Question 1

ABC Bank returned a cheque of $75 to the company as a dishonoured cheque.

On the company's bank reconciliation statement, this cheque should be:

added to the Balance as per Bank Statement.

O deducted from the Original balance of Cash at Bank account,

O added to the Original balance of Cash at Bank account.

deducted from the Balance as per Bank Statement.

Question 2

A company purchased inventory with a cheque, $500.

This cheque was correctly processed and recorded by the Bank.

However, the cheque was incorrectly recorded in the company's books (Cr Cash) at $5,000.

In the bank reconciliation statement, the company must:

add $4,500 to the Original balance of Cash at Bank account.

O deduct $4,500 from the Balance as per Bank Statement.

add $4,500 to the Balance as per Bank Statement.

O deduct $4,500 from the Original balance of Cash at Bank account.

Question 3

According to the

principle, a business entity should NOT have one person responsible for the related activities (such as

ordering merchandise inventory, receiving inventory, and paying for inventory).

faithful representation

O establishment of responsibility

O relevance

O segregation of duties

Question 4

Which of the following is NOT a feature of internal control?

O Consumer opinion surveys.

Electronic controls like passwords.

O Mandatory holiday.

O job rotation.

Question 5

Which of the following statements is NOT a feature of good internal control for cash?

Invoices and cash receipts should be pre-numbered.

O To save time, the cashier who knows best about cash movements should also maintain accounting records for cash.

O Only an authorised employee can have access to blank cheques.

Cash should be kept in a secured fireproof safe.

Question 6

The Code of Ethics for Professional Accountants issued by APES (Australian Professional and Ethical Standards Board) does NOT indude:

o objectivity.

O professional behaviour.

o confidentiality.

compassion.

Question 7

The Unadjusted Trial Balance shows Allowance for Bad Debts = $20,000 (Cr)

The Adjusted Trial Balance shows Allowance for Bad Debts

= $30,000 (Cr).

The adjusting entry must include:

O Cr Accounts Receivable

$30,000.

Cr Allowance for Bad Debts

$30,000.

Dr Bad Debts Expense

$20,000.

O Cr Allowance for Bad Debts

$10,000.

Question 8

Adjusting entries are prepared annually at the end of financial year (June 30). The interest rate is stated per annum

On 1 April 2023, Retailer Ltd. purchased inventory with a one-year, 6% note of $8,000

In the Adjusted Trial Balance as at 30 June 2023, which of the following is TRUE?

O Interest Expense = $80.

O Notes Payable = $8,480.

O Interest Payable = $120.

Notes Payable = $8,120.

Question 9:

Adjusting entries are prepared annually at the end of the financial gear (30 june)

ABC Lid sells electrical appliances with one year warranty

in the first year of operation, Sales = $300,000.

On 30 June, the unexpired warranty liability is estimated at 4% of sales.

The adjusting entry for warranty at the end of the year includes:

Dr Provision for Warranty $12,000; Cr Parts Inventory $12,000.

O Dr Provision for Warranty $12,000; Cr Cash $12,000.

Dr Warranty Expense $12,000;

Cr Provision for Warranty $12,000.

O Dr Provision for Warranty $12,000; Cr Warranty Expense $12,000.

Question 10

On Aug 1, Retailer Co. sold merchandise inventory to Customer Ltd, and accepted a $10,000 six-month note (with 10% interest per annum) for payment.

The journal entry to record this sale transaction on Aug 1 includes:

O Dr Notes Receivable

$10,500.

O Dr Accounts Receivable

$10,000.

O Dr Notes Receivable

$11,000.

O Dr Notes Receivable

$10,000.

Question 11

Which of the following statements is TRUE about the quick ratio?

O All answers given are correct.

O It indicates how much cash could be realised by selling off all the inventory.

O It reflects how much long-term debt a company has.

O It measures a company's ability to pay its current liabilities by using its liquid current assets.

Question 12

Equipment with a cost of $360,000 has an estimated sidual value of $30,000.

It is to be depreciated by the diminishing balance method with a depreciation rate of 25% per annum

What is the amount of depreciation expense for the first full year?

$85,000

$87,500

O $82.500

O $90,000

Question 13

At the beginning of the financial year (1 July), a truck had the carrying amount of $10,000 (cost = $50,000, accumulated depreciation

540,000).

The truck was sold for $8,000 cash on 1 July.

To record the sale of the truck, the journal entry would include:

Dr Loss on Disposal of Non-current Assets

$10,000.

O Dr Loss on Disposal of Non-current Assets

$2,000.

O Cr Loss on Disposal of Non-current Assets

$50,000.

O Cr Gain on Disposal of Non-current Assets

$8,000.

Question 14

Which of the following factors can lead to a decrease in value of a non-current asset?

O All answers given are correct.

Wear and tear through usage of the asset.

O The legal requirement to replace the asset after a period of usage.

O Technological obsolescence.

Question 15

Speedy Cat Delivery Co. has 10 delivery trucks.

it employs 5 full-time and 5 part-time truck drivers.

Which of the following is NOT true?

O Annual truck insurance premiums should be classified as capital expenditure.

The cost of a truck does NOT include the driver license fee for a truck driver.

o Additions and improvements to a truck should be capitalised and depreciated over the remaining useful life of the truck

o The expenditure related to ordinary truck repairs and maintenance reduces profit in the accounting period in which the expenditu incurred.

Question 16

The amount of income tax to be paid to the tax-collecting agency (Australian Taxation Office)

in respect of the taxable profit for the period is recognised as:

O a deferred tax liability.

a contingent tax liability.

O a current tax liability.

O a non-current tax liability.

Question 17

A taxable temporary difference leads to:

taxable amounts in the future and gives rise to a deferred tax liability.

O taxable amounts in the future and gives rise to a deferred tax asset.

O deductible amounts in the future and gives rise to a deferred tax asset.

deductible amounts in the future and gives rise to a deferred tax liability.

Question 18

The store manager wants to increase profit because the store plans to apply for a bank loan.

How could the store manager achieve this ethically?

O Recognise revenue before delivering goods to customers.

O Increase sales by opening the store an extra day each week.

O Do not record any depreciation expense for this year.

O Pay the electricity bill before the due date.

Question 19

According to the Positive Accounting Theory, which of the following can be a reason for earnings management?

Debt covenants.

O All answers given are correct.

O Looming government interference.

Performance-based compensation such as bonuses based on profit.

Question 20

A company uses the straight-line depreciation method for equipment in year 1, the the diminishing-balance method in year 2, and the units-of-production method in year 3.

Which qualitative characteristic is violated?

O Comparability.

O Timeliness.

O Relevance.

O Verifiability.

Ouestion 21

Which of the following statements about verifiability is NOT correct?

O Verifiability means that independent observers could reach a consensus that a particular depiction is a faithful representation

Indirect verification is where techniques or calculations are used to check the representation.

O Direct verification is through direct observation such as counting cash.

O It is one of the fundamental qualitative characteristics in the Conceptual Framework.

Question 22

When should an entity recognise a contingent asset and show it in the statement of financial position?

O The cash inflow associated with the asset is probable.

O Never. Contingent assets are not recognised.

The contingent asset is NOT relevant to decision making.

The cash inflow associated with the asset is not remote.

Question 23

Which of the following actions can be taken to manipulate earnings DOWNwards (to reduce profit)?

O All answers given are correct.

O Cutting advertising expenditure.

Changing bad debt expense from 29 of credit sales to 1% of credit sales.

O Shortening the useful life of a non-current asset.

Question 24

Which of the following statements about Non-GAAP measures is NOT true?

They are normally not audited.

O They often show better results than GAAP profit measures.

O They can influence decision making of the users, especially for non-sophisticated users.

They are calculated based on the same formulas/definitions across the companies.

Question 25

According to the Conceptual Framework, which of the following is the objective of general purpose financial reporting?

O Decision-usefulness objective.

Accountability objective.

Accounting consistency objective.

O Environmental substainability objective.