Q: What is the formula for calculating profit (loss) for the year in an income statement?

$$\text{Profit (Loss)} = \text{Total Income} - \text{Total Expenses}$$

Q: Which of the following is the correct formula for calculating the estimated ending bank balance in a cash budget?

$$\text{Estimated ending bank balance} = \text{Opening bank balance} + \text{Surplus/deficit of cash}$$

Q: Which of the following is the correct formula for calculating carrying amount of property, plant, and equipment?

$$\text{Carrying amount} = \text{Cost} - \text{Accumulated depreciation}$$

Question 1

Which of the following is classified as a current asset in a Statement of Financial Position?

Accepted Answer

Accounts receivable

Question 2

In preparing an income statement, which of the following is considered an administration expense?

Accepted Answer

Electricity

Question 3

What is the formula for calculating profit (loss) for the year in an income statement?

Accepted Answer

$$	ext{Profit (Loss)} = 	ext{Total Income} - 	ext{Total Expenses}$$

Question 4

Which item should NOT be included in a cash budget according to the study materials?

Accepted Answer

Drawings of stock

Question 5

A business purchases a new van for $12,000. How should this be recorded in the Statement of Financial Position?

Accepted Answer

As a non-current asset under 'Property, plant and equipment'

Question 6

If a business receives an invoice for supplies bought on credit, how is this transaction reflected in the cash budget?

Accepted Answer

It is not included in the cash budget

Question 7

Which of the following is the correct formula for calculating the estimated ending bank balance in a cash budget?

Accepted Answer

$$	ext{Estimated ending bank balance} = 	ext{Opening bank balance} + 	ext{Surplus/deficit of cash}$$

Question 8

Which of the following is an example of a finance cost in an income statement?

Accepted Answer

Interest on loan

Question 9

A business has the following balances: Fees received $$45,500, Repairs on vehicles 15$$,000, Driver's salary $$21,000, Office rent 5$$,000, Electricity $$6,000, Stationery 800$$, Insurance $$1,200, Interest on loan 6$$,200. What is the total expenses for the year?

Accepted Answer

$$55,200$$

Question 10

Which of the following is classified as equity in the Statement of Financial Position?

Accepted Answer

Closing capital

Question 11

If a business pays monthly interest on a term deposit, how should this be treated in the cash budget?

Accepted Answer

It is included as a cash receipt

Question 12

Which of the following is NOT an administration expense?

Accepted Answer

Driver's salary

Question 13

A business has an opening bank balance of $$3,200, receives cash for sales of 3$$,575, and pays painting assistants wages of $710. What is the estimated ending bank balance?

Accepted Answer

$$6,065$$

Question 14

Which of the following is a plausible reason for classifying 'Advertising' as an expense?

Accepted Answer

It is a cost incurred to generate revenue

Question 15

In a cash budget, which item would be classified as a cash receipt?

Accepted Answer

Cash received for sales

Question 16

Which of the following is the correct formula for calculating carrying amount of property, plant, and equipment?

Accepted Answer

$$	ext{Carrying amount} = 	ext{Cost} - 	ext{Accumulated depreciation}$$

Question 17

A business receives a deposit for a cleaning job to be completed in April 2023 for $120. How should this be treated in the cash budget for April?

Accepted Answer

It is included as a cash receipt

Question 18

Which of the following is a non-current liability?

Accepted Answer

Loan

Question 19

If a business has total assets of $$52,000 and total liabilities of 18$$,000, what is the net assets?

Accepted Answer

$$34,000$$

Question 20

Which of the following is NOT a cash budget rule?

Accepted Answer

Include depreciation of non-cash items

Financial Statements, Balance Day Adjustments, and Cash Budgets – Guided Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards