Question

chose the correct answer

6-A company gives 30 days credit on sales and has an (age of debt) of 107 days

A)this is good –it has a large debtors balance

B)it takes more than three months-on average –to collect its debts

C)it taked 30 days to collect its debts

D)it takes 107 days to pay its debts.

7-A company which turns its stocks of finished goods over 10timess per annum:

A)Has too much stock

B)has more than a month's stock on hand –on average

C)hasn't got enough stock

D)has 10times as much stock as needs

8- I must pay yearly insurance before the start of the year it applies to but I always pay it as late as I can. If I pay 600$ in December what is my insurance pre-payment at the end of January?

9- My year end balance sheet shows fixed assets of 5000$ and total liabilities of 1000$. My total reserves (owner's equity ) were 4500$ at the beginning of the year and I had made 2000$ profit by the year end. What are my current assets at the year end?

10- accountants say that a business whose books balance is one that is breaking even (making neither a profit nor a loss)

A)true

B)false

11- debits are a bad thing to have in your accounts?

A)true

B)false

12-the going concern concept allows you to put a higher value on manufacturing stock than you could get for it if you had to sell it on the open market

A)true

B)false

13-the double entry formlism does not distinguish between a receipt from a customer(as a result of a sale)and a receipt from a lender (whom you have to repay)

A)true

B)false

14)I have sold 100$ worth of goods this week but bought no stock for sale. This means I have a profit of 100$

A)true

B)false

Answer 1

6-A company gives 30 days credit on sales and has an (age of debt) of 107 days

B)it takes more than three months-on average –to collect its debts

7A company which turns its stocks of finished goods over 10timess per annum:.

B)has more than a month's stock on hand –on average

8- I must pay yearly insurance before the start of the year it applies to but I always pay it as late as I can. If I pay 600$ in December what is my insurance pre-payment at the end of January?

Solution: No insurance pre-payment at the end of January because insurane premium payable amount for full year paid at the end of Month ( December).

9- My year end balance sheet shows fixed assets of 5000$ and total liabilities of 1000$. My total reserves (owner's equity ) were 4500$ at the beginning of the year and I had made 2000$ profit by the year end. What are my current assets at the year end?

Solution: Total Liability and Equity : ( Total Begining of the year reserve+ Profit + Total Liabilities)

: ( 4500+2000+1000)= $7500

Fixed Asset: $5000

Current Asset= Total Liability& Equity- Fixed Asset

: ( $7500-$5000)= $2500