) When a customer eventually pays for items that have been purchased on credit,the transaction will affect:
A)an asset and a liability
B)an asset and an expense
C)two assets
D)an asset and income
Q4) An investment by shareholders in a company will increase:
A)assets and shareholders' equity.
B)assets and liabilities.
C)liabilities and shareholders' equity.
D)assets only.
Q5) The abbreviation for credit is _________.
Q6) Income has a (positive/negative)____________________ effect on Equity.
Page 6
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Chapter 5: Balance Sheet
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Q1) The cost of replacing an asset is known as its:
A)Market cost.
B)Current cost.
C)Present value.
D)Historical cost.
Q2) All these statements about the balance sheet are true,except
A)assets are listed in order of liquidity.
B)it shows the cash received and cash paid for the period.
C)it it reflects the accounting equation.
D)the total of the assets must equal the total of the liabilities plus equity.
Q3) _____________ earnings are cumulative profits made by a company that have not been distributed as dividends or transferred to a reserve account.
Q4) The credit sale of an asset at cost price:
A)decreases assets and increases liabilities.
B)leaves total assets constant.
C)increases assets and liabilities.
D)decreases assets and liabilities.
Q5) Under the accounting standards agricultural assets are recorded at their net ____________ value.
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Chapter 6: Income Statement and Statement of Changes in Equity
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Q1) To isolate the returns associated with investing decisions only,the measure of profit used is:
A)earnings before interest and taxation (EBIT)
B)earnings before interest,taxation,depreciation and amortisation (EBITDA)
C)gross profit
D)profit after taxation
Q2) The statement of comprehensive income reports the profit or loss and other Comprehensive income.Which of the following is an example of other comprehensive income?
A)dividends
B)royalties
C)non-current asset revaluations taken directly to a revaluation surplus
D)sales
Q3) Expenses classified by nature would not include:
A)manufacturing expenses
B)employee benefits expenses
C)depreciation expense
D)wages and salaries expense
Q4) Income accrued is income recognised _________ the cash has been received.
Page 8
Q5) The ___________ statement is prepared to calculate an entity's profit.
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Chapter 7: Statement of Cash Flows
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Q1) If profit is $53 000 and increases in the current assets,inventory and debtors,over the period total $18 000,net cash inflow from operating activities is:
A)$18 000
B)$71 000
C)$35 000
D)$53 000
Q2) Which of the following statements is true?
A)For an entity to survive,the net cash flow from operating activities should be positive.
B)For an entity to survive,the net cash flow from investing activities should be positive.
C)For an entity to survive,the net cash flow from financing activities should be positive.
D)For an entity to survive,the net cash flow from operating activities should be negative.
Q3) ___________________ activities include the cash effects of income and expense transactions.
Q4) A healthy business would normally expect to have a net cash __________ from operating activities.
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Chapter 8: Analysis and Interpretation of Financial Statements
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Q1) Explaining why the ROA (return on assets)ratio has changed necessitates an examination of:
A)the liquidity ratios and asset efficiency ratios
B)the profitability ratios and the market performance ratios
C)the asset efficiency ratios and the liquidity ratios
D)the profitability ratios and the asset efficiency ratios
Q2) The ratio that converts the absolute dollar amount of profit made to a per share basis is ____________________ share.
Q3) Greenfields Pty Ltd has a quick asset ratio of 2 to 1 and current liabilities of $22 000.If Greenfields Pty Ltd has $10 000 of inventory,the total current assets is:
A)$44 000
B)$54 000
C)$64 000
D)$32 000
Q4) _____________ profit divided by sales revenue gives the gross profit margin.
Q5) _________________ analysis is an analytical tool that involves expressing the reported financial numbers in relative terms
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Chapter 9: Budgeting
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Q1) A budget commonly used in the not-for-profit sector and which focuses on costs associated with a specific program is known as a __________ budget.
Q2) From the following data calculate the estimated cash received from total sales for December.
Total sales for October,$10 000; November,$15 000; December,$14 000
Credit sales are normally settled in the pattern,30% for cash,40% in the month of sale,30% in the month following the sale,and the balance in the second month following the sale.
A)$14 000
B)$11 400
C)$13 800
D)$10 500
Q3) An unfavourable variance occurs when:
A)actual costs are higher than budgeted costs.
B)budgeted costs are lower than actual costs
C)actual sales are lower than budgeted sales
D)all the options are correct
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11
Chapter 10: Cost-Volume-Profit Analysis
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Q1) The contribution margin ratio can be calculated as:
A)total contribution margin divided by selling price per unit
B)selling price per unit divided by contribution margin per unit.
C)contribution margin per unit divided by total sales
D)contribution margin per unit divided by the selling price per unit
Q2) The _______________ margin ratio can be used to perform CVP analysis in circumstances where the there is insufficient data to calculate the number of units of a product required to read the break-even point.
Q3) Buying in a product or service instead of producing it known as ________________.
Q4) If calculations show that the break-even point is too high for the period which of these is not a possible course of action?
A)consider reducing prices
B)consider changing the cost mix between fixed and variable costs
C)consider changing the sales mix
D)recheck the assumptions on which the analysis is based
Q5) An important assumption in CVP analysis is that all cost functions are assumed to be _______________.
Q6) As production increases,unit fixed costs (increase/decrease)_________________.
Page 12
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Chapter 11: Costing and Pricing in an Entity
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Q1) Which of these is not usually one of the levels of the activity hierarchy in a typical manufacturing entity?
A)Product level
B)Unit level
C)Facility level
D)Building level
Q2) Under the activity hierarchy of costs,costs incurred for the benefit of a group of products simultaneously,e.g.machine set-up costs are classified as:
A)unit level costs
B)batch level costs
C)product level costs
D)facility level costs
Q3) The first step from the list below in the process of allocating indirect costs is to:
A)identify a cost driver that has a strong correlation to the cost pool.
B)compute the indirect cost rate per cost driver.
C)allocate the indirect costs to each cost object.
D)decide on the number of indirect cost pools.
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13
Chapter 12: Capital Investment
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Sample Questions
Q1) An investment with a high risk margin has a high discount rate,which makes the net present value
A)higher.
B)lower.
C)unchanged as the risk has no effect on the NPV.
D)zero.
Q2) Cash flow analysis for investment decision making can be further complicated by the effect of _______________ benefits that stem from non-cash costs such as depreciation are considered.
Q3) Which of the following is least like to be a factor in loyalty amongst loyal but largely self-serving customers?
A)product or service always available when required
B)desired product or service always available
C)product or service available at the price the customer is prepared to pay
D)reward for past service
Q4) The payback method of investment decision making is generally regarded as:
A)too simplistic.
B)mostly accurate.
C)very accurate.
D)too complex for normal use.
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Chapter 13: Financing the Business
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Sample Questions
Q1) Which of these is not a cost of holding inventory?
A)ordering costs
B)lost sales
C)storage costs
D)deterioration and obsolescence
Q2) Foreign investment where capital is invested in an entity by an investor with significant influence over the key policies of the investee,is known as:
A)portfolio investment
B)direct investment
C)medley investment
D)indirect investment
Q3) Manufacturers hold raw materials inventory so:
A)production is not affected by disruptions in supply.
B)they are immune to sudden changes in price.
C)there is sufficient time between delivery and use for the quality to be checked.
D)their warehouses are not sitting empty too much of the time.
Q4) _________________ discounts are offered to debtors to provide a monetary incentive to encourage debtors to pay their accounts quickly.
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Chapter 14: Performance Measurement
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Q1) Sections of the Corporations Act and the accounting standards require large companies to report on director and executive ___________________ in their external reports.
Q2) The return on assets for a firm with a profit margin of 4.5%,compared to a firm with a profit margin of 3.5%,will:
A)always be higher
B)always be lower
C)always be the same
D)could be higher or lower
Q3) In executive remuneration packages,long-term performance is rewarded by:
A)payment of an annual bonus based on profitability
B)long term incentives such as share options
C)fixed remuneration
D)a company car and travel
Q4) If return on sales is 16% and investment turnover is 1.5 times,return on investment is
Q5) Goal _____________ occurs when the goals of the individual manager are in line with the goals of the entity.
Q6) The methods used to inventory and audit greenhouse gas emissions are
Page 16
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