Question

UTS: Accounting For Business Decisions A
27 MC Questions:

1. If Accounts Payable had a normal balance of $50,000 on 31^st December (end of the month) and there were debit postings totalling of $17,000 and credit postings of $32,000 during December. What would the Accounts Payable balance on 1^st December have been?
   1. $35,000 credit
   2. $65,000 credit
   3. $28,000 debit
   4. $35,000 debit
   5. $65,000 debit

2. Residual value is:
   1. Equal to the acquisition cost of a tangible operational asset.
   2. Expected amount recovered when asset disposed.
   3. Equal to acquisition cost plus repairs expenditure.
   4. The current value of an asset as of the balance sheet date.
   5. The same as book value of an asset.

3. On 1 February 2012 unearned revenue was credited for the amount of $16,000, representing revenue for eight months for the period 1 February to 30 September 2012. On the last day of the financial period, 28 February, 2012, the company should:
   1. Debit fees revenue for $14,000
   2. Credit fees revenue for $2,000
   3. Credit fees revenue for $14,000
   4. Credit fees receivable for $14,000
   5. Credit unearned fees for $2,000

4. Residual value is:
   1. Equal to the acquisition cost of a tangible operational asset.
   2. Expected amount recovered when asset disposed.
   3. Equal to acquisition cost plus repairs expenditure.
   4. The current value of an asset as of the balance sheet date.
   5. The same as book value of an asset.

5. In a period of increasing inventory prices, which inventory method will result in the highest profit (lowest expense)?
   1. FIFO
   2. LIFO
   3. Weighted average cost
   4. Cannot be determined with the limited information given
   5. This depends on the level of inventory held at the end of the period

6. James’ Company's inventory was destroyed by flood. Its records show net sales of $315,000, beginning inventory of $65,000, net purchases of $120,000 excluding GST, and a gross profit rate of 60%. What is the estimated value of the inventory?

1.     $30,000
2.     $40,500
3.     $59,000
4.     $374,000
5.     $575,500

7. Priska Star, an entrepreneur, began the year with total assets of $120,000, and liabilities of $70,000. During the year, she earned revenue of $140,000 and paid expenses of $30,000. She also invested an additional $20,000 in the business and withdrew $60,000 for living expenses. How much is the equity of the firm at year-end a) $90,00, $120,000, $130,000, $160,000 $100,000

8. Which principle provided the basis for recordings assets at cost:
   1. comparability principle
   2. real principle
   3. relevance principle
   4. reliability principle
   5. cost principle

9. According to AASB 102 Inventory must be reported at its:

1. 1. Sale price
   2. Net realisable value
   3. Market Value
   4. Lower of Cost or Net Realisable Value
   5. Acquisition Cost

10. Which of the following statements is true?

1. 1. If a debit entry is made to an account in the general journal, the same account will receive a credit entry when the amount is posted to the general ledger.
   2. If all transactions are correctly posted to the general ledger, the sum of the accounts with debit balances should be equal to the sum of the accounts with credit balances
   3. Posting occurs when numbers in the general ledger accounts are transferred to the general journal
   4. If the sum of debit balances equals the sum of the credit balnaces, this proves that there were no mistakes made in the posting process
   5. All of the above are true

11. A set of interrelated activities which when taken together define how an organisation conducts its operations is called:
    1. Supply chain
    2. Business model
    3. Value chain
    4. Joint venture
    5. Operating cycle

12. Which of the following is a characteristic of management accounting?
    1. It is used primarily by external users
    2. It often lacks flexibility
    3. It is future-oriented
    4. It involves the use of general reports relating to all areas of business
    5. The information it provides is extremely precise

13. It is usual for a retail shop to recognise revenue when
    1. The goods have been delivered to the customers premises
    2. The customer becomes legally obliged to pay for the goods
    3. The goods for sale have arrived from the supplier
    4. At the date the invoice is mailed to the customer
    5. At the date the customer's payment is received

14. The adjusting entry for supplies involves:
    1. A debit to Supplies Expense
    2. A credit to Supplies On Hand
    3. A debit to Cash
    4. A credit to Accounts Payable
    5. It depends if supplies are originally recorded as an asset or expense

15. As a starting point in the budgeting process which of the following is usually carried out?
    1. Cash budgeting
    2. Sales forecasting
    3. Variance analysis
    4. Financial statement analysis
    5. Cost estimation

16. In any organisation budgeting is important because:
    1. It provides accountants with work.
    2. It allows the organisation to know the future.
    3. It aids in financial statement analysis.
    4. It helps in the recording of transactions.
    5. It aids management planning.

17. Which of the following statements regarding the statement of cash flows is true?
    1. The statement of cash flows analyses the changes in consecutive balance sheets in conjunction with the income statement
    2. The statement of cash flows is organised to present classifications for total cash inflows and cash outflows
    3. The statement of cash flows analyses only the changes in current assets and current liabilities
    4. The statement of cash flows is an optional financial statement
    5. All of the above

18. A sunk cost is:
    1. a cost that is historical and irrelevant to future decisions
    2. an outlay expected to be incurred in the future because of a decision
    3. a historical cost that may be relevant to future decisions
    4. relevant to a decision because it changes depending on the alternative selected
    5. a cost that can be hidden

19. Carin’s Corner is a cafe specialising in making Turkish coffee. Being new, it can also afford to purchase 60 cups for $2 each. The cups come with matching saucers for $0.40 per saucer. Beans are purchased in 1kg bags for $17 each, capable of providing enough coffee for 60 persons. It buys 10 bags of coffee beans. It serves 400 people in its first week selling coffee for $3.80 per cup. Based on the scenario above, how much does the ‘fixed costs’ amount to at the end of the first week?

1.              $120
2.             $140
3.              $144
4.             $ 314
5.             $ 1520

20. Which of the following items is NOT important to future decision making

1. 1. Net Cash Flows
   2. Sunk Costs
   3. Relevant Costs
   4. Fixed Costs
   5. Variable Costs

21. Andrea’s Mowers manufactures two products; a mower and a blower. The following data is available:

	Mower	Blower
Sale Price	$358		$173
Variable cost	$125		$ 65

The company can manufacture two mowers per machine hour or three blowers per machine hour. Andrea’s Mowers has production capacity of 2500 machine hours per month. The contribution margin per machine hour for the blower is:

1.      $65
2.      $108
3.      $324
4.      $233
5.      $466

22. The excess of expected sales over break-even sales is:

1. 1. contribution margin
   2. margin of safety
   3. net profit
   4. sales revenue
   5. unexpected sales

23. Matt Pty Ltd paid six months’ rent on June 1 and debited Prepaid Rent $18,000. To be able to prepare accurate financial statements on June 30, Matt Pty Ltd should make an adjusting entry that includes:

1. 1. credit Rent Expense $18,000
   2. debit Prepaid Rent $15,000
   3. debit Rent Expense $3,000
   4. credit Prepaid Rent $21,000
   5. nothing – there is no need to make an adjusting entry

24. If Net Sales Revenue is $760,000 Gross profits $340,000 and Operating expenses are $280,000. What is the Cost of Goods Sold and Net Profit or Loss?

1.     COGS $420,000 and Profit $140,000
2.     COGS $420,000 and Profit $60,000
3.     COGS $760,000 and Loss $20,000
4.     COGS $480,000 and Profit $280,000
5.     None of the above

25. Cost of Goods sold is $26,000. Beginning inventory is $12,000. Ending inventory is $12,000. If there is no freight-in and total purchases are $30,000, calculate purchase returns and allowances?

1.      $1,000
2.      $2,000
3.      $3,000
4.      $4,000
5.     Cannot be calculated because of the limited information given

26. Nguyen sells two types of products X and Y. Product X sells for $35 per unit and has a variable cost of $20. Product Y sells for $50 and has a variable cost of $30. Total fixed costs are $20,000. Nguyen typically sells three X’s for every one Y. The break-even point in units is:

1.        500
2.        1,231
3.    1,500
4.        2,000
5.        10,000

27. Amanda Wong is a forensic accountant at Sheng’s Chartered Accountants. One of Amanda’s main roles as a forensic accountant is:
    1. Advising clients on investment options.
    2. Interpreting financial statements prepared under different accounting standards.
    3. Responsibility for the financial archives of large corporations.
    4. Pursuing customers who have overdue accounts with a business.
    5. Examining financial records and identifying fraudulent transactions

Please answer the following MC's. Thank you!

Answer 1