Thẻ ghi nhớ: ACCA C5 | Quizlet

Sales tax collected on behalf of the government is recorded:

A. As revenue B. As a liability C. As an expense D. As an asset

B. As a liability

When a business sells goods for $5,000 plus 10% sales tax, the amount credited to the Sales account is:

A. $5,500 B. $5,000 C. $500 D. $4,500

B. $5,000

The 10% sales tax above is recorded as:

A. Dr Cash $500, Cr Sales tax payable $500

B. Dr Sales tax expense $500, Cr Cash $500

C. Dr Sales tax payable $500, Cr Cash $500

D. Dr Cash $500, Cr Sales $500

A. Dr Cash $500, Cr Sales tax payable $500

Which inventory valuation method assumes that the most recent purchases are issued first?

A. FIFO B. LIFO C. Weighted average D. Specific identification

LIFO

If closing inventory is overstated, the effect on profit is:

A. Understated B. Overstated C. No effect D. Cannot be determined

B. Overstated

The inventory balance appears in the financial statements as:

A. Current liability B. Non-current asset C. Current asset D. Expense

C. Current asset

The cost of a tangible non-current asset includes:

A. Purchase price only

B. Purchase price plus directly attributable costs

C. All operating expenses

D. Selling costs

B. Purchase price plus directly attributable costs

Depreciation is:

A. A provision for asset replacement B. An allocation of cost over useful life C. A measure of market value D. Cash set aside for repairs

B. An allocation of cost over useful life

Which of the following is not an intangible non-current asset?

A. Patent B. Goodwill C. Trademark D. Inventory

D. Inventory

Goodwill is recognized in the statement of financial position only when:

A. Created internally

B. Arises on the purchase of another business

C. Management decides to value the brand

D. Estimated by auditors

B. Arises on the purchase of another business

The straight-line depreciation method:

A. Charges equal amounts each year

B. Charges more in early years

C. Charges less in early years

D. Is based on usage only

A. Charges equal amounts each year

If an asset is revalued upward, the increase is credited to:

A. Profit or loss B. Revaluation surplus (equity)

C. Accumulated depreciation D. Other payables

B. Revaluation surplus (equity)

Amortization applies to:

A. Tangible assets B. Intangible assets with finite life C. Land D. Inventory

B. Intangible assets with finite life

An impairment loss occurs when:

A. Carrying amount > recoverable amount B. Historical cost > purchase price C. Market value increases

A. Carrying amount > recoverable amount

Which cost is not capitalized?

A. Delivery and installation B. Major inspection before use C. Normal repairs after use D. Legal fees on acquisition

C. Normal repairs after use

An accrual is:

A. Expense paid in advance B. Expense incurred but not yet paid C. Revenue received in advance D. Prepayment of revenue

B. Expense incurred but not yet paid

A prepayment is:

A. Revenue earned but not invoiced B. Expense paid in advance C. Liability outstanding D. Irrecoverable debt

B. Expense paid in advance

The adjusting entry for an accrued expense is:

A. Dr Expense, Cr Accrued expense (liability) B. Dr Accrued expense, Cr Expense C. Dr Prepayment, Cr Cash D. Dr Cash, Cr Expense

A. Dr Expense, Cr Accrued expense (liability)

An irrecoverable debt is:

A. A doubtful debt B. A debt certain to be collected C. A debt that will not be collected D. An accrued income

C. A debt that will not be collected

When an irrecoverable debt is written off, the journal entry includes: A. Dr Bad debt expense, Cr Trade receivables

B. Dr Trade receivables, Cr Bad debt expense

C. Dr Allowance, Cr Trade receivables

D. Dr Sales, Cr Trade receivables

A. Dr Bad debt expense, Cr Trade receivables

The allowance for doubtful debts represents:

A. Cash set aside for bad debts

B. Estimate of receivables that may not be collected

C. Only specific debts identified as uncollectible

D. Accrued income

B. Estimate of receivables that may not be collected

The creation of an allowance for doubtful debts requires:

A. Dr Bad debt expense, Cr Allowance for doubtful debts

B. Dr Allowance, Cr Bad debt expense

C. Dr Receivables, Cr Allowance

D. Dr Sales, Cr Allowance

A. Dr Bad debt expense, Cr Allowance for doubtful debts

A provision is recognized when:

A. There is a present obligation and probable outflow of resources

B. Possible obligation only

C. No obligation

D. Remote chance of outflow

A. There is a present obligation and probable outflow of resources

A contingent liability is:

A. A certain liability

B. A possible obligation disclosed in notes

C. Always recorded in the balance sheet

D. A type of accrual

B. A possible obligation disclosed in notes

If the likelihood of outflow for a contingency is remote:

A. Record a provision B. Disclose only in notes

C. No action needed D. Recognize an asset

C. No action needed

Which is an example of a contingent asset?

A. Lawsuit the entity expects to win B. Inventory in transit

C. Trade receivables D. Cash in bank

A. Lawsuit the entity expects to win

Under accrual accounting, revenue is recognized when:

A. Cash is received B. Earned, regardless of cash

C. Invoice is issued D. Tax is paid

B. Earned, regardless of cash

The matching principle requires:

A. Recording expenses when cash is paid

B. Recording expenses in the period of related revenue

C. Deferring expenses to next year

D. Recognizing revenue when collected

B. Recording expenses in the period of related revenue

Provision for warranty costs should be recognized when:

A. Warranty costs are paid

B. Products are sold and obligation arises

C. Customer complains

B. Products are sold and obligation arises

A non-adjusting event after the reporting period is:

A. Bankruptcy of a major customer before year end

B. Bankruptcy of a major customer after year end (unrelated to conditions at year end)

C. Discovery of a prior year error

D. Receipt of invoice for services provided before year end

B. Bankruptcy of a major customer after year end (unrelated to conditions at year end)

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