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Question 01

Which one of the following could not be used to describe a summary of a company's assets, liabilities and capital at a specific date?

a) Profit and loss account

b) Balance sheet

c) Position statement

d) Statement of financial position

Question 02

The market value of a company whose shares are listed on a stock market can be found by:

a) looking at the company's latest balance sheet totals.

b) looking at the company's profit and loss account balance.

c) looking at the company's share price and multiplying it by the number of shares issued by the company at that date.

d) looking at the company's share price and multiplying it by the maximum number of shares the company is allowed to issue.

Question 03

Which one of the following could be described as an 'off balance sheet asset'?

a) Purchased goodwill

b) Internally generated goodwill

c) An asset being bought on hire-purchase

d) Leasehold land

Question 04

The International Accounting Standard on Intangible Assets presumes that the useful life of goodwill does not exceed which of the following time periods?

a) 5 years

b) 15 years

c) 10 years

d) 20 years

Question 05

A company spends £1m a year on the wages of scientific researchers. How would this be shown within the financial summaries?

a) £1m shown as an expense within the profit and loss account, but no entry shown on the balance sheet

b) £1m shown as an expense within the profit and loss account, and £1m shown as a fixed asset on the balance sheet

c) No entry within the profit and loss account, and £1m shown as a fixed asset on the balance sheet

d) No entries are needed which relate to scientific research

Question 06

Which one of the following tangible fixed assets would not normally be depreciated?

a) Buildings that have been revalued to a lower value than their original cost

b) Buildings that have been revalued to a higher value than their original cost

c) Leasehold land

d) Freehold land

Question 07

An asset leased under a finance lease would be shown in the lessee's financial summaries in which of the following ways?

a) The only entry would be to show the cost of the asset as a fixed asset on the balance sheet.

b) The entries would be to show the cost of the asset as a fixed asset, and any amounts due to the lessor as liabilities on the balance sheet. There would be no entries in the profit and loss account.

c) The entries would be to show the cost of the asset as a fixed asset, and any amounts due to the lessor as liabilities on the balance sheet. The finance charge for the year would be shown on the profit and loss account.

d) As it is leased, there would be no entries in the lessee's financial summaries.

Question 08

Separate items of stock are valued at:

a) the lower of cost and net realizable value.the lower of cost and realizable value.

b) the lower of cost and realizable value.

c) the lower of cost and replacement value.

d) the higher of cost and net realizable value.

Question 09

Which of the following would not be considered a component of 'cost' of stock?

a) Sales force salaries

b) Transport costs

c) Import duties

d) Purchase price

Question 10

If physical stock cannot be matched with invoiced prices, a theoretical stock valuation method such as FIFO is often used. What does FIFO mean?

a) Finished stock In Finished stock Out

b) First In First Out

c) Final Input Final Output

d) Fabrications Inward Fabrications Outward

Oxford University Press, Online Resource Centre, Chapter 06.

Chapter 06

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