ACCT 2401 ALL ONLINE TEST ACCOUTING QUESTIONS AND ANSWERS AVAILABLE

ACCT 2401 ALL ONLINE TEST ACCOUTING QUESTIONS AND ANSWERS AVAILABLE • If total sales is $90000, office expenses is $30000 and rent expense is $15000, profit or loss is which of the following? Selected Answer: $45000 profit Answers: $45000 profit $45000 loss $75000 loss $75000 profit Feedback: Profit equals $45000 = ($90000 – $30000 – $15000). Learning Objective 2.3 ~ outline the basic financial statements used in business to report to users for decision-making purposes. • Question 2 1 out of 1 points A chart of accounts is a: Selected Answer: listing of the ledger account titles and their account numbers. Answers: formal plan developed by management to estimate information flows through the computerised system. listing of the ledger account titles and their account numbers. list of accounts receivable and payable. chart showing the organisational structure of the entity. Learning Objective 3.2 ~ describe the accounting cycle used to record, classify and summarise transactions, including the use of ledger accounts and the general ledger. • Question 3 1 out of 1 points Ignoring GST, which of the following entries correctly records the purchase of land for $ financed by a $ cash deposit with the balance payable via a 20-year, 6% loan? Selected Answer: DR Land $; CR Bank $; CR Loan $ Answers: DR Land $; CR Bank $ DR Land $; CR Bank $ DR Land $; CR Bank $; CR Loan $ DR Land $; CR Loan $ Learning Objective 3.5 ~ discuss the purpose of a trial balance and how to prepare one. • Question 4 1 out of 1 points Select the account types for these items: ▪ Rent received in advance ▪ Mortgage ▪ Prepaid expenses ▪ Rates Selected Answer: Liability, liability, asset, expense Answers: Expense, liability, liability, equity Asset, equity, asset, expense Liability, liability, asset, expense Expense, liability, asset, liability Learning Objective 3.2 ~ describe the accounting cycle used to record, classify and summarise transactions, including the use of ledger accounts and the general ledger. • Question 5 In order to avoid disputes it is preferable for partners to: Selected Answer: have a written agreement. Answers: confirm their agreement with a handshake. share profits and losses equally. 1 out of 1 points • Question 6 have a written agreement. work as ‘silent’ partners. Learning Objective 2.1 ~ identify the common types of business entities. In accounting, ABN stands for: Selected 1 out of 1 points Answer: Australian Business Number. Answers: Annual Business Number. Australian Business Number. Automated Business Number. Australian Bank Number. Learning Objective 3.1 ~ identify the nature, purpose and evidence for transactions. • Question 7 1 out of 1 points Which of these events would be recorded by an accountant? Selected Answer: An employee is paid by being given a computer instead of their normal wages. Learning Objective 3.1 ~ identify the nature, purpose and evidence for transactions. Answers: An employee resigns. An employee receives a promotion. An employee injures themselves at work in the course of their duties. An employee is paid by being given a computer instead of their normal wages. Learning Objective 3.1 ~ identify the nature, purpose and evidence for transactions. • Question 8 1 out of 1 points Governments and not-for-profit entities will prepare a(an) statement to report their financial performance for a specific period of time. Selected Answer: operating Answers: equity operating financial balance Learning Objective 2.3 ~ outline the basic financial statements used in business to report to users for decision-making purposes. • Question 9 Which statement relating to a trial balance is incorrect? Selected 1 out of 1 points Answer: A trial balance reports the financial performance of an entity. Answers: A trial balance may be prepared at any time to test the equality of debits and credits in the ledger. The fact that the total of the debit column equals the total of the credit column does not guarantee that the ledger if free from errors. A trial balance reports the financial performance of an entity. A trial balance is a list of all the accounts in the ledger with their current balances. Learning Objective 3.5 ~ discuss the purpose of a trial balance and how to prepare one. • Question 10 1 out of 1 points If an entity has liabilities of $ and equity of $ its assets are: Selecte d Answer: Answers : $. Feedback: Assets equals liabilities plus equity. ($$ + $) = $. Learning Objective 2.3 ~ outline the basic financial statements used in business to report to users for decision-making purposes. $. $. $. $. Feedback: Assets equals liabilities plus equity. ($$ + $) = $. Learning Objective 2.3 ~ outline the basic financial statements used in business to report to users for decision-making purposes. Question 1 Week 3 0 out of 1 points Hodges Ltd uses a subsidiary ledger and control account system for its accounts receivable. At the end of the accounting period a list of customers' accounts and balances owing is prepared from the subsidiary ledger. The purpose of this customer list is to: Selected Answer: establish whether the total debits and total credits in the subsidiary ledger are equal. Answers: determine the amount that should be posted to the accounts receivable control account. establish whether the total debits and total credits in the subsidiary ledger are equal. provide information necessary for the completion of the trial balance. prove that the subsidiary ledger agrees with the control account. Learning Objective 7.3 ~ record appropriate transactions in subsidiary ledgers, and reconcile each ledger with the appropriate control account in the general ledger. Question 2 1 out of 1 points All the details of transactions between the entity and individual customers are found in the: Selected Answer: accounts receivable subsidiary ledger. Answers: accounts receivable subsidiary ledger. accounts payable control account. accounts payable subsidiary ledger. sales ledger. Learning Objective 7.3 ~ record appropriate transactions in subsidiary ledgers, and reconcile each ledger with the appropriate control account in the general ledger. Question 3 1 out of 1 points What is the general ledger posting from the credit sales journal? Selected Answer: DR Accounts receivable, CR Sales, CR GST payable Answers: DR Sales, CR Accounts receivable DR Sales, CR GST payable, CR Cash DR Accounts receivable, CR Sales, CR GST payable DR Cash, DR GST payable, CR Accounts receivable Learning Objective 7.4 ~ record transactions for sales, purchases, cash receipts and cash payments in special journals and understand the purpose and use of the general journal when special journals are used. Question 4 1 out of 1 points What advantage does the automatic production of documents and reports provide a business? Selected Answer: Production of relevant reports in a timely manner. Answers: Processing of thousands of transactions at high speed. Production of relevant reports in a timely manner. Fast response time for customer queries. Automatic posting of transactions to the general ledger. Learning Objective 7.6 ~ understand the basic features of accounting software Question 5 1 out of 1 points Unauthorised access to a business’s computer files and/or confidential information would be performed by people known as: Selected Answer: hackers. Answers: hackers. employees. viruses. fraudsters. Learning Objective 7.6 ~ understand the basic features of accounting software Question 6 1 out of 1 points Subsidiary ledgers in a manual accounting system have three main advantages. Which of the following is not one of those advantages? Selected Answer: They dramatically reduce the occurrence of bad debts. Answers: They dramatically reduce the occurrence of bad debts. They remove a mass of detail from the general ledger. They allow a division of labour in maintaining the general and subsidiary ledgers. They improve internal control through the reconciliation of the control account with the subsidiary ledger. Learning Objective 7.3 ~ record appropriate transactions in subsidiary ledgers, and reconcile each ledger with the appropriate control account in the general ledger. Question 7 0 out of 1 points Cathy is both a debtor and a creditor of Palm Ltd. At the end of the period Cathy owes Palm Ltd $500 while Palm Ltd owes Cathy $2000. After offsetting the amounts, Palm Ltd’s books show a balance of how much as still owing to or from Cathy? Selected Answer: Cathy (debtor) owes $1500 Answers: Cathy (creditor) is owed $1500 Cathy (debtor) owes $1500 Cathy (creditor) is owed $2500 Cathy (debtor) owes $2500 Learning Objective 7.4 ~ record transactions for sales, purchases, cash receipts and cash payments in special journals and understand the purpose and use of the general journal when special journals are used. Question 8 1 out of 1 points Reduction in processing costs is an advantage/disadvantage of: Selected Answer: advantage of computerised accounting systems. Answers: advantage of computerised accounting systems. disadvantage of computerised accounting systems. advantage of manual accounting systems. disadvantage of manual accounting systems. Learning Objective 7.6 ~ understand the basic features of accounting software Question 9 1 out of 1 points Which of the following is not a problem of computerised accounting systems? Selected Answer: Inability to network the systems Learning Objective 7.6 ~ understand the basic features of accounting software Answers: Computer viruses Computer fraud Power failures Inability to network the systems Learning Objective 7.6 ~ understand the basic features of accounting software Question 10 1 out of 1 points Data that have been processed in some prescribed manner to be more useful for decision making is called: Selected Answer: information. Answers: output. details. information. input. Learning Objective 7.1 ~ understand how an accounting system operates and describe the three phases involved in the development of accounting systems. Question 1 Week 4 1 out of 1 points Income and expenses are accumulated for only one year and are therefore known as: Selected Answer: temporary accounts. Learning Objective 5.2 ~ explain why temporary ledger accounts need to be closed. Answers: current accounts. short-term accounts. yearly accounts. temporary accounts. Learning Objective 5.2 ~ explain why temporary ledger accounts need to be closed. Question 2 1 out of 1 points Profit for a financial period is measured as: Selected Answer: Income less expenses. Answers: Income less expenses. Assets less liabilities. Current assets less current liabilities. DRs less CRs. Learning Objective 4.1 ~ describe the difference between the cash basis and the accrual basis of measuring profit. Question 3 1 out of 1 points Which of these is not a name for the original cost of an asset less its accumulated depreciation (if any)? Selected Answer: Depreciable amount Answers: Carrying amount Depreciable amount Book value Written down value Feedback: Carrying amount, book value and written down value are all terms that refer to the cost of an asset less accumulated depreciation. Depreciable amount is cost of an asset less its recoverable amount. Learning Objective 4.3 ~ identify and prepare the different types of adjusting entries. Question 4 1 out of 1 points The accounts of John’s Flowers show the following end of year balances: During the closing process the total debit to the profit or loss summary account would be: Selected Answer: $6025 Answers: $6570 $6025 $6500 $6350 Feedback: Supplies Expense $1500, Interest Expense $25, Salaries Expense $4500. Learning Objective 5.4 ~ describe the closing process, and enter closing entries in accounting records and prepare a post-closing trial balance. Question 5 0 out of 1 points Closing entries are recorded: Selected Answer: in the journal only. Answers: in the ledger only. in the journal only. in the journal and the ledger. on the worksheet. Learning Objective 5.4 ~ describe the closing process, and enter closing entries in accounting records and prepare a post-closing trial balance. Question 6 1 out of 1 points On 1 May 2018, Dress in Style received a $2000 advance payment from a customer for the design and making of a formal gown. The gown is expected to be completed by the end of August 2018. By 30 June 2018, approximately half of the dress is complete. The correct adjusting entry to be recorded at 30 June 2018 is: Selected Answer: DR Unearned income $1000; CR Dress-making income $1000 Answers: DR Dress-making expenses $1000; CR Unearned income $1000 DR Unearned income $1000; CR Bank $1000 DR Unearned income $1000; CR Dress-making income $1000 DR Income earned $1000; CR Dress-making income $1000 Learning Objective 4.3 ~ identify and prepare the different types of adjusting entries. Question 7 1 out of 1 points What type of account is Prepaid Rent? Selected Answer: Asset Answers: Liability Income Asset Expense Learning Objective 4.3 ~ identify and prepare the different types of adjusting entries. Question 8 1 out of 1 points The Prepaid Insurance account of Stephen’s Spas shows a balance of $3000, representing a two-year insurance premium paid on 1 February 2018. After recording the adjustment on 30 June 2018, the end of the accounting period: Selected Answer: Insurance expense in the income statement is $625 and Prepaid Insurance in the balance sheet is $2375. Answers: Insurance expense in the income statement is $3000 and Prepaid Insurance in the balance sheet is $0. Insurance expense in the income statement is $625 and Prepaid Insurance in the balance sheet is $2375. Insurance expense in the income statement is $2375 and Prepaid Insurance in the balance sheet is $625. Insurance expense in the income statement is $750 and Prepaid Insurance in the balance sheet is $2250. Learning Objective 4.3 ~ identify and prepare the different types of adjusting entries. Question 9 1 out of 1 points Which of these is not a purpose of a post-closing trial balance? Selected Answer: Determining how much profit the entity has made. Answers: Determining how much profit the entity has made. Testing for the equality of debits and credits in the general ledger. Making sure the ledger is correct as the starting point for the next financial period. Checking that all the revenue and expense accounts have been closed-off. Feedback: The post-closing trial balance is prepared after the income statement has been prepared and is not prepared to determine profit. Learning Objective 5.4 ~ describe the closing process, and enter closing entries in accounting records and prepare a post-closing trial balance. Question 10 1 out of 1 points The main reason for preparing a post-closing trial balance is to: Selecte d Answer: Answers : confirm that the ledger is in balance at the start of the new accounting period. determine if any closing entries have been missed. determine if any adjusting entries have been missed. confirm that the ledger is in balance at the start of the new accounting period. prepare the financial reports. Learning Objective 5.4 ~ describe the closing process, and enter closing entries in accounting records and prepare a post-closing trial balance. Question 1 Week 5 1 out of 1 points Cost of goods available for sale is equal to: Selected Answer: Beginning inventory + net purchases Answers: Beginning inventory + net purchases Beginning inventory + net purchases – ending inventory Beginning inventory – ending inventory Net purchases – ending inventory Learning Objective 6.6 ~ prepare a detailed income statement for a retail business. Question 2 1 out of 1 points Offering a credit customer a discount after the sale has occurred is a way to: Selected Answer: encourage early payment of the amount owing Learning Objective 6.3 ~ account for sales transactions of retail businesses, including goods and services tax, the treatment of sales returns, cash discounts, trade discounts and freight costs. Answers : increase sales put the customer in a good mood avoid GST encourage early payment of the amount owing Learning Objective 6.3 ~ account for sales transactions of retail businesses, including goods and services tax, the treatment of sales returns, cash discounts, trade discounts and freight costs. Question 3 0 out of 1 points The opening balance in the inventory account under a periodic inventory system represents: Selected Answer: inventory on hand at the end of the current period as determined by a physical stocktake. Answers: inventory on hand at the end of the current period as determined by a physical stocktake. opening inventory plus purchases less ending inventory. inventory on hand at the end of the current period before allowing for any inventory variances. inventory on hand at the end of the previous period as determined by a physical stocktake. Learning Objective 6.4 ~ account for purchases of inventory and cost of sales under both the perpetual and periodic inventory systems by retail businesses. Question 4 1 out of 1 points Using the periodic approach to accounting for inventory, beginning inventory plus purchases minus ending inventory as determined by a physical stocktake, is assumed to equal: Selected Answer: cost of sales. Learning Objective 6.4 ~ account for purchases of inventory and cost of sales under both the perpetual and periodic inventory systems by retail businesses. Answers: inventory turnover. gross profit. selling expenses. cost of sales. Learning Objective 6.4 ~ account for purchases of inventory and cost of sales under both the perpetual and periodic inventory systems by retail businesses. Question 5 1 out of 1 points When goods are returned by a customer or the price is adjusted, Australia’s GST legislation requires the retailer to issue the customer with for all amounts totalling more than $50. Selected Answer: an adjustment note Answers : an invoice a negative tax invoice an adjustment note a refund note Learning Objective 6.3 ~ account for sales transactions of retail businesses, including goods and services tax, the treatment of sales returns, cash discounts, trade discounts and freight costs. Question 6 1 out of 1 points Which of the following is not required to appear on a tax invoice? Selected Answer: The signature of the person authorising the invoice Learning Objective 6.3 ~ account for sales transactions of retail businesses, including goods and services tax, the treatment of sales returns, cash discounts, trade discounts and freight costs. Answers : The words ‘tax invoice’ The GST amount payable The ABN of the issuing entity The signature of the person authorising the invoice Learning Objective 6.3 ~ account for sales transactions of retail businesses, including goods and services tax, the treatment of sales returns, cash discounts, trade discounts and freight costs. Question 7 1 out of 1 points James Ltd sold goods to Cameron Ltd on credit for $2500. Ignoring GST and Cost of Sales, the correct accounting entry to record this transaction in James Ltd’s books is: Selected Answer: DR Accounts receivable $2500; CR Sales $2500 Answers : DR Accounts receivable $2500; CR Sales $2500 DR Sales $2500; CR Accounts receivable $2500 DR Bank $2500; CR Sales $2500 DR Sales $2500; CR Cost of sales $2500 Learning Objective 6.3 ~ account for sales transactions of retail businesses, including goods and services tax, the treatment of sales returns, cash discounts, trade discounts and freight costs. Question 8 1 out of 1 points The use of computers has been a breakthrough for the perpetual inventory system. Many retail businesses use optical-scan cash registers to read barcodes. The scanners record the sale and, at the same time, update the inventory records with the of the sale. Enitites adopt the perpetual system because they believe the benefits outwieigh the of keeping the system operational. Selected Answer: cost Answers: fair value cost discoun t date Question 9 0 out of 1 points Assuming that the net price method of recording purchases is used and that the business uses the perpetual method of inventory recording, the correct entry to record the purchase of goods for $5000 on credit, with terms of 2/10, n/30 is: (ignore GST). Selected Answer: DR Purchases $5000; CR Accounts payable $4900; CR Discount allowed $100 Learning Objective 6.7 ~ describe the net method of recording purchases and sales whenever there are settlement discounts. Answers: DR Inventory $5000; CR Accounts payable $5000 DR Inventory $4900; CR Accounts payable $4900 DR Inventory $4900; DR Discount allowed $100: CR Accounts payable $5000 DR Purchases $5000; CR Accounts payable $4900; CR Discount allowed $100 Learning Objective 6.7 ~ describe the net method of recording purchases and sales whenever there are settlement discounts. Question 10 0 out of 1 points Under the periodic inventory system inventory purchased is debited to which account? Selected Answer: Inventory Learning Objective 6.4 ~ account for purchases of inventory and cost of sales under both the perpetual and periodic inventory systems by retail businesses. Answers: Prepaid expenses Cost of sales Purchases Inventory Learning Objective 6.4 ~ account for purchases of inventory and cost of sales under both the perpetual and periodic inventory systems by retail businesses. Week 6 Question 1 0 out of 1 points Which of the following is not a characteristic of good internal control? Selected Answer: Insurance of assets Answers: Insurance of assets Joint responsibility for assets Regular bank reconciliations Rotation of employees over a range of tasks Learning Objective 11.2 ~ explain internal control procedures relevant to the control of cash receipts and cash payments. Question 2 1 out of 1 points The asset most commonly subject to misappropriation is: Selected Answer: cash. Answers: cash. plant and equipment. investments. land and buildings. Learning Objective 11.1 ~ define the term cash as it is used in accounting. Question 3 1 out of 1 points Which of the following statements relating to a cash budget is true? Selected Answer: Non-cash items such as depreciation are excluded. Answers: It is a statement of expected income and expenses. Non-cash items such as depreciation are excluded. It is usually prepared on a weekly basis. The longer the time period involved the easier it is to predict future cash flows. Learning Objective 11.5 ~ identify the purpose and control features of a cash budget and prepare a cash budget. Question 4 1 out of 1 points Jumbo Playgrounds makes 90% of its sales on credit. Of those credit sales, 70% of the payments are received in the month of sale and 30% in the month following sale. Budgeted sales are: What is the estimated amount to be received from debtors in December? Selected Answer: $ Answers: $63000 $75600 $ $ Feedback: $ = (90% × $ × 70%) + (90% × $ × 30%). Learning Objective 11.5 ~ identify the purpose and control features of a cash budget and prepare a cash budget. Question 5 1 out of 1 points Harry & Sons makes all of its purchases on credit; 50% are paid in the month of purchase; 30% during the month following the purchase and 20% in the second month following the purchase. Given the following data, determine the cash paid to creditors during June. Selected Answer: $64000 Answers: $30000 $64000 $54000 $60000 Feedback: ($50000 × 20%) + ($80000 × 30%) + ($60000 × 50%). Learning Objective 11.5 ~ identify the purpose and control features of a cash budget and prepare a cash budget. Question 6 1 out of 1 points Flynn and Associates had an unadjusted bank account ledger balance at 30 November of $3552 Dr. The bank statement at the same date showed a balance of $3460 Cr. Bank service charges for the month were $22 and outstanding cheques totalled $630. The bank statement revealed that the bank had collected dividends for the firm of $450 and a deposit of $1150 is not yet recorded on the statement. What is the corrected bank account ledger balance at 30 November? Selected Answer: $3980 Answers: $3530 $3460 $3980 $4130 Feedback: $3552 – $22 + $450. Learning Objective 11.3 ~ identify the purpose and control features in maintaining a bank account and prepare a bank reconciliation statement. Question 7 1 out of 1 points Which of the following is a broad principle of cash management that helps ensure that a business remains solvent? Selected Answer: All of the above Learning Objective 11.6 ~ explain the essential principles of cash management. Answers: Collect cash owing from accounts receivable as quickly as possible. Invest any cash that is surplus to requirements to earn a return for the business. Pay accounts payable just before the due date rather than when the statement is first received. All of the above Learning Objective 11.6 ~ explain the essential principles of cash management. Question 8 1 out of 1 points Which of the following is not necessarily one of the benefits of effective internal control? Selected Answer: A sound liquidity position Answers: Safeguarding of assets A sound liquidity position More accurate accounting data A more efficient accounting system Learning Objective 11.2 ~ explain internal control procedures relevant to the control of cash receipts and cash payments. Question 9 1 out of 1 points Which of the following is a principle of good cash management? Selected Answer: Investing surplus cash. Answers: Investing surplus cash. Keeping inventory at a level where no item required by a customer is ever out of stock. Paying creditors before the due date. Offering large cash discounts to debtors to pay within 30 days. Learning Objective 11.6 ~ explain the essential principles of cash management. Question 10 1 out of 1 points The correct order in which the steps in the bank reconciliation process occur is: I. Prepare the bank reconciliation II. Tick off the items in the prior reconciliation with the bank statement III. Tick off the cash receipts and cash payments journals with the bank statement IV. Update the cash receipts and cash payments journals with unticked items from the bank statement Selected Answer: II, III, IV, I Learning Objective 11.3 ~ identify the purpose and control features in maintaining a bank account and prepare a bank reconciliation statement. Answers: III, II, IV, I III, IV, II, I IV, II, III, I II, III, IV, I Learning Objective 11.3 ~ identify the purpose and control features in maintaining a bank account and prepare a bank reconciliation statement. Week 8 Question 1 1 out of 1 points Which of the following are ways in which a residual value can be recovered from an asset on its disposal? I. Trade in II. Sell second-hand III. Gift the asset to charity IV. Sell for scrap Selected Answer: I, II and IV only Learning Objective 14.5 ~ discuss the nature of depreciation and determine the amount of depreciation expense using several different cost allocation methods. Answers : I, II, III and IV I, II and III only II, III and IV only I, II and IV only Learning Objective 14.5 ~ discuss the nature of depreciation and determine the amount of depreciation expense using several different cost allocation methods. Question 2 1 out of 1 points IAS 16/AASB 116 specifies that all assets must be accounted for on acquisition at: Selected Answer: cost. Answers: cost. market value. depreciable value. net realisable value. Learning Objective 14.2 ~ compute the cost of property, plant and equipment. Question 3 1 out of 1 points A popular method for an entity to acquire the benefits of property, plant and equipment is to lease assets. Which of the following asset types are commonly subject to lease agreements? I. Buildings II. Motor vehicles III. Storage space IV. Equipment and Machinery Selected Answer: I, II, III and IV. Learning Objective 14.2 ~ compute the cost of property, plant and equipment. Answers: I and III only II and IV only I, II and IV only I, II, III and IV. Learning Objective 14.2 ~ compute the cost of property, plant and equipment. Question 4 1 out of 1 points The most commonly used depreciation method in Australia, as disclosed by a survey of the annual reports of listed companies, is: Selected Answer: straight-line. Answers : straight-line. units-of-use. sum-of-the digits. reducing-balance. Learning Objective 14. 5 ~ discuss the nature of depreciation and determine the amount of depreciation expense using several different cost allocation methods. Question 5 1 out of 1 points On what basis would the costs of several items of property, plant and equipment, acquired for a lump-sum payment, normally be allocated? Selected Answer: Fair value at acquisition date Learning Objective 14.3 ~ apportion the cost of a lump-sum payment for multiple asset acquisitions. Answers: Net realisable value at acquisition date Independent valuation at acquisition date Replacement cost at acquisition date Fair value at acquisition date Learning Objective 14.3 ~ apportion the cost of a lump-sum payment for multiple asset acquisitions. Question 6 1 out of 1 points The correct statement concerning subsequent costs incurred in relation to a depreciable asset after its original acquisition is: Selected Answer: If the subsequent cost of replacing part of an item of equipment is added to the carrying amount of that asset then the carrying amount of the part that is replaced must be decommissioned. Answers : If the subsequent cost of replacing part of an item of equipment is added to the carrying amount of that asset then the carrying amount of the part that is replaced must be decommissioned. The replacement of the tyres on a motor would add to the expected life of the vehicle. The painting of a building would normally be considered an improvement and capitalised. Subsequent costs should nearly always be capitalised rather than charged to an expense account. Learning Objective 14.6 – describe how to account for subsequent costs incurred in relation to property, plant and equipment. Question 7 1 out of 1 points In the financial statements prepared at the end of the accounting period the Accumulated Depreciation account appears on: Selected Answer: the balance sheet as a deduction from the related asset. Answers: the balance sheet as a liability. the income statement as an expense. the balance sheet as a deduction from the related asset. both the balance sheet and the income statement. Learning Objective 14.3 ~ apportion the cost of a lump-sum payment for multiple asset acquisitions. Question 8 0 out of 1 points When comparing the straight-line and the reducing-balance methods of depreciation, in the later years of the asset’s life the depreciation charge using the straight-line method will be: Selected Answer: the same. Answers : smaller. greater. the same. do not have enough information. Learning Objective 14.5 ~ discuss the nature of depreciation and determine the amount of depreciation expense using several different cost allocation methods. Question 9 1 out of 1 points Which of the following should not to be recorded in the ‘office equipment’ ledger account? Selected Answer: Office curtains and carpets Answers: Photocopier Computers Office curtains and carpets Printer/Fax machine Learning Objective 14.7 – record property and plant records in the property and plant subsidiary ledger. Question 10 0 out of 1 points Which of the following statements is incorrect? Selected Answer: Depreciation causes cash flow from operations to be greater than profit. Answers : Depreciation is an internal transaction. The cash at bank account is affected by depreciation. Depreciation causes cash flow from operations to be greater than profit. The total depreciation charged over the life of the asset should be the same regardless of the method of depreciation used. Learning Objective 14.5 ~ discuss the nature of depreciation and determine the amount of depreciation expense using several different cost allocation methods. Week 9