Question 1

An expense is considered to be __________________ if its non-disclosure could affect decisions made by the users of the statement of profit or loss.

Accepted Answer

The answer of An expense is considered to be __________________...

Question 2

The statement of profit or loss measures an entity's financial _________.

Accepted Answer

The answer of The statement of profit or loss measures...

Question 3

Which of the following is an example of other comprehensive income?
A) Dividends received.
B) Sales income.
C) Royalties.
D) Revaluations of assets recorded directly in the revaluation surplus account.

Accepted Answer

Other comprehensive income (OCI) includes gains and losses that are not part of net income, but rather are recognized directly in equity. Revaluations of assets recorded directly in the revaluation surplus account is an example of OCI. Dividends, sales income, and royalties are not considered examples of OCI.

Question 4

If the beginning balance of equity is $82 000,the ending balance is $37 000,and the loss for the period is $33 000,how much did the owner withdraw during the period for personal use?
A) $78 000
B) $49 000
C) $45 000
D) $12 000

Accepted Answer

The answer of If the beginning balance of equity is...

Question 5

Managers’ use of accounting discretion allowable under accounting policy choices and estimates to portray a desired level of profit in a particular reporting period is referred to as ___________________ management.

Accepted Answer

The answer of Managers’ use of accounting discretion allowable under...

Question 6

The statement of profit or loss is normally completed:
A) before the balance sheet.
B) after the balance sheet.
C) at the same time as the balance sheet.
D) at any time, the order of completion for these two statements is irrelevant.

Accepted Answer

The statement of profit or loss, also known as the income statement or statement of comprehensive income, is typically completed before the balance sheet as it reports the company’s financial performance over a specific period of time, whereas the balance sheet reports the company’s financial position at a specific point in time.

Question 7

A statement of changes in equity shows closing capital as:
A) beginning capital + capital contribution - profit - drawings.
B) beginning capital + capital contribution + profit + drawings.
C) beginning capital + capital contribution + profit - drawings.
D) beginning capital - capital contribution + profit - drawings.

Accepted Answer

Closing capital represents the total equity of the business at the end of the accounting period. It is calculated as the beginning capital plus any capital contributions made during the period, plus any profits earned during the period, minus any drawings taken by the owner during the period. Therefore, option C is the correct choice, as it adds the beginning capital, capital contribution, and profit, and deducts drawings to arrive at the closing capital balance.

Question 8

Accrued income is recognised _________ the cash has been received.

Accepted Answer

The answer of Accrued income is recognised _________ the cash...

Question 9

Gains from the disposal of non-current assets are recognised as ____________ income.

Accepted Answer

The answer of Gains from the disposal of non-current assets...

Question 10

The accounting standards require a statement of changes in ______________ to be prepared by all reporting entities.

Accepted Answer

The answer of The accounting standards require a statement of...

Question 11

An ______________ expense is recognised when the value of an asset is determined to be lower than its carrying amount.

Accepted Answer

The answer of An ______________ expense is recognised when the...

Question 12

The ______________ of _____________ depreciation method measures depreciation based on an asset's activity or output relative to the total activity or output expected.

Accepted Answer

The answer of The ______________ of _____________ depreciation method measures...

Question 13

An entity's profit or loss is measured over a _________ period of time.

Accepted Answer

The answer of An entity's profit or loss is measured...

Question 14

Two expenses that are recognised under accrual accounting but which do not involve any cash flows _________ and _________.

Accepted Answer

The answer of Two expenses that are recognised under accrual...

Question 15

For a transaction to be recognised as income in the statement of profit or loss the elements must satisfy both the ________________ and ________________criteria as specified in the Conceptual Framework.

Accepted Answer

The answer of For a transaction to be recognised as...

Question 16

Increases in assets or decreases in liabilities that result in increases in equity,other than those relating to contributions from holders of equity claims,is the Framework's definition of ____________________.

Accepted Answer

The answer of Increases in assets or decreases in liabilities...

Question 17

If an item meets the definition of an expense,to be reported in the income statement it must also meet the recognition criteria of being probable that the decrease in economic benefits has arisen and that the amount is able to be reliably _______________.

Accepted Answer

The answer of If an item meets the definition of...

Question 18

When an asset's __________ amount is lower than its carrying amount,the asset is deemed to have been __________.

Accepted Answer

The answer of When an asset's __________ amount is lower...

Question 19

The relevant profit measure that isolates the returns associated with investment decisions is ______________ ______________ ______________ and ______________.

Accepted Answer

The answer of The relevant profit measure that isolates the...

Question 20

The main expense incurred by a retail business is __________ of __________.

Accepted Answer

The answer of The main expense incurred by a retail...

Quiz 6: Statement of Profit or Loss and Statement of Changes in Equity

An expense is considered to be __________________ if its non-disclosure could affect decisions made by the users of the statement of profit or loss.

The statement of profit or loss measures an entity's financial _________.

Which of the following is an example of other comprehensive income?

If the beginning balance of equity is $82 000,the ending balance is $37 000,and the loss for the period is $33 000,how much did the owner withdraw during the period for personal use?

Managers’ use of accounting discretion allowable under accounting policy choices and estimates to portray a desired level of profit in a particular reporting period is referred to as ___________________ management.

The statement of profit or loss is normally completed:

A statement of changes in equity shows closing capital as:

Accrued income is recognised _________ the cash has been received.

Gains from the disposal of non-current assets are recognised as ____________ income.

The accounting standards require a statement of changes in ______________ to be prepared by all reporting entities.

An ______________ expense is recognised when the value of an asset is determined to be lower than its carrying amount.

The __ of _ depreciation method measures depreciation based on an asset's activity or output relative to the total activity or output expected.

An entity's profit or loss is measured over a _________ period of time.

Two expenses that are recognised under accrual accounting but which do not involve any cash flows _ and _.

For a transaction to be recognised as income in the statement of profit or loss the elements must satisfy both the and criteria as specified in the Conceptual Framework.

Increases in assets or decreases in liabilities that result in increases in equity,other than those relating to contributions from holders of equity claims,is the Framework's definition of ____________________.

If an item meets the definition of an expense,to be reported in the income statement it must also meet the recognition criteria of being probable that the decrease in economic benefits has arisen and that the amount is able to be reliably _______________.

When an asset's amount is lower than its carrying amount,the asset is deemed to have been .

The relevant profit measure that isolates the returns associated with investment decisions is and .

The main expense incurred by a retail business is of .