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Fundamentals of Financial Accounting

Last Update Apr 19, 2024
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Fundamentals of Financial Accounting Questions and Answers

Questions 1

Which of the following explains the concept of capital maintenance?

Options:

A.

the cost of maintaining an entity's non-current assets in good working condition

B.

the cost of replacing an entity's non-current assets

C.

the raising of new capital by the issue of shares

D.

retaining sufficient profits to ensure that closing net assets are at least equal in value to net assets at the beginning of the period

Questions 2

Which of the following would meet the definition of a liability in accordance with the Conceptual Framework's definition?

Options:

A.

An amount due from a customer for goods dispatched two weeks ago

B.

An amount due to a supplier for goods to be purchased in one month's time

C.

An amount which was paid to a supplier in relation to a dispute

D.

An amount due to a supplier for goods purchased one month ago

Questions 3

Refer to the exhibit.

A company has the following transactions for the month of April:

Closing inventory at the end of the period was $26,000 and gross profit was $90,000. The opening inventory was therefore:

Options:

A.

$32,000

B.

$20,000

C.

$6,000

D.

$26,000

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