Question

preparation of adjusting entries at the end of the financial year is required:

	a.	To ensure that cash inflows and cash outflows are accurately measured
	b.	To correct errors made during the year in the accounts
	c.	To provide for the correct recognition of income and expenses for the period
	d.	To achieve accurate reporting of all expenses paid at balance date
	e.	To eliminate the need for closing entries to be made in the accounts

preparing the financial statements of a business, which of the following statements concerning the Equity figure found in the Balance Sheet is correct?

	a.	It is decreased by any Drawings made by the owners
	b.	It is the amount owed by the entity to both outside and internal parties
	c.	It is the owners claim to the Liabilities of the entity after deducting Assets
	d.	It is fixed at the amount initially contributed when the business was formed
	e.	It is increased by a Net Loss during the financial period

preparing the accounts, at the end of the financial year management forgot to include an item of Dividend Income earned during the period. This will result in an:

	a.	Overstatement of liabilities and an understatement of net profit and equity
	b.	Understatement of assets and an overstatement of net profit and equity
	c.	Understatement of assets, net profit, and equity
	d.	Overstatement of assets, net profit, and equity
	e.	Overstatement of equity, and understatement of liabilities

Van Gough Pty Ltd borrows $222 000 cash from Ozzie Bank Ltd in 2010 and intends to pay it back in 2020.

How would the transaction have originally been recorded in the books of Van Gough Pty Ltd back in 2010, when the loan was taken out.

	a.	Debit - Accounts Payable $222 000; Credit - Cash at Bank $222 000
	b.	Debit - Cash at Bank $222 000; Credit - Accounts Receivable $222 000
	c.	Debit - Bank Loan $222 000; Credit - Cash at Bank $222 000
	d.	Debit - Bank Loan $222 000; Credit - Capital $222 000
	e.	Debit - Cash at Bank $222 000; Credit - Bank Loan $222 000

following is not an enhancing Qualitative Characteristic:

	a.	Verifiability
	b.	Materiality
	c.	Timeliness
	d.	Understandability
	e.	Comparability

following is not an important consideration in developing an accounting system:

	a.	Eliminating all fraud
	b.	Compatibility
	c.	Internal Control
	d.	Flexibility
	e.	Costs incurred and benefits provided

following statements concerning accrual accounting is correct?

	a.	Net profit is the excess of cash inflows from income over cash outflows for expenses
	b.	Expenses should be recognised in the period in which they are paid
	c.	For most businesses the cash approach gives a better measure of economic performance than does the accrual approach
	d.	Net profit is the excess of income earned over expenses incurred during the financial period
	e.	Revenue is recognised in the period in which it is received in cash

Closing the accounts refers to which of the following:

	a.	Writing off all accounts in the balance sheet so there are zero balances
	b.	Establishing a zero balance in the cash at bank account
	c.	Establishing zero balances in all ledger accounts
	d.	Transferring income and expense account balances to the profit and loss summary account, which is then closed off to the equity account
	e.	All of the above

publishers of ‘Guide to the Stock Market’, a magazine published monthly, received $396 in advance, including $36 GST on 1 March, 2019 for a whole one year’s subscription (12 issues) beginning with the March issue. On receipt of the subscription which entry will the company make in their books?

	a.	Debit - Cash $396; Credit - Subscriptions Revenue $396
	b.	Debit - Cash $396; Credit - GST Collections $36, Credit -Unearned Subscriptions (Liability) $360
	c.	Debit - Cash $396; Credit - GST Collections $36, Credit - Subscriptions Received in Advance (Asset) $360
	d.	Debit - Cash $360; Credit - Subscriptions Revenue $360
	e.	None of the above

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

Preparation of adjusting entries at the end of the financial year is required:

c. To provide for the correct recognition of income and expenses for the period

Preparing the financial statements of a business, which of the following statements concerning the Equity figure found in the Balance Sheet is correct?

a. It is decreased by any Drawings made by the owners

Preparing the accounts, at the end of the financial year management forgot to include an item of Dividend Income earned during the period. This will result in an:

c. Understatement of assets, net profit, and equity

Van Gough Pty Ltd borrows $222 000 cash from Ozzie Bank Ltd in 2010 and intends to pay it back in 2020. How would the transaction have originally been recorded in the books of Van Gough Pty Ltd back in 2010, when the loan was taken out.

e. Debit - Cash at Bank $222 000; Credit - Bank Loan $222 000

Following is not an enhancing Qualitative Characteristic:

a. Verifiability

Following is not an important consideration in developing an accounting system:

e. Costs incurred and benefits provided

Following statements concerning accrual accounting is correct?

d. Net profit is the excess of income earned over expenses incurred during the financial period

Closing the accounts refers to which of the following:

d. Transferring income and expense account balances to the profit and loss summary account, which is then closed off to the equity account

Publishers of ‘Guide to the Stock Market’, a magazine published monthly, received $396 in advance, including $36 GST on 1 March, 2019 for a whole one year’s subscription (12 issues) beginning with the March issue. On receipt of the subscription which entry will the company make in their books?

b. Debit - Cash $396; Credit - GST Collections $36, Credit -Unearned Subscriptions (Liability) $360