Income Statement - Cost of Sales - International Accounting Standards - Cash Flow - Industry Accounting Assignment Help

Assignment Task:

Income Statement Industry Accounting Assignment Help

1. In the accounts of a company whose income statement shows expenses analysed by function, the delivery charge associated with the purchase of raw materials for processing would be classified as:

 1.    Cost of sales

 2.    Distribution costs

 3.    Administration costs

 4.    Finance costs

2. What do you mean by Comprehensive income 

 1.    Comprehensive income is the change in equity (net assets) of an entity during a period from transactions and other events and circumstances from no owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

 2.    Comprehensive income is the equity (net assets) of an entity during a period from transactions and other events and circumstances from no owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

 3.    Comprehensive income is the change in equity (net assets) of an entity during a period from transactions and other events and circumstances from no owner sources. It does not include all changes in equity during a period except those resulting from investments by owners and distributions to owners.

 4.    None of the above

3.  The provision for depreciation of the asset sold is transferred to the debit side of the provision for Depreciation Account 

 1.    true

 2.    false

4.  An accrual is:

 1.    An expense relating to the current year and paid within the current year

 2.    An expense relating to the current year but not paid in the current year

 3.    An expense relating to next year and already paid in the current year

4.    None of the above

5.  Why accounting is called as SCIENCE 

 1.    Because it deals with human beings

 2.    Because it deal with the transaction

 3.    Because the transactions are recorded in the systematic manner

 4.    Accrual

6.  International Accounting Standards (IAS) have been developed by:

 1.    A trade-off between profitability and risk

 2.    The International Organisation of Securities Commission (IOSCO)

 3.    The European Commission

 4.    The Financial Reporting Council

 5.    None of the above

7. What is implied if the receivable account has increased?

 1.    Cash flow from operating activities is greater relative to net income.

 2.    Cash flow from operating activities is less relative to net income.

 3.    The firm's sales have increased relative to the prior year.

 4.    None of the above

8.  The recommendation that the role of the chief executive and chairman of a company be separated was one of the findings of which report? 
 
1.    Cadbury Report
 
2.    Ruttman Report
 
3.    Greenbury Report
 
4.    Hampel Report

9. If a firm's ratio of (total liabilities/total assets) is higher than the industry average while the total capitalization of the firm's stockholders' equity) is lower than the industry average, the most likely assumption is that the firm: 
 
1.    has more current liabilities than the industry average
 
2.    has more leased assets than the industry average
 
3.    will be more profitable than the industry average
 
4.    has more current assets than the industry average
 
5.    None of the above

10. The European Commission announced that International Financial Reporting Standards (IFRSs) had to be adopted by 2005 by:
 
1.    All enterprises in the EU
 
2.    All listed companies in the EU preparing their consolidated accounts
 
3.    All listed companies in the EU
 
4.    All companies in the EU
 
5.    None of the above

11. We can define Historical Cost as:  
 
1.    Assets are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition
 
2.    Liabilities are recorded at the amount of proceeds received in exchange for the obligation, or in some circumstances (for example, income taxes), at the amounts of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business.
 
3.    1 and 2
 
4.    None of the above

12. The amount of revenue recognized in the income statement by a company that sells goods to customers would be 
 
1.    the cash collected from customers during the current period.
 
2.    total sales, both cash and credit sales, for the period.
 
3.    total sales minus beginning amount of accounts receivable.
 
4.    the amount of cash collected plus the beginning amount of accounts receivable

13.  How would you know if a statement of cash flows had been prepared using the direct or the indirect method? 
 
1.    The direct method adjusts for deferrals and accruals.
 
2.    Depreciation will be subtracted from net income.
 
3.    The direct method starts with cash flow from operating activities and adds and subtracts adjustments to obtain net income.
 
4.    The indirect method begins with net income and adds and subtracts adjustments to obtain cash flow from operating activities.

14.  2007 current assets $100,000; 2007 long-term assets $300,000; 2007 total liabilities $150,000; and 2007 total shareholders' equity $250,000. Using the previous information and your knowledge of common-sized statements, select the statement that is false. 
 
1.    The common-size percent for total liabilities is 37.5percent.
 
2.    Common-size statements are a type of vertical analysis.
 
3.    Common-size statements allow companies of different sizes to be more easily compared
 
4.    The common-size percent for current assets is 33.3percent.

15. In 2007, the controller of the XYZ Company discovered that 2006 depreciation expense was overstated by $50,000, a material amount. Assuming an income tax rate of 40percent, the prior period adjustment to 2007 beginnings retained would be: 
 
1.    0
 
2.    $30,000 debit.
 
3.    $30,000 credit.
 
4.    None of the above

16. IFRS authorize three basic accounting models 
 
1.    Current cost accounting,
 
2.    Financial capital maintenance in nominal monetary units
 
3.    Financial capital maintenance in units of constant purchasing power
 
4.    All of the above

17. Which of the following is NOT true? 
 
1.    An accrual is a liability; a prepayment is an asset
 
2.    An accrual is an amount owing at the end of a period; a prepayment is an amount paid in advance
 
3.    An accrual is a liability; a prepayment is a fixed asset
 
4.    An accrual is a current liability; a prepayment is a current asset

18.  When the cash flow statement is prepared by using an indirect method, which part of it is different from the direct method? 
 
1.    Cash flow from investing activities
 
2.    Cash flow from financing activities
 
3.    Cash flow from operating activities
 
4.    All parts are the same in both methods

19.  As per the Convention of conservatism? 
 
1.    Profit is overstated
 
2.    Profit is not overstated
 
3.    Profit is deleted from the book of account
 
4.    Profit is added to the books of accounts
 
5.    1 and 4 both

20. The Modified Accelerated Cost Recovery System (MACRS) is used primarily to determine: 
 
1.    The minimum length of time to recover the after-tax cost of alternative investment opportunities.
 
2.    The fastest way to recover the cost of converting from a manual to a computer-based accounting system.
 
3.    Depreciation expense deductible for income tax purposes.
 
4.    The estimated useful lives to be used in computing depreciation expense for financial reporting purposes.

21.  The opinion of the auditor is termed as unqualified when the auditor concludes the following points about the financial statements except: 
 
1.    Presented fairly and unbiased
 
2.    Free from misleading information
 
3.    Consistency in the accounting policies
 
4.    Balance sheet showing the sound position

22. Comparison of the market price of the share with the earnings per share gives us which ratio? 
 
1.    Interest cover
 
2.    Divide cover
 
3.    Dividend yield
 
4.    Price/Earnings ratio

23.  Principle of Matching is very much important for? 
 
1.    As it helps in the ascertainment of the correct amount of Loss which is a measurement of performance
 
2.    Ascertainment of the correct amount of profit (income) which is a measurement of performance
 
3.    Only 1
 
4.    Only 2
 
5.    Both 1 and 2

24.  Decision-makers compare net income to net cash from operating activities. To make these amounts more comparable, the same accounts are included in each. The following accounts are used to compute both net income and net cash from operating activities except? 
 
1.    dividends declared and paid
 
2.    interest expense
 
3.    interest revenue
 
4.    dividend revenue

25. XYZ is considering the purchase of a new project with a four-year life. The depreciable basis is $100,000 and requires $20,000 of additional working capital. The project will generate $87,000 of additional revenue with $50,000 of additional operating expenses for each year of the four-year project. For tax purposes, the equipment falls into the three-year property class using MACRS percentages. The company is subject to a marginal tax rate of 40 percent. The salvage value at the end of the fourth year is expected to be $5,000. When we determine the project's terminal year incremental net cash flow, i.e., the flow for year 4, we apply the same step-by-step procedure for this period's cash flow as we do to those in all the interim periods. In addition, we give special recognition to a few cash flows that are connected with project termination. The adjustment (i.e., the sum of just those flows connected with project termination) that needs to be made to the incremental net cash flow for the fourth year of the project is closest to which of the four suggested answers below? 
 
1.    49466
 
2.    25000
 
3.    23000
 
4.    3000

26. Motor vehicles account has a balance of 80000 and provision for depreciation account has a balance of 20,000. One motor vehicle which was bought two years back for 10,000 for 20,000. The motor vehicle has been depreciated at 20 per cent per annum on cost. What was the balance on the provision of depreciation after this disposal? 
 
1.    12000
 
2.    15000
 
3.    16000
 
4.    10400

27. If a firm sold stock on credit then which of the following would be the result? 
 
1.    Current ratio decreases
 
2.    Acid test ratio decreases
 
3.    Current ratio increases
 
4.    Acid test ratio increases

28. Which of the following items are included in the adjustments to net income to obtain cash flow from operating activities? 
 
1.    The gain from an asset sale and the payment of dividends.
 
2.    The change in inventory and depreciation expense.
 
3.    Payment of dividends and depreciation expense.
 
4.    The change in accounts receivable and the acquisition of land.

29.  Which of the following statements is most correct? 
 
1.    For small companies, long-term debt is the principal source of external financing.
 
2.    Current assets of the typical manufacturing firm account for over half of its total assets.
 
3.    Strict adherence to the maturity matching approach to financing would call for all current assets to be financed solely with current liabilities.
 
4.    Similar to capital structure management, working capital management requires the financial manager to make a decision and not address the issue again for several months.

30. FRS 14 defines which ratio?
 
1.    Earnings per share
 
2.    Return on capital employed
 
3.    Dividend yield
 
4.    Return on equity

31. Revenue is generally realized at the time of sale when actually the title of ownership passes from the seller to the buyer. It is important because? 
 
1.    It recognizes the assets, liabilities, incomes and expenses as and when the transactions relating to these take place.
 
2.    It is not important
 
3.    None of these
 
4.    All of the above

32. Companies prepare financial statements at the end of each year and more often as needed.
 
1.    true
 
2.    false

33. Accounting can be seen as part of the total : 
 
1.    information system of the business
 
2.    financial system of the business
 
3.    computer system of the business
 
4.    commercial system of the business

34. Revenue is realized when? 
 
1.    Cash is withdrawn
 
2.    Cash is received
 
3.    Customer purchase your product
 
4.    All of the above

35. Variable real value non-monetary? 
 
1.    Quoted and unquoted shares
 
2.    Plant
 
3.    Foreign exchange
 
4.    Finished goods

36. Suppose that XYZ Express, Inc. has a ROA of 7percent and pays a 6percent coupon on its debt. XYZ Express has a capital structure that is 70percent equity and 30percent debt. Relative to a firm that is 100percent equity-financed, XYZ Express's Net Profit will be ________ and its ROE will be ________.?
 
1.    lower, lower
 
2.    higher, higher
 
3.    higher, lower
 
4.    lower, higher
 
5.    It is impossible to predict.

37. A corporation's free cash flow is its: 
 
1.    Cash flow from operating activities that is not subject to income taxes.
 
2.    Cash flow from operating activities available after basic business obligations have been met.
 
3.    Net increase in cash from all sources during the year.
 
4.    Cash flow from operating activities less all cash payments for investing and financing activities.

38. Which of the following statement is correct? 
 
1.    We can find out from the books of account how much is due to creditors (liabilities)
 
2.    How much the firm owns (assets).
 
3.    One can know about the profit earned or loss suffered
 
4.    1 and 3
 
5.    All of the above

39. Adherence to international accounting standards should result in financial statements giving: 
 
1.    A totally accurate representation of a company’s results to its directors
 
2.    A fair presentation of a company’s state of affairs
 
3.    Full and accurate information to shareholders
 
4.    Reasonably correct information to shareholders

40. What are the elements of Financial statement as per FASB.? 
 
1.    According to FASB, the elements of financial statements are the building blocks with which financial statements are constructed
 
2.    An entity’s cash receipts and cash payments relating to its financing activities during a particular period.
 
3.    The Financial Accounting Standards Board (FASB) has defined the following elements of financial statements of business enterprises: assets, liabilities, equity, revenues, expenses, gains, losses, investment by owners, distribution to owners and comprehensive income.
 
4.    1 and 3
 
5.    1 and 2

41. How can supermarkets generate high-profit levels with low-profit margins? 
 
1.    Low gearing
 
2.    Low dividends
 
3.    High liquidity
 
4.    High stock turnover

42. The end product of the accounting cycle is known as the: 
 
1.    Tax return
 
2.    Financial statements
 
3.    Auditor’s annual report
 
4.    Annual general meeting

43. Reserves and surplus are required to be classified as follows? 
 
1.    Capital reserves
 
2.    Capital redemption reserve
 
3.    Securities premium reserve
 
4.    All of the above

44. The purpose of providing for depreciation in the profit and loss account is to: 
 
1.    Reflect the duality concept
 
2.    Ensure funds are available to purchase new assets to replace those disposed of
 
3.    Reflect the net realisable value of the asset in the balance sheet
 
4.    Ensure a charge is made against revenue for the amount of a fixed asset used up in achieving that revenue

45. Which one of the following would reduce the cash balances of a business and not reduce the profit for the year? 
 
1.    Interest paid
 
2.    Distribution costs
 
3.    Wages paid
 
4.    Dividends paid

46. Convention of the full disclosure is defined as? 
 
1.    Convention of full disclosure requires that all material and relevant facts concerning financial statements should be fully disclosed
 
2.    Full disclosure means that there should be full, fair and adequate disclosure of accounting information
 
3.    Adequate means a sufficient set of information to be disclosed
 
4.    Only 1 and 3
 
5.    All of the above

 

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