Please choose the correct answer and NO explanation needed, thank you.

Question 1: J&J Courier Company buys a second -hand delivery truck for the business at a cost of $38,000 by taking out a bank loan over a term of 3 years. What impact will this have on the accounting equation?

1) Liabilities will increase by $38,000. Owner's Equity will decrease by $38,000

2) Assets will increase by $ 38,000. Liabilities will increase by 38,000. Owner's Equity will remain the same

3) The $38,000 will be evenly split between assets and liabilities. Assets will increase by $19,000. Liabilities will increase by $19,000. Owner's Equity will remain the same

4) There will be no impact on the accounting equation since the delivery van was purchased second-hand

Question 2: Which of the following statement is TRUE in relation to the presentation of the income statement?

1) Large organisations that are required to comply with accounting standards have no choice about how they present their income statements.

2)If an organisation presents its expenses based on the function if expenses approach, then expenses will be classified according to their nature.

3) Allocating costs to functions may require arbitrary allocations and involve considerable judgement

4) Larger organisations might tend to show more details about specific expenses, whereas smaller organisations tend to aggregate many of their expenses

Question 3: How should an organisation account for the scenario whereby the organisations has performed the related service and has issued an invoice to the customer, but the organisation has not yet received the cash?

1) The organisation should recognize the income and receipt of cash. Cash at bank (asset) will increase and income will increase (equity increases)

2) The organisation should recognize the income and recognize the asset, perhaps called an account receivable. Account receivable (asset) will increase and income will increase (equity increases)

3) The organisation should not recognize the income. Instead, they should recognize an increase in cash, and recognize a liability: revenue received in advance. Cash at bank (asset) will increases and revenue received in advance (liability) will increase.

4) The organisation has nothing to recognize.

Questions 4: Which of the following statements is FALSE in relation to 'net cash flows'

1) Net cash flows are the differences between cash inflows and cash outflows

2) Net cash flows can be either positive or negative

3) Net cash flows are determined by adopting the process of accrual accounting

4) None of these choices

Question 5: A company started the accounting period with accounts payable of $40,000 and ended the accounting period with accounts payable of $ 35,000. Inventory costing $420,000 was purchased during the period. How much cash was paid to the suppliers of inventory?

1) $420,000

2) $460,000

3) 425,000

4) $385,000