In a cash flow statement, which one of the following would appear as an outflow of cash? Select one: a. An increase in debtors during the year. b. An increase creditor during the year. c. Depreciation charges on fixed assets. d. Loss on sale of a fixed asset. 12A credit balance on accruals account indicates? Select one: a. a liability and an expense owing. b. an asset and a prepayment of income. c. an asset and an accrual of income. d. a liability and an expense prepaid. 6ABC paid XYZ rent in advance for one year. By recording this payment ABC will reflect: Select one: a. An increase in assets and liabilities. b. An increase in assets and stockholder's equity. c. An increase in assets and decrease in liabilities. d. No change in total assets. 8Which of the following expenses will not be analyzed to administrative expenses in a published profit and loss account for a company? Select one: a. Bank charges and interest. b. Office expenses. c. General expenses. d. Managing Director Salary. 15When shares are issued at a premium, the value of the share premium should be: Select one: a. Taken to the profit and loss account b. Shown under current liabilities in the balance sheet. c. Shown under capital & reserves in the balance sheet. d. Taken to the trading account. 19At January 1, year 1, a sole proprietorship's assets totaled 210,000, and its liabilities amounted to 120,000. During year 1, owner investments amounted to 72,000, and owner withdrawals totaled 75,000. At December 3 I, year 1, assets totaled 270,000, and liabilities amounted to 171,000. The amount of net profit for year 1 was Select one: a. 0 b. 6,000 c. 9,000 d. 12,000 23Which one of the following is capital expenditure? Select one: a. repairs to motor vehicles. b. goods taken by owner for own use. c. cost of raw materials used in extending the premises. d. renewing the electrical wiring in the office. 24For the ratio Return on Capital Employed, which of the following best describes capital employed? Select one: a. Share capital. b. Share capital + Reserves. c. Share capital + Current Assets. d. Share capital + Fixed Assets. 28Which of the following best explains what is meant by “capital expenditure”? Capital expenditure is expenditure Select one: a. relating to the acquisition or improvement of non current assets. b. relating to the issue of share capital. c. on non current assets, including repairs and maintenance. d. on expensive assets. 32The gross profit can be calculated using which of the following: Select one: a. Net profit – purchases b. Sales – direct expenses c. Sales – Cost of sales d. Net assets + Current Assets – Current Liabilities
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
11In a
Select one:
a. An increase in debtors during the year.
b. An increase creditor during the year.
c.
d. Loss on sale of a fixed asset.
12A credit balance on accruals account indicates?
Select one:
a. a liability and an expense owing.
b. an asset and a prepayment of income.
c. an asset and an accrual of income.
d. a liability and an expense prepaid.
6ABC paid XYZ rent in advance for one year. By recording this payment ABC will reflect:
Select one:
a. An increase in assets and liabilities.
b. An increase in assets and
c. An increase in assets and decrease in liabilities.
d. No change in total assets.
8Which of the following expenses will not be analyzed to administrative expenses in a published
Select one:
a. Bank charges and interest.
b. Office expenses.
c. General expenses.
d. Managing Director Salary.
15When shares are issued at a premium, the value of the share premium should be:
Select one:
a. Taken to the profit and loss account
b. Shown under current liabilities in the
c. Shown under capital & reserves in the balance sheet.
d. Taken to the trading account.
19At January 1, year 1, a sole proprietorship's assets totaled 210,000, and its liabilities amounted to 120,000. During year 1, owner investments amounted to 72,000, and owner withdrawals totaled 75,000. At December 3 I, year 1, assets totaled 270,000, and liabilities amounted to 171,000. The amount of net profit for year 1 was
Select one:
a. 0
b. 6,000
c. 9,000
d. 12,000
23Which one of the following is capital expenditure?
Select one:
a. repairs to motor vehicles.
b. goods taken by owner for own use.
c. cost of raw materials used in extending the premises.
d. renewing the electrical wiring in the office.
24For the ratio Return on Capital Employed, which of the following best describes capital employed?
Select one:
a. Share capital.
b. Share capital + Reserves.
c. Share capital + Current Assets.
d. Share capital + Fixed Assets.
28Which of the following best explains what is meant by “capital expenditure”?
Capital expenditure is expenditure
Select one:
a. relating to the acquisition or improvement of non current assets.
b. relating to the issue of share capital.
c. on non current assets, including repairs and maintenance.
d. on expensive assets.
32The gross profit can be calculated using which of the following:
Select one:
a. Net profit – purchases
b. Sales – direct expenses
c. Sales – Cost of sales
d. Net assets + Current Assets – Current Liabilities
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