Deck 5: Balance Sheet

Question 1

Which of the following is not a liability class found on a balance sheet?

A)payables
B)borrowings
C)provisions
D)allowance for doubtful debts

Answer 1

D

Question 2

Which of these is not a part of equity?

A)Income
B)Expenses
C)Cash
D)General reserve

Answer 2

C

Question 3

The balance sheet of an entity:

A)lists the assets,liabilities and equity at a point in time.
B)lists all assets and liabilities at present values.
C)gives all of the facts regarding financial position.
D)is the most important financial statement

Answer 3

A

Question 4

Which of the following is a liability?

A)provision for doubtful debts
B)accumulated depreciation
C)deferred revenue
D)revenue receivable

Question 5

The account unearned income is a:

A)an income account.
B)an expense account.
C)an asset account.
D)a liability account.

Question 6

Which of the following is not an essential characteristic for an asset?

A)future economic benefits are expected to flow to the entity from the resource.
B)the resource must be controlled by the entity
C)the resource must be as a result of a past event
D)the resource must be owned by the entity

Question 7

If total assets equal $145 000,total liabilities are $95 000 and total equity equals $55 000 then net assets equals

A)$145 000
B)$200 000
C)$95 000
D)$55 000

Question 8

Under the Corporations Act a company's assets are to be classified according to their nature or function.Which of the following classifications would not be used for assets?

A)liquidity
B)marketability
C)physical characteristics
D)source

Question 9

When an individual or entity,such as a superannuation fund,buys some shares on the stock exchange the total equity of the company in which the shares are purchased:

A)increases
B)remains unchanged
C)decreases
D)will be greater than total liabilities

Question 10

Select the asset that is not an identifiable intangible asset.

A)Goodwill
B)Brand name
C)License
D)Development expenditure

Question 11

The equity shown in a business's balance sheet is.

A)exactly equal to the market value of all the businesses assets less its outstanding debts
B)exactly equal to the total of the assets minus the total liabilities
C)exactly equal to the historical cost of all the business assets less its outstanding debts
D)exactly equal to the total of the assets plus the total liabilities

Question 12

The credit sale of an asset at cost price:

A)decreases assets and increases liabilities.
B)leaves total assets constant.
C)increases assets and liabilities.
D)decreases assets and liabilities.

Question 13

A balance sheet can be presented in a number of ways.Which of these is not one of those ways?

A)As a contingent report
B)As a budgeted report
C)As a consolidated report
D)Including comparative figures

Question 14

Which of these is not part of shareholders' equity in the balance sheet?

A)Share capital
B)Retained earnings
C)Revaluation reserve
D)Dividends payable

Question 15

The liabilities of an entity are owed to:

A)its debtors.
B)its creditors.
C)its owners.
D)its shareholders.

Question 16

The statement regarding equity that is true is:

A)It is decreased by profit
B)It is fixed at the amount initially contributed by the owners
C)It is the owners' claim on the net assets of the entity
D)It arises solely from the retained earnings of the entity

Question 17

Which of these is not a current liability?

A)Dividend payable
B)Accounts payable
C)General reserve
D)Accrued expenses

Question 18

All these statements about the balance sheet are true,except

A)assets are listed in order of liquidity.
B)it shows the cash received and cash paid for the period.
C)it

Question 19

Trend Co Ltd was set up in 2013 with share capital of $1 000 000.In year 1 a loss of $200 000 was recorded,in year 2 a profit of $50 000 and in year 3 a profit of $450 000.Also in year 3 a dividend of 2% of paid up capital was paid to shareholders and $30 000 was transferred from retained earnings to a general reserve.The shareholder's equity of Trend Co Ltd at the end of year 3 was:

A)$1 280 000
B)$1 250 000
C)$280 000
D)$250 000

Question 20

The common characteristic shared by all assets is:

A)their tangible nature.
B)their long life.
C)their great monetary value.
D)their expected future economic benefits.

Question 21

Trade Wind Ltd acquired all the shares in Clear Wind Ltd at a cost of $1 250 000.The fair value of the assets acquired was $1 450 000 and the fair value of the liabilities assumed was $450 000.The amount of goodwill acquired by Trade Wind Ltd is:

A)$1 000 000
B)$200 000
C)$250 000
D)$850 000

Question 22

Under the accounting standards internally generated goodwill should:

A)not appear as an asset on the balance sheet.
B)should appear on the balance sheet as a current asset.
C)should appear on the balance sheet as a non-current asset.
D)should appear on the balance sheet as equity

Question 23

A truck was purchased for $45 000,its estimated residual value is $5000 and accumulated depreciation of $10 000 has been written off.Its carrying value is:

A)$10 000.
B)$35 000.
C)$45 000.
D)$30 000.

Question 24

Determine the value of inventory using the 'lower of cost or net realisable value' rule.
$\begin{array}{cccc} & \text { Number } & \text { Cost Each } & \text { Net realisable value each } \\\text { Item LA } & 15 & \$ 20 & \$ 35 \\\text { tem FA } & 3 & \$ 25 & \$ 38 \\\text { tem GA } & 1 & \$ 18 & \$ 10\end{array}$

A)$393
B)$385
C)$649
D)$657

Question 25

Which of the following is not true regarding the use of the first-in first-out (FIFO)method of valuing inventory?

A)Cost of sales is assumed to consist of the weighted average of the goods acquired
B)The most recent goods acquired are assumed to be included in closing inventory
C)The earliest goods acquired are assumed to comprise closing inventory
D)Cost of sales is assumed to consist of the most recent goods acquired

Question 26

The asset class 'investments accounted for using the equity method' will only appear on the balance sheet if:

A)the entity owns 100% of the shares in another entity
B)the entity owns 75% of the shares in another entity
C)the entity owns enough shares in another entity to enable it to exert significant influence over the other entity's decision making
D)the entity owns enough shares in another entity to enable it to exert

Question 27

The cost of replacing an asset is known as its:

A)Market cost.
B)Current cost.
C)Present value.
D)Historical cost.

Question 28

If an asset purchased for $60 000 with a carrying amount of $55 000 is offered for sale at $50 000 and is purchased for $45 000 then the buyer would value the building at:

A)$45 000
B)$50 000
C)$55 000
D)$60 000

Question 29

Which of the following is not true regarding the value given to an asset in the balance sheet?

A)it is equal to its carrying value.
B)it is dependent on the valuation method used.
C)it is unrelated to the financing method used to purchase it.
D)it is always based on historical cost.

Question 30

Living animals or plants such as trees in a plantation,dairy cattle,or chickens are known under the accounting standards as:

A)Farming assets
B)real assets
C)Biological assets
D)Natural assets

Question 31

The statement concerning goodwill that is not true is:

A)Internally generated goodwill cannot be recognised
B)Goodwill can be revalued upwards
C)Goodwill must be tested for impairment at least annually
D)Goodwill is an unidentifiable intangible asset

Question 32

Assets and liabilities are listed in the balance sheet in order of:

A)degree of risk.
B)tangibility.
C)liquidity.
D)profitability.

Question 33

Accumulated depreciation on a liability is:

A)the amount of the liability already repaid.
B)the amount received in interest from investing due to the delaying of payments to outside entities.
C)the reduced value of a debt due to the passing of time.
D)liabilities cannot be depreciated.

Question 34

Which of the following would not be included in the asset class cash and cash equivalents?

A)cash at bank
B)cash on hand
C)accounts receivable
D)short term deposits

Question 35

The distinction between current and non-current liabilities is based on:

A)Whether the liability is secured or unsecured
B)The size of the liability
C)Whom the liability is owned to
D)When the liability is due for payment

Question 36

The effect on the balance sheet of an accounting entry making a transfer from the retained earnings account to a general reserve account is:

A)a decrease the total shareholders' equity of the company.
B)there is no change to total shareholders' equity.
C)an increase in the total shareholders' equity of the company.
D)a decrease in the total shareholders' equity and a decrease in assets

Question 37

Which of the following statements regarding reserves is not true?

A)reserves can be created by transferring retained earnings
B)reserves can be created by certain requirements in the accounting standards
C)reserves can be created by certain requirements of the Corporations Act
D)reserves

Question 38

The statement regarding accumulated depreciation that is true is:

A) It helps calculate the market value of an asset
B) It is classified as a liability
C) It reflects the portion of the cost of an asset that has been assigned as an expense
D) It is classified as an expense

Question 39

The statement concerning goodwill that is not correct is:

A)Goodwill can be recognised on the balance sheet only if it is purchased
B)Goodwill is calculated as the excess of the consideration paid for a business over the fair value of the net assets acquired
C)Goodwill can only be purchased when a business is acquired as a going concern
D)Goodwill represents the value of trademarks,brand names,patents,licences etc.

Question 40

The statement concerning asset valuation is that is incorrect is:

A)Subject to a few exceptions,non-current assets,after acquisition,can be measured at either cost or fair value.
B)If non-current assets are measured using the cost basis,they cannot be valued at less than their recoverable amount.
C)If non-current assets are measured using the fair value basis fair value must be regularly reassessed.
D)Assets and liabilities are recorded initially at their historical cost.

Question 41

Collection of an accounts receivable will:

A)increase the cash account and decrease the accounts receivable account.
B)increase both the cash account and the accounts receivable account.
C)decrease both the cash account and the accounts receivable account.
D)decrease the cash account and increase the accounts receivable account.

Question 42

The elements of the balance sheet i.e.assets,liabilities and equity are defined in the _________________ ___________________.

Question 43

A ______________ financial liability is a financial liability whose value depends on the value on an underlying asset,

Question 44

A _________________ debt has a priority claim over the entity's assets in the event of the failure of the entity.

Question 45

Non-monetary assets without physical form are known as ________________ assets.

Question 46

The ______________ concept

Question 47

Which of the following measures of 'value' is not used under AASB accounting standards for property,plant and equipment?

A)fair value
B)written down value
C)historical cost
D)current cost

Question 48

The original cost of an asset less its _____________depreciation is its carrying amount.

Question 49

_____________ earnings are cumulative profits made by a company that have not been distributed as dividends or transferred to a reserve account.

Question 50

The account accumulated depreciation is reported on the

A)income statement as an expense.
B)balance sheet as a contra asset account
C)balance sheet as a liability
D)balance sheet as an expense

Question 51

Goodwill is regarded as a particular type of intangible asset;an ______________ intangible.

Question 52

On the balance sheet of a publicly listed manufacturing company the current asset inventories would not include:

A)raw materials
B)finished goods available for sale
C)work-in-progress
D)cost of sales

Question 53

Which of these items of importance for decision-making can be measured and included on the balance sheet?

A)The value of employee's skills and abilities
B)Future claims on the business from leasing arrangements
C)The cost of bad publicity
D)Identifiable intangible assets

Question 54

_______________ decisions are decisions relating to the acquisition and sale of assets.

Question 55

The negative asset,allowance for __________ debts reduces the value of accounts receivable by the amount expected to be uncollectible.

Question 56

At acquisition date,the cost price and fair value should be fairly equivalent.However,with the passage of time:

A)the fair value and cost price of an item can diverge
B)the fair value and cost price of an item remain fairly constant
C)the fair value is always greater than the cost price
D)the cost price is always greater than the fair value

Question 57

Which of the following statements regarding the value of assets in the balance sheet is not correct?

A)the value of assets in the balance sheet may be a mixture of values of historical cost and fair values
B)some assets may be valued at historical cost
C)some assets may be valued at fair value
D)some assets

Question 58

External claims on the assets of an entity are known as ___________________.

Question 59

Before a liability can be recognised on the balance sheet,it must satisfy the recognition criteria namely that it must be ______________ that an outflow of resources embodying economic benefits will result and that the amount can be measured reliably.

Question 60

Which of the following balance sheet items is not affected by the choice of measurement method?

A)accounts receivable
B)inventory
C)prepayments
D)property,plant and equipment

Question 61

Non-current assets with limited useful lives are known as _________________ assets.

Question 62

Under the accounting standards agricultural assets are recorded at their net ____________ value.

Question 63

The inventory valuation method that assumes that the first items bought are the first items sold is the first-in______________-______________ method.

Question 64

The __________-______-first-out method of inventory valuation is not permitted to be used in Austral