Solution for ACCT2101 Final Exam Practice Questions _revised 2022

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Final Exam Practice Questions SECTION A: MULTIPLE CHOICE QUESTIONS 1. Financial stability refers to the ability of an entity to: a) minimise expenses. b) increase market share. c) meet long-term ... obligations. d) achieve a high rate of profit. e) Maximize sales revenue 2. A column for discount allowed could be found in which of the following journal(s)? a) Purchase b) Cash payments c) Cash receipts d) Sales e) None of the above 3. Vertical analysis of a statement of financial position usually: a) calculates each balance sheet item as a percentage of sales. b) calculates each balance sheet item as a percentage of share capital. c) calculates each balance sheet item as a percentage of the bank balance. d) calculate each balance sheet item as a percentage of the liabilities. e) calculates each balance sheet item as a percentage of total assets. 4. A complete set of financial statements comprises which of the following? I Statement of cash flows II Statement of changes in equity III Statement of financial position IV Statement of profit or loss and other comprehensive income V Notes comprising a summary of accounting policies and other explanatory information. a) I, II, III and IV only b) II, III and IV only c) I, II, III, IV and IV d) III, IV and V only e) II and III only FINAL EXAM PRACTICE QUESTIONS 2 5. Which of the following are non-cash transactions or events? I Credit sale II Barter transaction III Purchase of a building financed by a mortgage IV Takeover paid for with shares in the acquiring company a) All of the above b) I and II only c) I, II and IV only d) II and IV only e) I, II and III only. 6. The Novice Corporation purchased a machine for $80 000 on 1 January 2018. The machine is expected to have a useful life of 5 years, a residual value of zero, and a production capacity of 120 000 units before it is scrapped. The Novice Corporation uses the units-of-production method to calculate depreciation. For the year ending 31 December 2018, the depreciation was $16 000. The number of units produced during 2019 is 30 000. The carrying amount of the machine at 31 December 2019 is: a) $16 000 b) $20 000 c) $30 000 d) $44 000 e) $60 000 CA = Cost – Accumulated Dep. = $80 000 – $16 000 – (30 000/120 000 * $80 000) = $44 000 7. On 31 December 2019 an item of machinery had a cost of $300 000 and accumulated depreciation of $280 000. If the machinery was sold for a profit of $30 000 on 1 January 2020, how much was recorded as income from the proceeds of the sale? a) $20 000 b) $50 000 c) Nil d) $300 000 e) $30 000 Proceeds of the sale = profit + carrying amount = $30 000 + ($300 000 - $280 000) = $50 000 [Show More]

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