Accounting for IGCSE & O level - Advanced Principles (Section 1)
1
Which of following mentions the importance of the independence of an accountant?
პასუხი
(C)
Accountants should not show favour or be influenced by the opinion of others.
2
The statement about the factors that will increase the rate of inventory turnover are correct, except:
პასუხი
(C)
holding excess inventory
3
Which of the following is a fundamental accounting assumption?
პასუხი
(D)
The going concern assumption.
4
What is the main objective of the business entity principle?
პასუხი
(A)
To keep the financial records of a business separate from the owner's personal financial affairs.
5
Which of the following will improve a company's liquidity?
პასუხი
A
B
C
6
What is the purpose of the duality principle?
პასუხი
(B)
To guarantee that every transaction is recorded in at least two accounts.
7
Which of the following is not an impact of good credit contact?
პასუხი
(C)
Increasing inventory.
8
What is the main focus of the consistency principle?
პასუხი
(C)
To use the same accounting methods from one period to the next.
9
What is the effect of an overstatement of closing inventory on the cost of goods sold and profit for the period?
პასუხი
(C)
Cost of goods sold understated, profit overstated.
10
What does a low quick ratio indicate?
პასუხი
(B)
Inability to pay short term debts.
11
Which of the following is true about working capital?
პასუხი
(D)
Efficient management of inventory boosts a business’s working capital position.
12
Which of the following is an application of the accounting period principle?
პასუხი
(C)
Dividing the lifetime of a business into successive accounting periods.
13
Why is it important to use accounting concepts and conventions?
პასუხი
(A)
To make financial statements and information to be meaningful and comparable.
14
Which of the following actions will INCREASE the gross profit margin?
პასუხი
A
C
15
What is the main focus of the prudence principle?
პასუხი
(C)
To exercise caution in accounting and avoid overstating assets or income.
16
Which of the following will not be in the financial statements?
პასუხი
(D)
Information on non-financial performance
17
What is the primary purpose of the going concern principle in accounting?
პასუხი
(C)
To assume that a business will continue to operate for the foreseeable future.
18
What can the financial information from the accounts of a business tell you?
პასუხი
(A)
Financial strength, position, and performance.
19
Which of the following best describes the relationship between inventory levels and inventory turnover?
პასუხი
(B)
Higher inventory levels result in lower inventory turnover.
20
Which of the following is an application of the historic cost principle?
პასუხი
(A)
Recording assets and expenses at their actual price paid.
21
Inventory turnover ratio measures the rate at which inventory is sold and replaced over a given period. Which factor is least relevant to increasing a company's inventory turnover ratio?
პასუხი
(D)
Offer extended credit terms to customers.
22
What does the historical cost principle state?
პასუხი
(B)
Assets and expenses should be recorded at their original cost.
23
The rule of inventory turnover is a useful indicator of how successfully a business is at selling its products and replacing its inventory. It measures how frequently inventory is sold off and replaced during an accounting year. It is calculated as follows:
პასუხი
(A)
cost of sales / average inventory
24
Which action would most likely decrease a company's current ratio?
პასუხი
(B)
Purchasing inventory on credit.
25
The gross profit margin is calculated as:
პასუხი
(A)
Gross profit / revenue * 100%
26
How can inventory turnover be increased?
პასუხი
B
C
27
Which of the following is an example of a liquidity ratio?
პასუხი
(B)
Current ratio
28
What is the relationship between accounting standards and different methods for similar items?
პასუხი
(A)
Accounting standards allow for different methods for similar items.
29
What is the formula for working capital?
პასუხი
(A)
Current Assets - Current Liabilities
30
What actions can Chemtura take to improve its liquidity?
პასუხი
B
C
D
31
What information is used to compute a business's current ratio?
პასუხი
(B)
Current assets and current liabilities.
32
Which of the following represents a core tenet of the matching principle?
პასუხი
(A)
Costs must be matched against related income.
33
Which stakeholders are interested in the financial health of a business?
პასუხი
A
B
34
Is an increase in the trade receivables collection period good or bad for business?
პასუხი
(B)
Bad: The collection period has now become too long, due to poor credit control, resulting in fewer increases in trade debts.
35
Is a reduction in the trade payables payment period good or bad for business?
პასუხი
(B)
Bad: The business was previously taking longer to pay suppliers. The business may achieve cash discount for paying promptly. This will increase its profits.
36
What is the purpose of having consistent accounting methods from one period to another?
პასუხი
(A)
To make financial statements easier to understand and compare
37
Which of the following will reduce working capital?
პასუხი
(C)
Purchasing inventory.
38
Which of the following is NOT a financial ratio?
პასუხი
(D)
Capital employed
39
Which of the following is an example of the realization principle?
პასუხი
(B)
Recognizing income as goods and services are supplied
40
Which of the following is not a method a business can improve its liquidity?
პასუხი
(B)
Increasing short-term debt.
41
Is an increase in the trade payables payment period good or bad for business?
პასუხი
(A)
Good: The business can previously taking longer to pay supplies. The business may achieve cash discount for paying promptly. This will increase its profits.
42
What is the main goal of a business?
პასუხი
(B)
Making a Profit
43
If the closing inventory is overstated, the cost of goods sold is ______ and the gross profit is ______.
პასუხი
(B)
understated, overstated
44
Which of the following is a limitation of accounting statements and ratio analysis?
პასუხი
(D)
All of the above
45
Factors that will cause the working capital and quick ratios to improve are:
პასუხი
A
B
C
46
What does the phrase 'liquid assets' mean in accounting?
პასუხი
(B)
Assets converted to cash quickly.
47
Which of the following actions improves a company’s liquidity position?
პასუხი
A
B
C
48
Why is it important to use international standards for accounting?
პასუხი
(A)
To make it easier to understand financial statements
49
Which of the following are accounting concepts?
პასუხი
A
B
C
D
50
What are the key characteristics of an accountant?
