Question 1

A company's first transaction in 2012 was to pay $7500 cash for wages earned and recognised as an expense in 2011.Which of the following changes took place as a consequence of that transaction?

Accepted Answer

A)   Revenue decreased by $7500.
B)   Liabilities decreased by $7500.
C)   Profit decreased by $7500.
D)   Assets increased by $7500.E) All of the above
F) A) and D)

Question 2

Consider the following information. 
(i) $20 000 of accounts payable was paid.
(ii) $100 000 from accounts receivable was received.
(iii) Inventory of $200 000 was purchased on credit.
(iv) Credit sales of $700 000 (cost of goods sold was $450 000) were made.
(v) $10 000 of prepayments expired during the month.
Assets increased during the period by:

Accepted Answer

A)   $220 000
B)   $250 000
C)   $420 000
D)   $430 000.E) A) and B)
F) None of the above

Question 3

After which of the following transactions will the accounting equation NOT balance?

Accepted Answer

A)   theft of inventory by an employee
B)   receipt by the business of a gift from a grateful customer
C)   discovery of a reef of gold on land owned by the business
D)   payment to a supplier recorded as an increase in an asset and a decrease from another asset.E) C) and D)
F) B) and D)

Question 4

Which of the following statements is NOT true?

Accepted Answer

A)   If the total assets owned by a business total $110 000 and owners' equity totals $30 000,liabilities total $80 000.
B)   If total assets decreased by $30 000 during a specific period and owners' equity decreased by $35 000 during the same period,the period's change in total liabilities was a $65 000 increase.
C)   If total assets decreased by $50 000 during a specific period and owners' equity decreased by $40 000 during the same period,the period's change in total liabilities was a $10 000 decrease.
D)   If total assets increased by $75 000 during a specific period and liabilities decreased by $10 000 during the same period,the period's change in total owners' equity was an $85 000 increase.E) A) and B)
F) A) and C)

Question 5

MNO Ltd sells goods on credit for $100 000 (cost price $60 000) .Which of the following is the correct journal entry to record this transaction?

Accepted Answer

A)   DR Cash $100 000,CR Sales revenue $100 000
B)   DR Accounts receivable $100 000,DR COGS $60 000 CR Inventory $60 000,CR Sales revenue $100 000
C)   DR Accounts receivable $100 000,CR Sales revenue $40 000,CR COGS $60 000
D)   DR COGS $40 000,CR Inventory $60 000,CR Sales revenue $100 000.E) B) and D)
F) None of the above

Question 6

Consider the following information. 
(i) $20 000 of accounts payable was paid.
(ii) $100 000 from accounts receivable was received.
(iii) Inventory of $200 000 was purchased on credit.
(iv) Credit sales of $700 000 (cost of goods sold was $450 000) were made.
(v) $10 000 of prepayments expired during the month.
What is the profit for the period?

Accepted Answer

A)   $120 000
B)   $240 000
C)   $250 000
D)   none of the above.E) B) and C)
F) A) and C)

Question 7

A business sells inventory for $220,receiving $100 cash as a deposit with the customer owing the remainder.The journal entry will include:
A) a debit to accounts receivable of $120
B) a debit to inventory of $120
C) a credit to accounts receivable of $100
D) a credit to inventory for $220.

Accepted Answer

The answer of A business sells inventory for $220,receiving $100...

Question 8

A bill from a consultant was received for work done in May 2012.There was no previous record of the transaction.It will be paid in July 2012.In May 2012:

Accepted Answer

A)   an asset decreased and an expense increased
B)   an asset decreased and a liability decreased
C)   a liability increased and an expense increased
D)   no entry is required until the next accounting period.E) None of the above
F) C) and D)

Question 9

Inventory purchased on credit was returned to the supplier.

Accepted Answer

A)   an asset increased and another asset decreased
B)   an asset decreased and an expense increased
C)   an asset decreased and a liability decreased
D)   a liability increased and an expense increasedE) B) and C)
F) A) and B)

Question 10

A debit balance in which of the following accounts would indicate a likely error?

Accepted Answer

A)   salaries expense
B)   accounts payable
C)   prepayments
D)   equipment.E) B) and C)
F) B) and D)

Question 11

Assets at the end of the period are $120 000 and liabilities have increased by $36 000.Dividends of $12 000 were declared and paid,and no shares were issued during the period.The net profit or loss during the period is:

Accepted Answer

A)   $96 000 net profit
B)   $72 000 net profit
C)   $12 000 net loss
D)   not determinable from the above information.E) None of the above
F) A) and B)

Question 12

Inventory was purchased for cash.

Accepted Answer

A)   An asset increased and another asset decreased.
B)   An asset decreased and an expense increased.
C)   An asset decreased and a liability decreased.
D)   A liability increased and an expense increased.E) None of the above
F) B) and D)

Question 13

Identify the journal entry required to correctly record each of the following transactions.
-Purchased goods on credit.
A. DR Inventory  $\quad $ CR Accounts payable

B. DR Inventory  $\quad $ CR Accounts receivable

C. DR Accounts  $\quad $ Receivable $\mathrm { CR }$ inventory

D. DR Purchases CR Cash at bank

Accepted Answer

The answer of Identify the journal entry required to correctly...

Question 14

During the year,the liabilities of a company decreased by $32 034 and the assets decreased by $16 035.Consequently the owners' equity must have:

Accepted Answer

A)   decreased by $15 999
B)   increased by $15 999
C)   increased by $48 069
D)   decreased by $48 069.E) A) and C)
F) B) and D)

Question 15

Which of the following items would decrease profit for the year?

Accepted Answer

A)   purchase of equipment for cash
B)   payment of a dividend
C)   declaration of a dividend
D)   none of the above.E) B) and D)
F) A) and D)

Question 16

If a year's depreciation is charged on a piece of equipment,the effect on the accounting equation is that:

Accepted Answer

A)   an asset increases and another asset decreases
B)   an asset decreases and owners' equity decreases
C)   an asset decreases and a liability decreases
D)   a liability increases and owners' equity decreases.E) B) and D)
F) B) and C)

Question 17

A customer was invoiced for services rendered.

Accepted Answer

A)   A liability increased and another liability decreased.
B)   An asset decreased and a liability decreased.
C)   An asset increased and revenue increased.
D)   An asset increased and another asset decreased.E) All of the above
F) A) and D)

Question 18

Equipment is purchased on credit,when:

Accepted Answer

A)   one asset increases and another asset decreases
B)   an asset increases and a liability increases
C)   an asset decreases and a liability decreases
D)   an asset decreases and owners' equity decreases.E) A) and B)
F) A) and C)

Question 19

Use the information given below to answer the following questions:
Retained profits of Livermore Pty Ltd at 1 July 2011 were $5500. The accounting records for year ended 30 June 2012 showed the following information:
 $ Revenues earned 35500 Cash collected from customers 5700 Expenses incurred 32250 Expenses paid in cash 29620 Dividends declared and paid 1500\begin{array} { l r } &\$\	ext { Revenues earned } & 35500 \	ext { Cash collected from customers } & 5700 \	ext { Expenses incurred } & 32250 \	ext { Expenses paid in cash } & 29620 \	ext { Dividends declared and paid } & 1500\end{array} Revenues earned  Cash collected from customers  Expenses incurred  Expenses paid in cash  Dividends declared and paid ​$35500570032250296201500​  
-A customer provides a deposit of $500 000 near year-end.The product will not be delivered until next year.This transaction will:

Accepted Answer

A)   increase net profit,total assets and cash
B)   increase net profit and cash but not total assets
C)   increase total assets and cash but not net profit
D)   increase cash but not increase net profit or total assets. E) B) and C)
F) A) and B)

Question 20

The owner contributed cash as additional capital,when:

Accepted Answer

A)   one asset increased and another asset decreased
B)   an asset increased and owners' equity increased
C)   a liability increased and owners' equity decreased
D)   a liability decreased and owners' equity increased.E) B) and C)
F) C) and D)

Exam 3: The Double-Entry System

MNO Ltd sells goods on credit for $100 000 (cost price $60 000) .Which of the following is the correct journal entry to record this transaction?

Correct Answer
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A company's first transaction in 2012 was to pay $7500 cash for wages earned and recognised as an expense in 2011.Which of the following changes took place as a consequence of that transaction?

Correct Answer
verified

Inventory was purchased for cash.

Correct Answer
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After which of the following transactions will the accounting equation NOT balance?

Correct Answer
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Which of the following statements is NOT true?

Correct Answer
verified

If a year's depreciation is charged on a piece of equipment,the effect on the accounting equation is that:

Correct Answer
verified

A business sells inventory for $220,receiving $100 cash as a deposit with the customer owing the remainder.The journal entry will include: A) a debit to accounts receivable of $120 B) a debit to inventory of $120 C) a credit to accounts receivable of $100 D) a credit to inventory for $220.

Correct Answer
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Equipment is purchased on credit,when:

Correct Answer
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Correct Answer
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Correct Answer
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Assets at the end of the period are $120 000 and liabilities have increased by $36 000.Dividends of $12 000 were declared and paid,and no shares were issued during the period.The net profit or loss during the period is:

Correct Answer
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The owner contributed cash as additional capital,when:

Correct Answer
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A debit balance in which of the following accounts would indicate a likely error?

Correct Answer
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Correct Answer
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During the year,the liabilities of a company decreased by $32 034 and the assets decreased by $16 035.Consequently the owners' equity must have:

Correct Answer
verified

A bill from a consultant was received for work done in May 2012.There was no previous record of the transaction.It will be paid in July 2012.In May 2012:

Correct Answer
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A customer was invoiced for services rendered.

Correct Answer
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Inventory purchased on credit was returned to the supplier.

Correct Answer
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Correct Answer
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Which of the following items would decrease profit for the year?

Correct Answer
verified

Exam 3: The Double-Entry System

MNO Ltd sells goods on credit for $100 000 (cost price $60 000) .Which of the following is the correct journal entry to record this transaction?

Correct AnswerverifiedShow Answer

A company's first transaction in 2012 was to pay $7500 cash for wages earned and recognised as an expense in 2011.Which of the following changes took place as a consequence of that transaction?

Correct AnswerverifiedShow Answer

Inventory was purchased for cash.

Correct AnswerverifiedShow Answer

After which of the following transactions will the accounting equation NOT balance?

Correct AnswerverifiedShow Answer

Which of the following statements is NOT true?

Correct AnswerverifiedShow Answer

If a year's depreciation is charged on a piece of equipment,the effect on the accounting equation is that:

Correct AnswerverifiedShow Answer

A business sells inventory for $220,receiving $100 cash as a deposit with the customer owing the remainder.The journal entry will include: A) a debit to accounts receivable of $120 B) a debit to inventory of $120 C) a credit to accounts receivable of $100 D) a credit to inventory for $220.

Correct AnswerverifiedShow Answer

Equipment is purchased on credit,when:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assets at the end of the period are $120 000 and liabilities have increased by $36 000.Dividends of $12 000 were declared and paid,and no shares were issued during the period.The net profit or loss during the period is:

Correct AnswerverifiedShow Answer

The owner contributed cash as additional capital,when:

Correct AnswerverifiedShow Answer

A debit balance in which of the following accounts would indicate a likely error?

Correct AnswerverifiedShow Answer

Identify the journal entry required to correctly record each of the following transactions. -Purchased goods on credit. A. DR Inventory \quad CR Accounts payable B. DR Inventory \quad CR Accounts receivable C. DR Accounts \quad Receivable CR\mathrm { CR }CR inventory D. DR Purchases CR Cash at bank

Correct AnswerverifiedShow Answer

During the year,the liabilities of a company decreased by $32 034 and the assets decreased by $16 035.Consequently the owners' equity must have:

Correct AnswerverifiedShow Answer

A bill from a consultant was received for work done in May 2012.There was no previous record of the transaction.It will be paid in July 2012.In May 2012:

Correct AnswerverifiedShow Answer

A customer was invoiced for services rendered.

Correct AnswerverifiedShow Answer

Inventory purchased on credit was returned to the supplier.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following items would decrease profit for the year?

Correct AnswerverifiedShow Answer

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