Reference no: EM132857380

Questions -

Q1. How is the allocation of partnership profits affected by drawings?

a. Drawings must be deducted from profits before they are allocated.

b. Drawings only affect profit allocation if the partnership agreement provides for interest on drawings.

c. Drawings must be added back to profits before they are allocated.

d. Drawings must be deducted from partners' salaries.

Q2. Under the financial capital concept, profit exists:

a. only when the entity's assets are higher than their liabilities.

b. only after the entity has set aside enough capital to maintain the operating capability of its assets.

c. only after the entity has maintained it capital, measured at the dollar value of equity, or the purchasing power of those dollars, at the beginning of the period.

d. only when the effects of inflation have been considered.

Q3. A bank loan for $50 000, taken out on 1 July 2018, is repayable in equal instalments, plus interest, over 5 years. The annual repayments are due on the second last day of the financial year. How would the loan be classified in a balance sheet prepared at 30 June 2019, the end of the entity's financial year?

a. Current liability $5 000; non-current liability $45 000

b. Current liability $10 000; non-current liability $50 000

c. Current liability $10 000; non-current liability $40 000

d. Non-current liability $50 000

Q4. Which of the following is not a constraint of the Conceptual Framework's qualitative characteristic of timeliness?

a. The frequency of the reporting period.

b. Preparing financial reports for a 12-month period.

c. Having information available in time to influence decisions.

d. The longer the delay in publication of the financial reports after the end of the financial period, the less relevant the information for decision-making purposes.

Q5. Under Australian awards, which statement relating to annual leave is correct?

a. Employees are generally entitled to five weeks paid annual leave a year.

b. An employee is not entitled to annual leave until he/she has worked with the same employer for a minimum of twelve months.

c. Employees are entitled to be paid pro-rata for annual leave not taken if their employment terminates.

d. Annual leave is only recognised in the financial statements when it is actually paid to an employee.

Q6. Under IAS 18/AASB 118 interest income should be recognised:

a. proportionately over time, as the interest is earned.

b. at the date of agreement.

c. at the end of the loan period.

d. when the contract for the loan is signed.