Revision Package - Assessment 1

Chapter 1

1. The job of the modern accountant is a challenging one. The most critical requirement is:

a. neatness.
b. punctuality.
c. ability to manage change.
d. ability to add up.

2. Which of the following has been the most influential in redefining the role of accountants
as analysts and decision makers rather than as mainly number-crunchers?

a. The collapse of major company groups.

b. The trend towards globalisation.
c. Developments in information technology.
d. The increase in demand for non-financial information.

3. There are four steps in the accounting process. Which of the steps is most concerned
with the classification and summarisation of financial data?

a. Identification
b. Recording
c. Measurement
d. Communication

4. Which of these is not an economic decision?

a. Choosing a utilities provider.

b. Taking out a loan.
c. Purchasing a mobile phone.
d. Supporting a sports team.
5. Accounting is defined as the process of identifying, measuring, recording and
__________ economic information to permit informed judgements and economic
decisions by users of the information.

a. observing
b. communicating
c. processing
d. certifying

Chapter 2

1. Which of the following statements is incorrect?:

a. The liability of shareholders to contribute to the debts of an insolvent company

is limited.
b. A sole proprietorship is an accounting entity.
c. Individual partners are personally liable for partnership debts.
d. Partnerships are regarded as separate legal entities.

2. In order to avoid later disputes it is desirable that a partnership agreement:

a. is in writing.
b. should have the partners sharing profits and losses equally.
c. should set up the partnership as a separate legal entity.
d. should set out in detail how the how all likely transactions are to be recorded.

3. Which of the following is the correct expression of the accounting equation?

a. Assets + liabilities = equity.

b. Assets = liabilities – equity.
c. Assets + equity = liabilities.
d. Assets = liabilities + equity.

4. Maintaining a satisfactory relationship between an entity’s resource inputs and its

output of product or services is referred to as:

a. planning.
b. efficiency.
c. organising.
d. effectiveness.
5. How well an entity attains its goals is referred to as:

a. efficiency.
b. planning.
c. organising.
d. effectiveness.

Chapter 3
1. The transactions below are from the records of Templestowe Picture Framers, the
internal transaction is:

a. cash sale.
b. paid monthly rent on premises.
c. credit sale.
d. recorded depreciation on shop fixtures and fittings.

2. Which of these events would not be recorded by accountants?

a. Received an order from a customer.

b. The owner paid his daughter’s school fees from the business bank account.
c. Credit sale.
d. Depreciation on motor vehicles calculated at the end of the firm’s financial year.

3. Which of these events would be recorded by accountants?

a. An employee receives a promotion.

b. An employee hurts themselves at work in the course of their duties.
c. An employee resigns.
d. An employee is paid by being given a computer instead of their normal wages.

4. Which of the following statements is true?

a. The entries to account for GST are regarded as internal transactions.

b. GST collections is an asset account.
c. If the GST inclusive price of a package of books is $1200 the GST component is
$120.
d. In the income statement income and expenses are recorded net of GST.
5. The source document for a cash sale could be a:

a. purchase order.
b. credit card slip.
c. cheque butt.
d. credit note.