IAB Financial Accounting & Reporting 4

Question 1

An adjusting entry to record accrued salaries at year-end would include:

Accepted Answer

Debit Salaries Expense; Credit Salaries Payable

Answer

Accrued salaries are expensed (debit Salaries Expense) and recorded as a liability (credit Salaries Payable) when earned but not yet paid.

Question 2

Which financial statement reports cash inflows and outflows categorized as operating, investing, and financing activities?

Accepted Answer

Statement of Cash Flows

Answer

The Statement of Cash Flows classifies all cash movements into operating, investing, and financing activities.

Question 3

Goods held on consignment by a retailer on behalf of a supplier should be included in whose inventory?

Accepted Answer

The supplier's inventory, since they retain ownership

Answer

Consigned goods remain the property of the supplier (consignor) and are included in the supplier's inventory, not the retailer's.

Question 4

What is 'gross profit'?

Accepted Answer

Net Sales minus Cost of Goods Sold

Answer

Gross Profit is calculated as Net Sales minus Cost of Goods Sold and represents profit before operating expenses.

Question 5

Which of the following represents a financing activity on the Statement of Cash Flows?

Accepted Answer

Payment of dividends to shareholders

Answer

Dividend payments relate to equity holders and are classified as financing activities on the cash flow statement.

(IAB) International Association of Bookkeepers Certification Practice Test