Accounting for Non-Specialists Practice Exam
Course Introduction
This course introduces the fundamental principles and concepts of accounting to students with little or no prior background in the subject. It emphasizes the practical use of accounting information for decision-making purposes rather than technical preparation of accounts. Topics include understanding financial statements, basic bookkeeping, cost analysis, budgeting, and the interpretation of accounting data for planning, control, and performance evaluation in organizations. The course is designed to provide essential accounting literacy to non-specialists, enabling them to effectively use financial information in their professional and personal lives.
Recommended Textbook
Financial Accounting An Integrated Approach 6th Australia Edition by Trotman
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Page 2
Chapter 1: Introduction to Financial Accounting
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Sample Questions
Q1) The life of a business is divided into equal periods to determine profit or loss for that period.What assumption/concept underlies this procedure?
A) Materiality
B) Monetary
C) Accounting period
D) Accounting entity
Answer: C
Q2) What is the balance of liabilities?
A) $18 000
B) $30 000
C) $20 000
D) $21 000
Answer: A
Q3) What is the balance of total assets at 30 June 2016?
A) $400 000
B) $420 000
C) $580 000
D) None of the answers provided
Answer: B
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Page 3
Chapter 2: Measuring and Evaluating Financial Position and
Financial Performance
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Sample Questions
Q1) Which of the following is NOT an expense of a company?
A) Cost of goods sold
B) Dividends paid to shareholders
C) Interest for the period
D) Depreciation on factory
Answer: B
Q2) Which of the following accounts would appear in an income statement?
A) Accumulated depreciation
B) Cost of goods sold
C) Rent payable
D) None of the answers provided
Answer: B
Q3) Which of the following is NOT an expense of a company?
A) Cost of goods sold
B) Repayment of principal on a loan
C) Repayment of interest on a loan
D) Sales commission
Answer: B
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Chapter 3: The Double-Entry System
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Sample Questions
Q1) Identify the journal entry required to correctly record the following transaction. Depreciation expense on motor vehicles for the year incurred.
A) Dr Motor vehicles
Cr Accumulated depreciation
B) Dr Accumulated depreciation
Cr Depreciation expense
C) Dr Depreciation expense
Cr Motor vehicles
D) Dr Depreciation expense
Cr Accumulated depreciation
Answer: D
Q2) A cheque was drawn to pay an account payable.
A) A liability increased and another liability decreased.
B) An asset decreased and a liability decreased.
C) An asset decreased and an expense increased.
D) None of the above is correct.
Answer: B
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Page 5
Chapter 4: Record-Keeping
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Sample Questions
Q1) Which transaction is an accrual accounting end-of-period adjustment?
A) (7)
B) (8)
C) (9)
D) (10)
Q2) Which transaction represents the acquisition of a noncurrent asset?
A) (2)
B) (4)
C) (9)
D) (10)
Q3) What is the closing balance of inventory?
A) $120 000
B) $140 000
C) $200 000
D) $260 000
Q4) Which of the following is an internal transaction?
A) Payment of dividends to shareholders
B) Loan to a director
C) Depreciation of equipment
D) Purchase of machinery on credit
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Chapter 5: Accrual Accounting Adjustments
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Sample Questions
Q1) What was the depreciation expense for year ended 31 December 2016?
A) $10 500
B) $9250
C) $8500
D) $8000
Q2) Able Ltd operates on a five-day working week.Employees are paid on Thursday for work completed to Wednesday.The weekly wages bill is $40 000.If 30 June 2016 fell on a Tuesday,what was the accrued wages payable on 30 June 2016?
A) $8000
B) $16 000
C) $32 000
D) None of the answers provided
Q3) What is the journal entry made by TV Manufacture Ltd on 7 October 2016?
A) Dr Warranty expense Cr Warranty liability
B) Dr Warranty liability Cr Warranty expense
C) Dr Warranty liability Cr Cash
D) Dr Cash Cr Warranty liability
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Chapter 6: Financial Reporting Principles, accounting
Standards and Auditing
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Sample Questions
Q1) The preparation of financial statements in a similar form to those of other companies facilitates:
A) comparability.
B) materiality.
C) faithful representation.
D) understandability.
Q2) The return you earn by owning a share is:
A) the cash from dividends.
B) the current price of the share on the Australian Securities Exchange.
C) the change in the market price of the share.
D) cash from dividends plus the change in the market price of the share.
Q3) The agency charged with the administration and enforcement of the <i>Corporations Act 2001 </i>is the:
A) Australian Accounting Standards Board.
B) Australian Securities Exchange.
C) Australian Securities and Investments Commission.
D) Australian Accounting Research Foundation.
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Page 8
Chapter 7: Internal Control and Cash
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Sample Questions
Q1) Which of the following is NOT true of a sound system of internal control?
A) Implementation of controls involves costs.
B) A sound system of internal control is the responsibility of management.
C) All errors and irregularities should be eliminated.
D) A sound system of internal control is fundamental to the production of reliable financial reports.
Q2) The statement that compares the balance as shown in the bank's records with the balance in the cash at bank account at a particular date is known as the:
A) bank statement.
B) bank reconciliation statement.
C) bank control account.
D) cash flow statement.
Q3) What was the final bank balance in Alison Ltd's ledger at 31 December?
A) $5400 Dr
B) $5400 Cr
C) $8600 Dr
D) $8600 Cr
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Chapter 8: Accounts Receivable and Further
Record-Keeping
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Sample Questions
Q1) What was the balance of the debtors control account at 31 January 2016?
A) $8400
B) $4100
C) $3900
D) $4400
Q2) Which of the following statements about subsidiary ledgers and control accounts is NOT true?
A) Every entry made to an account in the subsidiary ledger is also reflected in the control account in the general ledger.
B) All credit entries will be the same in aggregate between the subsidiary ledger and the control account.
C) The total of the balances appearing in the accounts in the subsidiary ledger should equal the balance appearing in the control account.
D) If the total of the subsidiary ledger accounts fails to agree with the balance of the control account,the subsidiary ledger must be in error.
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Chapter 9: Inventory
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Sample Questions
Q1) What was the value of ending inventory of Algo,using the LIFO assumption in a periodic inventory system?
A) $1580
B) $1480
C) $1460
D) $1590
Q2) A company discovered that inventory that cost $1000 and normally sells for $1200 has become obsolete and will be scrapped next month.The effect of the adjusting journal entry is to:
A) decrease profit by $1000 and decrease total assets by $1000.
B) decrease profit by $1200 and decrease total assets by $1000.
C) decrease profit by $1200 and decrease total assets by $1200.
D) decrease profit by $1000 and not affect total assets.
Q3) Raw materials of inventory were purchased on credit for $200 000 on 10 June.The company uses the perpetual method.This transaction will:
A) increase assets,liabilities and shareholders' equity.
B) increase assets and liabilities but reduce shareholders' equity.
C) increase liabilities but have no effect on assets or shareholders' equity.
D) increase assets and increase liabilities.
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Page 11
Chapter 10: Noncurrent Assets
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Sample Questions
Q1) A machine purchased on 1 July 2016 cost $100 000 and has a zero estimated salvage value.The useful life of the machine is five years.If the machine was sold on 30 September 2018,what would its net book value be?
A) $45 000
B) $50 000
C) $55 000
D) $60 000
Q2) Which of the following should NOT be included in the cost of a new machine?
A) Delivery of machine to factory
B) Repair costs to existing equipment
C) Cost of testing machine
D) Installation costs
Q3) Assuming Norman Ltd used the reducing balance method of depreciation and a rate of 40 per cent,the balance of the accumulated depreciation account at 30 June 2017 was:
A) $28 800.
B) $18 000.
C) $10 800.
D) none of the answers provided.
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Page 12
Chapter 11: Liabilities
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Sample Questions
Q1) When a liability increases which of the following is correct?
A) An expense may increase.
B) An asset may decrease.
C) Shareholders' equity may increase.
D) Revenue may increase.
Q2) When a business collects GST from customers,it records:
A) a contra asset.
B) a liability.
C) an expense.
D) an asset.
Q3) Future warranty costs related to this year's sales will appear in the balance sheet under:
A) an accrual on the balance sheet.
B) a provision on the balance sheet.
C) a contingent liability on the balance sheet.
D) a contingent liability in the notes to the accounts.
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Chapter 12: Completing the Balance Sheet
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Sample Questions
Q1) Which of the following is NOT true with respect to bonus shares? They:
A) increase net assets.
B) have no effect on cash balances.
C) give directors the opportunity to signal future dividend policy to current and future shareholders.
D) total shareholders' equity increases.
Q2) If Yu Ltd used the equity method,what would have been the impact of Ping Ltd's 31 December 2016 earnings announcement?
A) Investment in Ping Ltd would have increased by $150 000.
B) Dividend revenue would have increased by $150 000.
C) Investment in Ping Ltd would have increased by $150 000 and dividend revenue would have increased by $150 000.
D) There would be no impact.
Q3) If Sky-High Ltd used the equity basis,what revenue would it record for the year ended 31 December 2016 in respect of its investment in Down Ltd?
A) $90 000
B) $150 000
C) $190 000
D) $280 000
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Page 14
Chapter 13: Revenue and Expense Recognition: Additional Concepts
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Sample Questions
Q1) Which of the following transactions should not result in revenue recognition in 2016?
A) Services for a customer were carried out on credit in 2016,to be collected in 2017.
B) Services were carried out for a customer for cash in 2016.
C) Payment was received from a customer in 2016,for services provided in 2015.
D) Goods were sold to a customer on credit in 2016,with cash to be collected in 2017.
Q2) What is the effect of the error on 2015 cash from operations?
A) There is no cash effect.
B) It is $1200 too high.
C) It is $1800 too high.
D) It is $3000 too high.
Q3) How much profit was earned during the third year if the completion of production method was used?
A) $360 000
B) $440 000
C) $800 000
D) $400 000
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15
Chapter 14: The Statement of Cash Flows
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Sample Questions
Q1) What was the cash flow from operating activities?
A) ($90)
B) ($350)
C) ($610)
D) ($500)
Q2) The prepaid insurance account showed an opening balance of $22 000 and a closing balance of $25 000.Insurance expense was $67 000.What was the cash payment for insurance?
A) $64 000
B) $67 000
C) $70 000
D) $45 000
Q3) What was the cash flow from investing activities?
A) $570
B) $210
C) ($290)
D) ($330)
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) Which of the following statements about a ratio is NOT true?
A) If the financial statements are materially misstated,then ratios will be misleading.
B) A ratio is always expressed as a percentage.
C) A ratio can be interpreted and used meaningfully only with a good understanding of the company.
D) Ratios are indicators that can be interpreted.
Q2) Which of the following could NOT explain an increase in the return on equity ratio?
A) Share buyback
B) Declaring a final dividend
C) Increase in profits
D) Purchase of land on credit
Q3) The inventory of Dyer Ltd for year ended 31 December 2016 was $70 000.The number of days' inventory on hand was 91.25 days.What was the cost of goods sold for the year?
A) $140 000
B) $259 000
C) $280 000
D) None of the answers provided
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17
Chapter 16: Accounting Policy Choices
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Sample Questions
Q1) what would be the effect on cash from operations?
A) $340 000 reduction
B) $217 600 increase
C) $217 600 reduction
D) no effect
Q2) what would be the effect on depreciation expense?
A) $122 400 reduction
B) $217 600 reduction
C) $340 000 reduction
D) $217 600 increase
Q3) Select the balance sheet account(s)that would be affected by a policy choice at the same time as the cost of goods sold income statement account.
A) Accounts receivable
B) Inventories
C) Prepaid expenses
D) Property,plant and equipment
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18
Chapter 17: Sustainability Reporting
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Sample Questions
Q1) An organisation has direct control over the amount of emissions it creates through:
A) its use of fuel to operate machinery.
B) outsourcing printing activities.
C) use of electricity supplied by an electrical company.
D) no means;an organisation does not have direct control over emissions.
Q2) Sustainability reporting refers to:
A) environmental,social and economic performance.
B) reporting on carbon emissions.
C) maximising the net returns to shareholders.
D) maximising the net profits of the organisation.
Q3) Which of the following is an environment performance indicator?
A) Policy,practices and spending on locally based suppliers
B) Direct economic value generated
C) Energy consumption within the organisation
D) Development and impact of infrastructure investments and services supported
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