FREE PTA Level 1 Questions and Answers

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

Closing net assets + drawings - capital introduced - opening assets

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

Closing net assets - drawings - capital introduced - opening net assets

Closing net assets + drawings + capital introduced - opening assets

Correct! Wrong!

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

A Statement of Financial Position is intended to show:

a clear and definite review of what a firm is truly worth.

the amount the firm may be sold for in liquidation.

the business's assets and the claims against them.

the amount the business may be sold for as a going concern.

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?

$50,040

$51,850

$39,360

$13,420

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.

2 and 4

1 and 3

3 and 4

1 and 2

Correct! Wrong!

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?

The acquiring of long-term investments

The nominal value of debentures redeemed at par throughout the year.

The Dividends given to preferred stockholders during the year

The Statement of Profit or Loss for Taxation for the Year

Correct! Wrong!

A debit entry to the sales account might indicate

irrecoverable debts are written off

credit sales for the repair of an error

correction of a mistake or returned goods

cash sales

Correct! Wrong!

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?

The petty cash amount of $1,920 has been excluded from the trial balance.

Discount obtained $960 has been deducted from discount authorized account.

A receipt of $1,920 for commission receivable was removed from the documents.

The $960 spent for plant maintenance has been accurately recorded in the cash book and credited to the plant asset account.

Correct! Wrong!

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?

Asset values understated and profit overstated

Asset values and profit both overstated

Asset values and profit both understated

Asset values overstated and profit understated

Correct! Wrong!

Asset values will be understated and profit will be overstated

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

To provide assistance on the use of International Financial Reporting Standards.

To develop a set of global accounting standards

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?

No disclosure or provision is needed.

Disclosed by note and no provision is provided.

Correct! Wrong!

What exactly is the purpose of amortization?

To distribute the cost of the intangible non-current asset across its useful life.

To decrease the value of the intangible asset.

To guarantee that funds are available to replace the asset in the future.

Correct! Wrong!

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

FREE PTA Level 2 Questions and Answers
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FREE PTA Level 1 Questions and Answers

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

A Statement of Financial Position is intended to show:

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?

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.

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

A debit entry to the sales account might indicate

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?

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

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

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?

What exactly is the purpose of amortization?

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