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QUESTION 1

1. Revenues result in an increase in assets or a decrease in liabilities.

   True

   False

1 points

QUESTION 2

1. The cost of goods sold is the _____ of inventory that has been sold.

   	a.	Cost
   	b.	Both a) and b)
   	c.	Neither a) nor b)
   	d.	Sales price

1 points

QUESTION 3

1. Which of the following statements about gross profit is NOT true?

   	a.	Gross profit is equal to total income minus total expenses.
   	b.	An entity cannot be sustainable unless the gross profit is positive.
   	c.	Gross profit is equal to sales less cost of sales.
   	d.	Gross profit is applicable to manufacturing and retail businesses.

1 points

QUESTION 4

1. ____________________ is equal to net revenues minus cost of goods sold.

   	a.	Gross profit
   	b.	Net profit
   	c.	Both a) and b)
   	d.	Neither a) nor b)

1 points

QUESTION 5

1. Withdrawals by an owner are found on the income statement as an expense.

   True

   False

1 points

QUESTION 6

1. The income statement:

   	a.	reports the assets, liabilities and equity at a specific point in time.
   	b.	summarises the change in retained earnings over a specific period of time.
   	c.	presents the income and expenses of an entity for a specific period of time.
   	d.	reports the changes in assets, liabilities and equity over a period of time.

1 points

QUESTION 7

1. ____________________ are the expenses (other than cost of goods sold) that a business incurs in its day-to-day operations.

   	a.	Tax expenses
   	b.	Operating expenses
   	c.	Interest expenses
   	d.	Finance costs

1 points

QUESTION 8

1. To determine its cash flows and outflows from operating activities, a business only needs to analyse its income statement accounts.

   True

   False

1 points

QUESTION 9

1. Decreases in economic benefits in the form of outflows or depletions of assets or incurrences of liabilities that result in a decrease in equity, other than those relating to distributions to equity participants is the definition of:

   	a.	income
   	b.	liabilities
   	c.	expenses
   	d.	equity

1 points

QUESTION 10

1. To make business decisions external users evaluate a business' risk, operating capability and financial flexibility.

   True

   False

1 points

QUESTION 11

1. Which of the following would NOT be classified as a cash flow from investing activities?

   	a.	Proceeds from repayment of loans to other parties
   	b.	Payment for plant and equipment.
   	c.	Proceeds from a loan to the entity
   	d.	Proceeds from the sale of plant and equipment

1 points

QUESTION 12

1. Buying a kitchen equipment to start up a restaurant is would be classified as which item in a statement of cash flow.

   	a.	Financing and operating
   	b.	Investing
   	c.	Operating
   	d.	Financing

1 points

QUESTION 13

1. Paying cash for purchase of Inventory would be classified as an operating item in a statement of cash flow.

   True

   False

1 points

QUESTION 14

1. The common business expense that does NOT appear in the statement of cash flows is the depreciation expense.

   True

   False

1 points

QUESTION 15

1. A decrease in the balance of Account Receivable would impact the following group in a cash flow statement.

   	a.	Financing Activities
   	b.	The transaction will not impact Cash Flow Statement
   	c.	Investing Activities
   	d.	Operating Activities

1 points

QUESTION 16

1. The income statement and cash flow statement are related because both report on:

   	a.	activities during an accounting period.
   	b.	increases in liabilities.
   	c.	increases in owner's equity.
   	d.	none of the options given.

1 points

QUESTION 17

1. Which of these causes a difference between the profit in the income statement and the net cash increase in the statement of cash flows?

   	a.	Depreciation.
   	b.	Wages owing.
   	c.	Credit sales not collected yet.
   	d.	All of the above.

1 points

QUESTION 18

1. Obtaining cash from creditors is an example of financing item in a statement of cash flow.

   True

   False

1 points

QUESTION 19

1. The primary purpose of the statement of cash flows is to:

   	a.	show the profit made at the end of the period
   	b.	show the cash balance at the end of the period
   	c.	provide information about the profit or loss during the accounting period
   	d.	provide information about the cash receipts and cash payments made during the accounting period

1 points

QUESTION 20

1. Which of these would NOT be classified as an operating item in a statement of cash flows?

   	a.	Decrease in bank overdraft.
   	b.	Payment of wages
   	c.	Payment of rent for business premises
   	d.	Interest expense paid.

1 points

QUESTION 21

1. In the current accounting period, expenses calculated on an accrual basis are $100 000 and the cash paid for expenses shown in the statement of cash flows is $80 000, therefore:

   	a.	expenses may have been paid for in advance in the previous period.
   	b.	expenses may have been incurred in the current period that have not been paid.
   	c.	depreciation may have been charged in the income report.
   	d.	all of the options are correct.

1 points

QUESTION 22

1. If the opening balance of plant and equipment was $310 000, the closing balance was $350 000 and plant and equipment costing $30 000 was sold during the period, what was the cost of equipment purchased?

   	a.	$350 000
   	b.	$40 000
   	c.	$30 000
   	d.	$70 000

1 points

QUESTION 23

1. Using the appropriate information from the table below, calculate the Net Cash Flow from Investing Activities:

   Cash balance, 1 July 2014 Cash paid to employees and suppliers Cash received from sale of land Cash paid as income taxes Cash received from dividends Cash paid to purchase delivery truck	$ 56 700 220 100 142 000 19 600 2500 40 000
   Cash received as proceeds from borrowings Cash paid as drawings Cash received from customers Cash received as interest Cash paid for interest Cash paid to purchase equipment	25 000 59 000 285 600 6 800 4 300 310

   	a.	101 690
   	b.	-19 600
   	c.	142 000
   	d.	56 700

1 points

QUESTION 24

1. Using the appropriate information from the table below, calculate the Net Cash Flow from Operating Activities:

   Cash balance, 1 July 2014 Cash paid to employees and suppliers Cash received from sale of land Cash paid as income taxes Cash paid to purchase delivery truck	$ 56 700 220 100 142 000 19 600 40 000
   Cash received as proceeds from borrowings Cash paid as drawings Cash received from customers Cash paid for interest Cash paid to purchase equipment	25 000 59 000 285 600 4 300 310

   	a.	285 600
   	b.	-220 100
   	c.	41600
   	d.	-19 600

1 points

QUESTION 25

1. In the current accounting period, sales (calculated on an accrual basis) are $360 000 and the cash received from sales is $140 000, therefore:

   	a.	there must have been more cash sales than credit sales.
   	b.	cash may have been collected from sales that occurred in the previous period.
   	c.	credit sales that occurred in the current period may not yet have been paid for.
   	d.	none of the options are correct.

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