Introduction to Accounting Mock
Exam
Course Introduction
Introduction to Accounting provides students with a foundational understanding of accounting principles, concepts, and practices. The course covers essential topics such as the accounting cycle, double-entry bookkeeping, preparation of financial statements, and analysis of basic financial information. Students are introduced to key terms and procedures used in the recording and reporting of financial transactions, as well as the ethical and regulatory environment of accounting. By the end of the course, students will have developed practical skills to interpret and communicate financial information, laying the groundwork for more advanced study in financial and managerial accounting.
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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46 Verified Questions
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Sample Questions
Q1) 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
Q2) Which of the following organisations may use financial statements?
1)Australian Taxation Office
2)A church congregation
3)A university
A) 1 and 2 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2 and 3
Answer: D
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Page 3
Chapter 2: Measuring and Evaluating Financial Position and
Financial Performance
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60 Verified Questions
60 Flashcards
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Sample Questions
Q1) Which of the following is NOT a revenue of a company?
A) Sale of goods
B) Dividends received on shares
C) Rent from premises
D) Issue of shares
Answer: D
Q2) The balance of retained profits at the beginning of a period was $1000 and at the end of the period it was $850.A dividend of $50 was declared and paid.What was the net profit/loss for the period?
A) Net loss $100
B) Net profit $100
C) Net loss $200
D) Net profit $200
Answer: A
Q3) To which balance sheet grouping does the item 'wages payable' belong?
A) Current asset.
B) Noncurrent asset
C) Current liability
D) Noncurrent liability
Answer: C
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Chapter 3: The Double-Entry System
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Sample Questions
Q1) Received cash from customer.
A) Dr Accounts receivable Cr Cash
B) Dr Cash Cr Accounts payable
C) Dr Cash Cr Accounts receivable
D) None of the answers are correct.
Answer: C
Q2) Identify the journal entry required to correctly record the following transaction. Purchased goods on credit.
A) Dr Inventory
Cr Accounts payable
B) Dr Inventory
Cr Accounts receivable
C) Dr Accounts receivable
Cr Inventory
D) Dr Purchases
Cr Cash at bank
Answer: A
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Page 5
Chapter 4: Record-Keeping
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45 Verified Questions
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Sample Questions
Q1) A chart of accounts is:
A) a depiction of the significant and formal relationships and roles within a business organisation.
B) a list,in some logical form,of all relevant transactions in a business organisation.
C) a list,in chronological order,of journal accounts used in an accounting system.
D) a list of the complete set of account titles and their related reference numbers.
Q2) Which of the following accounts does NOT appear on a post-closing trial balance?
A) Insurance expense
B) Prepaid rent
C) Accumulated depreciation
D) Retained profits
Q3) Which transaction represents the acquisition of a noncurrent asset?
A) (2)
B) (4)
C) (9)
D) (10)
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Chapter 5: Accrual Accounting Adjustments
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Sample Questions
Q1) What is the journal entry made by TV Manufacture Ltd on 30 June 2016?
A) Dr Warranty liability Cr Cash
B) Dr Warranty liability Cr Warranty expense
C) Dr Warranty expense Cr Warranty liability
D) None of the answers provided
Q2) Which of the following statements about prepaid expenses is NOT true?
A) Prepaid expenses arise because an expenditure has been made,but there is still value extending into the future.
B) Prepaid expenses are expenses that have been incurred during the current period,but will not be paid until the following period.
C) Prepaid expenses are usually classified as current assets.
D) Prepaid expenses arise when the payment schedule for an expense doesn't match the company's fiscal period.
Q3) What was the depreciation expense for year ended 30 June 2016?
A) $15 000
B) $10 000
C) $7500
D) $5000
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Chapter 6: Financial Reporting Principles, accounting
Standards and Auditing
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42 Flashcards
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Sample Questions
Q1) If the market is efficient with respect to accounting information,which of the following statements is true?
A) Accounting reports are useless to investors.
B) It is impossible to 'beat the market' using only accounting information that was released to the market 1 month ago.
C) Knowing the contents of an annual report before it is released to the market would not be useful to an investor.
D) Capital markets respond only to expected new information.
Q2) Which of the following statements about capital markets is true?
A) Systematic risk refers to the risk arising from a firm's financing decision.
B) Returns of high-beta stocks tend to vary less than overall market prices.
C) The efficient market hypothesis states that it is not possible to consistently 'beat the market' by using publicly available information.
D) If the efficient market hypothesis were true,it would be impossible to make money in the stock market.
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8
Chapter 7: Internal Control and Cash
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Sample Questions
Q1) What was the bank balance in Alison Ltd's books at 31 December before the adjustments?
A) $7800 Dr
B) $7900 Cr
C) $8600 Dr
D) $9400 Cr
Q2) In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for dividend on shares,$1200,deposited directly into the bank account,appearing on the bank statement is to:
A) add it to the balance as per bank statement.
B) deduct it from the balance as per bank statement.
C) add it to the balance per company records.
D) deduct it from the balance per company records.
Q3) The statement that compares the balance as shown in the bank's records with the balance in the cash at bank account at a particular date is known as the:
A) bank statement.
B) bank reconciliation statement.
C) bank control account.
D) cash flow statement.
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Page 9
Chapter 8: Accounts Receivable and Further
Record-Keeping
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29 Flashcards
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Sample Questions
Q1) In posting the total of the cash column in a cash receipts journal,the entry that would be made is:
A) Dr Cash.
B) Cr Cash.
C) Dr each of the specific accounts that comprise the total.
D) Cr each of the specific accounts that comprise the total.
Q2) What was the balance of the debtors control account at 30 June 2016?
A) $3000
B) $7000
C) $10 000
D) $14 000
Q3) K Ltd reported beginning and ending balances in the Allowance for doubtful debts account of $723 000 and $904 000 respectively.It also reported that write-offs of bad debts amounted to $648 000.Assuming that no previously written-off accounts had been collected,what amount did K Ltd record as bad debt expense for the period?
A) $467 000
B) $648 000
C) $829 000
D) $904 000
Page 10
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Chapter 9: Inventory
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Sample Questions
Q1) Inventory with a value of $300 000 was written down to $250 000 in June 2016 because of falling prices in the industry.This transaction will:
A) decrease assets,profit and shareholders' equity.
B) decrease assets and profit,but not shareholders' equity.
C) decrease assets and shareholders' equity but not profit.
D) decrease assets and decrease shareholders' equity.
Q2) If Pinkerton Ltd had employed the periodic inventory method,what would its gross profit have been?
A) $280 000
B) $300 000
C) $320 000
D) $440 000
Q3) During the year ended 30 June 2016,Rico Ltd had net sales of $750 000 and net purchases of $440 000.Cost of goods sold was $475 000.What was Rico Ltd's gross profit for the year ended 30 June 2016?
A) $240 000
B) $275 000
C) $310 000
D) $475 000
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Page 11
Chapter 10: Noncurrent Assets
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Sample Questions
Q1) A building with a cost of $500 000,an estimated residual value of $50 000,and an estimated useful life of 20 years was depreciated by the straight-line method for 10 years.In the eleventh year,it was determined that the useful life should be extended by 10 years (i.e.from 20 years to 30 years).The residual value was to remain the same.The depreciation expense for the eleventh year is:
A) $11 250.
B) $12 500.
C) $13 750.
D) $15 000.
Q2) What was the balance of accumulated depreciation at 31 December 2018?
A) $84 000
B) $93 600
C) $97 440
D) $60 000
Q3) Using the straight-line method,what is the amount of depreciation for the first full year?
A) $37 500
B) $42 500
C) $41 250
D) $40 000
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Chapter 11: Liabilities
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Sample Questions
Q1) Interest owed to the bank by MNO Ltd would appear on MNO's balance sheet as:
A) accounts payable.
B) an accrual on the balance sheet.
C) a provision on the balance sheet.
D) contingent liability.
Q2) Which of the following is a liability?
A) Unearned revenue
B) Sales revenue
C) Accrued revenue
D) Prepayments
Q3) Which of the following is NOT true? When a liability increases:
A) cash may increase.
B) revenue may increase.
C) another liability may decrease.
D) expenses may increase.
Q4) When a business collects GST from customers,it records:
A) a contra asset.
B) a liability.
C) an expense.
D) an asset.
Page 13
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Chapter 12: Completing the Balance Sheet
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Sample Questions
Q1) If Sky-High Ltd used the cost basis,what was the balance sheet value of investment in Down Ltd at 31 December 2016?
A) $510 000
B) $600 000
C) $690 000
D) $880 000
Q2) What was the balance of share capital at 11 October?
A) $25 000
B) $125 000
C) $150 000
D) $110 000
Q3) 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
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Chapter 13: Revenue and Expense Recognition: Additional Concepts
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Sample Questions
Q1) What difference would there be to profit for year 1 if the completion of production method were used?
A) Profit would be $470 000 lower.
B) Profit would be $470 000 higher.
C) There would be no difference.
D) It cannot be determined from the above information.
Q2) What is the effect of the error on the 2015 net profit?
A) It is $3000 too high.
B) It is $1800 too high.
C) It is $1200 too high.
D) Profit is not affected.
Q3) How much profit was earned during the first year if the percentage of completion method was used?
A) $200 000
B) $240 000
C) $250 000
D) $800 000
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Page 15
Chapter 14: The Statement of Cash Flows
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Sample Questions
Q1) Which of the following is NOT a financing cash flow?
A) Dividends received
B) Issue of shares
C) The borrowing of $10 000 from the bank
D) Share buybacks
Q2) The income tax payable account showed an opening balance of $62 000 and a closing balance of $75 000.Income tax expense was $68 000.What was the income tax paid?
A) $55 000
B) $68 000
C) $81 000
D) $62 000
Q3) What was the value of plant purchased?
A) $20 000
B) $70 000
C) $88 000
D) $120 000
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) What is the effect on ROE?
A) It increases.
B) It decreases.
C) It is not effected.
D) It cannot be determined from the information provided.
Q2) Which of the following could explain a substantial increase in the current ratio (presently 1:1)?
A) Purchase of inventory for cash
B) Sale of a major noncurrent asset near year-end
C) A large prepayment near year-end
D) Received a cash deposit for work to be done next year
Q3) f Del Ltd reduces the number of days' inventory on hand to 60,what will be the new inventory turnover?
A) 3 times p.a.
B) 6 times p.a.
C) 12 times p.a.
D) 9 times p.a.
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Chapter 16: Accounting Policy Choices
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Sample Questions
Q1) Which of the following is NOT an area in which companies typically make policy accounting choices?
A) Whether the purchase of equipment is included in cash flow from investing or cash flow from financing
B) The amount of cost of goods sold reported
C) The amount of disclosure in the notes to the financial statements
D) When to recognise revenue
Q2) Which of the following would be increased by an accounting policy change involving the accrual of greater employee benefits expense?
A) Assets
B) Liabilities
C) Net profit
D) Shareholders' equity
Q3) What effect would such policy change have on assets?
A) $180 000 overstated
B) $144 000 overstated
C) $124 000 overstated
D) No effect
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18
Chapter 17: Sustainability Reporting
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Sample Questions
Q1) Which of the following are Environmental GRI performance indicators?
(i)Emissions: direct greenhouse gas emissions.
(ii)Compliance: monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.
(iii)Products and services: percentage of products sold and their packaging materials that are reclaimed,by category.
A) (i)and (ii)only
B) (i)and (iii)only
C) (ii)and (iii)only
D) (i), (ii)and (iii)
Q2) Measurement and reporting of climate change related information is of use to stakeholders to:
A) evaluate the level of dividend they may receive.
B) understand the impact of the business operations on the environment.
C) identify and evaluate sustainability issues.
D) measure the impact of the business operations on the environment.
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