Principles of Accounting Exam Preparation Guide
Course Introduction
Principles of Accounting introduces students to the foundational concepts and practices essential for understanding financial and managerial accounting. The course covers the accounting cycle, the preparation and interpretation of financial statements, and the principles governing asset, liability, and equity accounts. Students will also explore the ethical responsibilities of accountants and the role of accounting information in business decision-making. Through practical exercises and case studies, learners develop skills in recording, classifying, and summarizing financial transactions, equipping them with the knowledge needed for further study in accounting and related fields.
Recommended Textbook
Atrills Accounting for Business Students 1st Australian Edition by Atrill McLaney
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14 Chapters
893 Verified Questions
893 Flashcards
Source URL: https://quizplus.com/study-set/3519
Page 2
Chapter 1: Introduction to Accounting
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76 Verified Questions
76 Flashcards
Source URL: https://quizplus.com/quiz/69888
Sample Questions
Q1) Which statement is incorrect?
A)A budget defines precise targets, e.g., level of sales, levels of inventory.
B)A budget is expressed in monetary terms.
C)A budget is a short-term plan.
D)A budget summarises past information.
Answer: D
Q2) Budgets are typically set for:
A)a decade.
B)one year.
C)one month.
D)five years.
Answer: B
Q3) Which of the following are differences between management and financial accounting?
A)Nature of reports produced
B)Frequency of reports
C)Level of detail in reports
D)All of the above
Answer: D
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Page 3
Chapter 2: Measuring and Reporting Financial Position
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72 Verified Questions
72 Flashcards
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Sample Questions
Q1) What is the effect on the statement of financial position when the business has cash sales of $15 000 of goods that were originally purchased for $10 000?
A)Increase asset bank $12 000; increase equity $12 000
B)Increase asset bank $15 000; decrease asset inventory $10 000; increase equity $5 000
C)Increase asset bank $4 000; increase equity $4 000
D)None of the above
Answer: B
Q2) The accounting assumption that a business will continue to operate into the foreseeable future is the:
A)entity assumption.
B)going concern assumption.
C)accounting period assumption.
D)historical cost assumption.
Answer: B
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Chapter 3: Measuring and Reporting Financial Performance
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72 Verified Questions
72 Flashcards
Source URL: https://quizplus.com/quiz/69886
Sample Questions
Q1) If equity at the beginning of the period is $180 000, profit for the period is $90 000 and $25 000 is withdrawn by the owner during the period, equity at the end of the period is:
A)$115 000
B)$245 000
C)$289 000
D)cannot be calculated from the information provided.
Answer: B
Q2) Which statement about net profit is not true?
A)Net profit normally represents the amount of cash generated from operations for the period.
B)Net profit is a measure of achievement or productive effort.
C)Net profit increases equity.
D)None of the statements, i.e., all are true.
Answer: A
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Chapter 4: Recording Transactionsthe Journal and Ledger Accounts
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44 Verified Questions
44 Flashcards
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Sample Questions
Q1) The process of transferring revenue and expense accounts to the profit and loss account, and then transferring the balance of the profit and loss account and drawing account to the capital account is:
A)creating the trial balance.
B)creating the profit and loss statement.
C)balancing the accounts.
D)closing off the accounts.
Q2) An account used to calculate gross profit on trading, prior to the profit and loss account is a/an ________ account.
A)cost of sales
B)inventory
C)contra
D)trading
Q3) After adjustments are completed, the next step is to prepare:
A)the balance sheet.
B)the profit and loss statement.
C)the trial balance.
D)the adjusted trial balance.
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Chapter 5: Accounting Systems and Internal Control
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39 Verified Questions
39 Flashcards
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Sample Questions
Q1) Which of the following businesses would be most likely use sales and purchases books?
A)A hardware store
B)A real estate agent
C)A physician
D)A hair salon
Q2) Cloud computing:
A)can be expensive because of frequent version updating requirements.
B)utilises an online server instead of a physical computer for data storage.
C)eliminates privacy and legal concerns.
D)does not eliminate the need for redundant bookkeeping.
Q3) The ledger containing revenue and expense accounts is the:
A)nominal ledger.
B)general ledger.
C)sales ledger.
D)purchases ledger.
Q4) The move to e-commerce has created new and varied difficulties in the area of internal control.
A)True
B)False
Page 7
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Chapter 6: Introduction to Limited Companies
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64 Verified Questions
64 Flashcards
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Sample Questions
Q1) The largest source of new finance for Australian companies is:
A)retained profits.
B)share issues.
C)bank loans.
D)revaluations.
Q2) If a company has a share capital of $150 000, revenue reserves of $25 000 and retained profits of $50 000, what is the maximum amount it can legally distribute as cash dividends?
A)$130 000
B)$75 000
C)$145 000
D)$30 000
Q3) A public issue of shares where the investor must state in advance the amount they are willing to pay for the shares is called a:
A)tender issue.
B)private issue.
C)share purchase plan.
D)venture share issue.
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8
Chapter 7: Regulatory Framework for Companies
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) Incorrect capitalisation of expenses is a means of creative accounting that:
A)overstates revenues.
B)understates revenues.
C)understates net income.
D)overstates net income.
Q2) Which of the following comments in relation to the statement of cash flows is incorrect? The statement of cash flows:
A)allows the user of the report to determine where cash has been generated.
B)is essentially a formal statement of all transactions affecting the cash account.
C)highlights where cash has been spent.
D)is a duplication of information already provided in the other financial statements.
Q3) Which of the following is a responsibility of the directors of a public company?
A)To maintain an internal control system within the company
B)To ensure financial statements are prepared showing a true and fair view of an organisation's financial situation
C)To organise for financial reports to be audited
D)All of the above
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9
Chapter 8: Measuring and Reporting Cash Flows
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70 Verified Questions
70 Flashcards
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Sample Questions
Q1) For The Book Co share capital increased by $200 000 in total over a year in which there was a bonus issue of 20 000 new shares at $2 per share. The cash flow from the issue of shares is:
A)$160 000
B)$200 000
C)$180 000
D)$240 000
Q2) The income statement tends to obscure cash movements because it is:
A)only produced annually.
B)accrual-based.
C)cash-based.
D)not audited.
Q3) In 2015, G Co repaid $45 000 to the bank on a mortgage loan. $35 000 was interest on the mortgage and $10 000 was repayment of the principal. The repayment would appear in the statement of cash flows as:
A)operating outflow $45 000.
B)operating outflow $35 000; investing outflow $10 000.
C)financing inflow $45 000.
D)operating outflow $35 000; financing outflow $10 000.
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Page 10
Chapter 9: Corporate Social Responsibility and Sustainability Accounting
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58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/69880
Sample Questions
Q1) Which of the following statements is not correct?
A)Social and environmental concerns now have to be taken seriously by business.
B)It is no longer sufficient for business to be focused solely on the maximisation of wealth.
C)All businesses currently accept that sustainability is the primary goal.
D)There is increasing pressure for management to address a much broader range of issues than in the past.
Q2) The total impact of business actions on society at large is known as:
A)social responsibility.
B)risk.
C)corporate governance.
D)economic impact.
Q3) What is the most common area of voluntary social responsibility reporting in Australia?
A)Nuclear waste
B)Human resources (health and safety, working conditions, etc.)
C)Philanthropy
D)None of the above
Q4) Briefly outline the essence of the balance scorecard approach.
Page 11
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Chapter 10: Analysis and Interpretation of Financial Statements
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67 Verified Questions
67 Flashcards
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Sample Questions
Q1) U2 Ltd is considering whether to offer trade credit to A1 Ltd. The ratio from A1's accounts that will be most useful in assessing the firm's ability to repay its trade debts on time is the:
A)gearing.
B)asset turnover period.
C)interest cover.
D)average settlement period for accounts payable.
Q2) If earnings per share is 30c and the market price of each share is $6, the price-earnings ratio is:
A)20:1
B)10:1
C)5:1
D)25:1
Q3) What is a good benchmark to compare business performance during a given period?
A)Budgeted performance
B)Past performance
C)Competitor's performance
D)All of the above
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Chapter 11: Costvolumeprofit Analysis and Relevant Costing
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70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/69878
Sample Questions
Q1) How is margin of safety best described?
A)As the difference between the actual output and the break-even output
B)As the difference between variable costs and total output
C)As the difference between the fixed costs and total revenue
D)As the difference between break-even point and total revenue
Q2) A spreadsheet that includes various possible changes in prices is an example of which of the following?
A)Sensitivity analysis
B)Cost-volume-profit analysis
C)Regression analysis
D)Double-entry bookkeeping
Q3) Refer to the table above. The sale of 6 000 photo frames would result in:
A)a profit of $9 000.
B)a profit of $6 000.
C)a loss of $2 000.
D)a loss of $3 000.
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13
Chapter 12: Full Costing
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67 Verified Questions
67 Flashcards
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Sample Questions
Q1) Refer to the table above. The direct unit cost per racquet for April is:
A)$17.00
B)$9.60
C)$16.70
D)$11.60
Q2) At the time of the industrial revolution in Britain, the manufacturing sector was characterised by the following features, except for:
A)high use of technology.
B)a relatively uncompetitive market.
C)direct labour-intensive and direct labour-paced production.
D)a low level of overheads relative to direct costs.
Q3) Refer to the table above. The overhead recovery rate (rounded), using direct labour hours as the allocation base, is:
A)$3.90 per DLH.
B)$7.20 per DLH.
C)$5.90 per DLH.
D)$7.00 per DLH.
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14
Chapter 13: Planning and Budgeting
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) Which of the following could not be a possible cause of an adverse (unfavourable)materials usage variance?
A)Faulty machinery
B)Poor quality materials
C)An increase in the price of the raw materials
D)Inexperienced workers
Q2) Refer to the table above. What will be the amount of total production for October 2018?
A)9 400 units
B)7 800 units
C)10 100 units
D)8 400 units
Q3) 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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15
Chapter 14: Capital Investment Decisions
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68 Verified Questions
68 Flashcards
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Sample Questions
Q1) The finding from surveys of the methods of business investments that is true is:
A)businesses generally only use one method to assess each investment decision.
B)there is a tendency for larger businesses to use the discounting methods.
C)the payback method is hardly used in practice.
D)All of the statements are true
Q2) 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
Q3) Container Ltd, a manufacturing firm, is considering investing $110 000 in a new mainframe computer. It is estimated that net cash flow per year will be $30 000 and the computer will have a 10-year useful life and zero residual value. The machine will be depreciated on a straight-line basis. What is the accounting rate of return?
A)10.55%
B)30.0%
C)22.72%
D)15.86%
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Page 16