Accounting for IGCSE & O level - Final Statements (Section 3)
1
Which item is recorded under the heading 'current assets'?
Відповідь
(C)
Closing inventory
2
What is the purpose of preparing an income statement?
Відповідь
(B)
To evaluate the performance of the company over a specific period.
3
What do you subtract from sales to calculate gross profit?
Відповідь
(C)
Cost of goods sold
4
What typically comes after the trading account in an income statement?
Відповідь
(B)
Profit and loss account
5
Which of the following is shown in the income statement?
Відповідь
(C)
Revenue
6
Trade receivables are?
Відповідь
(A)
Money owed to the business by customers
7
What is the formula for gross profit?
Відповідь
(A)
Revenue - Cost of Sales
8
What is the formula for owner's equity?
Відповідь
(A)
Assets - Liabilities
9
What would be the effect on a company's working capital if it uses cash to pay off accounts payable?
Відповідь
(C)
Working capital remains the same
10
What is the main purpose of the statement of financial position (balance sheet)?
Відповідь
(B)
To present a snapshot of a company's assets, liabilities, and equity at a specific point in time.
11
How does the choice of inventory valuation method (FIFO, LIFO, AVCO) affect a company's reported profit during periods of changing prices?
Відповідь
(B)
It can significantly impact reported profit.
12
Which of the following is NOT included in the cost of goods sold?
Відповідь
(D)
Selling and administrative expenses
13
Which of the following is a current asset?
Відповідь
(B)
Accounts Receivable
14
What is the basic accounting equation?
Відповідь
(A)
Assets = Liabilities + Equity
15
What is the formula for calculating 'Net Assets'?
Відповідь
(A)
Capital Employed - Non-Current Liabilities
16
If a business's liabilities are more than its assets, it will have...
Відповідь
(A)
Negative equity
17
Which of the following is *not* included in the expense accounts?
Відповідь
(D)
Cost of Sales
18
What is the main function of the income statement?
Відповідь
(B)
To summarize a company's revenue, expenses, and profitability over a period.
19
In the context of an income statement, what does 'revenue' represent?
Відповідь
(C)
The total income generated from sales of goods and services.
20
Which financial statement reports a company's financial performance over a period of time?
Відповідь
(B)
Income Statement
21
If a department has a high gross profit margin, what does that indicate?
Відповідь
(B)
The department is selling goods at a high profit relative to their cost.
22
What is the first section of an income statement?
Відповідь
(C)
Trading account.
23
Which are the common rules for valuing assets?
Відповідь
(D)
All of the above
24
Which of the following factors affects the net realizable value of inventory?
Відповідь
A
C
D
25
What is the purpose of an inventory valuation statement?
Відповідь
(C)
To determine the value of the ending inventory and COGS.
26
Which of the following are considered current assets?
Відповідь
A
B
C
27
What factors can increase capital employed in a business?
Відповідь
B
D
28
Suburban Services Ltd. have just started up in business supplying cordless vacuum cleaners. During the first three months trading they have been buying from various suppliers at different prices to establish where they can get the best deals.
Відповідь
(A)
True
29
If a business has more assets than liabilities, what does that indicate?
Відповідь
(C)
The business has positive owner's equity.
30
What is the formula for calculating working capital?
Відповідь
(C)
Current Assets - Current Liabilities
31
When calculating the gross profit, what is the calculation?
Відповідь
(A)
Sales - Cost of Sales
32
Where does the owner's equity reside?
Відповідь
(A)
Balance sheet
33
Goodwill is a premium paid by the buyer over the book value of its ______
Відповідь
(D)
net assets
34
Which of the following is NOT a current asset?
Відповідь
(D)
Equipment
35
What is the significance of the "first-in, first-out" (FIFO) method?
Відповідь
(C)
It matches the cost of the first units purchased with those sold first.
36
What is the impact on the owner's equity when a business makes a profit?
Відповідь
(A)
Increases owner's equity
37
Which of the following would likely be considered the best inventory valuation method for a business selling perishable goods?
Відповідь
(A)
FIFO
38
Describe the three methods of valuing inventory
Відповідь
(A)
FIFO, LIFO, AVCO
39
What is the effect on the accounting equation if a business owner invests cash into the business?
Відповідь
(B)
Assets increase, owner's equity increases
40
What do banks and tax authorities use the statement of financial position for?
Відповідь
(B)
To assess creditworthiness and liquidity risk.
41
Which of the following is NOT an example of a current asset?
Відповідь
(D)
Land
42
What does the term "cost of goods sold" represent?
Відповідь
(A)
The total cost of all goods sold during a period.
43
What does the cost of sales represent?
Відповідь
(B)
The cost of the goods sold during a specific period.
44
How can net profit for the year be increased?
Відповідь
(C)
By reducing the total expenses.
45
If revenue from sales exceeds the cost of the items sold, what is the outcome?
Відповідь
(B)
A gross profit.
46
Temlah Adwole operates a small music store. Over a number of years he has accumulated an inventory of CDs. These have cost an average of $6.00 to purchase. Due to the increasing popularity of digital downloading of music, it has become more difficult to sell these CDs and a decision has been taken to have an immediate “clear out” sale at a price of $4.00 for every disc following the accounting year end. An additional $0.50 will be spent on repackaging. At what price should these CDs be valued at the year end?
Відповідь
(C)
$3.50
47
How do you calculate Gross Profit?
Відповідь
(A)
Sales - Cost of Goods Sold
48
What is the effect on the income statement of a net loss?
Відповідь
(B)
Decreases net assets and owner's equity.
49
What are the two main categories of assets?
Відповідь
(A)
Current and Non-Current
50
In a merchandising business, what does "Cost of Goods Sold" include?
Відповідь
(C)
The cost of the inventory that was sold during the period.
