Accounting Revison
Choose the one alternative that best completes the statement or answers the question. 1) Changing the value of closing inventory from cost to net realisable value is an application of which accounting concept? A) B) C) D) 2) Going concern. Historical cost. Consistency. Prudence.
Which statement relating to depreciation is true? A) The cash account is affected by charging depreciation B) Accumulated depreciation represents the portion of an asset's cost that has been transferred to depreciation expense C) Accumulated depreciation is a contra-expense account D) Depreciation represents cash that can be used to replace assets when they wear out
3)
As at 31 December 2010 there are outstanding accounts receivable totalling $12,000. The balance on the provision for doubtful debts account as at 1 January 2010 is $600. The firm wishes to maintain the provision for doubtful accounts receivable at 4% of outstanding accounts receivable. The correct entry in the account to record this would be: Debit Profit & Loss $120 Provision for doubtful debts $480 Provision for doubtful debts $120 Profit & Loss $480 Credit Provision for doubtful debts $120 Profit & Loss $480 Profit & Loss $120 Provision for doubtful debts $480
A) B) C) D) 4)
Which of the following is not a reason for providing for depreciation of non-current assets? A) B) C) D) Depletion Assets may increase in value Wear and tear of assets Technical obsolescence
5)
An asset was purchased on 1 January 2009 for $5,500. It had an estimated residual value of $1,000 at the end of its useful life of 5 years. What would be the net book value of the asset as at 31 December 2011? A) B) C) D) $3,700 $2,200 $2,816 $4,600
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6)
On 1 January 2010 L Howard owed K Haynes $450. On 11 November 2010 Howard was declared bankrupt and the amount owing was written off as a bad debt. Using the direct write-off method, the entry to record the debt being written off in the books of Haynes would be: Debit
Which statement relating to depreciation is true? A) The cash account is affected by charging depreciation B) Accumulated depreciation represents the portion of an asset's cost that has been transferred to depreciation expense C) Accumulated depreciation is a contra-expense account D) Depreciation represents cash that can be used to replace assets when they wear out
3)
As at 31 December 2010 there are outstanding accounts receivable totalling $12,000. The balance on the provision for doubtful debts account as at 1 January 2010 is $600. The firm wishes to maintain the provision for doubtful accounts receivable at 4% of outstanding accounts receivable. The correct entry in the account to record this would be: Debit Profit & Loss $120 Provision for doubtful debts $480 Provision for doubtful debts $120 Profit & Loss $480 Credit Provision for doubtful debts $120 Profit & Loss $480 Profit & Loss $120 Provision for doubtful debts $480
A) B) C) D) 4)
Which of the following is not a reason for providing for depreciation of non-current assets? A) B) C) D) Depletion Assets may increase in value Wear and tear of assets Technical obsolescence
5)
An asset was purchased on 1 January 2009 for $5,500. It had an estimated residual value of $1,000 at the end of its useful life of 5 years. What would be the net book value of the asset as at 31 December 2011? A) B) C) D) $3,700 $2,200 $2,816 $4,600
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6)
On 1 January 2010 L Howard owed K Haynes $450. On 11 November 2010 Howard was declared bankrupt and the amount owing was written off as a bad debt. Using the direct write-off method, the entry to record the debt being written off in the books of Haynes would be: Debit