Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
|
|
|
1.
|
Which
of the following would be a correct title for a set of financial statements? a. | Profit and loss
account as at 31 March and balance sheet for the year to 31 March | b. | Profit and loss
account for the year to 31 March and balance sheet as at 31 March | c. | Profit and loss
account for the year to 31 March and balance sheet for the year to 31 March | d. | Profit and loss
account as at 31 March and balance sheet as at 31 March | | |
|
|
|
2.
|
A
person who had £1,000 a year ago now has £1,100. Inflation ran at a rate of 3% during the
year. In real terms, the person is better off by:
|
|
|
3.
|
Cost
of goods sold (or cost of sales) is equal to: a. | Closing stock plus purchases minus opening
stock | b. | Opening stock plus purchases minus closing
stock | c. | Opening stock plus purchases plus closing
stock | d. | Purchases minus opening stock minus closing
stock | | |
|
|
|
4.
|
Assuming a closing stock of £20,000, the profit of a business for an accounting
period is £50,000. It now transpires that the real closing stock figure is only £10,000.
The effect on the profit for the accounting period is: a. | A reduction of
50% | c. | An increase of
20% | b. | No
effect | d. | A reduction of
20% | | | | |
|
|
|
5.
|
In
times of rising prices, the FIFO method of stock valuation gives: a. | A higher stock
valuation than LIFO and a lower cost of goods sold | b. | A lower stock
valuation than LIFO and a higher cost of goods sold | c. | A higher stock
valuation than LIFO and a higher cost of goods sold | d. | A lower stock
valuation than LIFO and a lower cost of goods sold | | |
|
|
|
6.
|
A
business which has no opening stock at the start of an accounting period first buys 100 units of
stock at £2 each, then buys 100 units at £3 each, then buys 200 units at £4 each and
then buys 150 units at £5 each. There are no sales until the very end of the period when 380
units are sold. Using the FIFO method, closing stock should be valued at:
|
|
|
7.
|
The
cost of closing stock at the end of an accounting period is: a. | Usually greater
than net realisable value | c. | Never less than
net realisable value | b. | Usually less than net realisable
value | d. | Always less than
net realisable value | | | | |
|
|
|
8.
|
In
general, the amount of depreciation charged in relation to an asset for an accounting period
is: a. | A portion of the
asset's cost | b. | A measure of the consumption of the asset during the
period | c. | A non-cash expense | d. | All of the
above | | |
|
|
|
9.
|
A
fixed asset which cost £8,000 has an expected useful life of 4 years and an expected residual
value of £2,000. The annual depreciation charge, using the straight line method,
is: a. | £2,000 | c. | £1,500 | b. | £6,000 | d. | £500 | | | | |
|
|
|
10.
|
A
fixed asset which cost £8,000 is to be depreciated at a rate of 30% using the reducing balance
method. The amount of depreciation in the third year is: a. | £1,176 | c. | £,2400 | b. | £1,680 | d. | £2,744 | | | | |
|