Bcom Bachelor of Commerce Bachelor of Commerce: Financial Accounting 4

Question 1

The cost of goods sold formula is:

Accepted Answer

Beginning Inventory + Net Purchases − Ending Inventory

Answer

COGS = Beginning Inventory + Net Purchases − Ending Inventory; this measures the cost of goods actually sold during the period.

Question 2

Unearned revenue is classified as:

Accepted Answer

A liability because goods or services are still owed to the customer

Answer

Unearned revenue represents a future obligation to deliver goods or services, making it a liability until the performance obligation is satisfied.

Question 3

Which inventory costing method is NOT permitted under IFRS?

Accepted Answer

LIFO

Answer

IFRS prohibits the use of LIFO (Last-In, First-Out) because it can produce balance sheet inventory values that do not reflect current costs.

Question 4

Accumulated depreciation on the balance sheet represents:

Accepted Answer

The total depreciation recorded on an asset since it was placed in service

Answer

Accumulated depreciation is the cumulative total of all depreciation expense recognized on an asset since its acquisition date.

Question 5

The debt-to-equity ratio is calculated as:

Accepted Answer

Total Liabilities ÷ Total Equity

Answer

The debt-to-equity ratio compares total liabilities to shareholders' equity, measuring how much debt is used relative to equity financing.

Bcom Bachelor of Commerce Practice Test