Chapter 5- KTQT

1 : A statement or report that records the fluctuation in business's capital is referred as

• A. Balance sheet

• B. Income statement

• C. Cash flow statement

• D. Statement of changes in equity

2 : Financial statements mainly help in

• A. Assumption of economic events

• B. Anticipation of economic events

• C. Recording of economic events

• D. Communication of economic events

3 : Which of the following financial statements shows the financial position of a business at a specific date?

• A. Balance sheet

• B. Income statement

• C. Cash flow statement

• D. Statement of changes in equity

4 : The expenses related to the main operations of business are referred as:

• A. Administration expense

• B. Non-administration expense

• C. Selling expenses

• D. Operating expenses

5: Assets minus liabilities equal to

• A. Goodwill

• B. Working capital

• C. Net income

• D. Capital

6 : Which of the following statements are correct?

(1) Only tangible assets (i.e. those with physical substance) are recognised in the financial statements.

(2) Faithful representation means that the commercial effect of a transaction must always be shown in the financial statements even if this differs from legal form.

(3) Businesses only report transactions, events and balances that are material to users of the financial statements.

• A. All of them

• B. 1 and 2 only

• C. 2 only

• D. 2 and 3 only

7 : Which one of the following statements best explains the sales account?

• A. It is credited with the total of sales made, including sales tax

• B. It is credited with the total of sales made, excluding sales tax

• C. It is credited with the total purchases made, including sales tax

• D. It is credited with the total expenses, excluding sales tax

8 : Which one of the following statements is correct?

• A. Carriage inwards and carriage outwards are both accounted for as an expense in the statement of profit or loss.

• B. Carriage inwards and carriage outwards are both accounted for as income in the statement of profit or loss

• C. Carriage inwards is treated as an expense and carriage outwards is treated as income in the statement of profit or loss.

• D. Carriage inwards is treated as income and carriage outwards is treated as an expense in the statement of profit or loss.

9 : Which of the following might appear as an item in a company's statement of changes in equity?

1 Profit on disposal of properties

2 Surplus on revaluation of properties

3 Equity dividends proposed after the reporting date

4 Issue of share capital

• A. 1, 3 and 4 only

• B. 2 and 4 only

• C. 1 and 2 only

• D. 3 and 4 only

10 : Where, in a set of financial statements complied in accordance with international accounting standards, would you expect to find dividends paid?

(1) Statement of profit or loss and other comprehensive income.

(2) Statement of financial position.

(3) Statement of cash flows.

(4) Statement of changes in equity.

• A. (1) and (3)

• B. (2) and (3)

• C. (1) and (4)

• D. (3) and (4)