1 T.Jackson had inventory that cost 1300. The net realisable value of the inventory is 750. Normal profit is 325. What value should Jackson show on the balance sheet for Inventory? a) 1625 b) 1075 c) 750 d) 1300 2 Which inventory costing method assigns to ending Inventory the newest __ the most recent __ costs incurred during the period? a) first in, first out (FIFO) b) average cost c) specific unit cost d) last in, first out (LIFO) 3 Assume Nile.com.au began April with 14 units of Inventory that cost a total of 266. During April Nile purchased and sold goods as follows: Apr 8 Purchase 42 units 20 14 Sale 35 units 40 22 Purchase 28 units 22 27 Sale 42 units 40 Under the FIFO inventory method, how much is Niles cost of sales for the sale on 14 April? a) 1106 b) 686 c) 1400 d) 700 4 Under the FIFO method, Nile.com.aus Journal entry (entries) on 14 April is (are):a) Accounts receivable 686Inventory 686 b. Cost of sales 686Inventory 686c) Accounts receivable 1 400 Sales revenue 1400 d) Both b) and c) are correct. 5 After the purchase on 22 April, what is Niles cost of the inventory on hand? Nile uses FIFO. a) 1022 b) 1036 c) 616 d) 1722 6 Which inventory costing method results in the lowest net profit during a) period of rising inven tory costs? a) average cost b) specific) unit cost c) frst in, first out (FIFO) d) last in, first out (LIFO) 7 Suppose Nile.com.au used the averagecost method and the perpetual inventory system. Use the Nile.com.au data) in question 3 to calculate the average unit cost of the firms inventory on hand at 8 April. Round unit cost to the nearest cent. a) 21.00 b) 19.75 c) 19.50 d) none of the above. 8 Which of the following is most closely linked to accounting conservatism? a) lowerofcostandnetrealisablevalue rule b) materiality concept c) relevance d) comparability 9 At 30 June 2014, Stevenson Supplies overstates ending inventory by 36000. How does this error affect cost of sales and net profit for 2014?a) overstates cost of sales and understates net profit b) understates cost of sales and overstates net profit c) leaves both cost of sales and net profit correct because the errors cancel each other d) overstates both cost of sales and net profit 10 Suppose Supreme Clothing suffered a) hurricane loss and needs to estimate the cost of the goods destroyed. Beginning inventory was 94000, net purchases totalled 564000 and sales came to 940000. Supremes normal gross profit percentage is 55%. Use the gross profit method to estimate the cost of the inventory lost in the hurricane. a) 658000 b) 235000 c) 517000 d) 1410001 Which of the following Is not part of the definition of Internal control? a) safeguard assets b) encourage employees to follow company policy c) separation of dutles d) promote operational efficiency 2 Internal auditors focus on __; external auditors are more concerned with __. Fill in the blanks.a) cash receipts; cash payments b) ecommerce; fraud c) documents; records d) operations; financial statements 3 Darice Goodrich recelves cash from customers. Her other assigned job) is to past the collections to customer accounts receivable. Her company has weak: a) ethics b) computer controls c) separation of duties d) assignment of responsibilities 4 The document that explains all differences between the companys cash records and the banks figures is called a(n): a) bank statement b) bank collection c) bank reconciliation d) electronic fund transfer 5 Which items appear on the book side of a) bank reconciliation? a) outstanding cheques b) deposits in transit c) both a and b d) none of the above 6 Which items appear on the bank side of a) bank reconciliation? a) outstanding cheques b) deposits in transit c) both a and b d) none of the above 7 Highlux Companys Cash account shows an ending balance of 570. The bank statement shows a) 20 service charge and a) dishonoured cheque for 100. A) 250 deposit is in transit and outstanding cheques total 400. What is Highluxs adjusted book cash balance? a) 300 b) 450 c) 620 d) 850 8 After performing a) bank reconciliation, we need to journalise: a) all items on the bank side of the reconciliation b) all items on the book side of the reconciliation c) all items on the reconciliation d) no items from the reconciliation because the cash transactions need no adjustments 9 Payment by cheque is an important internal control over cash payments because: a) the cheque must be signed by an authorised official b) before signing the cheque, the official reviews the invoice supporting the payment c) the cheque acts as a) source document d) all of the above 10 Separation of duties is important for internal control of: a) cash receipts b) cash payments c) neither of the above d both a) and b1 With good internal controls, the person who handles cash can also: a) account for cash recelpts from customers b) account for cash payments c) ksue credits to customers for sales returns d) none of the above 2 Bad debts are the same as a) uncollectable accounts b) doubtful accounts c) neither of the above d) both a and b 3 Which method of estimating bad debts focuses on Bad debts expense for the income statement? a) percentage of sales approach b) ageing of accounts approach c) net realisable value approach d) all of the above 4 Your companyuses the allowance method to account for bad debts. At the beginning of the year, Allowance for doubtful debts had a) credit balance of 1 100. During the year you recorded Bad debts expense of 3000 and wrote off uncollectable receivables of 2 100. What is your yearend balance in Allowance for doubtful debts? a) 1000 b) 2000 c) 3100 d) 3200 5 Your ending balance of Accounts receivable is 20000. Use the data) in the preceding question to calculate the net realisable value of Accounts receivable at yearend. a) 18000 b) 19000 c) 20000 d) 21 000 6 What is wrong with the direct writeoff method of accounting for bad debts? a) The direct writeoff method does not set up an allowance for doubtful debts. b) The direct writeoff method overstates assets on the balance sheet. c) The direct writeoff method does not match expenses against revenue very well. d) All of the above. 7 At 30 June, you have a) 10000 bill receivable from a) customer. Interest of 8% has accrued for six months on the bill. What will your financial statements report for this situation? a) Nothing, because you havent received the cash yet. b) Balance sheet will report the bill receivable of 10000. c) Balance sheet will report the bill receivable of 10000 and interest receivable of 400. d) Income statement will report a) bill receivable of 10000. 8 Return to the data) in the preceding question. What will the income statement report for this situation? a) nothing, because you havent received the cash yet b) interest revenue of 400 c) bill receivable of 10000 d) both b and c 9 At yearend, your company has cash of 10000, receivables of 50000, inventory of 40000 and prepaid expenses totalling 5 000. Liabilities of 60000 must be paid next year. What is your acid test ratio? a) 0.83 b) 1.00 c) 1.67 d) cannot be determined from the data) given 10 Return to the data) in the preceding question. A) year ago recelvables stood at 70000, and sales for the current year total 730000. How many days did It take you to collect your average level of receivables? a) 45 b) 35 c) 30 d) 20 1 Which cost is not recorded as part of the cost of a) building? a) annual building maintenance b) construction materials and labour c) earthmoving for the buildings foundation d) real estate commission paid to buy the building 2 Federal Express bought four used Boeing planes. Each plane was worth 33 mllion, but the owner sold the combination for 124 million. How much is FedExs cost of each plane? a) 124 million b) 132 million c) 31 million d) 30 million 3 How should you record a capital expenditure? a) debit an asset b) debit an expense c) debit a) liability d) debit capital 4 Which method is likely to produce the most depreciation in the first year? a) straight line b) reducing balance c) units of production d) all produce the same total depreciation 5 An Aslan Airline jet costs 28 million and is expected to fly 200 million kilometres during its 10year life. Residual value is expected to be zero because the plane was used when acquired. If the plane travels 54 million kilometres in the first year, how much depreciation should Asian Airline record under the unitsofproduction method? a) 2.8 million b) 7.56 million c) 5.6 million d) cannot be determined from the data) given 6 Which depreciation method would you prefer to use for income tax purposes? Why? a) straight line because it is simplest b) units of production because it best tracks the assets use c) reducing balance because it gives the fastest tax deductions for depreciation d) reducing balance because it gives the most total depreciation over the assets life 7 A) copy machine cost 40000 when new and has accumulated depreciation of 35000. Suppose Quick Print scraps this machine, receiving nothing. What is the result of the disposal transaction? a) no gain or loss b) gain of 5000 c) loss of 35000 d) loss of 5000 8 Suppose Quick Print in the preceding question sold the machine for 5000. What is the result of this disposal transaction? a) gain of 2000 b) loss of 2000 c) gain of 3000 d) no gain or loss 9 When is a) revaluation increment credited to a) revaluation surplus? a) always b) never c) always, unless it reverses a previous decrement d never, unless it reverses a previous decrement 10 Which intangible asset is recorded only as part of the acquisition of another business? a) patent b) copyright c) goodwill d) franchise1 Known possible liabilities of uncertain amounts should be: a) reported on the Income statement b) ignored (record them when paid) c) reported on the balance sheet d) reported only in the notes to the financial staternents 2 On 1 January, you borrowed 10000 on a) fiveyear, 8% note payable. At 31 December of that year, you should record: a) interest payable of 800 b) nothing (the note Is already on the books) c) note receivable of 10000 d) cash payment of 10000 3 Your business makes cash sales of 100000 worth of goods (plus GST of 10%) and collected cash up front. What current liability does the sale create? a) none b) unearned revenue of 10000 c) GST payable of 10000 d) sales revenue of 110000 4 At 31 December your business owes employees for three days of the fiveday working week. The total payroll for the week is 8000. What Journal entry should you make at 31 December? a) nothing, because you will pay the employees on Friday a) Salary expense 4800 Salary payable 4 800 b) Salary expense 8 000 Salary payable 8 000 c) Salary payable 4 800 Salary expense 4 800 5 What is unearned revenue? a) receivable b) current asset c) revenue d) current liability 6 Miele Appliances owed estimated warranty payable of 1000 at the end of 2014. During 2015, Miele made sales of 100000 and expects product warranties to cost 3% of the sales. During 2015, Miele paid 2500 for warranties. What is Mieles estimated warranty payable at the end of 2015? a) 3 500 b) 2 500 c) 2000 d) 1 500 7 Payroll expenses Include: a) salaries and wages b) employee benefits c) payroll tax d) all of the above 8 An employer must pay the Australian Taxation Office the amount of: a) optional deductions b) required deductions c) income tax withheld d) all of the above 9 The document that an employer gives each employee at the end of the year to report annual earnings and taxes paid is the: a) payroll record b) earnings record c) tax file number declaration form d) PAYG payment summary 10 The foundation of internal control over payroll Is: a) paying the correct amount of payroll tax b) separating payroll duties c) filing government tax forms on time d) accurately calculating gross pay, deductions and net pay1 A) fiveyear, 100000, 6% unsecured note payable was issued on 1 January 2013. The note requires principal payments of 20000 plus interest due each year with the first payment due on 31 December 2013. On 31 December 2014, immediately after the note payment, the balance sheet would show: a) 60000 in Noncurrent (Longterm) notes payable b) 6000 in Interest payable c) 20000 in Current portion of longterm notes payable and 6000 in Interest payable d) 40000 in Noncurrent (longterm) notes payable 2 Susans trial balance shows 200000 face value of debentures with a) discount balance of 2000. The debentures mature in 10 years. How will the debentures be presented on the balance sheet? a) Debentures payable 198000 (net of 2000 discount) will be listed as a) noncurrent liability. b) Debentures payable 200000 will be listed as a) noncurrent llability. A) 2000 discount on debentures will be listed as a) contra) current liability. c) Debentures payable 200000 will be listed as a) noncurrent liability. d) Debentures payable 200000 will be listed as a) noncurrent liablity. A) 2000 discount on debentures payable will be listed as a) current liability. 3 Debentures payable with a) face value of 400000 and term of 10 years were issued on 1 January 2014 for 410000. On the maturity date, what amount will the business pay to debenture holders? a) 400000 b) 410000 c) 390000 d) 10000 4 Pattersons issued 200000 of 4% serial debentures at face value on 31 December 2012. Half of the debentures mature on 1 January 2015, while the other half of the debentures mature on 1 January 2020. On 31 December 2014, the balance sheet will show which of the following? a) Debentures payable of 200000 will be listed as a) noncurrent (longterm) liability. b) Debentures payable of 100000 will be listed as a) noncurrent (longterm) liability and debentures payable of 100000 will be listed as a) current liability. c) Debentures payable of 200000 will be listed as a) current liability. d) Debentures payable of 208 000 will be listed as a) noncurrent (longterm) liability. 5 Which of the following is the correct journal entry to record the issue of a) 100000 face value debenture at 95? a) Cash 100 000 Discount on debentures 5 000 Debentures payable 95 000 b) Cash 95 000 Debentures payable 95 000 c) Debentures payable 95 000 Cash 95 000 d) Cash 95 000 Discount on debentures 5 000 Debentures payable 100 000 6 A 200000 debenture priced at 101.5 can be bought or sold for: a) 200000 + interest b) 203000 c) 3000 d) 197000 7 Flipco issued a) 10year unsecured note payable on 1 January 2014 for 800 000. The note requires annual principal payments each 31 December of 80000 plus interest at 5%. The entry to record the annual payment on 31 December 2015 includes: a) a debit to Interest expense for 36 000 b) a) debit to Interest expense for 40000 c) acredit to Unsecured notes payable for 80000 d) acredit to Cash of 120000 8 Daniels debentures payable carry a) stated Interest rate of 5% and the market rate of interest is 7%. The price of the Danlels debentures will be at: a) par value b) a premium c) maturity value d) a discount 9 Nicholas Smith Fitness Gym has 700000 of 20year debentures payable outstanding. These debentures had a) discount of 56000 when issued, which was 10 years ago. The business uses the straightline amortisation method. The carrying amount of 6. lese debentures is: a) 672000 b) 644000 c) 700000 d) 728 000 10 Alan Smith Antiques issued its 7% 20year debentures payable at a) price of 846720 (maturity value is 900000). The firm uses the straightline amortisation method for the debentures. Interest expense for each year is: a) 65 664 b) 60 336 c) 63000 d) 59 2701 How does a) partnership get started? a) The partners reach an agreement and begin operations. b) The partners register with the Australian Securities and Investments Commission. c) The partners get a) licence from the state government. d) All of the above. 2 Which characteristic) identifies a) partnership? a) limited personal liability b) unlimited life c) no business income tax d) all of the above 3 Abbott and Brown form a) partnership. Abbott contributes 10000 cash and 40000 in inven tory. Brown contributes 5000 in cash and land with a) current market value of 30000 (cost of 15000). Which of the following is correct? a) Brown, capital is credited for 20000. b) Brown, capital is credited for 35 000. c) Brown, capital is debited for 20000. d Brown receives a) bonus of 30000 from Abbott. 4 The partnership of Abbot and Brown splits profits 14 to Abbot and 34 to Brown. There is no provision for losses. The partnership has a) loss of 200000. What is Browns share of the loss? a) 50000 b) 200000 c) 150000 d) cannot be determined because the losssharing ratio is not given 5 Partner drawings: a) decrease partnership capital b) increase partnership liabilities c) decrease partnership profit d) increase partnership capital 6 Charles pays 30000 to Steven to acquire Stevens 15000 interest in a) partnership. The journal entry to record this transaction is: a) Charles, capital 15 000 Steven, capital 15 000 b. Steven, capital 15 000 Charles, capital 15 000 c) Steven, capital 30 000 Charles, capital 30 000 d) Steven, capital 45 000 Charles, capital 45 000 7 Peter and Steve admit Meredith to their partnershilp, with Meredith paying 70000 more than the book value of her equity in the new business. Peter and Steve have no formal profitandloss sharing agreement. What effect does admitting Meredith to the partnership have on the capital balances of Peter and Steve? a) credit the Peter and Steve capital accounts for 35000 each b) cannot be determined because theres no profitandloss ratio c) deblt the Peter and Steve capital accounts for 35000 each d) credit the Peter and Steve capital accounts for 70000 each 8 Wright retires from the partnership of Edwards, Lee and Wright. The partners share profits and losses in the ratio of 3:2:5. Wrights capital balance is 32000 and he receives 37000 in final settlement. What is the effect on the capital accounts of Edwards and Lee? a) Edwards capital decreases by 3000 b) Edwards capital decreases by 5000 c) Edwards capital increases by 3 000 d) Lees capital decreases by 5000 9 The carrying value of the assets of the MLW partnership is 150000. In liquidation, the partner ship sells the assets for 174000. Partners M, L and W split profits equally. How should the partnership account for the sale of the assets? a) debit cash for 174 000 b) increase each of the partners capital accounts by 8000 c) credit the assets for 150000 d) all of the above 10 Partnership financial statements report: a) total profit on the balance sheet b) revenues on the income statement c) liabilities on the income statement d) expenses on the balance sheet
1 T.Jackson had inventory that cost $1300 The net realisable value of the inventory is $750 Normal profit is $325 What value should Jackson show on the balance sheet for Inventory? a) $1625 b) $1075 c) $750 d) $1300 Which inventory costing method assigns to ending Inventory the newest the most recent costs incurred during the period? a) first in, first out (FIFO) b) average cost c) specific unit cost d) last in, first out (LIFO) Assume Nile.com.au began April with 14 units of Inventory that cost a total of $266 During April Nile purchased and sold goods as follows: Apr Purchase 42 units @ $20 14 Sale 35 units @ $40 22 Purchase 28 units @ $22 27 Sale 42 units@ $40 Under the FIFO inventory method, how much is Nile's cost of sales for the sale on 14 April? a) $1106 b) $686 c) $1400 d) $700 Under the FIFO method, Nile.com.au's Journal entry (entries) on 14 April is (are): a) Accounts receivable Inventory 686 686 b Cost of sales 686 Inventory c) Accounts receivable 686 400 Sales revenue 1400 d) Both b) and c) are correct After the purchase on 22 April, what is Nile's cost of the inventory on hand? Nile uses FIFO a) $1022 b) $1036 c) $616 d) $1722 Which inventory costing method results in the lowest net profit during a) period of rising inven- tory costs? a) average cost b) specific) unit cost c) frst in, first out (FIFO) d) last in, first out (LIFO) Suppose Nile.com.au used the average-cost method and the perpetual inventory system Use the Nile.com.au data) in question to calculate the average unit cost of the firm's inventory on hand at April Round unit cost to the nearest cent a) $21.00 b) $19.75 c) $19.50 d) none of the above Which of the following is most closely linked to accounting conservatism? a) lower-of-cost-and-net-realisable-value rule b) materiality concept c) relevance d) comparability At 30 June 2014, Stevenson Supplies overstates ending inventory by $36000 How does this error affect cost of sales and net profit for 2014? a) overstates cost of sales and understates net profit b) understates cost of sales and overstates net profit c) leaves both cost of sales and net profit correct because the errors cancel each other d) overstates both cost of sales and net profit 10 Suppose Supreme Clothing suffered a) hurricane loss and needs to estimate the cost of the goods destroyed Beginning inventory was $94000, net purchases totalled $564000 and sales came to $940000 Supreme's normal gross profit percentage is 55% Use the gross profit method to estimate the cost of the inventory lost in the hurricane a) $658000 b) $235000 c) $517000 d) $141000 Which of the following Is not part of the definition of Internal control? a) safeguard assets b) encourage employees to follow company policy c) separation of dutles d) promote operational efficiency Internal auditors focus on ; external auditors are more concerned with Fill in the blanks a) cash receipts; cash payments b) e-commerce; fraud c) documents; records d) operations; financial statements Darice Goodrich recelves cash from customers Her other assigned job) is to past the collections to customer accounts receivable Her company has weak: a) ethics b) computer controls c) separation of duties d) assignment of responsibilities The document that explains all differences between the company's cash records and the bank's figures is called a(n): a) bank statement b) bank collection c) bank reconciliation d) electronic fund transfer Which items appear on the book side of a) bank reconciliation? a) outstanding cheques b) deposits in transit c) both a and b d) none of the above Which items appear on the bank side of a) bank reconciliation? a) outstanding cheques b) deposits in transit c) both a and b d) none of the above Highlux Company's Cash account shows an ending balance of $570 The bank statement shows a) $20 service charge and a) dishonoured cheque for $100 A) $250 deposit is in transit and outstanding cheques total $400 What is Highlux's adjusted book cash balance? a) $300 b) $450 c) $620 d) $850 After performing a) bank reconciliation, we need to journalise: a) all items on the bank side of the reconciliation b) all items on the book side of the reconciliation c) all items on the reconciliation d) no items from the reconciliation because the cash transactions need no adjustments Payment by cheque is an important internal control over cash payments because: a) the cheque must be signed by an authorised official b) before signing the cheque, the official reviews the invoice supporting the payment c) the cheque acts as a) source document d) all of the above 10 Separation of duties is important for internal control of: a) cash receipts b) cash payments c) neither of the above d both a) and b With good internal controls, the person who handles cash can also: a) account for cash recelpts from customers b) account for cash payments c) ksue credits to customers for sales returns d) none of the above 'Bad debts' are the same as a) uncollectable accounts b) doubtful accounts c) neither of the above d) both a and b Which method of estimating bad debts focuses on Bad debts expense for the income statement? a) percentage of sales approach b) ageing of accounts approach c) net realisable value approach d) all of the above Your companyuses the allowance method to account for bad debts At the beginning of the year, Allowance for doubtful debts had a) credit balance of $1 100 During the year you recorded Bad debts expense of $3000 and wrote off uncollectable receivables of $2 100 What is your year-end balance in Allowance for doubtful debts? a) $1000 b) $2000 c) $3100 d) $3200 Your ending balance of Accounts receivable is $20000 Use the data) in the preceding question to calculate the net realisable value of Accounts receivable at year-end a) $18000 b) $19000 c) $20000 d) $21 000 What is wrong with the direct write-off method of accounting for bad debts? a) The direct write-off method does not set up an allowance for doubtful debts b) The direct write-off method overstates assets on the balance sheet c) The direct write-off method does not match expenses against revenue very well d) All of the above 7 At 30 June, you have a) $10000 bill receivable from a) customer Interest of 8% has accrued for six months on the bill What will your financial statements report for this situation? a) Nothing, because you haven't received the cash yet b) Balance sheet will report the bill receivable of $10000 c) Balance sheet will report the bill receivable of $10000 and interest receivable of $400 d) Income statement will report a) bill receivable of $10000 Return to the data) in the preceding question What will the income statement report for this situation? a) nothing, because you haven't received the cash yet b) interest revenue of $400 c) bill receivable of $10000 d) both b and c At year-end, your company has cash of $10000, receivables of $50000, inventory of $40000 and prepaid expenses totalling $5 000 Liabilities of $60000 must be paid next year What is your acid- test ratio? a) 0.83 b) 1.00 c) 1.67 d) cannot be determined from the data) given 10 Return to the data) in the preceding question A) year ago recelvables stood at $70000, and sales for the current year total $730000 How many days did It take you to collect your average level of receivables? a) 45 b) 35 c) 30 d) 20 Which cost is not recorded as part of the cost of a) building? a) annual building maintenance b) construction materials and labour c) earthmoving for the building's foundation d) real estate commission paid to buy the building Federal Express bought four used Boeing planes Each plane was worth $33 mllion, but the owner sold the combination for $124 million How much is FedEx's cost of each plane? a) $124 million b) $132 million c) $31 million d) $30 million How should you record a capital expenditure? a) debit an asset b) debit an expense c) debit a) liability d) debit capital Which method is likely to produce the most depreciation in the first year? a) straight line b) reducing balance c) units of production d) all produce the same total depreciation An Aslan Airline jet costs $28 million and is expected to fly 200 million kilometres during its 10-year life Residual value is expected to be zero because the plane was used when acquired If the plane travels 54 million kilometres in the first year, how much depreciation should Asian Airline record under the units-of-production method? a) $2.8 million b) $7.56 million c) $5.6 million d) cannot be determined from the data) given Which depreciation method would you prefer to use for income tax purposes? Why? a) straight line because it is simplest b) units of production because it best tracks the asset's use c) reducing balance because it gives the fastest tax deductions for depreciation d) reducing balance because it gives the most total depreciation over the asset's life A) copy machine cost $40000 when new and has accumulated depreciation of $35000 Suppose Quick Print scraps this machine, receiving nothing What is the result of the disposal transaction? a) no gain or loss b) gain of $5000 c) loss of $35000 d) loss of $5000 Suppose Quick Print in the preceding question sold the machine for $5000 What is the result of this disposal transaction? a) gain of $2000 b) loss of $2000 c) gain of $3000 d) no gain or loss When is a) revaluation increment credited to a) revaluation surplus? a) always b) never c) always, unless it reverses a previous decrement d never, unless it reverses a previous decrement 10 Which intangible asset is recorded only as part of the acquisition of another business? a) patent b) copyright c) goodwill d) franchise Known possible liabilities of uncertain amounts should be: a) reported on the Income statement b) ignored (record them when paid) c) reported on the balance sheet d) reported only in the notes to the financial staternents On January, you borrowed $10000 on a) five-year, 8% note payable At 31 December of that year, you should record: a) interest payable of $800 b) nothing (the note Is already on the books) c) note receivable of $10000 d) cash payment of $10000 Your business makes cash sales of $100000 worth of goods (plus GST of 10%) and collected cash up front What current liability does the sale create? a) none b) unearned revenue of $10000 c) GST payable of $10000 d) sales revenue of $110000 At 31 December your business owes employees for three days of the five-day working week The total payroll for the week is $8000 What Journal entry should you make at 31 December? a) nothing, because you will pay the employees on Friday a) Salary expense 4800 Salary payable b) Salary expense 800 000 Salary payable c) Salary payable 000 800 Salary expense 800 What is unearned revenue? a) receivable b) current asset c) revenue d) current liability Miele Appliances owed estimated warranty payable of $1000 at the end of 2014 During 2015, Miele made sales of $100000 and expects product warranties to cost 3% of the sales During 2015, Miele paid $2500 for warranties What is Miele's estimated warranty payable at the end of 2015? a) $3 500 b) $2 500 c) $2000 d) $1 500 Payroll expenses Include: a) salaries and wages b) employee benefits c) payroll tax d) all of the above An employer must pay the Australian Taxation Office the amount of: a) optional deductions b) required deductions c) income tax withheld d) all of the above The document that an employer gives each employee at the end of the year to report annual earnings and taxes paid is the: a) payroll record b) earnings record c) tax file number declaration form d) PAYG payment summary 10 The foundation of internal control over payroll Is: a) paying the correct amount of payroll tax b) separating payroll duties c) filing government tax forms on time d) accurately calculating gross pay, deductions and net pay A) five-year, $100000, 6% unsecured note payable was issued on January 2013 The note requires principal payments of $20000 plus interest due each year with the first payment due on 31 December 2013 On 31 December 2014, immediately after the note payment, the balance sheet would show: a) $60000 in Non-current (Long-term) notes payable b) $6000 in Interest payable c) $20000 in Current portion of long-term notes payable and $6000 in Interest payable d) $40000 in Non-current (long-term) notes payable Susan's trial balance shows $200000 face value of debentures with a) discount balance of $2000 The debentures mature in 10 years How will the debentures be presented on the balance sheet? a) Debentures payable $198000 (net of $2000 discount) will be listed as a) non-current liability b) Debentures payable $200000 will be listed as a) non-current llability A) $2000 discount on debentures will be listed as a) contra) current liability c) Debentures payable $200000 will be listed as a) non-current liability d) Debentures payable $200000 will be listed as a) non-current liablity A) $2000 discount on debentures payable will be listed as a) current liability Debentures payable with a) face value of $400000 and term of 10 years were issued on January 2014 for $410000 On the maturity date, what amount will the business pay to debenture holders? a) $400000 b) $410000 c) $390000 d) $10000 Pattersons issued $200000 of 4% serial debentures at face value on 31 December 2012 Half of the debentures mature on January 2015, while the other half of the debentures mature on January 2020 On 31 December 2014, the balance sheet will show which of the following? a) Debentures payable of $200000 will be listed as a) non-current (long-term) liability b) Debentures payable of $100000 will be listed as a) non-current (long-term) liability and debentures payable of $100000 will be listed as a) current liability c) Debentures payable of $200000 will be listed as a) current liability d) Debentures payable of $208 000 will be listed as a) non-current (long-term) liability Which of the following is the correct journal entry to record the issue of a) $100000 face value debenture at 95? a) Cash 100 000 Discount on debentures 000 Debentures payable 95 000 b) Cash 95 000 Debentures payable c) Debentures payable 95 000 95 000 Cash d) Cash Discount on debentures 95 000 95 000 000 Debentures payable 100 000 A $200000 debenture priced at 101.5 can be bought or sold for: a) $200000 + interest b) $203000 c) $3000 d) $197000 Flipco issued a) 10-year unsecured note payable on January 2014 for $800 000 The note requires annual principal payments each 31 December of $80000 plus interest at 5% The entry to record the annual payment on 31 December 2015 includes: a) a debit to Interest expense for $36 000 b) a) debit to Interest expense for $40000 c) acredit to Unsecured notes payable for $80000 d) acredit to Cash of $120000 Daniels' debentures payable carry a) stated Interest rate of 5% and the market rate of interest is 7% The price of the Danlels debentures will be at: a) par value b) a premium c) maturity value d) a discount Nicholas Smith Fitness Gym has $700000 of 20-year debentures payable outstanding These debentures had a) discount of $56000 when issued, which was 10 years ago The business uses the straight-line amortisation method The carrying amount of lese debentures is: a) $672000 b) $644000 c) $700000 d) $728 000 10 Alan Smith Antiques issued its 7% 20-year debentures payable at a) price of $846720 (maturity value is $900000) The firm uses the straight-line amortisation method for the debentures Interest expense for each year is: a) $65 664 b) $60 336 c) $63000 d) $59 270 How does a) partnership get started? a) The partners reach an agreement and begin operations b) The partners register with the Australian Securities and Investments Commission c) The partners get a) licence from the state government d) All of the above Which characteristic) identifies a) partnership? a) limited personal liability b) unlimited life c) no business income tax d) all of the above Abbott and Brown form a) partnership Abbott contributes $10000 cash and $40000 in inven- tory Brown contributes $5000 in cash and land with a) current market value of $30000 (cost of $15000) Which of the following is correct? a) Brown, capital is credited for $20000 b) Brown, capital is credited for $35 000 c) Brown, capital is debited for $20000 d Brown receives a) bonus of $30000 from Abbott The partnership of Abbot and Brown splits profits 1/4 to Abbot and 3/4 to Brown There is no provision for losses The partnership has a) loss of $200000 What is Brown's share of the loss? a) $50000 b) $200000 c) $150000 d) cannot be determined because the loss-sharing ratio is not given Partner drawings: a) decrease partnership capital b) increase partnership liabilities c) decrease partnership profit d) increase partnership capital Charles pays $30000 to Steven to acquire Steven's $15000 interest in a) partnership The journal entry to record this transaction is: a) Charles, capital 15 000 Steven, capital b Steven, capital 15 000 15 000 Charles, capital c) Steven, capital 15 000 30 000 Charles, capital d) Steven, capital Charles, capital 30 000 45 000 45 000 Peter and Steve admit Meredith to their partnershilp, with Meredith paying $70000 more than the book value of her equity in the new business Peter and Steve have no formal profit-and-loss- sharing agreement What effect does admitting Meredith to the partnership have on the capital balances of Peter and Steve? a) credit the Peter and Steve capital accounts for $35000 each b) cannot be determined because there's no profit-and-loss ratio c) deblt the Peter and Steve capital accounts for $35000 each d) credit the Peter and Steve capital accounts for $70000 each Wright retires from the partnership of Edwards, Lee and Wright The partners share profits and losses in the ratio of 3:2:5 Wright's capital balance is $32000 and he receives $37000 in final settlement What is the effect on the capital accounts of Edwards and Lee? a) Edwards' capital decreases by $3000 b) Edwards' capital decreases by $5000 c) Edwards' capital increases by $3 000 d) Lee's capital decreases by $5000 The carrying value of the assets of the MLW partnership is $150000 In liquidation, the partner- ship sells the assets for $174000 Partners M, L and W split profits equally How should the partnership account for the sale of the assets? a) debit cash for $174 000 b) increase each of the partners' capital accounts by $8000 c) credit the assets for $150000 d) all of the above 10 Partnership financial statements report: a) total profit on the balance sheet b) revenues on the income statement c) liabilities on the income statement d) expenses on the balance sheet ... $21.00 b) $19.75 c) $19.50 d) none of the above Which of the following is most closely linked to accounting conservatism? a) lower-of-cost-and-net-realisable-value rule b) materiality concept c)... year-end a) $18000 b) $19000 c) $20000 d) $21 000 What is wrong with the direct write-off method of accounting for bad debts? a) The direct write-off method does not set up an allowance for doubtful