Test Content Question 1 5 Points Quick and Current Ratio are both profitability ratios. True B False Question 2 5 Points Statement of Financial Position is a statement that shows the assets of a business and the claims on those assets. Le abilities and capital A True B False Question 3 5 Points Prepaid cost is an amount paid during the current period where that amount will not be incurred until the next period. True B) False Question 4 5 Points A review of the year-end trial balance revealed that loan repayments totaling 23.320 include a 6% interest (.e. 100% loan repayment +6% interest). The journal entry required to make the adjustment is: Debit Loan a/c (SOFP) - 1,399.20: Credit Interest a/c (18) - 1,399.20 B Debit Loan a/c (SOFP) - 1,320: Credit Interest a/c (IS) - 1,320 Debit interest a/c (IS) - 1,399.20: Credit Loan a/c (SOFP) - 1,399.20 Debit Interest a/c (S) - 1,320: Credit Loan a/c (SOFP) - 1,320 Question 5 5 Points A specific bad debt is best described as: A debt that is unlikely to ever be paid but where details of the customer and the original sales cannot be traced. B A debt that is more than 90 days old. A debt that may be paid in the future but also may not and therefore, a proportion of the outstanding amount is written off in compliance with the prudence principle of accounting. A debt that is unlikely to ever be paid and where details of both the customer and original sales are available. Question 6 5 Points Atrial balance did not balance and a suspense account was created. An investigation of transactions revealed that a cash payment of 650 for wages was credited to both the bank account and the wages. The joumal required to correct this error is: A Debit Suspense a/c (650) Credit Wages a/c (650) B Debit Suspense a/c (1,300Credit Wages a/c (1,300) Debit Wages a/c (E650): Debit Bank a/c (650) Debit Wages alc (1,300): Credit Suspense ale t1,300) 5 Points Question 7 The requirement to account for accruals and prepayments in financial reporting arises, in the main, as a result of: The matching principle of accounting The double-entry bookkeeping system The work of electronic / computerised accounting systems The entity principle of accounting 5 Points Question 8 An increase in profits will cause an increase in which of following options? Payables B) Accruals Assets Liabilities