7. is the characteristic of a partnership whereby each partner is liable for partnership debts to the full extent of his or her private assets.

Select one:

a.limited liability.

b.mutual agency.

c.limited life.

d.unlimited liability.

Buster and Foster each own 30 000 shares in Rebound Company LtD. If Buster sells his shares directly to Foster:

Select one:

a.the bank account for Rebound Company increases.

b.the share capital for Rebound Company increases.

c.the share capital for Rebound Company remains the same.

d.the share capital for Rebound Company decreases.

When accounting for share issues, the ultimate debit and credit entries are to which accounts?

Select one:

a.DR Bank; CR Allotment

b.DR Application; CR Share capital

c.DR Bank; CR Share capital

d.DR Share Capital; CR Bank

Under the Conceptual Framework, 'increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants', is the definition of:

Select one:

a.equity.

b.income.

c.assets.

d.contributions.

Interest paid on a loan provided by a partner should be:

Select one:

a.recognised by the partnership as an expense.

b.a distribution of profit in the profit or loss distribution account.

c.recorded as a prepayment in the balance sheet.

d.recognised as income for the partner who provided the loan.

Which of the following is a disadvantage to shareholders of using long-term debt rather than equity?

Select one:

a.Interest is tax deductible.

b.Lenders do not have voting rights.

c.Lenders do not share in excess profits.

d.Interest payments must be made on time regardless of a reduction in profitability.

In the Conceptual Framework, materiality is an aspect of:

Select one:

a.timeliness.

b.understandability.

c.relevance.

d.faithful representation.

Which statement relating to workers' compensation insurance is incorrect?

Select one:

a.The percentage rate of premium is the same rate for all employers.

b.It is compulsory for all employers to take out workers' compensation insurance.

c.When workers' compensation insurance is paid in advance, the journal entry is: DR Prepaid workers' compensation insurance; CR Bank .

d.The premium is based on a percentage of the wages and salaries bill for the coming year.

Which of the following statements relating to a 'general partnership' is incorrect?

Select one:

a.Each partner is liable for the debts of the partnership only in proportion to their original contribution.

b.Partners have unlimited liability.

c.Each partner is personally liable for the obligations of the partnership.

d.It is the most common form of partnership.

Hastings Star Company estimates that the amount of monthly salaries on which four weeks annual leave is payable is $83 200. What is the correct accounting entry to accrue annual leave at the end of the month?

Select one:

a.DR Annual leave expense $6 400; CR Annual leave payable $6 400

b.No accounting entry is required

c.DR Annual leave payable $6 400; CR Bank $6 400

d.DR Annual leave payable $6 400; CR Annual leave expense $6 400

In 2009 which group was set-up in the Asia-Oceania region as part of the establishment of global accounting standards?

Select one:

a.Group of 100

b.Asian-Oceanian Standard-Setting Group (AOSSG)

c.International Accounting Standards Board (IASB)

d.Asian-Oceanian Audit-Setting Board (AOASB)

Under IAS 37/AASB 137, which of the following provisions is not regarded as a liability?

Select one:

a.Provision for onerous contracts

b.Provision for warranties

c.Provision for long-service leave

d.Provision for doubtful debts

Accounting information that is representative of the real-world is likely to meet the Conceptual Framework's criteria of:

Select one:

a.understandability.

b.relevance.

c.faithful representation.

d.comparability.

The accounting standard setting body in the USA is the:

Select one:

a.AASB.

b.USAASB.

c.IASB.

d.FASB.

The common recognition criteria for each of assets, liabilities, income and expenses is that they must be:

Select one:

a.reliable.

b.measured reliably.

c.faithfully representeD.

d.matched in the period they occur.

Which type of company has the right to advertise share issues to the general public?

Select one:

a.Proprietary company

b.A company limited by guarantee

c.Both a proprietary and a public company

d.Public company

Under IAS 20/AASB 120, Accounting for Government Grants, it is true that:

Select one:

a.government grants relating to assets are to be credited directly to equity.

b.a government grant relating to income must be recognised in full at the time the grant is receiveD.

c.a government grant relating to an asset may be presented as a reduction in the carrying amount of the asset concerneD.

d.subsidies for agricultural activities are discussed in the appendix to IAS 20/AASB 120.

Which statement concerning drawings by partners in a partnership is correct?

Select one:

a.Interest is charged on drawings if the partnership agreement is silent on the matter.

b.Drawings are taken into account when calculating the final distribution of profit between the partners.

c.Charging interest on drawings acts as an incentive to partners to withdraw money from the partnership.

d.Drawings are generally regarded as withdrawals of future profits.

Minstrel Ltd decided to issue 200 000 ordinary shares for $2.50 each, payable in instalments, $1 on application, $1 on allotment and the balance payable at the discretion of the company. Applications were received for 220 000 shares. The shares were allotted by the directors at a meeting held a week after the close of applications. After refunding applications for 20 000 shares, which of the following is the correct journal entry to transfer the application money to the share capital account?

Select one:

a.DR Application $200 000; CR Share capital $200 000

b.DR Application $220 000; CR Share capital $220 000

c.DR Application $220 000; CR Cash trust account $220 000

d.DR Cash trust account $200 000; CR Share capital account $200 000

Lotus Company Ltd decided to issue 100 000 ordinary shares for $3.00 each, payable in instalments, 50c on application, $1.50 on allotment and the balance payable at the discretion of the company. Applications were received for 120 000 shares. The shares were allotted by the directors a week after the close of applications and refunds were made for 20 000 shares. The correct journal entry to record the full receipt of the allotment instalment is:

Select one:

a.DR Bank account $150 000; CR Allotment $150 000

b.DR Allotment $180 000; CR Share capital $180 000

c.DR Share capital $150 000; CR Bank account $150 000

d.DR Bank account $180 000; CR Allotment $180 000

Which of the following is a not a disadvantage of operating as a partnership rather than as a company?

Select one:

a.Fewer disclosure requirements

b.Partners can act on behalf of the other partners and bind them to a contract by acting within the apparent scope of the business.

c.Personal liability for all obligations of the partnership.

d.Greater difficulty in selling a share of the business.

On 1 July 2019 the balance in Wolston Pty Ltd's retained earnings account was $450 000. The balance on 30 June 2020 was $700 000. On 20 June 2020, the directors declared dividends of $120 000 which were payable on 31 August 2020. Assuming all closing entries have been completed the profit for the year ending 30 June 2020 was:

Select one:

a.$ 370 000

b.$ 250 000

c.$ 580 000.

d.$ 450 000.

GAAP stands for:

Select one:

a.generally accepted accounting practices.

b.generally accepted accounting principles.

c.general auditing and accountancy practices.

d.government approved accounting policy.

Bonnie and Cathy have a profit and loss sharing agreement where: (1) salaries of $20 000 each are credited, (2) 10% interest is allowed on capital balances (3) the remaining profit or loss is split 60-40 in favour of Bonnie. At the end of the year, before the distribution of profits or losses, capital account balances were $50 000 and $35 000 for Bonnie and Cathy, respectively. Profit for the year was $66 000 before distributions to partners. Assuming capital balances are adjusted to reflect profits and losses, what is Bonnie's ending capital account balance?

Select one:

a.$64 600

b.$35 500

c.$89 600

d.$85 500

Under current accounting standards, share issue expenses are treated as a:

Select one:

a.asset.

b.deduction from the proceeds of the share issue.

c.expense.

d.liability.

The objective of allocating profits and losses is to reward each partner fairly for the resources and services contributed to the partnership. Which of the following factors would not be directly relevant in negotiating a profit and loss sharing agreement for a partnership?

Select one:

a.Work done by each partner in the partnership.

b.The size of each partner's non-partnership assets.

c.The risks assumed by each partner.

d.Capital contributed by each partner to the partnership.

Which organisation is concerned with improving disclosure in financial reports of companies listed on the various exchanges throughout Australia?

Select one:

a.Accounting Standards Board

b.Australian Stock Exchange

c.Australian Companies Exchange

d.Australian Securities Exchange

Which of the following would not be defined as a liability under the Conceptual Framework?

Select one:

a.An arrangement to pay a quarterly bonus commission to salespersons for achieving sales over a certain level.

b.Money owing to a supplier for goods purchaseD.

c.Salaries owing to managers.

d.A loan from a financial institution.

Under current accounting standards preliminary expenses of forming a company must be treated as a:

Select one:

a.deduction from the proceeds of the share issue.

b.expense.

c.liability.

d.asset.

58. The basic journal entry to make a general reserve is:

Select one:

a.DR Retained earnings, CR General reserve

b.DR Income, CR General reserve

c.DR General reserve, CR Retained earnings

d.DR Profit or loss summary, CR General reserve