Financial Accounting Acct1530 Paper

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Time Allowed: Reading Time: This examination paper has

3 Hours 10 minutes 16 pages

Total Number of Questions: 6 Total Marks Available:
Answer ALL questions The questions are NOT of equal value All answers are to be written in the examination booklet provided Candidates are to supply their own calculators All answers must be written in ink. Except where they are expressly required, pencils may be used only for drawing, sketching or graphical work. This paper may be retained by the candidate


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Question 1

Multiple Choice (20 marks)

On a separate page in your examination booklet, write the numbers 1 through 20 on separate lines down the page. For each of the 20 questions that follow, write the letter corresponding to the most correct answer (i.e. A, B, C, or D). Make sure you write the letter clearly. There is only one correct answer for each question. If you write more than one letter as your answer for a particular question, your answer will be marked incorrect.


Which of the following statements about financial accounting is true? A . Financial statements are summaries of a large number of individual events. B. Managers are concerned with the reliability of financial reports, not with how well they will be interpreted. C. It keeps a record of all events affecting an organisation. D. The only aspects of a business enterprise of concern to management are financial position and financial performance.


Which of the fo llowing is not an asset? A. Inventory. B. Provision for employee entitlements. C. Accounts receivable. D. Marketable securities.


Which of the following statements about the accounting entity concept is false? A. The concept puts a boundary on the transactions that are to be recorded for any particular acco unting entity. B. Accounting entities do not necessarily correspond to legal entities. C. The concept allows the owner to evaluate the performance of the business. D. None of the above, i.e., all statements are true.


An asset should be recognised in the financial statements when: 1. an exchange has occurred. 2. it possesses a cost or other val ue that can be reliably measured. 3. it is probable that the future economic benefits embodied in the asset will eventuate. A.

1 and 2 only.
I and 3 only. 2 and 3 only. 1,2, and 3.





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Question 1 (cont.)


Use the information below to answer the following question. • • • • • Shareholders invest $100,000 in the business. Inventory of $80,000 is purchased on account. Damaged inventory that was purchased on credit for $10,000 was returned. Equipment costing $200,000 was purchased which was financed by a loan from the seller, repayable in 5 years. Paid $40,000 to a creditor.

As a result of the above transactions, total assets increased by: A. $100,000 B. $170,000 C. $330,000 D. None of the above.


Use the information below (as at 31 December 2008) to answer the following question Share Capital $100,000 $150,000 Equipment Inventory $30,000 Accounts Receivable $20,000 Accounts Payable $30,000 $80,000 Retained Profits $10,000 Cash There were no dividends paid during the year. There were no transfers to or from reserves during the year. If the balance of retained profits at the start of the year was $50,000, what was the profit for the year? A. $30,000 B. $80,000 C. $50,000 D. None of the above.


Which of the following statements about accumulated depreciation is false? A. It always decreases when the asset to which it relates is sold. B. It always represents the depreciation charge for the current period. C. Cost less accumulated depreciation gives net book value. D. It is a contra asset account.


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