Could you help me with a few multiple choice question on Accounting?

Posted on 2014-04-14 11:44:00 in Accounting by ELENA

A test for distinguishing between an asset and an expense is

a. Whether the benefit extends into the next accounting period

b. Whether the payment is made in cash

c. The amount of the transaction



Which is not an example of an accounting estimate

a. Useful life of depreciable asset

b. Long service leave provided

c. Accounts payable



Expenses classified by nature would not include:

a. Manufacturing expenses

b. Depreciation expense

c. Wages and salaries expense

Cash receipts from interest and dividends are classified as which activity in the statement of cash flows

a. Operating

b. Investing

c. Financing or operating



Which of these is an early warning sign indicating problems with cash flows?

A. Dividends paid are greater than cash flow from operations

B. A large amount has been spent on the acquisition of fixed assets

C. Proceeds from financing activities are used to finance investment activities.



A possible explanation for a company reporting a loss on the profit report but a positive cash inflow of funds from operations is:

a. A decrease in trade debtors

b. An increase in trade debtors

c. An increase in inventory.



The section of the statement of cash flows that is generally considered to be the best measure of a company’s ability to continue as a going concern is:

Cash flows from investing activites

Cash flows from operating activities

Each gives an equal estimation.

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