1. Which of the following is not a financial instrument? a. A perpetual debt instrument, meaning no maturity date that pays interest annually extending into the indefinite future. b. Gold bullion deposited in bank c. Cash deposited in bank d.Ordinary share capital issued by the entity. . 2. If purchases were made under terms of (a) trade discount of 20%, (b) credit terms of 2/10, n/30, and (c) shipping terms of FOB shipping point, freight collect, which of the following sentences are FALSE? a. If the entity paid on the tenth day, it would only pay 98% of the invoice price. b. The entity will pay for its freight-in on the purchase. c. The invoice price is only 80% of the list price. d. If the entity uses the perpetual inventory method, shipping cost would be recorded as a debit to Freight-in and a credit to cash. . 3.When share dividends of a different class are received a. A new investment account is debited and dividend income is credited b. A new investment account is debited and the original investment account is credited c. No formal entry is made but only a memorandum d. Cash is debited and dividend income is credited . 4. [S1] A share split increases the number, par value and market value of the shares. [S2] From the point of view of the investor, redemption of the shares is an impairment of the investment. a. Only S1 is true. b. Only S2 is true. c. Both S1 and S2 are true. d. Both S1 and S2 are false. . 5. Which of the following should be EXCLUDED in the computation of Trade and Other Current Receivables? a. Special deposits on contract bids that is collectible in nine months time b. Accrued income on rent and royalties c. Collectible from an officer without an agreed settlement date d. Advances from customers which are immaterial . 6. [S1] When cash is received in lieu of stock dividends, there may be a gain on sale of the financial asset. [S2] When dividends were distributed using stocks from another corporation, it is appropriately called as a property dividend. a. Only S1 is true. b.Only S2 is true. c. Both S1 and S2 are true. d. Both S1 and S2 are false. . 7. [S1] The direct write-off method of bad debts requires a journal entry when the receivables become doubtful of collection. [S2] An aging of accounts receivable makes use of the income statement approach of estimating bad debts expense. a. Only S1 is true. b. Only S2 is true. c. Both S1 and S2 are true. d. Both S1 and S2 are false