Accounting Quiz Year 2

From the list below, identify the items that could be found in the debit side of Realisation Account.

• Discounts received

• Loss on dissolution

• Discounts allowed

• The carrying amount of assets

• Cost of dissolution

State three kinds of inventory generally held by a manufacturing business.

• raw materials

• transit inventory

• work in progress

• finished goods

• pipeline inventory

Choose two advantages of using the net present value (NPV) method for investment appraisal.

• It takes into account cash flow which is more objective than profitability

• It takes into account the distorted value of cash

• It takes into account the time value of money

• The life of the project is difficult to predict.

Calculate the total fixed overhead variance for September.

• $ 840 Adverse

• $1,000 Adverse

• $1,000 Favourable

• $ 840 Favourable

Choose the disadvantages of using the accounting rate of return method.

• ARR is simple to calculate.

• Results can be compared to present profitability.

• It does not recognise the timing of cash flows

• It takes into account the aggregate earnings of the project(s)

What is the name of the capital account of a club?

• accumulated fund

• retained earnings

• current account

• bank account

Subscriptions in arrears is a current asset. True/False?

• true

• false

Give the Formula for Accounting rate of return.

• ( Average Investment / Average Profit )

• ( Average Profit / Average Investment )

• ( Average Investment / Average Profit ) x 100

• ( Average Profit / Average Investment ) x 100

Calculate the Internal Rate of Return (IRR) for this project using the formula.

Give four main methods of appraising a capital project.