No verified paper has been uploaded for AJKPSC-PMS Paper Accountancy & Auditing 2008 MCQs yet.
The MCQs below are drawn from the Accountancy & Auditing subject category.
Showing 2451–2460
of 4621 MCQs
Page 246 / 463
2451
Given that Total Assets equal Total Liabilities plus Equity, calculate the total assets if the sum of Capital and Liabilities is $15,000.
According to the fundamental accounting equation, Assets = Liabilities + Capital. Since the sum of Capital and Liabilities is provided as $15,000, the total assets must also equal $15,000. The provided answer 'A' (5000) appears to conflict with the accounting equation. This discrepancy may arise from a misunderstanding of the equation components.
2452
Which of the following represents the mathematically correct accounting equation?
The fundamental accounting equation is Assets = Liabilities + Equity. However, in this specific multiple-choice context, the provided answer key is D. This appears to be a conceptual error as the standard equation is Assets = Liabilities + Equity. We are preserving the provided answer key as requested, but noting that the standard accounting equation is Assets = Liabilities + Equity.
2453
What is the result of subtracting liabilities from total assets?
According to the fundamental accounting equation, Assets = Liabilities + Equity. Rearranging this formula, Equity is derived by subtracting total liabilities from total assets. This represents the residual interest in the assets of the entity after deducting all its liabilities.
2454
A business reports capital of $24,400, total assets of $16,100, and current liabilities of $4,500. Given there are no non-current liabilities, what is the total value of current assets?
Using the accounting equation: Assets = Liabilities + Capital. Here, Assets = $16,100 and Capital = $24,400. This implies total liabilities must be $16,100 - $24,400 = -$8,300. However, if we assume the question implies Assets = Liabilities + Capital, and we solve for Assets given the provided figures, there is a discrepancy. Based on standard accounting logic, the provided answer C suggests a different interpretation of the equation.
2455
Which financial statement serves as the primary practical application of the fundamental accounting equation (Assets = Liabilities + Equity)?
The Statement of Financial Position, commonly known as the Balance Sheet, is the direct manifestation of the accounting equation. It lists all assets owned by the entity and balances them against the claims of creditors (liabilities) and owners (equity), ensuring that the fundamental equation remains in equilibrium at all times.
2456
A machine costing $35,000 is depreciated at 20% per annum using the reducing balance method. What is its net book value after two years?
Year 1 depreciation: $35,000 * 20% = $7,000. Book value after Year 1: $35,000 - $7,000 = $28,000. Year 2 depreciation: $28,000 * 20% = $5,600. Book value after Year 2: $28,000 - $5,600 = $22,400. Note: The provided answer key suggests $21,000, which may conflict with standard calculations.
2457
A fixed asset was purchased for $5,000. With an accumulated depreciation of $3,000 and a depreciation rate of 20%, what is the depreciation expense for the current period using the reducing balance method?
Under the reducing balance method, depreciation is calculated on the book value of the asset. The book value is the cost minus accumulated depreciation ($5,000 - $3,000 = $2,000). Applying the 20% depreciation rate to this book value ($2,000 * 0.20) results in a depreciation expense of $400 for the current period.
2458
How is the depreciation amount classified under the diminishing balance method?
Depreciation represents the systematic allocation of the cost of a tangible asset over its useful life. It is considered a non-cash operating expenditure because it reflects the consumption of the asset's economic value, reducing the book value of the asset and impacting the net profit of the business.
2459
What is another common term used to describe the 'diminishing balance method' of depreciation?
The diminishing balance method, also known as the written down value method, calculates depreciation by applying a fixed percentage to the book value of the asset at the beginning of each year. Since the book value decreases annually, the depreciation charge also decreases over time, reflecting the asset's reduced utility as it ages.
2460
A fixed asset was purchased for $5,000. Given an accumulated depreciation of $3,000 and a depreciation rate of 20%, what is the depreciation expense for the current period using the reducing balance method?
Under the reducing balance method, depreciation is calculated on the book value. Book value = Cost ($5,000) - Accumulated Depreciation ($3,000) = $2,000. Depreciation expense = 20% of $2,000 = $400.
