FREE PTA Level 1 Questions and Answers

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Which of the following estimates a trader's net profit over a certain period?

Correct! Wrong!

Profit = Closing net assets + drawings - capital introduced - opening net assets

A Statement of Financial Position is intended to show:

Correct! Wrong!

The goal of a SOFP is to indicate the assets of the firm and the claims against them.

A grocery store's net assets were $64,800 as of January 31, 2008, with a net profit of $30,600 for the year. On August 31, 2007, the proprietor invested an extra $7,200. He also withdrew $960 each month and $840 worth of products on December 24, 2007. What were the net assets on February 1, 2007?

Correct! Wrong!

Net assets at 31/1/08 is $64,800 Less: profit for the year ($30,600)

Which of the following things may show on a company's Statement of Cash Flows? (1) Surplus from revaluation of non-current assets (2) Proceeds from the issuing of shares. (3) Proposed dividend. (4) Dividends received.

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The only factors that generate cash flow are the revenues from the issuance of shares and dividends received.

Which of the following would not show on a Statement of Cash Flows?

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A debit entry to the sales account might indicate

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The debit side of a company's trial balance equals $1,920 greater than the credit sale. Which of the following problems might entirely account for the difference?

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The discount received should have been credited to the discount received account (rather than subtracted from the discount permitted). So the credits are too low and the debits are too high, resulting in a total disparity of 2 x 960 = $1,920.

In times of rising prices, what impact does using the historical cost concept have on a company's asset values and profit?

Correct! Wrong!

Asset values will be understated and profit will be overstated

What is the function of the International Financial Reporting Interpretations Committee?

Correct! Wrong!

Their function is to provide advise on the application of International Financial Reporting Standards.

How should a contingent liability be shown in a company's financial statements if the possibility of a transfer of economic advantages to settle it is remote?

Correct! Wrong!

What exactly is the purpose of amortization?

Correct! Wrong!

The goal of amortization is to distribute the expense of an intangible non-current asset over its useful life.

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