Test bank for financial ACCT asia pacific 1st edition

Test Bank for Financial ACCT Asia Pacific 1st Edition

Which of the following statements is true regarding economic events?

1. a. The signing of a service contract is an example of an external event that is
recorded in the accounting records
2. b. Every event which affects an entity can be identified from a source
document
3. c. All internal and external events must be measured with sufficient reliability.
4. d. External events involve exchanges between an entity and another entity
outside the company


Which of the following underlying assumptions of the conceptual framework
is the reason the dollar is used in the preparation of financial
statements?

1. a. Economic entity
2. b. Continuity
3. c. Time-period
4. d. Monetary unit
Which of the following is an assumption made in the preparation of financial
statements?

1. a. Financial statements are prepared for a specific entity that is distinct from
the entity's owners
2. b. The current market value is assumed to be less relevant than the original
cost paid
3. c. The preparation of financial statements for a specific time period assumes
that the statement of financial position covers a designated period of time
4. d. Financial statements are prepared assuming that inflation has a distinct

effect on the monetary unit
The time period assumption is necessary because:

1. a. inflation exists and causes confusing swings in financial statement
amounts over time
2. b. business owners and interested parties want periodic measurements of the
business’s success or failure
3. c. business owners and interested parties expect full disclosure of all
economic events throughout the entire time period
4. d. it is required by the federal government


The going concern assumption is concerned with:

1. a. the company's ability to continue operations long enough to carry out its
existing obligations
2. b. any information that is capable of influencing the decisions of anyone
using the financial statements
3. c. measuring ongoing business activities at their exchange price at the time
of the initial external transaction
4. d. offsetting management's natural optimism by providing a prudent
approach to uncertainty in financial statement items
‘Revenues’ are best described as:

1. a. a decrease in resources resulting from the sale of goods or the provision of
services
2. b. an increase in resources resulting from the sale of goods or the provision of
services
3. c. assets used or consumed in the sale of products or services
4. d. an increase in the financing activities

‘Expenses’ are best described as:

1. a. an increase in resources resulting from the sale of goods or the provision of
services
2. b. the amount of interest or claim that the owners have in the business
3. c. the future economic resources of a business entity
4. d. a decrease in resources resulting from the sale of goods or provision of
services


Which statement demonstrates the financial success or failure of the
company over that specific period of time?

1. a. The statement of cash flows
2. b. The statement of changes in equity
3. c. The statement of financial position
4. d. The statement of comprehensive income
The resources used to generate revenues during a period are called:

1. a. Profit
2. b. Expenses
3. c. Revenues
4. d. Dividends
Which of the following is the correct date format for the financial statement
heading?

1. a. Statement of financial position for the Year Ended 30 June 2013
2. b. Statement of comprehensive income at 30 June 2013
3. c. Statement of comprehensive income for the Year Ended 30 June 2013
4. d. Statement of changes in equity at 30 June 2013

Which of the following terms best describes a distribution of the profit of a
company to its owners?

1. a. Retained earnings
2. b. Dividends


3. c. Liquidation of assets
4. d. Monetary unit
IPOD Corporations' end of year statement of financial position consisted of
the following amounts. Cash $ 150 000 Accounts receivable $500 000
Property, plant and equipment 700 000 Long-term debt 400 000 Ordinary
share 1 000 000 Accounts payable 200 000 Retained earnings ? Inventory 350
000 What amount should IPOD report on its statement of financial position for
total assets?

1. a. $1 100 000
2. b. $1 550 000
3. c. $1 700 000
4. d. $1 900 000
IPOD Corporations' end of year statement of financial position consisted of
the following amounts. Cash $150 000 Accounts receivable $500 000 Property,
plant and equipment 700 000 Long-term debt 400 000 Ordinary share 1 000
000 Accounts payable 200 000 Retained earnings ? Inventory 350 000 What is
IPOD’s retained earnings balance at the end of the current year?

1. a. $100 000
2. b. $1 100 000
3. c. $1 600 000
4. d. $1 700 000

The Peck Company reported the following items on its financial statements
for the year ending 30 June 2013. Sales $1 560 000 Cost of sales $1 400 000
Selling, general and Other expense 30 000 administrative expense 40 000
Dividends 10 000 Income tax expense 25 000 The statement of
comprehensive income for Peck will report profit for the current year in the
amount of:

1. a. $ 45 000


2. b. $ 65 000
3. c. $ 85 000
4. d. $465 000
The Peck Company reported the following items on its financial statements
for the year ending 30 June 2013. Sales $1 560 000 Cost of sales $1 400 000
Selling, general and Other expense 30 000 administrative expense 40 000
Dividends 10 000 Income tax expense 25 000 How much will be reported as
retained earnings on its statement of financial position at 30 June 2013, if this
is the first year of operations?

1. a. $45 000
2. b. $55 000
3. c. $85 000
4. d. Not enough information is provided.
Ponzi Corporation reported the following information for the year ended 30
June 2013. Profit $100 000 Dividends 6 000 Retained earnings at 30 June 2013
$120 000 What was the balance of retained earnings at 1 July 2012?

1. a. $ 21 000
2. b. $ 26 000

3. c. $106 000
4. d. $214 000
Ponzi Corporation reported the following information for the year ended 30
June 2013. Profit $100 000 Dividends 6 000 Retained earnings at 30 June 2013
$120 000 What was the economic effect of the payment of Ponzi's
dividends?

1. a. The dividend reduced profit for 2013


2. b. The dividend should be added to profit if the company's accounting
equation is in balance
3. c. The dividend reduced total retained earnings
4. d. The dividends must be paid whenever Ponzi Corp. reports profit
You are a potential creditor and are concerned that a particular company you
are ready to give a loan to might have too much debt. Which financial
statement would provide you with the information needed to evaluate your
concern?

1. a. The statement of financial position
2. b. The statement of comprehensive income
3. c. The statement of changes in equity
4. d. The statement of public accounting
Which financial statement would you refer to in order to determine how many
resources (assets) the company owned?

1. a. The statement of financial position
2. b. The statement of changes in equity
3. c. The statement of comprehensive income
4. d. The statement of public accounting

Businesses engage in which of the following three main activity
categories?

1. a. Financing, investing, operating
2. b. Cash, credit, non-cash
3. c. Financing, credit, operating


4. d. Financing, management, operating
Which one of the following is not one of the three business activities?

1. a. Financing
2. b. Operating
3. c. Investing
4. d. Measuring
Which financial statement would you analyse to determine its operating
performance for the past year?

1. a. The statement of financial position
2. b. The statement of changes in equity
3. c. The statement of comprehensive income
4. d. The statement of public accounting
Which one of the following financial statements shows the end of the year
cash balance for a business entity?

1. a. The statement of comprehensive income and the statement of changes in
equity
2. b. The statement of financial position and the statement of cash flows
3. c. The statement of changes in equity and the statement of cash flows
4. d. The statement of financial position and the statement of changes in equity

Which one of the following involves a liability for a business?

1. a. An obligation to pay for goods purchased on credit from a supplier


2. b. Inventories purchased for cash
3. c. Amounts invested by the owners
4. d. Shares sold to the general public
Which one of the following is a correct fundamental accounting equation?

1. a. Assets + Liabilities = Equity
2. b. Assets + Retained Earnings = Equity
3. c. Assets + Equity = Liabilities
4. d. Assets = Liabilities + Equity
How is the statement of financial position linked to the other financial
statements?

1. a. The amount of retained earnings is reported on the statement of financial
position as a liability
2. b. Retained earnings are added to total assets and reported on the statement
of financial position
3. c. Retained earnings are reported on the statement of financial position
4. d. There is no link between the statement of financial position and other
statements, as each contains different accounts and provides different
information
On 1 July 2012, Blackstone Company reported assets of $1 000 000 and
liabilities of $600 000. During 2013 assets decreased by $200 000 and equity
decreased $250 000. What is the amount of equity at 30 June 2013?

1. a. $650 000

2. b. $150 000
3. c. $400 000


4. d. $800 000
Which of the following best describes the term ‘retained earnings’?

1. a. The amount of total profits earned by a company since it began operations
2. b. The amount of claim that the owners have on the assets of the company
3. c. The future economic resources of a company
4. d. The accumulated profit of a company that has not been distributed to
owners in the form of dividends
Which one of the following items appears on a statement of financial
position?

1. a. Retained earnings
2. b. Sales revenue
3. c. Electricity expense
4. d. Dividends
Which of the following is an organisation that lends funds to a business entity
and expects repayment of the funds?

1. a. A partner
2. b. A shareholder
3. c. An owner
4. d. A creditor


Which of the following invests funds into a business and is considered an
owner?

1. a. Shareholders
2. b. Creditors
3. c. Bankers
4. d. Lenders
Which one of the following financial statements reports an entity's financial
position at a specific date?

1. a. The statement of financial position
2. b. The statement of changes in equity
3. c. The statement of comprehensive income
4. d. Both the statement of comprehensive income and the statement of
financial position
Bailout Corp. reported the following information for the year ended 30 June
2013. Revenues $2 500 000 Expenses 2 000 000 Retained earnings at 30 June
2012 100 000 Retained earnings at 30 June 2013 450 000 How much was paid
out in dividends in 2013?

1. a. $500 000
2. b. $150 000
3. c. $350 000
4. d. $250 000


Jetson Corp. reported the following information for the year ended 30 June
2013. Revenue $14 000 000 Expenses 11 500 000 Dividends 1 000 000
Retained earnings at 30 June 2013 1 750 000 What was the retained earnings
balance at 30 June, 2012?

1. a. $ 250 000

2. b. $2 500 000
3. c. $1 500 000
4. d. $ 350 000
On 1 July 2012, Money Company's balance in retained earnings was $10 000
000. At the end of the year, 30 June 2013, the balance in retained earnings
was $9 400 000. During 2013, the company earned profit of $440 000. How
much were dividends?

1. a. $1 040 000
2. b. $1 000 000
3. c. $ 600 000
4. d. $ 440 000
Refer to the following information for Tarp Corporation. Beginning retained
earnings $550 000 Ending retained earnings 700 000 Dividends paid 100 000
Revenue 525 000 What is the profit for Tarp Corp.?

1. a. $150 000
2. b. $250 000
3. c. $300 000
4. d. $350 000


Which of the following statements is true regarding economic events?

1. a. The signing of a service contract is an example of an external event that is
recorded in the accounting records
2. b. Every event which affects an entity can be identified from a source
document
3. c. All internal and external events must be measured with sufficient reliability.
4. d. External events involve exchanges between an entity and another entity

outside the company
Which of the following underlying assumptions of the conceptual framework
is the reason the dollar is used in the preparation of financial
statements?

1. a. Economic entity
2. b. Continuity
3. c. Time-period
4. d. Monetary unit
Which of the following is an assumption made in the preparation of financial
statements?

1. a. Financial statements are prepared for a specific entity that is distinct from
the entity's owners
2. b. The current market value is assumed to be less relevant than the original
cost paid
3. c. The preparation of financial statements for a specific time period assumes
that the statement of financial position covers a designated period of time
4. d. Financial statements are prepared assuming that inflation has a distinct
effect on the monetary unit


The time period assumption is necessary because:

1. a. inflation exists and causes confusing swings in financial statement
amounts over time
2. b. business owners and interested parties want periodic measurements of the
business’s success or failure
3. c. business owners and interested parties expect full disclosure of all
economic events throughout the entire time period

4. d. it is required by the federal government
The going concern assumption is concerned with:

1. a. the company's ability to continue operations long enough to carry out its
existing obligations
2. b. any information that is capable of influencing the decisions of anyone
using the financial statements
3. c. measuring ongoing business activities at their exchange price at the time
of the initial external transaction
4. d. offsetting management's natural optimism by providing a prudent
approach to uncertainty in financial statement items
‘Revenues’ are best described as:

1. a. a decrease in resources resulting from the sale of goods or the provision of
services
2. b. an increase in resources resulting from the sale of goods or the provision of
services
3. c. assets used or consumed in the sale of products or services
4. d. an increase in the financing activities


‘Expenses’ are best described as:

1. a. an increase in resources resulting from the sale of goods or the provision of
services
2. b. the amount of interest or claim that the owners have in the business
3. c. the future economic resources of a business entity
4. d. a decrease in resources resulting from the sale of goods or provision of
services
Which statement demonstrates the financial success or failure of the

company over that specific period of time?

1. a. The statement of cash flows
2. b. The statement of changes in equity
3. c. The statement of financial position
4. d. The statement of comprehensive income
The resources used to generate revenues during a period are called:

1. a. Profit
2. b. Expenses
3. c. Revenues
4. d. Dividends
Which of the following is the correct date format for the financial statement
heading?

1. a. Statement of financial position for the Year Ended 30 June 2013


2. b. Statement of comprehensive income at 30 June 2013
3. c. Statement of comprehensive income for the Year Ended 30 June 2013
4. d. Statement of changes in equity at 30 June 2013
Which of the following terms best describes a distribution of the profit of a
company to its owners?

1. a. Retained earnings
2. b. Dividends
3. c. Liquidation of assets
4. d. Monetary unit
IPOD Corporations' end of year statement of financial position consisted of
the following amounts. Cash $ 150 000 Accounts receivable $500 000

Property, plant and equipment 700 000 Long-term debt 400 000 Ordinary
share 1 000 000 Accounts payable 200 000 Retained earnings ? Inventory 350
000 What amount should IPOD report on its statement of financial position for
total assets?

1. a. $1 100 000
2. b. $1 550 000
3. c. $1 700 000
4. d. $1 900 000
IPOD Corporations' end of year statement of financial position consisted of
the following amounts. Cash $150 000 Accounts receivable $500 000 Property,
plant and equipment 700 000 Long-term debt 400 000 Ordinary share 1 000
000 Accounts payable 200 000 Retained earnings ? Inventory 350 000 What is
IPOD’s retained earnings balance at the end of the current year?

1. a. $100 000


2. b. $1 100 000
3. c. $1 600 000
4. d. $1 700 000
The Peck Company reported the following items on its financial statements
for the year ending 30 June 2013. Sales $1 560 000 Cost of sales $1 400 000
Selling, general and Other expense 30 000 administrative expense 40 000
Dividends 10 000 Income tax expense 25 000 The statement of
comprehensive income for Peck will report profit for the current year in the
amount of:

1. a. $ 45 000
2. b. $ 65 000

3. c. $ 85 000
4. d. $465 000
The Peck Company reported the following items on its financial statements
for the year ending 30 June 2013. Sales $1 560 000 Cost of sales $1 400 000
Selling, general and Other expense 30 000 administrative expense 40 000
Dividends 10 000 Income tax expense 25 000 How much will be reported as
retained earnings on its statement of financial position at 30 June 2013, if this
is the first year of operations?

1. a. $45 000
2. b. $55 000
3. c. $85 000
4. d. Not enough information is provided.


Ponzi Corporation reported the following information for the year ended 30
June 2013. Profit $100 000 Dividends 6 000 Retained earnings at 30 June 2013
$120 000 What was the balance of retained earnings at 1 July 2012?

1. a. $ 21 000
2. b. $ 26 000
3. c. $106 000
4. d. $214 000
Ponzi Corporation reported the following information for the year ended 30
June 2013. Profit $100 000 Dividends 6 000 Retained earnings at 30 June 2013
$120 000 What was the economic effect of the payment of Ponzi's
dividends?

1. a. The dividend reduced profit for 2013
2. b. The dividend should be added to profit if the company's accounting

equation is in balance
3. c. The dividend reduced total retained earnings
4. d. The dividends must be paid whenever Ponzi Corp. reports profit
You are a potential creditor and are concerned that a particular company you
are ready to give a loan to might have too much debt. Which financial
statement would provide you with the information needed to evaluate your
concern?

1. a. The statement of financial position
2. b. The statement of comprehensive income
3. c. The statement of changes in equity
4. d. The statement of public accounting


Which financial statement would you refer to in order to determine how many
resources (assets) the company owned?

1. a. The statement of financial position
2. b. The statement of changes in equity
3. c. The statement of comprehensive income
4. d. The statement of public accounting
Businesses engage in which of the following three main activity
categories?

1. a. Financing, investing, operating
2. b. Cash, credit, non-cash
3. c. Financing, credit, operating
4. d. Financing, management, operating
Which one of the following is not one of the three business activities?

1. a. Financing
2. b. Operating
3. c. Investing
4. d. Measuring
Which financial statement would you analyse to determine its operating
performance for the past year?

1. a. The statement of financial position
2. b. The statement of changes in equity


3. c. The statement of comprehensive income
4. d. The statement of public accounting
Which one of the following financial statements shows the end of the year
cash balance for a business entity?

1. a. The statement of comprehensive income and the statement of changes in
equity
2. b. The statement of financial position and the statement of cash flows
3. c. The statement of changes in equity and the statement of cash flows
4. d. The statement of financial position and the statement of changes in equity
Which one of the following involves a liability for a business?

1. a. An obligation to pay for goods purchased on credit from a supplier
2. b. Inventories purchased for cash
3. c. Amounts invested by the owners
4. d. Shares sold to the general public
Which one of the following is a correct fundamental accounting equation?

1. a. Assets + Liabilities = Equity

2. b. Assets + Retained Earnings = Equity
3. c. Assets + Equity = Liabilities
4. d. Assets = Liabilities + Equity


How is the statement of financial position linked to the other financial
statements?

1. a. The amount of retained earnings is reported on the statement of financial
position as a liability
2. b. Retained earnings are added to total assets and reported on the statement
of financial position
3. c. Retained earnings are reported on the statement of financial position
4. d. There is no link between the statement of financial position and other
statements, as each contains different accounts and provides different
information
On 1 July 2012, Blackstone Company reported assets of $1 000 000 and
liabilities of $600 000. During 2013 assets decreased by $200 000 and equity
decreased $250 000. What is the amount of equity at 30 June 2013?

1. a. $650 000
2. b. $150 000
3. c. $400 000
4. d. $800 000
Which of the following best describes the term ‘retained earnings’?

1. a. The amount of total profits earned by a company since it began operations
2. b. The amount of claim that the owners have on the assets of the company
3. c. The future economic resources of a company
4. d. The accumulated profit of a company that has not been distributed to

owners in the form of dividends


Which one of the following items appears on a statement of financial
position?

1. a. Retained earnings
2. b. Sales revenue
3. c. Electricity expense
4. d. Dividends
Which of the following is an organisation that lends funds to a business entity
and expects repayment of the funds?

1. a. A partner
2. b. A shareholder
3. c. An owner
4. d. A creditor
Which of the following invests funds into a business and is considered an
owner?

1. a. Shareholders
2. b. Creditors
3. c. Bankers
4. d. Lenders
Which one of the following financial statements reports an entity's financial
position at a specific date?

1. a. The statement of financial position

2. b. The statement of changes in equity
3. c. The statement of comprehensive income
4. d. Both the statement of comprehensive income and the statement of
financial position
Bailout Corp. reported the following information for the year ended 30 June
2013. Revenues $2 500 000 Expenses 2 000 000 Retained earnings at 30 June
2012 100 000 Retained earnings at 30 June 2013 450 000 How much was paid
out in dividends in 2013?

1. a. $500 000
2. b. $150 000
3. c. $350 000
4. d. $250 000
Jetson Corp. reported the following information for the year ended 30 June
2013. Revenue $14 000 000 Expenses 11 500 000 Dividends 1 000 000
Retained earnings at 30 June 2013 1 750 000 What was the retained earnings
balance at 30 June, 2012?

1. a. $ 250 000
2. b. $2 500 000
3. c. $1 500 000
4. d. $ 350 000
On 1 July 2012, Money Company's balance in retained earnings was $10 000
000. At the end of the year, 30 June 2013, the balance in retained earnings
was $9 400 000. During 2013, the company earned profit of $440 000. How
much were dividends?

1. a. $1 040 000

2. b. $1 000 000
3. c. $ 600 000
4. d. $ 440 000
Refer to the following information for Tarp Corporation. Beginning retained
earnings $550 000 Ending retained earnings 700 000 Dividends paid 100 000
Revenue 525 000 What is the profit for Tarp Corp.?

1. a. $150 000
2. b. $250 000
3. c. $300 000
4. d. $350 000