1. In recording accounting transactions, evidence that a transaction has taken place is obtained from: a. Source documents. b. The trial balance. c. The ledger. d. The journal. 2. Which of the following users would not be considered an internal user of accounting data for a company? a. A supplier of the company. b. The chief executive officer of the company. c. The financial director of the company. d. A salesperson employed by the company. 3. An income statement: a. Summarises changes in retained earnings for a specific period of time. b. Reports the changes in assets, liabilities, and equity for a specific period of time. c. Reports the assets, liabilities, and equity at a specific date. d. Presents the revenues and expenses for a specific period of time. 4. Trevor Ltd had total assets of $160,000 and total liabilities of $140,000 at the beginning of the year. During the year the business recorded $200,000 in revenues, $110,000 in expenses, and dividends of $20,000 were distributed. Equity at the end of the year is: a. $90,000. b. $20,000. c. $9,000. d. $280,000. 5. A list of accounts and their balances at a given time is called a: a. Journal. b. Posting. c. Trial balance. d. Profit and loss statement. 6. The cost principle requires assets to be initially recorded at: a. Market value. b. The amount paid for them. c. Selling price. d. Liquidation value.7. Merlyn Ltd had these assets, liabilities and equity. What is the balance amount of the trial balance? $ Cash in hand 50, 000 Bank overdraft 340, 000 Trade Payables 120, 000 Inventory 83,500 Trade Receivable 170, 200 Office furniture 509,400 Bank Loan 303, 100 Premises 670, 000 Share Capital 720,000 a. $1,483,100 b. $1,760,200 c. $440,050 d. $150,600 8. The CORRECT accounting equation is: a. Assets + Liabilities = Capital + Drawings b. Assets - Liabilities = Capital - Drawings - Profits c. Assets + Capital - Drawings - Profits = Liabilities d. Assets - Liabilities = Capital - Drawings + Profits 9. Solvency measures the ability of a business to: a. Repay its long-term debts at maturity and interest as it becomes due. b. Meet its short-term obligations. c. Pay its obligations that will fall due within the operating cycle. d. Turn its inventory into cash. 10.The cash payment of a liability: a. Decreases assets and equity. b. Increases assets and decreases liabilities. c. Decreases assets and increases liabilities. d. Decreases assets and liabilities. 11.A business that receives cash in advance of performing a service will: a. Debit cash and credit prepaid expenses. b. Debit unearned revenue and credit accounts payable. c. Debit cash and credit unearned revenue. d. Debit cash and credit accounts receivable.12.The journal entry to record a credit sale is: a. DR Cash Account CR Inventory Account b. DR Cash Account CR Service revenue Account c. DR Accounts receivable Account CR Cost of sales Account d. DR Accounts receivable Account CR Sales Account 13.The going concern principle assumes that the business: a. Will be liquidated in the near future. b. Will be purchased by another business. c. Is in a growth industry. d. Will remain in operation for the foreseeable future. 14.The accounting period concept states that: a. The business will remain in operation for the foreseeable future. b. The life of a business can be divided into artificial time periods. c. Every business entity can be separately identified and accounted for. d. Only those events that can be expressed in money may be included in the accounting records. 15.Additions, enhancements and improvements: a. Occur frequently during the ownership of a property, plant and equipment. b. Should be capitalised and depreciated over the remaining useful life of the related property, plant and equipment asset. c. Normally involve immaterial expenditures. d. Typically only benefit the current accounting period. 16.Lizza Ltd purchased plant equipment on January 1, 2020, for $500,000. It is estimated that the plant will have a $50,000 residual value at the end of its 8-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at 31 December 2020, is: a. $56,250. b. $62,500. c. $443,750. d. $62,25017.Profit margin is calculated by dividing: a. Sales by cost of sales. b. Gross profit by net sales. c. Profit by equity. d. Profit by net sales. 18.Suzzie Limited has cash of $10,000, cash at bank totaling $30,000, trade receivables amounting to $20,000, and current liabilities of $50,000. The quick ratio for this company is: a. 1.00 : 1. b. 0.78 : 1. c. 1.20 : 1. d. 1.88 : 1. 19.Retained earnings represents: a. The shareholders' claim on total assets. b. The amount of cash held by the business. c. The total of revenue for the period. d. The amount of profit held in the company for future use. 20.Terry paid advertising expense of $121,000 by cheque. How would Terry record the expenses that have been paid? a. Bank Account $121,000 Advertising Expenses Account $121,000 b. Accounts payable Account $121,000 Bank Account $121,000 c. Advertising Expenses Account $121,000 Accounts payable $121,000 d. Advertising Expenses Account $121,000 Bank Account $121,000The following information should be used to answer questions 21 and 22. The following information pertains to Dolly Ltd operating activities for 2020. The company sells boxes and sold 50,000 units in 2020. Purchases $890,000 Selling, Distribution and Administrative Expenses 240,000 Opening Inventory 54,000 Closing Inventory 44,000 Sales Revenue 1,600,000 21.What is the gross profit percentage? a. 43.75% b. 34.75% c. 56.25% d. 28.75% 22.What is the net profit margin percentage? a. 43.75% b. 34.75% c. 56.25% d. 28.75% 23.The accounting records of Nelly Ltd revealed the following costs: direct materials used, $50,000; direct labor, $42,000; manufacturing overhead, $75,000; and selling and administrative expenses, $22,000. Nelly's product costs total: a. $167,000. b. $189,000. c. $92,000. d. $114,000. 24.The cash budget reflects: a. All revenues and all expenses for a period. b. Expected cash receipts and cash disbursements from all sources. c. All the items that appear on a budgeted income statement. d. All the items that appear on a budgeted balance sheet.25.Ace Ltd's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: January $ 80,000 February $ 48,000 March $120,000 The cash inflow in the month of March is expected to be: a. $90,400. b. $68,400. c. $72,000. d. $86,400. 26.A variable cost is a cost that: a. Varies per unit at every level of activity. b. Occurs at various times during the year. c. Varies in total in proportion to changes in the level of activity. d. May not be incurred, depending on management's discretion. 27.Under absorption costing, all of the following are product costs except: a. Fixed overhead. b. Variable overhead. c. Variable manufacturing costs. d. Selling and administrative expenses. 28.The level of activity at which total revenues equal total costs is the: a. Variable point. b. Fixed point. c. Semi-variable point. d. Break-even point. 29.A manufacturing process requires small amounts of glue. The glue used in the process is classified as: a. A prime cost. b. An indirect material. c. A direct material. d. Miscellaneous expense. 30.Budgeting is usually most closely associated with which management function? a. Planning b. Directing c. Motivating d. ControllingThe following information should be used to answer questions 31 to 34. Lynette Ltd provides the following information: Selling price per unit: $60 Variable cost per unit: $36 Fixed costs per month: $384,000 31.How much is the contribution margin per unit? a. $24.00 b. $36.00 c. $96.00 d. $60.00 32.How much is the contribution margin ratio? a. 0.56 b. 0.65 c. 0.40 d. 0.04 33.What is the breakeven point in terms of units sold? a. 10,667 b. 6,400 c. 4,600 d. 16,000 34.What is the breakeven point in terms of sales revenues? a. $690,000 b. $960,000 c. $16,000 d. $640,000 35.A flexible budget is: a. A budget that is constantly being changed. b. A budget that comprises variable costs only. c. A budget that is adjusted to reflect different costs at different activity levels. d. A budget that will be changed at the end of every month in order to reflect the actual costs of a department. 36.Which of the following will result in an favorable direct labour price variance? a. When actual direct labour hours exceed standard direct labour hours b. When actual direct labour hours are less than standard direct labour hours c. When the actual direct labour rate exceeds the standard direct labour rate d. When the actual direct labour rate is less than the standard direct labour rate37.Capital budgeting applies to which of the following? a. Budgeting for yearly operational expenses b. Making decisions about sales budgets for the coming year c. Deciding among various long-term investment decisions d. Making decisions about the financing of operations The following information relates to questions 38 to 40. Pinky Ltd is considering purchasing new equipment costing $1,000,000. Pinky's management has estimated that the equipment will generate cash flows as follows: Year 1 $280,000 Year 2 $300,000 Year 3 $420,000 Year 4 $520,000 Year 5 $590,000 Using the discount factors in the table provided below. Please round all calculations to the nearest whole dollar. Present Value of $1 5% 6% 7% 8% 9% 10% 1 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 2 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 3 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 4 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 5 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 38.What is the payback period? a. 4 years b. 3.2 years c. 3.5 years d. 3 years 39.Calculate the present value of the net cash inflows above, using a discount rate of 8%. a. $1,633,592 b. $1,363,592 c. $633,592 d. $2,633,59240.Calculate the net present value of the investment project (including initial investment plus the NPV of the net cash inflows above) using a discount rate of 8%. a. $2,633,592 b. $0 c. $1,633,592 d. $633,592

25. Ace Ltd's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were: January $ 80,000 February $ 48,000 March $120,000 The cash inflow in the month of March is expected to be: a. $90,400. b. $68,400. c. $72,000. d. $86,400. 26. A variable cost is a cost that: a. Varies per unit at every level of activity. b. Occurs at various times during the year. c. Varies in total in proportion to changes in the level of activity. d. May not be incurred, depending on management's discretion. 27. Under absorption costing, all of the following are product costs except: a. Fixed overhead. b. Variable overhead. c. Variable manufacturing costs. d. Selling and administrative expenses. 28. The level of activity at which total revenues equal total costs is the: a. Variable point. b. Fixed point c. Semi-variable point. d. Break-even point. 29. A manufacturing process requires small amounts of glue. The glue used in the process is classified as: a. A prime cost. b. An indirect material. C. A direct material. d. Miscellaneous expense. 30. Budgeting is usually most closely associated with which management function? a. Planning b. Directing c. Motivating d. Controlling37. Capital budgeting applies to which of the following? a. Budgeting for yearly operational expenses Making decisions about sales budgets for the coming year C. Deciding among various long-term investment decisions d. Making decisions about the financing of operations The following information relates to questions 38 to 40. Pinky Ltd is considering purchasing new equipment costing $1,000,000. Pinky's management has estimated that the equipment will generate cash flows as follows: Year 1 $280,000 Year 2 $300,000 Year 3 $420,000 Year 4 $520,000 Year 5 $590,000 Using the discount factors in the table provided below. Please round all calculations to the nearest whole dollar. Present Value of $1 5% 6% 7% 18% 9% 10% 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 38. What is the payback period? a. 4 years b. 3.2 years c. 3.5 years d. 3 years 39. Calculate the present value of the net cash inflows above, using a discount rate of 8%. a. $1,633,592 b. $1,363,592 C. $633,592 d. $2,633,59212. The journal entry to record a credit sale is: a. DR Cash Account CR Inventory Account b. DR Cash Account CR Service revenue Account c. DR Accounts receivable Account CR Cost of sales Account d. DR Accounts receivable Account CR Sales Account 13. The going concern principle assumes that the business: a. Will be liquidated in the near future. b. Will be purchased by another business. c. Is in a growth industry. d. Will remain in operation for the foreseeable future. 14. The accounting period concept states that: a. The business will remain in operation for the foreseeable future. b. The life of a business can be divided into artificial time periods. c. Every business entity can be separately identified and accounted for. d. Only those events that can be expressed in money may be included in the accounting records. 15. Additions, enhancements and improvements: a. Occur frequently during the ownership of a property, plant and equipment. b. Should be capitalised and depreciated over the remaining useful life of the related property, plant and equipment asset. c. Normally involve immaterial expenditures. d. Typically only benefit the current accounting period. 16. Lizza Ltd purchased plant equipment on January 1, 2020, for $500,000. It is estimated that the plant will have a $50,000 residual value at the end of its 8-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at 31 December 2020, is: a. $56,250. b. $62,500. C. $443,750. d. $62,250.The following information should be used to answer questions 21 and 22. The following information pertains to Dolly Ltd operating activities for 2020. The company sells boxes and sold 50,000 units in 2020. Purchases $890,000 Selling, Distribution and Administrative Expenses 240,000 Opening Inventory 54,000 Closing Inventory 44,000 Sales Revenue 1,600,000 21. What is the gross profit percentage? a. 43.75% b. 34.75% C. 56.25% d. 28.75% 22. What is the net profit margin percentage? a. 43.75% b. 34.75% c. 56.25% d. 28.75% 23. The accounting records of Nelly Lid revealed the following costs: direct materials used, $50,000; direct labor, $42,000; manufacturing overhead, $75,000; and selling and administrative expenses, $22,000. Nelly's product costs total: a. $167,000. b. $189,000. C. $92,000. d. $114,000. 24. The cash budget reflects: a. All revenues and all expenses for a period. b. Expected cash receipts and cash disbursements from all sources. C. All the items that appear on a budgeted income statement. d. All the items that appear on a budgeted balance sheet.40. Calculate the net present value of the investment project (including initial investment plus the NPV of the net cash inflows above) using a discount rate of 8%. a. $2,633,592 b. $0 C. $1,633,592 d. $633,59217. Profit margin is calculated by dividing: a. Sales by cost of sales. b. Gross profit by net sales. C. Profit by equity. d. Profit by net sales. 18. Suzzie Limited has cash of $10,000, cash at bank totaling $30,000, trade receivables amounting to $20,000, and current liabilities of $50,000. The quick ratio for this company is: a. 1.00 : 1. b. 0.78 : 1. c. 1.20 : 1. d. 1.88 : 1. 19. Retained earnings represents: a. The shareholders' claim on total assets. b. The amount of cash held by the business. c. The total of revenue for the period. d. The amount of profit held in the company for future use. 20. Terry paid advertising expense of $121,000 by cheque. How would Terry record the expenses that have been paid? a. Bank Account $121,000 Advertising Expenses Account $121,000 b. Accounts payable Account $121,000 Bank Account $121,000 C. Advertising Expenses Account $121,000 Accounts payable $121,000 d. Advertising Expenses Account $121,000 Bank Account $121,000The following information should be used to answer questions 31 to 34. Lynette Ltd provides the following information: Selling price per unit: $60 Variable cost per unit: $36 Fixed costs per month: $384,000 31. How much is the contribution margin per unit? $24.00 b. $36.00 $96.00 $60.00 32. How much is the contribution margin ratio? a. 0.56 b. 0.65 C. 0.40 0.04 33. What is the breakeven point in terms of units sold? a. 10,667 b. 6,400 4,600 16,000 34. What is the breakeven point in terms of sales revenues? a. $690,000 b. $960,000 C. $16,000 $640,000 35. A flexible budget is: a. A budget that is constantly being changed. b. A budget that comprises variable costs only. C. A budget that is adjusted to reflect different costs at different activity levels. d. A budget that will be changed at the end of every month in order to reflect the actual costs of a department. 36. Which of the following will result in an favorable direct labour price variance? a. When actual direct labour hours exceed standard direct labour hours b. When actual direct labour hours are less than standard direct labour hours C. d. When the actual direct labour rate exceeds the standard direct labour rate When the actual direct labour rate is less than the standard direct labour rate1. In recording accounting transactions, evidence that a transaction has taken place is obtained from: a. Source documents. b. The trial balance. c. The ledger. d. The journal. 2. Which of the following users would not be considered an internal user of accounting data for a company? a. A supplier of the company. b. The chief executive officer of the company. c. The financial director of the company. d. A salesperson employed by the company. 3. An income statement: a. Summarises changes in retained earnings for a specific period of time. b. Reports the changes in assets, liabilities, and equity for a specific period of time. c. Reports the assets, liabilities, and equity at a specific date. d. Presents the revenues and expenses for a specific period of time. 4. Trevor Ltd had total assets of $160,000 and total liabilities of $140,000 at the beginning of the year. During the year the business recorded $200,000 in revenues, $110,000 in expenses, and dividends of $20,000 were distributed. Equity at the end of the year is: a. $90,000. b. $20,000. c. $9,000. d. $280,000. 5. A list of accounts and their balances at a given time is called a: a. Journal. b. Posting. C. Trial balance. d. Profit and loss statement. 6. The cost principle requires assets to be initially recorded at: a. Market value. b. The amount paid for them. c. Selling price. d. Liquidation value.7. Merlyn Ltd had these assets, liabilities and equity. What is the balance amount of the trial balance? Cash in hand 50, 000 Bank overdraft 340, 000 Trade Payables 120, 000 Inventory 83,500 Trade Receivable 170, 200 Office fumiture 509,400 Bank Loan 303, 100 Premises 670, 000 Share Capital 720,000 a. $1,483,100 b. $1,760,200 c. $440,050 d. $150,600 8. The CORRECT accounting equation is: a. Assets + Liabilities = Capital + Drawings b. Assets - Liabilities = Capital - Drawings - Profits C. Assets + Capital - Drawings - Profits = Liabilities d. Assets - Liabilities = Capital - Drawings + Profits 9. Solvency measures the ability of a business to: a. Repay its long-term debts at maturity and interest as it becomes due. b. Meet its short-term obligations. c. Pay its obligations that will fall due within the operating cycle. d. Turn its inventory into cash. 10. The cash payment of a liability: a. Decreases assets and equity. b. Increases assets and decreases liabilities. c. Decreases assets and increases liabilities. d. Decreases assets and liabilities. 11. A business that receives cash in advance of performing a service will: a. Debit cash and credit prepaid expenses. b. Debit unearned revenue and credit accounts payable. c. Debit cash and credit unearned revenue. d. Debit cash and credit accounts receivable