James took out a business loan on 30 October 2019. The loan attracts interest at the rate of 10% per annum, payable 6 monthly in arrears. If the business year end is 31 December 2019, then 2 months interest should be charged as an expense in the statement of comprehensive income. Select one: a. True b. False Question 2 Not yet answered Marked out of 1.00 Flag question Edit question Question text Sofia pays rent in advance for her business. Her trial balance at the business year-end, 31 December 2018, shows a figure of sh87,500 for rent. During 2018, she had paid rent of sh18,750 for the three months ended 29 February 2019. Her financial statements for the year ended 31 December 2018 should show: Select one: a. The rent expense deducted in arriving at the profit or loss for the year would be sh75,000 and a pre-payment of sh12,500 would be included on the statement of financial position. b. The rent expense deducted in arriving at the profit or loss for the year would be sh87,500 and no pre-payment for rent would be included on the statement of financial position. c. The rent expense deducted in arriving at the profit or loss for the year would be sh 93,750 and an accrual of sh6,250 for rent owing would be shown on the statement of financial position. d. The rent expense deducted in arriving at the profit or loss for the year would be sh81,250 and a pre-payment of sh6,250 would be included on the statement of financial position. Question 3 Not yet answered Marked out of 1.00 Flag question Edit question Question text If the trial balance at Larry ltd year end shows trade receivables of sh19,900 and bad debts of sh600 written off during the year, which of the following statements is true? Select one: a. The statement of comprehensive income should include a bad debt expense of sh600 and trade receivables of sh19,900 should be included on the statement of financial position. b. The statement of comprehensive income should include no bad debt expense and trade receivables of sh19,900 should be included on the statement of financial position. c. The statement of comprehensive income should include a bad debt expense of sh600 and trade receivables of sh19,300 should be included on the statement of financial position. d. The statement of comprehensive income should include no bad debt expense and trade receivables of sh19,300 should be included on the statement of financial position. Question 4 Not yet answered Marked out of 1.00 Flag question Edit question Question text During the year ended 31 December, the business made sales of sh45,000 and purchases of sh25,000. The inventory at the beginning of the year was valued at sh8,000 and, at 31 December, sh4,500. The gross profit for the year was: Select one: a. sh23,500. b. sh32,500. c. sh20,000. d. sh16,500. Question 5 Not yet answered Marked out of 1.00 Flag question Edit question Question text A trader has made a sale of sh.75,500 out of which cash sales amounted to sh.25,500. He showed trade receivables on 31-3-2019 at sh25,500. Which concept is followed by him? Select one: a. Accrual b. Cost c. Going concern d. Money measurement Question 6 Not yet answered Marked out of 1.00 Flag question Edit question Question text On December 31, 2019 and 2020, Jimenez Corporation had 100,000 shares of common stock and 10,000 shares of noncumulative and nonconvertible preferred stock issued and outstanding. Additional information: Stockholders equity at the end of 2020 was sh 4,500,000; Net income for 2020 was sh 1,200,000; Dividends on preferred stock year during 2020 was sh 300,000; Market price per share of common stock at the end of 2020 was sh 144. The price-earnings ratio on common stock at December 31, 2020, was__________________ Select one: a. 16 to 1. b. 10 to 1. c. 14 to 1. d. 12 to 1. Question 7 Not yet answered Marked out of 1.00 Flag question Edit question Question text Philip's account balances at the business year end show a figure for trade receivables of sh103,100. Included in this figure is an amount of sh6,500 owed by Reece, which will not be received. Philip usually creates a provision for doubtful debts of 2% of trade receivables. The figure for trade receivables on the statement of financial position at the year-end should be: Select one: a. sh101,038. b. sh107,408. c. sh94,538. d. sh94,668. Question 8 Not yet answered Marked out of 1.00 Flag question Edit question Question text Which of the following interpretations of the prudence concept is not true: Select one: a. The prudence concept underpins the need for businesses to create a provision for doubtful debts. b. The prudence concept requires preparers of accounts to anticipate all costs. c. The prudence concept requires preparers of accounts to anticipate all income. d. The prudence concept requires preparers of accounts to take a cautious approach to accounts preparation. Question 9 Not yet answered Marked out of 1.00 Flag question Edit question Question text Lucys statement of comprehensive income for her first year of trading to 30 September 2019 showed a charge for insurance of sh90,000. Lucy actually paid sh130,000 for insurance during that financial year. Which of the following statements is true? Select one: a. Insurance had been prepaid by sh40,000 at the year end. b. Insurance of sh40,000 had been accrued for at the year end. c. Insurance of sh90,000 had been prepaid at the year end. d. Insurance of sh90,000 had been accrued for at the year end. Question 10 Not yet answered Marked out of 1.00 Flag question Edit question Question text Clive's business has paid telephone bills amounting to sh21,500 during his financial year, which ended on 30 September 2020. After the year end, he receives a bill for the three months ended 31 October 2020 amounting to sh6,600. Which of the following is true? Select one: a. The business should accrue sh2,200 for telephone expenses at the year end. b. The business should accrue sh25,900 for telephone expenses at the year end. c. The business should accrue sh4,400 for telephone expenses at the year end. d. The business will have pre-paid telephone expenses of sh4,400 at the year end. Question 11 Not yet answered Marked out of 1.00 Flag question Edit question Question text The John Marketing Company provides advertising services to an investment company in year 1 but receives advertising fee in year 2. The John Marketing Company recognizes this revenue in year 1. This action of John Marketing Company is justified by: Select one: a. revenue recognition principle b. going concern concept c. economic entity concept d. business entity concept Question 12 Not yet answered Marked out of 1.00 Flag question Edit question Question text Chandra's bakery business has the following account balances at 30 September 2019: Ovens sh3,800,000, inventories sh410,000, trade payables 265,000, loan of sh500,000 and a bank overdraft of sh109,000. Chandra's equity as at 30 September 2019 is: Select one: a. sh3,554,000. b. sh3,866,000. c. sh3,336,000 d. sh3,836,000. Question 13 Not yet answered Marked out of 1.00 Flag question Edit question Question text Which one of the following statements regarding the statement of financial position is false? Select one: a. It shows the average assets and liabilities of a business over the last financial period. b. It shows how much the owner has invested in the business. c. It shows the assets and liabilities of a business at a certain point in time. d. It was formerly known as the balance sheet. Question 14 Not yet answered Marked out of 1.00 Flag question Edit question Question text Sean has prepared his financial statements for the year ended 31March 2019, which show a net profit of sh30,000, current assets of sh234,400 and a total assets figure of sh710,500. He has since discovered that the inventory figure he used was understated as he left out closing inventory valued at sh10,100 from his workings. Which of the following statements is true? Select one: a. The revised profit for the year should be sh40,100. b. The revised current assets figure will be sh224,300. c. The value of closing inventory figure does affect the profit for the year or the net assets. d. The revised total assets figure will be sh740,500. Question 15 Not yet answered Marked out of 1.00 Flag question Edit question Question text Mark has a year-end of 30 June 2019. He has paid telephone line rental of sh 60,000 for the period from 1 June 2019 to 31 August 2019. Mark should record a prepayment of sh20,000 in his financial statements. Select one: a. False b. True Question 16 Not yet answered Marked out of 1.00 Flag question Edit question Question text Clear reporting of revenue recognition policies and detailed descriptions of low-persistence items and major discretionary accruals (such as write-downs and provisions for reorganization) will bring earnings management into the open. Which of the following statements are true? Select one: a. This type of reporting shall increase managers' ability to manipulate and bias the financial statements for their own advantage. b. This type of reporting shall decrease the manager's ability to manipulate and bias the financial statements for their own advantage. c. All of the above d. This type of reporting is bad for investors, the intricate information would just confuse them. Question 17 Not yet answered Marked out of 1.00 Flag question Edit question Question text A company has a cost of goods sold of sh 530,000; the beginning inventory is sh 120,000, and ending inventory is sh 180,000. Calculate the number of days to sell the inventory. (Round the figures to the nearest whole) Select one: a. 100 days b. 125 days c. 104 days d. 83 days Question 18 Not yet answered Marked out of 1.00 Flag question Edit question Question text A firm has the following operating income rates for the last four years: 2016, 9.0%; 2017, 8.9%; 2018, 9.1%; 2019, 8.8%. From a standpoint of trend analysis, what conclusion might an analyst reach regarding the firms revenue growth? Select one: a. The trend analysis indicates the firms operating income has materially declined over time and is cause for investor concern. b. The trend analysis indicates the firms operating income has been increasing at a fiscally healthy rate over time. c. The trend analysis indicates the firms operating income has been flat over time. d. The conclusion is indeterminable from the information given. Question 19 Not yet answered Marked out of 1.00 Flag question Edit question Question text Bruno buys two lorries costing sh41million in total. They are depreciated on the reducing-balance basis at the rate of 40% per annum. Which of the following statements is true? Select one: a. The NBV of the lorries after two years will be sh14.76 million and the depreciation charge for year 2 will be sh9.84 million b. The NBV of the lorries after one year will be sh14.76 million and the depreciation charge for year 2 will be sh16.4 million c. The NBV of the lorries after two years will be sh24.6 million and the depreciation charge for year 2 will be sh9.84 million. d. The NBV of the lorries after one year will be sh24.6 million and the depreciation charge for year 2 will be sh16.4. million Question 20 Not yet answered Marked out of 1.00 Flag question Edit question Question text Which of the following statements regarding the going concern concept is true? Select one: a. The going concern concept only applies if the business is trading profitably. b. The going concern concept applies where it appears that the business will not continue to exist for more than the next 12 months. c. The going concern concept assumes that the business will never fail. d. The going concern concept assumes that the business will continue for the foreseeable future. Question 21 Not yet answered Marked out of 1.00 Flag question Edit question Question text During the year ended 31 December, the business made sales of sh45,000 and purchases of sh25,000. The inventory at the beginning of the year was valued at sh4,500 and, at 31 December, sh8,000. The gross profit for the year was: Select one: a. sh23,500. b. sh32,500. c. sh20,000. d. sh16,500. Question 22 Not yet answered Marked out of 1.00 Flag question Edit question Question text In assessing the financial prospects for a firm, financial analysts use various techniques. An example of vertical, common-size analysis is: Select one: a. a comparison in financial ratio form between two or more firms in the same industry b. an assessment of the relative stability of a firms level of vertical integration c. advertising expense is 2% greater compared with the previous year d. advertising expense for the current year is 2% of sales Question 23 Not yet answered Marked out of 1.00 Flag question Edit question Question text Sales are sh260,000. Purchases are sh150,000. Opening inventory is sh22,000. Closing inventory is sh26,000. What is the inventory turnover? Select one: a. 10 times b. 10.8 times c. 7 times d. 6.1 times Question 24 Not yet answered Marked out of 1.00 Flag question Edit question Question text For every debit there will be an equal credit according to Select one: a. Cost concept b. Dual aspect concept c. Matching concept d. Money measurement concept Question 25 Not yet answered Marked out of 1.00 Flag question Edit question Question text To achieve a reasonably objective basis, financial forecasts and projections should be prepared I. In accordance with GAAP. II. Using information that is in accordance with the plans of the entity. III. With due professional care. Select one: a. I and III. b. I and II. c. II and III. d. I, II, and III.