BSNS115 - Multiple choice tutorial
questions With Solved Solutions.
Creating a budget is: - Answer part of the management accounting process
Recording cashflow is - Answer part of the financial accounting process
the financial statements - Answer -can be called by multiple names
- can differ in terms of their title by company
- are made up of several parts
accounting is - Answer - the language of business
- used to provide information for users
- a tool for decision making
1. Which of the following is not a limitation of accounting information?
a) Its objective nature.
b) Its subjective nature.
c) The use of historical data to predict future events.
d) The time delay from when events take place and their reporting.
e) None of the above - Answer a. Its objective nature. - benefit > limitation
1. The term accounting refers to:
a) the process of identifying, measuring, recording and communicating economic information
b) the process of producing financial statements
c) the recording of monetary transactions in the financial records of an entity
d) the provision of an opinion as to the accuracy and regulatory compliance of financial
statements.
None of the above - Answer a) the process of identifying, measuring, recording and
communicating economic information
1. If an entity borrows cash on a bank loan:
- What accounts will be affected? - Answer a) Assets increase, liabilities increase
(cash increase, bank loan increase)
, If an entity pays an accounts payable: - Answer Assets decrease, liabilities decrease
(cash, AR decrease and AP decrease)
If an entity declares and pays dividends - Answer asset increase, equity decreases
(cash increase, retained earnings decrease )
if an entity collects an accounts receivable: - Answer assets increase, assets decrease
(cash increase, AR decrease)
If an entity sells inventory on account at a profit - Answer Assets increase, equity increases -
because we sold at a profit
(cash reveune increase, retained earnings increase)
if an entity pays operating expenses in cash - Answer assets decrease, equity decrease
(cash decrease, retained earnings decrease)
if an entity issues ordinary shares in the company - Answer assets increase, equity increases
contributed capital increases
What are the 3 types of errors that can occur when recording transactions and give example of
each - Answer 1- Single entry error
- only one part transaction recorded
2. transposition error
- number entered wrong
e.g. $3250 vs $5320
3. Incorrect Entry
- simply entered numbers wrong
Describe the overall effect to assets when the following transactions occur:
i. the firm borrows money from the bank - Answer current assets will increase (bank loan),
and cash will increase
ii. a customer pays their bill - Answer decrease assets
- accounts receivable decrease
questions With Solved Solutions.
Creating a budget is: - Answer part of the management accounting process
Recording cashflow is - Answer part of the financial accounting process
the financial statements - Answer -can be called by multiple names
- can differ in terms of their title by company
- are made up of several parts
accounting is - Answer - the language of business
- used to provide information for users
- a tool for decision making
1. Which of the following is not a limitation of accounting information?
a) Its objective nature.
b) Its subjective nature.
c) The use of historical data to predict future events.
d) The time delay from when events take place and their reporting.
e) None of the above - Answer a. Its objective nature. - benefit > limitation
1. The term accounting refers to:
a) the process of identifying, measuring, recording and communicating economic information
b) the process of producing financial statements
c) the recording of monetary transactions in the financial records of an entity
d) the provision of an opinion as to the accuracy and regulatory compliance of financial
statements.
None of the above - Answer a) the process of identifying, measuring, recording and
communicating economic information
1. If an entity borrows cash on a bank loan:
- What accounts will be affected? - Answer a) Assets increase, liabilities increase
(cash increase, bank loan increase)
, If an entity pays an accounts payable: - Answer Assets decrease, liabilities decrease
(cash, AR decrease and AP decrease)
If an entity declares and pays dividends - Answer asset increase, equity decreases
(cash increase, retained earnings decrease )
if an entity collects an accounts receivable: - Answer assets increase, assets decrease
(cash increase, AR decrease)
If an entity sells inventory on account at a profit - Answer Assets increase, equity increases -
because we sold at a profit
(cash reveune increase, retained earnings increase)
if an entity pays operating expenses in cash - Answer assets decrease, equity decrease
(cash decrease, retained earnings decrease)
if an entity issues ordinary shares in the company - Answer assets increase, equity increases
contributed capital increases
What are the 3 types of errors that can occur when recording transactions and give example of
each - Answer 1- Single entry error
- only one part transaction recorded
2. transposition error
- number entered wrong
e.g. $3250 vs $5320
3. Incorrect Entry
- simply entered numbers wrong
Describe the overall effect to assets when the following transactions occur:
i. the firm borrows money from the bank - Answer current assets will increase (bank loan),
and cash will increase
ii. a customer pays their bill - Answer decrease assets
- accounts receivable decrease
