1. Which of these would not be considered an internal user of accounting information?

A. Sales representative of a company

B. Human resources manager

C. Chief Financial Officer

D. Production supervisor

E. None of the above

Answer:

2. A company

A. has limited liability.

B. is an easy type of business entity to set up.

C. is less risky to supply goods or services to than a partnership.

D. A and C.

E. all of the above.

Answer:

3. A partnership has which of the following set of characteristics?

A. Harder to raise funds and gives the owner full control

B. Shared control, tax advantages, increased skills and resources

C. Simple to set up but increased government regulation

D. Easier to transfer ownership and raise funds, and no personal liability

E. None of the above

Answer:

4. It is important to remember that in an accounting system, we should recognise only

A. Business transactions of the entity.

B. Transactions that affect both the owner and the business.

C. Revenue and expense items of the entity as at a particular point in time.

D. Revenue and expense items for the current period.

E. None of the above

Answer:

5. If total liabilities decreased by $14,000 and owner's equity increased by $6,000 over a period, then total assets must have changed by?

A. $14,000 increase

B. $20,000 increase

C. $8,000 decrease

D. $8,000 increase

E. None of the above

Answer:

6. The assets of Quinn's business increased by $40,000 and the liabilities increased by $5,000 during the current year. If the profit for this period was $25,000, what additional contribution or withdrawal was made by the owner? (Assume only a withdrawal or a contribution was made).

A. Drawings $10,000

B. Contribution $10,000

C. Contribution $5,000

D. Drawings $5,000

E. Contribution $15,000

Answer:

7. If a sole proprietor who owns an electrical store takes home a DVD player for his own personal use it would be considered to be:

A. An expense because an asset has been given away

B. An increase in equity and a decrease in assets because the proprietor now owns the DVD player

C. A decrease in assets and a decrease in equity because by taking the DVD player the owner has made a drawing from the business

D. An increase in assets and an increase in equity

E. None of the above

Answer:

8. The correct classification for the following is:

1. land

2. accounts receivable

3. sales revenue

4. accounts payable

A. 1 asset 2 liability 3 income 4 asset

B. 1 asset 2 asset 3 liability 4 liability

C. 1 asset 2 liability 3 liability 4 liability

D. 1 asset 2 liability 3 asset 4 liability

E. 1 asset 2 asset 3 income 4 liability

Answer:

9. If: assets at beginning = $20,000

liabilities at beginning = $11,500

income for the period = $36,900

equity at end = $9,600

what was the amount of expense for the period?

A. $35,800

B. $26,200

C. $16,600

D. $24,300

E. None of the above

Answer:

10. The cost of replacing an item is known as its:

A. Market cost.

B. Current cost.

C. Present value.

D. Historical cost.

E. Fair value.

Answer: