PTA Level 1

Question 1

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

Accepted Answer

Closing net assets + drawings - capital introduced - opening assets

Answer

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

Answer

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

Answer

Closing net assets + drawings + capital introduced - opening assets

Question 2

A Statement of Financial Position is intended to show:

Accepted Answer

the business's assets and the claims against them.

Answer

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

Answer

the amount the firm may be sold for in liquidation.

Answer

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

Question 3

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?

Accepted Answer

$39,360

Answer

$50,040

Answer

$51,850

Answer

$13,420

Question 4

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.

Accepted Answer

2 and 4

Answer

1 and 3

Answer

3 and 4

Answer

1 and 2

Question 5

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

Accepted Answer

The Statement of Profit or Loss for Taxation for the Year

Answer

The acquiring of long-term investments

Answer

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

Answer

The Dividends given to preferred stockholders during the year

Question 6

A debit entry to the sales account might indicate

Accepted Answer

correction of a mistake or returned goods

Answer

irrecoverable debts are written off

Answer

credit sales for the repair of an error

Answer

cash sales

Question 7

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?

Accepted Answer

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

Answer

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

Answer

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

Answer

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

Question 8

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

Accepted Answer

Asset values understated and profit overstated

Answer

Asset values and profit both overstated

Answer

Asset values and profit both understated

Answer

Asset values overstated and profit understated

Question 9

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

Accepted Answer

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

Answer

To develop a set of global accounting standards

Question 10

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?

Accepted Answer

No disclosure or provision is needed.

Answer

Disclosed by note and no provision is provided.