FAC1601 - Financial Accounting and Reporting MCQS with Correct Answers - Past Papers

Financial Accounting and Reporting MCQS with correct. The MCQs are based on the
illustrations below.


Illustrations
1. A company purchased a building for $100,000 on January 1, 2023. The building
is expected to have a useful life of 20 years and a residual value of $20,000.

2. A company purchased equipment for $50,000 on January 1, 2023. The
equipment is expected to have a useful life of 10 years and a residual value of
$5,000.

MCQs
1. The depreciation expense for the building for the year 2023 is:


A. $5,500

B. $5,000

C. $4,500

D. $4,000

2. The depreciation expense for the equipment for the year 2023 is:


A. $4,500

B. $2,500

C. $2,000

D. $1,000

3. The balance of the accumulated depreciation account for the building at the end
of 2023 is:


A. $0

B. $5,000

C. $4,500

D. $4,000

,4. The balance of the accumulated depreciation account for the equipment at the
end of 2023 is:


A. $4500

B. $2,500

C. $2,000

D. $1,000

5. The carrying value of the building at the end of 2023 is:


A. $100,000

B. $96,000

C. $90,000

D. $85,000

6. The carrying value of the equipment at the end of 2023 is:


A. $50,000

B. $47,500

C. $45,500

D. $42,500

7. The net income for the year 2023 is $100,000. The company declared and paid a
$20,000 cash dividend during the year. The retained earnings balance at the
beginning of 2023 was $50,000. What is the retained earnings balance at the end
of 2023?


A. $130,000

B. $90,000

C. $80,000

D. $70,000

, 8. The company has a current ratio of 2.0. The current assets are $100,000. What
are the current liabilities?


A. $50,000

B. $60,000

C. $70,000

D. $80,000

9. The company has a debt-to-equity ratio of 1.5. The total liabilities are $100,000.
What are the total equity?


A. $56,556

B. $66,667

C. $78,150

D. $60,320

10. The company has a profit margin of 10%. The net income is $100,000. What are
the total sales?


A. $1,000,000

B. $900,000

C. $800,000

D. $700,000

Answers
1. D

2. A

3. D

4. A

5. B

6. C

, 7. A

8. A

9. B

10. A

11. A company has a current ratio of 2.0. The current liabilities are $50,000. What are
the current assets?
A. $100,000
B. $150,000
C. $200,000
D. $250,000
Answer: A


12. A company has a debt-to-equity ratio of 1.5. The total equity is $50,000. What are
the total liabilities?
A. $75,000
B. $100,000
C. $125,000
D. $150,000
Answer: A


13. A company has a profit margin of 10%. The total sales are $1,000,000. What is the
net income?
A. $100,000
B. $200,000
C. $300,000
D. $400,000
Answer: A


14. A company has a return on assets of 15%. The total assets are $1,000,000. What is
the net income?
A. $150,000
B. $200,000
C. $300,000
D. $400,000