Which is NOT true about budgeting?

Uses past figures that are reliable

Why is the P&L Summary never listed in an accounting report?

It is a temporary account and only exists on Balance Day

The Historical Cost principle states that a transaction should be recorded:

at original cost or value backed by source documents

Which of the following is false?

QAR can be improved by reducing stock levels

Financial data collecting, recording, reporting, analysis

The narration of Drawings in the General Journal should be:

transfer of Drawings account to Capital account

Which of the following should be closed on the credit side?

Insurance, Cost of Sales, Interest Expense

How is the 'Drawings' account closed off?

Cr in drawings account, Dr in capital account

Why is Discount Revenue not listed under Revenues in the Income Statement?

It is not a rev. earned from the firms ability to sell stock

The role of a stocktake is to...

Verify accuracy of stock cards, Detect any stock losses or gains

Is when stock on hand is greater than shown on stock card

Which is NOT a difference between footing and balancing?

Balancing and footing both involve calculating totals

Which transaction would be recorded in the General Journal?

Owner contributing a Non-current asset

The consistency principle states that:

accounting methods be applied the same way between periods

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VCE Accounting Units 3 &4 Revision

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Questions 140

Answers

1
A resource controlled by the entity with expected economic benefit in the next 12mths is:
current liability
current asset
non-current liability
non-current asset
2
The correct Creditors Control entry in the General Journal for a purchase return of $300
Creditors Control DR $300
Creditors Control DR $330
Creditors Control CR $330
Creditors Control CR $300
3
Which of the following is NOT a measure of Profitability?
Creditors Turnover
Return on Assets
Net Profit Margin
Return on Investment
4
Goodwill is classified as:
Expense
Revenue
Asset
Liability
5
Which is NOT true about budgeting?
It aids decision-making by providing a benchmark to compare
Uses past figures that are reliable
It assists planning by predicting the future
The process of preparing reports that uses estimates
6
Which of the following does NOT belong in the income statement?
Bank
Sales revenue
Cost of sales
Rent expense
7
Debtors is:
a revenue
a liability
an expense
an asset
8
Why is the P&L Summary never listed in an accounting report?
It is irrelevant
It is an inaccurate representation
The Net Profit/Loss is always wrong
It is a temporary account and only exists on Balance Day
9
The Historical Cost principle states that a transaction should be recorded:
at the sale price
at the price of a new item
at market value, as negotiated with the seller
at original cost or value backed by source documents
10
The Profit and Loss Summary closes off...
Revenues and Expenses
Revenues, Expenses, Drawings and Capital
Assets and Liabilities
Revenues, Expenses and Drawings
11
Which of the following is false?
DTO can be improved by reducing credit sales
QAR can be improved by reducing stock levels
CTO is heavily dependent on STO & DTO
STO increases when stock levels increase
12
Business is seperate from the owner and other entities, and its records should be seperate
Monetary Unit
Entity
Conservatism
Going Concern
13
(T/F) The BDA for Accrued Revenue increases Liabilities.
False
True
14
The correct Stock Control entry in the General Journal for a Sales Return of $300 (50% mark up)
Stock Control CR $150
Stock Control DR $200
Stock Control CR $200
Stock Control DR $150
15
What is Accounting?
Financial data collecting, recording, reporting, analysis
Counting money
Manipulation of financial data and records
Recording day-to-day activities of a business
16
The narration of Drawings in the General Journal should be:
transfer of Capital account to Drawings account
transfer of Drawings account from P&L Summary
closing Drawings account to Capital account
transfer of Drawings account to Capital account
17
A bad debt is a/an...
Current liability
Expense
Revenue
Current asset
18
Cost of Sales is
An asset
An Expense
A liability
Owner's Equity
19
Which of the following is NOT a type of special journal?
Cash payments journal
Cash journal
Personal journal
Purchases journal
20
Items must be recorded and reported in the currency of where the reports are prepared
Reporting Period
Entity
Monetary Unit
Historical Cost
21
Reports should include all information which is useful for decision-making
Comparability
Understandability
Reliability
Relevance
22
Sales Revenue – Cost of Goods Sold =
Cash
Net Profit
Cost of Sales
Gross Profit
23
What type of source document is this?
Credit note
Cheque butt
Sales invoice
Cash receipt
24
Drawings affects:
profit only
cash and profit
cash only
25
Which of the following should be closed on the credit side?
Cash sales, Credit sales, Stock gain
Stock loss, Advertising, Vehicle
Insurance, Cost of Sales, Interest Expense
Wages, Stock Control, Buying expense
26
Purchase Returns are recorded in the...
General Journal
Purchases Journal
Cash Receipts Journal
Cash Payments Journal
27
A stock loss is...
When stock on hand is more than shown on stock card
A Current Liability
Revenue earned
An expense incurred
28
The life of the business is divided into 'periods' of time to allow reports to be prepared
Consistency
Entity
Going Concern
Reporting Period
29
Loan repayments affects:
profit only
cash only
cash and profit
30
Stock Turnover is a measure of...
Profitability
Liquidity
Efficiency
Stability
31
How is the 'Drawings' account closed off?
Cr in drawings account, Dr in capital account
Cr in drawings account, Dr in P&L summary
Dr in drawings account, Cr in P&L summary
Dr in drawings account, Cr in capital account
32
Why is Discount Revenue not listed under Revenues in the Income Statement?
It is not a rev. earned from the firms ability to sell stock
it is a transaction with the owner
It is not a saving of inflow of economic benefit
Discount Revenue is an expense
33
The role of a stocktake is to...
Take the stock for sale
Verify accuracy of stock cards
Detect any stock losses or gains
Keep staff busy
34
GST Paid affects:
cash only
cash and profit
profit only
35
A stock gain...
Is when stock on hand is greater than shown on stock card
Is when stock on hand is less than shown on stock card
Is an asset
Is an expense
36
A Stock loss occurs when..
Oversupply from suppliers
Undersupply to customers
Stock is lost
37
Credit Sales affects:
profit only
cash only
cash and profit
38
Depreciation affects:
profit only
cash and profit
cash only
39
Which is NOT a difference between footing and balancing?
Only assets, liabilities and owner's equity are balanced
Balancing is done at the end of period
Balancing and footing both involve calculating totals
Balancing is more formal than footing
40
A Stock Gain is a/an ___________ earned when the stocktake shows more stock than the stock card
Expense
Asset
Revenue
Stock
41
Which transaction would be recorded in the General Journal?
Owner contributing cash
Owner withdrawing cash
Owner contributing a Non-current asset
Cash purchase of stock
42
Which account is NOT affected in a credit sale?
Creditors Control
GST Clearing
Credit Sales
Stock Control
43
The generally accepted rules that govern the way accounting information is generated is:
objective of the Australian Accounting Standards Board
the entity concept
accounting principles
going concern principle
44
Sales Returns are recorded in the
Cash Payments Journal
Cash Receipts Journal
General Journal
Sales Journal
45
When received, Prepaid Revenue is recorded on the Balance Sheet as a...
Expense
Current Liability
Current Asset
Revenue
46
The consistency principle states that:
the quality of the product must remain the same
the amount of study you do must stay the same all year-round
the production methods should remain the same over time
accounting methods be applied the same way between periods
47
A stock loss will...
Credit "Stock Control"
Credit "Stock Loss"
Credit "Stock Gain"
Debit "Stock Control"
48
Purchase of a non-current asset affects:
profit only
cash and profit
cash only
49
If expected revenues are $12000 and expected expenses are $7000, what is budgeted net profit?
4000
5000
2000
6000
50
A reason for a stock gain is...
Oversupply to a supplier
Oversuppy from a supplier
Undersupply from a supplier
Oversupply to a customer
51
Cost of Sales affects:
cash and profit
profit only
cash only
52
FIFO stands for:
Front In, Front Out
Flip it, First Out
First In, First Out
First Out, First In
53
Calculate Liabilities:
44,600
33,400
42,000
59,200
54
Which of the following is NOT an Accounting Principle?
Monetary Units
Consistency
Historical Cost
Source Documents
55
(T/F) BDA's are likely to increase the number of accounts incl in a Post Adjusted Trial Balance
True
False
56
Financial data is:
information collected from the ABS
sorted, classified and summarised information
raw facts and figures which financial information is based
providing financial information to assist decision-making
57
Reports should contain information verified by source document evidence so free from bias
Conservatism
Reliability
Historical Cost
Comparability
58
Which of the following does NOT belong in the balance sheet?
drawings
vehicle
credit sales
bank overdraft
59
What is the correct formula for Debtors Turnover?
Av Debtors/Credit Sales x 365
Av Debtors/Credit Purchases x 365
Av Debtors/Total Sales x 365
Credit Sales/Av Debtors x 365
60
Which of the following are NOT users of accounting information?
Banks
Creditors
Debtors
Sharemarket
61
The Accounting Equation is:
R-E=OE
OE=L-A
A+L=OE
A-L=OE
62
If an asset is sold it will affect which of the following ratios?
Improve ROA & WCR
Improve ATO & DTO
Improve ATO & ROA
Worsen ROI & NPM
63
The source document used to verify a sales return is a
cash receipt
cheque butt
sales invoice
credit note
64
A bad debt is a/an ...
liability
credit
expense
revenue
65
A business purchases goods on credit from a creditor. In other words...
A creditor is a supplier
A creditor is the same as a debtor
A creditor is a current asset
A creditor is a current liability
66
What AP or QC will be breached if drawings is counted in the calculation of profit?
Entity
Conservatism
Relevance
Reliability
67
Evaluating profitability is limited by
the use of historical data
the use of different accounting methods
the use of averages
all of the above
68
An INCREASE in Assets is shown on the:
Debit side
Credit side
69
The life of the business is assumed to be continuous, and its records are kept on that basis:
Agree value
Entity principle
Reporting period
Going concern
70
Conservatism suggests:
corporate dress is imposed at all times
losses recorded when probable, gains recorded when certain
gains recorded when probable, losses recorded when certain
use of language in a report must be professional
71
(T/F) If an order is placed but no deposit is received, the transaction should be rec in the GJ
True
False
72
The cash purchase of stock has no effect on Owner's Equity.
True
False
73
Which is an INCORRECT transaction for a cash sale of $100 + GST (at 20% markup)?
Dr Cost of Sales 100
Cr Sales 120
Cr GST Clearing 12
Dr Bank 120
74
The source document for a credit transaction is:
cash receipt
memo
invoice
cheque butt
75
Prepaid Revenue should not be recorded as revenue until...
the GST has been received
the beginning of the next reporting period
the prepayment matches the value of the sale
there has been an exchange of goods/services
76
Return on Assets is a measure of...
Liquidity
Efficiency
Stability
Profitability
77
The owner contributed $5000, which account is credited?
Credit
Drawings
Cash
Capital
78
GST is included in the balance in the stock card.
False
True
79
Where would the P&L Summary appear?
General Journal, General Ledger
Balance Sheet
General Ledger, Balance Sheet
Trial Balance, Balance Sheet
80
State one way of improving GPM without affecting Asset Turnover
improve the quality of staff to increase sales
find a cheaper supplier to reduce cost price of stock
improve security to reduce stock losses
spend more on advertising to increase sales
81
A bad debt will ...
Credit "Bad debts"
Debit "Bad debts"
Credit "Debtors Control"
Debit "Debtors control"
82
Which would not be recorded as an "Advertising" expense?
Use of stock as a prize
Drawings of Stock
Use of Stock for display purposes
Donation of stock to a charity
83
Which of the following are NOT qualitative characteristics?
Reliability
Understandability
Relevance
Consistency
84
Calculate Capital:
27,400
42,000
36,100
59,200
85
Stage 3 of the Accounting Process is?
Reporting
Recording
Advice
Source documents
86
Which entry would NOT be recorded in the General Journal?
Owner contributing cash
Owner withdrawing stock
Correcting entries
Recording of a bad debt
87
Stock is recorded at the selling price in stock cards.
True
False
88
Discount Revenue affects:
cash and profit
profit only
cash only
89
First In First Out (FIFO) is not applied when recording a __________ in a stock card.
Sale of Stock
Stock Gain
Stock Loss
Purchase of Stock
90
Drawings will:
Decrease Expenses
Increase Capital
Decrease Assets
Increase Expenses
91
What does 5/10, n/30 mean?
Customer needs to pay net amount in 30 days
Customer receives 5% if paid in first 10 days
Customer receives 10% if paid in first 5 days
Customer gets a discount if they pay within 30 days
92
True or False: The General Journal records cash transactions.
True
False
93
A benefit of conducting a Stocktake is..
Take stock home.
The physical counting of stock.
Identification of stock losses and gains
Employees can spend time with stock
94
Stock Gain affects:
cash and profit
cash only
profit only
95
Interest loan is classified as:
Liability
Asset
Revenue
Expense
96
Accrued Revenues need to be recognised in financial reports to reflect...
income earned and received
income received but not yet earned
expenses incurred but not yet paid
income earned but not yet received
97
Which of the following is NOT a benchmark for comparison?
performance of similar firms
general performance of the economy
performance in previous periods
budgeted perrmance
98
Using a credit note to record returns of stock complies with which qualitative characteristic?
Reliability
Comparability
Relevance
Understandability
99
Which of the following is NOT a non-financial indicator of performance?
value of sales returns
# of customer complaints
# of sales returns
# of telephone enquiries
100
A Prepaid Expense affects:
profit only
cash only
cash and profit
101
A debtor is somebody who purchases goods on credit from the business. So, in other words...
A debtor is a current liability
A debtor is a supplier
The business will owe the debtor money
A debtor is a customer
102
A list of all account in the general ledger and their balances is known as a:
general ledger
T-account
credit journal
trial balance
103
Sales returns are recorded in the stock card by using
the latest issued cost price in the stock card
the cost price identified on the supplier's credit note
the First In First Out method
the lowest available price in the balance column
104
Cost of Sales is an expense incurred when...
Stock is sold to customers
Stock is paid for
Stock is purchased
The owner takes stock from the business
105
A GST Settlement is a/an :
Revenue
Expense
Liability
Asset
106
Which of the following is NOT a Qualitative Characteristic?
Relevance
Reliability
Comparability
Reporting Period
107
Why are drawing accounts not closed to the P&L Summary account?
It would be a breach Reliability
Drawings is a transaction that involves the owner
Drawings is expressly excl from the defn of expenses
Drawings only belong in the Balance Sheet
108
A stock gain will...
Credit "Stock Loss"
Credit "Stock Gain"
Debit "Stock Gain"
Credit "Stock Control"
109
When a payment that includes Accrued Revenue is received, the transaction is recorded in the...
Cash Receipts Journal
General Journal
Cash Payments Journal
Special Journals
110
Which of the following is not a use of the Income Statement?
asses the firm’s ability so corrective actions can be taken
to return the balance of rev and exp accounts to zero
aid decision-making about the firm’s adequacy of mark-up
help with calculation of financial indicators
111
Purchase returns are recorded in the stock card by using
the First In First Out method
the cost price identified by the supplier's credit note.
the reverse of First In First Out
the general mark up of the business
112
A BDA for Accrued Revenue has the following effect on Net Profit:
Decrease
No Effect
Increase
113
The use of stock for advertising purposes will...
Credit "Stock Loss"
Credit "Stock Gain"
Debit "Stock Control"
Decrease assets
114
"Transactions should be recorded at their original purchase price" describes:
Historical Cost
Reliability
Conservatism
Going Concern
115
What does a credit transaction refer to?
Pay first, get stock later
Purchase goods on credit card
Receive stock, pay later
It's like paying a deposit
116
Credit purchases are recorded in the Purchases Journal, the columns would be:
Date, debtor, Inv #, Sales, GST, Total debtors
Date, creditor, Inv #, stock, GST, Total debtors
Date, creditor, Inv #, Sales, GST, Total creditors
Date, creditor, Inv #, Stock, GST, Total creditors
117
Which of the following could explain an improvement in Gross Profit Margin?
a reduction in wages
an increase in sales volume
a reduction in stock losses
an increase in sales price
118
Which is NOT a benefit of the perpetual system of stock recording?
Fast and slow moving lines of stock detected
Stock Losses and Gains can be detected
Increases stock on hand
Provides a continuous record of stock on hand
119
Which represents the accounting process?
Source documents>Records>Reports>Provide advice
Provide advice>Records>Source documents>Reports
Reports>source documents>Provide advice>Records
Records>source documents>reports>Provide advice
120
The purpose of the BDA for prepaid revenue is to...
recognise the expense in the reporting period when incurred
recognise the revenue in the reporting period when earned
recognise the revenue in the reporting period when paid for
keep accountants in a job
121
Which of the following errors will be revealed by using a trial balance?
An incorrect amount on both sides of the ledger
Two entries recorded on the same side
An omitted transaction
Transaction recorded in the wrong account
122
"The business should use the same accounting methods to allow comparison of reports" describes:
Comparability
Conservatism
Reporting Period
Consistency
123
Selling price is $350. Calculate total price.
$350
$35
$395
$385
124
Which of the following accounts have a balance on the debit side?
Premises and Sales
Commision and Discount Revenue
Stock gain and Wages
Freight In and Freight Out
125
"The life of the business is assumed continuous" describes:
Historical Cost
Monetary Unit
Entity
Going Concern
126
A purchase return is
reported in the Income Statement
not reported in an accounting report
reported in the Cash Flow Statement
reported in the Balance Sheet
127
Return on Owners Investment assesses
profitability from an owners' perspective
long-term stability of the firm
expense control
profitability from a managers point of view
128
(T/F) When a deposit on a sale is received, GST is not recorded
True
False
129
Wages incurred is different from wages owed because:
wages incurred=expense; wages owed=liability
wages incurred=liability; wages owed=expense
wages incurred=expense; wages owed=asset
wages incurred=liability; wages owed=asset
130
Which formula explains the relationship between ROA, ATO and NPM?
ROA = ATO + NPM
NPM = ROA x ATO
ATO = ROA + NPM
ROA = ATO x NPM
131
The use of stock for advertising purposes will...
Increase Owners Equity
Increase Assets
Increase Liabilities
Decrease assets
132
A Net Loss will be recorded in the following way:
CR P&L Summary; CR Capital
DR P&L Summary; DR Capital
DR Capital; CR P&L Summary
DR P&L Summary; CR Capital
133
Losses should be recorded when probable but gains only when certain
Reliability
Conservatism
Comparabilty
Consistency
134
Including Sales Returns in the Income Statement is supported by
Relevance
Reliability
Understandability
Comparability
135
What type of source document is this?
Credit note
Cheque butt
Cash receipt
Sales invoice
136
Reports should be presented in a manner that makes it easy for the user to comprehend
Understandability
Comparability
Consistency
Conservatism
137
A credit balance on GST Clearing means:
An asset to the business
A liability to the ATO
An expense to the business
A refund from the ATO
138
What is the qualitative characteristic relating to the presentation of the income statement?
relevance
comparability
understandability
reliability
139
Calculate Assets:
102,900
33,400
92,600
84,000
140
Cashflow Cover is a measure of a firm's ability to meet its short term obligations with
Current Assets
Total Cashflow
Total Assets
Operating Cashflow

VCE Accounting Units 3 &4 Revision Flashcards | StudBud