621 current solved

8/8/2019 621 Current Solved

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Created By Muhammad Naveed

FIN621 CURRENT QUIZ SOLVED BY

Question # 1 of 15 ( Start time: 11:26:34 AM ) Total Marks: 1

Resources owned by a business are called:

Select correct option:

1. Owner equity2. Assets (page# 18)3. Reserves4. Liabilities


Which of the following is deducted from the net income while preparing cash flow statement by

indirect method?


1. Decrease in inventories2. Increase in accounts payable3. Depreciation4. Increase in inventories


Which of the following represents the negative future cash flows for an enterprise?


1. Assets2. Ownerequity3. Liabilities4. Capital


Under which cost flow assumption is the ending inventory composed of the most recently

purchased merchandise?


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1. FIFO2. LIFO3. Average cost4. Specific identification


The information in statement cash flows assists the investors, creditors, and others in assessing:


1. Enterprise ability to meet its obligations2. Enterprise ability to pay dividends3. Enterprise needs for external financing4. Enterprise needs for external financing


Which of the following should NOT be called Sales ?


1. Goods sold for cash2. Office fixtures sold3. Goods sold on credit4. Sale of item previously included in Purchasese


Which of the following account would NOT be closed to the income summary account at the endof a period?

Rent expense

Revenue earned

Wages expense

Accumulated depreciation


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A business has purchased a building on cash, how it would be recorded in the journal?


1. Building - Debit; Cash - Credit2. Cash - Debit; Building - Credit3. Building - Debit; Owner equity - Credit4. Building - Debit; Accounts Payable - Credit


All of the following accounts would be closed in Income Summery Account EXCEPT:


1. Commission earned account2. Prepaid insurance3. Salaries Expense account4. Wages account


In which of the following account, a credit balance would be an evidence for a mistake or an

error?


1. Mr. A Capital Account2. Cash account3. Notes payable account (page #6)4. Drawings account


Which of the following principle is used for recording a revenue?


1. Matching Principle2. Cost Principle3. Realization Principle4. Objectivity Principle


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Revenue Recording is done on Realization Principle. In this case, the date of rendering

services or date of delivery of good sold is considered as the date of earning revenue.


Primary purpose of the cash flows statement is to provide the information about:


1. Errors or discrepancies between cash book and income statement2. Receipts and payments of cash in the period3. Non cash adjustment that effect the income statement4. Cash paid to the customers and creditors of the business


Using the following information calculate Net Income: Sales Revenue Rs.200, 000, Loss on Saleof Equipment Rs.10, 000, Amortization Expense Rs.20, 000 and Cost of Goods Sold Rs.50, 000.


1. Rs. 170,0002. Rs. 130,0003. Rs. 120,0004. Rs. 180,000


Audit opinions can NOT be classified as which of the following?


1. Adverse opinion2. Unqualified opinion p--1003. Qualified opinion4. Disagreement of opinion


According to _______ the personal expenses paid by Mr. A from his own pocket would not be

recorded in business books of account.



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1. Realization principle2. Separate entity principle3. Matching principle4. Materiality principle

On November 30, 2008 ABC Company borrowed Rs. 4,000 from bank by issuing an interest-

bearing note payable.

This loan is to be paid in three months along with interest computed at an annual rate of 9%.

What will be the entry on Nov 30 to record this borrowing?

Cash Debit; Notes payable Credit

Notes payable Debit; Cash Credit

Interest expense Debit; Cash Credit

Interest payable Debit; Notes payable - Credit

Using the following information calculate Net Income: Sales Revenue Rs.200, 000, Loss on Sale

of Equipment Rs.10, 000, Amortization Expense Rs.20, 000 and Cost of Goods Sold Rs.50, 000.

Rs. 170,000

Rs. 130,000

Rs. 120,000

Rs. 180,000

There are five main kinds of current assets. Which of the following is NOT among them?

Cash and equivalents

Deferred income

Accounts receivable

Prepaid expenses

The most widely used means of estimating periodic depreciation expense is the ____________

method.

Straight line

Double declining balance


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Sum of the year digit methods

Accelerated depreciation method

Which one of the following is usually classified as an inventory item?

Goods purchased for resale to customers

Items purchased and used by the company such as office supplies

Items purchased for a specific customer job

Items purchased and the quantity on hand does not need to be tracked

Accelerated depreciation method is mostly used for ____________.

Financial statements

Assets valuation 100%

Inventory valuation

Income tax returns

Assets of the business are valued and recorded at cost in the financial statement as these are not

for resale purposes, according to which of the following?

Going concern assumption

Cost Principle

Separate entity principle

Objectivity principle

iii) Going-concern assumption: connected with cost principle, assets acquired for use and

not for resale.


Matching Principle

Cost Principle

Realization Principle

Objectivity Principle


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A company has interest expense of Rs. 35,000, its accrued liabilities are increased by Rs. 7000.

Calculate the cash payments for the interest.

Rs. 28,000

Rs. 42,000

Rs. 30,000

Rs. 18,000

A company purchased the land in exchange for the capital stock; it would affect which of the

following?

Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

It would not affect any section

Which one of the following transactions should be classified as a financing activity?

Purchase of equipment

Purchase of treasury stock 100%

Sale of trademarks

Income tax refund

Net current assets are equivalent to:

Stock plus debtors plus cash

Current liabilities less current assets

Working capital

Fixed assets plus current assets less current liabilities

Pre-paid expense is a(n) _________ type of account.

Liability

Asset

Revenue


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Expense

Mr. A purchases a piece of land for cash and debit made to machinery account. What would be

the effect of this error on the trial balance?

Debit side would be decrease with the same amount

Credit side would be increase with the same amount

Total of the trial balance would be agree in all aspect

None of the given options

Adjusting entries are used to:

Bring account balances up to date at year end

Close temporary accounts at year end

Close permanent accounts at year end

Bring account balances at zero

Question # 1 of 15 ( Start time: 09:07:37 PM ) Total Marks: 1

Which of the following items are included in the financing activities section of the statement of

cash flows?

Cash effects of transactions involving making and collecting loans

Cash effects of acquiring and disposing of investments and property, plant, and equipment

Cash effects of transactions obtaining resources from owners and providing them with a return

on their investment

Cash effects of transactions that enter into the determination of net income




Matching Principle

Cost Principle




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Adjusting entries are required for which of the following accounts?

Income Summary accounts

Revenue and expense accounts

All types of accounts

Assets and liabilities accounts

e) Making adjusting entries: These are the Entries required for those transactions which affect

revenues or expenses of more than one accounting period.


Depreciation is added back to profit when arriving at the cash flow from operating activities

because:

Depreciation is only an estimated amount ( offline quiz 2009)

Depreciation does not affect profit

Depreciation does not result in a flow of cash

Depreciation only affects the balance sheet, not the profit and loss account


Under which cost flow assumption is the ending inventory composed of the most recentlypurchased merchandise?


FIFO

LIFO

Average cost

Specific identification





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Deferred income

Accounts receivable

Prepaid expenses


______is helpful for the investors and creditors to assess the cash and non cash aspects of

investing and financing transactions on an entitys financial position?

Balance Sheet

Income Statement

Statement of cash flows

Statement of changes in equity


Which of the following must be included in a company's summary of significant accounting

policies in the notes to the financial statements?


Description of current year equity transactions

Summary of long-term debt outstanding

Schedule of fixed assets

Revenue recognition policies


Which of the following terms present a cause and effect relationship with each other?

Income statement and balance sheet

Revenue and assets

Assets and liabilities

Revenues and expenses




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Adverse opinion

Unqualified opinion

Qualified opinion

Disagreement of opinion


Which of the following expenses would normally be classified as Other or Non Operating

Expense on a multiple-step income statement?

Interest expense

Depreciation expense

Insurance expense

Salaries expense


Gross profit is:

Excess of sales over cost of goods sold

Sales less Purchases

Cost of goods sold + Opening stock

Net profit less expenses of the period


Which of the following principle states that the assets are purchased for the use and not for resale

purpose?

Stable Currency principle


Going-concern principle

Cost Principle


Which of the following would NOT be the characteristics of current assets?

Likely to change before the next accounting period is over

Not bought for resale


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Use as part of the firm's trading operations

Liquidity


Which of the following would be affected by the difference between revenues and expenses?

Assets

Owners equity 100%

Liabilities

Capital


Resources owned by a business are called:


Owner equity

Assets

Reserves

Liabilities


Which of the following is deducted from the net income while preparing cash flow statement byindirect method?


Decrease in inventories

Increase in accounts payable

Depreciation

Increase in inventories


Which of the following represents the negative future cash flows for an enterprise?



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Assets

Owners equity

Liabilities

Capital


Under which cost flow assumption is the ending inventory composed of the most recentlypurchased merchandise?


FIFO

LIFO

Average cost

Specific identification


The information in statement cash flows assists the investors, creditors, and others in assessing:


Enterprises ability to meet its obligations

Enterprises ability to pay dividends

Enterprises needs for external financing

Enterprises needs for external financing


Which of the following should NOT be called Sales?


Goods sold for cash

Office fixtures sold

Goods sold on credit


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Sale of item previously included in Purchases


Which of the following account would NOT be closed to the income summary account at the end

of a period?


Rent expense

Revenue earned

Wages expense

Accumulated depreciation


A business has purchased a building on cash, how it would be recorded in the journal?


Building - Debit; Cash - Credit

Cash - Debit; Building - Credit

Building - Debit; Owners equity - Credit

Building - Debit; Accounts Payable - Credit


All of the following accounts would be closed in Income Summery Account EXCEPT:


Commission earned account

Prepaid insurance

Salaries Expense account

Wages account


In which of the following account, a credit balance would be an evidence for a mistake or an

error?



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Mr. A Capital Account

Cash account

Notes payable account

Drawings account




Matching Principle

Cost Principle




Primary purpose of the cash flows statement is to provide the information about:


Errors or discrepancies between cash book and income statement

Receipts and payments of cash in the period

Non cash adjustment that effect the income statement

Cash paid to the customers and creditors of the business


Using the following information calculate Net Income: Sales Revenue Rs.200, 000, Loss on Sale

of Equipment Rs.10, 000, Amortization Expense Rs.20, 000 and Cost of Goods Sold Rs.50, 000.


Rs. 170,000

Rs. 130,000

Rs. 120,000 100%


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Rs. 180,000




Adverse opinion

Unqualified opinion

Qualified opinion

Disagreement of opinion


According to _______ the personal expenses paid by Mr. A from his own pocket would not be

recorded in business books of account.


Realization principle

Separate entity principle

Matching principle

Materiality principle

MC080200627 : Muhammad Naveed

Quiz Start Time: 12:11 PM

Question # 1 of 15 ( Start time: 12:11:25 PM )




Income Summary accounts


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Revenue and expense accounts

All types of accounts

Assets and liabilities accounts


Which of the following depreciation method does NOT provide a better tax shield?

Straight line

Sum of the years digit

Double declining balance

Accelerated depreciation


Which one of the following statement shows the effects of cash inflows and outflows?

Balance Sheet

Statement of Owners Equity

Income Statement

Statement of Cash Flows

Which of the following would NOT represent the cash outflows for the business?

Purchase of building for cash

The sale of land for cash

Retirement of long term debt

The payment of cash for dividends



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The true and fair presentation of the financial statements depends, among other things, upon

which of the following?

Strong financial position

Concept of materiality

Matching principle

Realization principle


A company has interest expense of Rs. 35,000, its accrued liabilities are increased by Rs. 7000.

Calculate the cash payments for the interest.

Rs. 28,000

Rs. 42,000

Rs. 30,000

Rs. 18,000


Which of the following is the next step after the preparation of trial balance?

Adjusted trial balance

Financial statements

Adjusting entries

Closing entries


Gross profit is:

Excess of sales over cost of goods sold


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Sales less Purchases

Cost of goods sold + Opening stock

Net profit less expenses of the period


Which one of the following would lead to the decrease in the owners equity?

Purchasing a piece of land

Paying dividends to shareholders

Purchasing equipment on account

Paying back the principal of a loan


Which of the following is NOT an example of cash equivalents?

Certificates of Deposit

Money market accounts

Money market mutual funds

Euro Bond


Which of the following would be affected by the difference between revenues and expenses?

Assets

Owners equity

Liabilities

Capital


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Which of the following account will appear in the post-closing trial balance?

Owners Capital

Service Fees Earned

Income Summary

Owners Withdrawals


Which of the following is NOT true about depreciation?

Depreciation causes perpetual and gradual fall in the value of asset

Depreciation does not depend upon on fluctuations in the market value of asset

Depreciation is a charged in case of fixed assets only

Depreciation is a charge against revenue of two or more accounting periods




Deferred income

Accounts receivable

Prepaid expenses


Which of the following is the most common adjusting entry?

Un-earned revenue

Pre-paid expense


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Depreciation expense

Accrued revenue

621 current solved

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