ACCA Accountant in Business 4

Question 1

Which financial statement shows a company's assets, liabilities, and equity at a specific point in time?

Accepted Answer

Statement of financial position

Answer

The statement of financial position (balance sheet) provides a snapshot of what a company owns and owes at a single date.

Question 2

A company's current assets total $500,000 and current liabilities total $250,000. What is the current ratio?

Accepted Answer

2.0

Answer

Current ratio = Current assets ÷ Current liabilities = $500,000 ÷ $250,000 = 2.0.

Question 3

Which of the following best describes 'working capital'?

Accepted Answer

Current assets minus current liabilities

Answer

Working capital measures short-term liquidity as the difference between current assets and current liabilities.

Question 4

Under the accruals (matching) concept, when should revenue be recognized?

Accepted Answer

When the goods or services are delivered/performed

Answer

The accruals concept requires revenue to be recognized when earned (goods/services delivered), not when cash changes hands.

Question 5

Which of the following is classified as a non-current (fixed) asset?

Accepted Answer

A factory building owned by the company

Answer

Non-current assets are held for long-term use in the business, such as property, plant, and equipment.

ACCA - Association of Chartered Certified Accountants Practice Test