Course Introduction
Principles of Accounting Review
Questions
Principles of Accounting introduces students to the foundational concepts and practices of financial and managerial accounting. The course covers essential topics such as recording financial transactions, preparing and interpreting financial statements, understanding the accounting cycle, and applying generally accepted accounting principles (GAAP). Students will develop analytical skills for evaluating a company's financial position and performance, explore ethical considerations in accounting, and gain practical knowledge relevant to various business settings. This course provides the necessary groundwork for further study in accounting and related business disciplines.
Recommended Textbook
Atrills Accounting for Business Students 1st Australian Edition by Atrill McLaney
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14 Chapters
893 Verified Questions
893 Flashcards
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Page 2
Chapter 1: Introduction to Accounting
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76 Verified Questions
76 Flashcards
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Sample Questions
Q1) Standardised formats are most relevant to:
A)departmental reports.
B)management reports.
C)external financial reports.
D)internal reports.
Answer: C
Q2) Sustainability reporting focuses on:
A)financial aspects.
B)environmental and social factors.
C)customer satisfaction.
D)Both A and C.
Answer: B
Q3) The statement concerning the key qualities of accounting information that is untrue is:
A)the qualities are frequently in conflict.
B)relevant information may help to predict future events or confirm past events.
C)relevant information often contains a degree of subjectivity.
D)None of the statements is untrue, i.e., all are true statements.
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 overall effect on the statement of financial position when the business sells inventory for a profit of $5 000?
A)Increase total assets $3 000; decrease total equity $3 000
B)Increase total assets $5 000; increase total equity $5 000
C)No change in total assets; no change in total equity
D)None of the above
Answer: B
Q2) Without the business entity convention, which item in the statement of financial position would not exist?
A)Assets
B)Equity
C)Liabilities
D)Cash at bank
Answer: B
Q3) Which of the following is not necessarily a liability?
A)Provision for holiday pay
B)Bank overdraft
C)Loan to employee
D)None of the above, i.e., all are necessarily liabilities
Answer: C
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Chapter 3: Measuring and Reporting Financial Performance
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Sample Questions
Q1) Which of the following is a measure of wealth created for owners?
A)Operating profit
B)Gross profit
C)Net profit
D)All of the above
Answer: D
Q2) The method of inventory valuation that assumes the earliest inventory acquired is the first to be sold is the:
A)lower of cost and net realisable value method.
B)average cost method
C)FIFO method.
D)LIFO method.
Answer: C
Q3) The recognition criteria that must be satisfied under the Conceptual Framework for income to be included in the profit report is:
A)probable that the inflow of resources has occurred.
B)inflow of resources able to be reliably measured.
C)income must be matched with expenses.
D)Both A and B.
Answer: D
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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) A sale on account results in a debit to cash and a credit to sales.
A)True
B)False
Q2) In a perpetual inventory system, an end of period inventory count and valuation is required to compute cost of sales.
A)True
B)False
Q3) List five examples of errors that would prevent a trial balance from balancing.
Q4) 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
6
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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) It's time to reconcile petty cash. Vouchers indicate that the following amounts have been used:
Purchase of toner for copy machine for $60 on August 1
Purchase of postage for $25 on August 7
Purchase of petrol for the company truck for $125 on August 14
Purchase of lunch for employee training for $78.90 on August 21
Cost to send an overnight cheque to a vendor of $15.75 on August 28
August began with a balance of $150 in petty cash and fund was replenished with an additional $350 on August 1. Complete the petty cash book for August.
Q2) With a computerised accounting system, there is no need for:
A)internal controls.
B)checks and balances.
C)updating each subsystem manually.
D)data backups.
Q3) 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.
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Page 7
Chapter 6: Introduction to Limited Companies
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Sample Questions
Q1) Which of the following accounts only appears on group financial statements?
A)Non-controlling interest
B)Amounts receivable by a parent company from a subsidiary
C)Profit earned by a subsidiary from a sale made to its parent
D)Total group revenue
Q2) 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.
Q3) An investor invests in Canta Ltd by purchasing 2 000 shares for $2.50 each. In the following year, the company distributes a 1 for 1 share dividend (bonus issue). After the issue, the number of shares held by the investor:
A)will increase by 200 and the market price of the shares will fall.
B)will increase by 2 000 and the market price of the shares will remain the same.
C)will increase by 2 000 and the market price of the shares will rise.
D)will increase by 2 000 and the market price of the shares will fall.
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Chapter 7: Regulatory Framework for Companies
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40 Verified Questions
40 Flashcards
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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) Which of the following statements is true about the order of repayment for a company in liquidation?
A)Creditors rank before ordinary shareholders.
B)Ordinary shareholders rank before preference shareholders.
C)Wages owing to employees rank last.
D)All of the statements are true.
Q3) Assume the opening balance of equity (01/07/2017)is $1 500 000. During 2017/18, there was a share issue of $540 000, dividends declared of $280 000 and a profit for the year of $75 000, What is the equity balance on the 30/06/2018?
A)$2 650 000
B)$2 370 000
C)$1 835 000
D)Not enough data to calculate the closing balance
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9
Chapter 8: Measuring and Reporting Cash Flows
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70 Flashcards
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Sample Questions
Q1) Which of the following is an example of a non-cash investing or financing transaction?
A)Charging depreciation
B)Sale of a parcel of shares
C)Repayment of a loan
D)The purchase of a building paid for by an issue of shares direct to the vendor
Q2) 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
Q3) Which transaction would not appear in the body of a statement of cash flows?
A)Acquisition of assets by means of a share issue
B)Purchase of a building by incurring a mortgage to the seller
C)Conversion of a liability to equity
D)All of the above
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Page 10
Chapter 9: Corporate Social Responsibility and Sustainability Accounting
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58 Verified Questions
58 Flashcards
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Sample Questions
Q1) Briefly outline the essence of the balance scorecard approach.
Q2) A study by Deegan and Gordon in 1996 reviewing the accounts of 197 Australian companies found which of the following types of environmental disclosures?
A)Recycling of materials
B)Use of environmentally safe products in manufacturing
C)Compliance with government standards
D)All of the above
Q3) The balanced scorecard approach was developed by:
A)John Elkington
B)Kaplan and Norton
C)R Grey
D)KPMG
Q4) Once there is a complete move to sustainability reporting, TBL:
A)will still be required.
B)may have to be extended.
C)will be absorbed by sustainability reporting.
D)may have to be modified.
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Chapter 10: Analysis and Interpretation of Financial Statements
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67 Flashcards
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Sample Questions
Q1) The price-earnings ratio per ordinary share is:
A)1.8:1
B)7.2:1
C)5.0:1
D)3.0:1
Q2) Which ratios are specifically concerned with assessing the returns and performance of shares held for investment purposes?
A)Liquidity ratios
B)Gearing ratios
C)Investment ratios
D)Efficiency ratios
Q3) If the price-earnings ratio is 8 times, the earnings yield is:
A)8%
B)12.5%
C)80%
D)10%
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Chapter 11: Costvolumeprofit Analysis and Relevant Costing
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70 Flashcards
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Sample Questions
Q1) Variable costs are best defined as:
A)varying from period to period.
B)varying directly in proportion to the number of employees.
C)varying directly in proportion to the level of activity.
D)varying over time.
Q2) If sales revenue totals $84 000, selling price is $6 per unit, variable costs are $2.50 per unit and fixed costs are $48 000 per annum, the profit that will be earned is:
A)$13 714
B)$19 200
C)$1 000
D)$5 600
Q3) Which of these is not a relevant qualitative factor in deciding to outsource a product rather than continue making it?
A)Loss of in-house expertise and specialisation
B)Loss of control over quality
C)The quality of other products
D)The reliability of supply
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13
Chapter 12: Full Costing
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Sample Questions
Q1) When determining full costs the treatment of direct costs under activity-based costing:
A)is the same as under traditional costing.
B)relies upon identifying appropriate cost drivers.
C)must be related to activities.
D)Both B and C
Q2) Refer to the information above. The direct costs incurred in providing a perm to a client would be:
A)all costs mentioned above.
B)hairdresser salary, shampoo, and conditioner.
C)hairdresser salary, colour and perm solution.
D)hairdresser salary.
Q3) 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.
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Chapter 13: Planning and Budgeting
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Sample Questions
Q1) If actual sales are $96 000 and budgeted sales are $87 000 and actual advertising paid is $6 100 and budgeted advertising is $7 300, the variances are respectively are:
Note: F - Favourable, U - Unfavourable (adverse).
A)$9 000F; $1 200U
B)$9 000U; $1 200U
C)$9 000F; $1 200F
D)$9 000U; $1 200F
Q2) If the principal objective of a firm is to enhance wealth, the most important budget target to meet is:
A)bank balance.
B)sales.
C)profit.
D)production.
Q3) What does flexing the budget mean?
A)Revising the budget sales figure to match actual sales
B)Ignoring previously set targets
C)Revising the budget to reflect changes in management behaviour
D)Revising the original budget estimates to produce a budget based on the actual volume of activity
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Page 15
Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) Wishlist recently purchased a new packaging machine for $678 026. The machine has a remaining useful life of 10 years. Net cash flow per year will be $120 000. The internal rate of return is:
A)16%
B)20%
C)24%
D)12%
Q2) Which of the following statements is incorrect?
A)It may be very difficult to quantify all factors that impact on an investment decision.
B)Investment decisions are made easier as cash forecasts are always correct.
C)The validity of assumptions made in relation to an investment proposal may influence the final decision.
D)The results from using an investment appraisal method is only one input into the final decision.
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