Accounting Mock Exam
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Part 1 – Multiple Choices Questions - Accounting
1) Which one of the following is an external user of accounting information?
a) Potential Investors
b) Employees
c) Managers
d) Owners of the company
Answer: a
2) Cost of goods sold is £10000 and gross profit is £4000 then sales will be
a) +£14,000
b) −£14,000
c) +£6,000
d) −£6000
Answer: a
3. 5. Which of the following is not a current liability?
a. Wages payable.
b. Accounts payable.
c. Taxes payable.
d. Bonds payable.
3) Which of the following would be a liability for a business?
a) Money owed to business by customers
b) Trade receivables
c) Account payables
d) Account receivables
Answer: c
4) Which one of the following would be classified as a current asset for a furniture retailer
a) Goodwills
b) Furniture held for resale
c) Trade payable
d) Property, plant and equipment
Answer: b
5) Please find below Balance sheet of Aksari Ltd.
|
Balance sheet as at 31 December 2009 |
£ |
|
Current assets |
|
|
Inventories |
5,000 |
|
Trade receivables |
3,000 |
|
Investments |
1,500 |
|
Cash and bank |
500 |
|
|
|
|
Non-current assets |
|
|
Building and equipment |
20,000 |
|
|
|
|
|
|
|
Equity |
|
|
Ordinary shares |
4,000 |
|
Share premium |
4,650 |
|
Retained earnings |
11,500 |
The total liabilities are
a) £9,850
b) £8,850
c) £11,500
d) £20,150
= 9850
Answer: a
Total Liabilities = Total Assets – Equity
= (5000+3000+1500+500+20000)-(4000+4650+11500)= £9850
6) The quick ratio EXCLUDES which of the following?
a) Accounts/Trade receivables
b) Cash in the Bank
c) Inventory
d) Account/Trade payable
Answer: c
Using the following information to answer questions 7 and 8.
Listed in random order below are the balance sheet figures of Askari Ltd as at 31 March 2021:
Trade/ Account receivables £ 50,000
Cash £ 20,000
Inventories £ 10,000
Trade/ Account payables £ 30,000
Long-Term Loan £ 40,000
7) Askari's quick ratio is:
a) 2.67
b) 4.00
c) 1.14
d) 2.33
Answer: d
Quick Ratio = (Current Assets – Inventories)/Current Liabilities
= (80,000 - 10,000)/30,000= 2.33
8) Askari's current ratio is:
a) 1.14
b) 2.33
c) 2.67
d) 4.00
Answer: c, Current Ratio = 80,000/30,000= 2.67
9) John has made the following predictions for his business for the first six months of trading to 30 June 2020:
Sales in January and Febuary = £20,000 per month
Sales in March and April = £35,000 per month
Sales in May and June = £ 45,000 per month
Sales in July= £55,000 per month
All Sales will be on one month's credit
The total cash received in July will be:
a) £ 255,000
b) £ 155,000
c) £ 200,000
d) None of the above
Answer: c
10) The income statement measures:
a) what the firm owns and how those assets are financed
b) the profitability of the firm at a given point in time
c) the profitability of the firm over a period of time
d) how changes in the balance sheet are financed over time
Answer: c
11) Prime cost comprises the following combination of costs
a) Direct materials and factory overhead
b) Direct labour, and factory overhead
c) Direct material, direct labour and direct expense
d) Factory overhead only
Answer: c
12) Sales in the year ending 31st March 2019 were £ 43,200. Identify the gross profit margin, as a percentage, in each of following independent situations. Gross profit for the year was £ 5,400
a) 25%
b) 20%
c) 12.5%
d) 0.125%
Answer: c, Gross Profit Margin= Gross Profit/Sales = (43200/5400)*100 = 12.5%
13) Wages for canteen staff in factory would be classed as:
a) Direct materials
b) Administration expenses
c) Direct Labour
d) Indirect Labour
Answer: d
14. On the basis of the information provided below a business reported the gross profit for the period as £34,000 and net profit as £14,000.
|
Opening Inventory |
£354,000 |
|
Purchases |
£712,000 |
|
Sales |
£900,000 |
|
Closing Inventory |
£200,000 |
Since then it has been discovered that closing inventory is in fact £ 120,000. The effect of correcting this error is:
a) gross profit increases by £80,000
b) gross profit decreases by £80,000
c) gross profit as well as net profit remain unchanged
d) gross profit increases by £80,000 and net profit remains unchanged
Answer: b
15) If revenues are £12,000 and all variable cost are £6000, then contribution margin would be
a) £ -17,000
b) £ +17,000
c) £ +6,000
d) £ -5,000
Answer: c
16) December 31 2011, Jimenez Corporation had 60,000 no. of ordinary shares of common stock.
Additional information is as follows:
• Profit after tax for 2011= £120,000
• Market price per share of common stock at the end of 2011= £144
The price-earnings ratio on common stock at December 31, 2011 was
a) 18 to 1
b) 72 to 1
c) 36 to 1
d) None of these
Answer: b
= 120,000/60,000= 2:1
= 144/2 = 72:1
17) Listed in random order below are the balance sheet figures of Qalam Ltd as at 31 March 2021:
• Trade receivables £ 50,000
• Trade payables £ 40,000
• Building £ 90,000
• Long-term loan £ 40,000
• Inventories £ 10,000
• Cash and cash equivalents £ 20,000
Qalam's Current Liabilities are
A. £ 65,000
B. £ 40,000
C. £ 100,000
D. £ 90,000
Answer: b
2023-06-10