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Fundamentals Of Accounting And Auditing - Accounting And Auditing Section 2 Online Exam Quiz

Important questions about Fundamentals Of Accounting And Auditing - Accounting And Auditing Section 2. Fundamentals Of Accounting And Auditing - Accounting And Auditing Section 2 MCQ questions with answers. Fundamentals Of Accounting And Auditing - Accounting And Auditing Section 2 exam questions and answers for students and interviews.

1. Cost of the asset minus scrap value/ Life of the asset is the formula of

Options

A : Diminishing balance method

B : Annuity method

C : Straight-line method

D : The sum of the digits method

2. The Diminishing balance method means a method by which-

Options

A : The rate of depreciation falls year by year

B : The amount on which depreciation is calculated falls year by year

C : The rate and amount which is applied falls year by year

D : None of the above

3. Which among the following is false about Diminishing balance method-

Options

A : the amount of depreciation is high in the initial years

B : Depreciation is calculated on the original cost of the asset

C : the value of the asset cannot be reduced to zero

D : Cost of depreciation remains constant

4. Which of the following accounting concepts or principles require the calculation of depreciation of the fixed assets?

Options

A : Prudence concept

B : Accrual concept

C : Consistency concept

D : Matching concept

5. Depreciation is an

Options

A : Income

B : Expense

C : Asset

D : Liability

46. The tax base for an asset equals:

Options

A : carrying amount – future taxable amount + future deductible amount;

B : carrying amount + future taxable amount – future deductible amount;

C : carrying amount – future taxable amount – future deductible amount;

D : carrying amount + future taxable amount + future deductible amount;

47. The tax-effective method of accounting for a company’s income tax is based on an assumption that:

Options

A : income tax expense is equal to income tax payable;

B : income tax expense is not equal merely to current tax liability (asset) but is also a function of the company’s deferred tax liabilities and assets;

C : an accounting balance sheet and a tax balance sheet are the same;

D : a tax balance sheet is prepared according to the income tax legislation and accounting standards.

48. Which of the following items give rise to a taxable temporary difference? I Prepayments II Rent received in advance III Provision for employee benefits IV Research & development V Goodwill VI Provision for warranty

Options

A : I, II, and II.

B : I, II, and VI.

C : I, IV, and V.

D : II, III, and VI.

49. Current and deferred tax assets lead to the recognition of:

Options

A : reserves;

B : income;

C : expenses;

D : losses;

50. Where the impairment of goodwill is not tax-deductible, AASB 112 Income Taxes:

Options

A : does not permit the application of deferred tax accounting to goodwill;

B : allows the recognition of a deferred tax item in relation to goodwill;

C : requires that any deferred tax items in relation to goodwill be recognized directly in equity;

D : requires that any deferred tax items for goodwill be capitalized in the carrying amount of goodwill;

51. Which of the following items are excluded from the explanation of the relationship between income tax expense and prima facie tax on profit (ie accounting profit multiplied by the applicable rate)? I Building depreciation II Bad debts expense III Exempt income IV Loss from change in tax rate V Annual leave expense VI Entertainment expense

Options

A : I and VI.

B : II and VI.

C : II and V.

D : I, III, IV, and VI.

52. The revaluation under AASB 116 Property, Plant and Equipment apply to:

Options

A : all assets on an individual basis;

B : individual current assets only;

C : individual non-current assets only;

D : assets on a class-by-class basis;

53. A non-current property, plant, and equipment asset is depreciated using the straight-line method. The asset was revalued upwards after four years of use. There is no change in the remaining useful life of six years or to the residual value. Which of the following relationships reflect the effect of the revaluation on the prospective depreciation of the asset?

Options

A : Same depreciation rate – higher annual depreciation expense;

B : Same depreciation rate – same annual depreciation expense;

C : Higher depreciation rate – higher annual depreciation expense;

D : Higher depreciation rate – same annual depreciation expense;

54. The accepted method of accounting for a business combination under AASB 3 Business Combinations is:

Options

A : the purchase method;

B : the cost method;

C : the acquisition method;

D : the fair value method;

55. Which of the following statements about the requirements of AASB 3 Business Combinations is incorrect?

Options

A : An acquirer to be identified.

B : Goodwill acquired to be recognized.

C : The assets, liabilities, and contingent liabilities to be measured initially at cost at the acquisition date.

D : Disclosure of information that enables users to evaluate changes in the carrying amount of goodwill.

56. Consider the following quotation and answer the question below. In accordance with AASB 3 Business Combinations, goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. This statement is:

Options

A : incorrect because this is the definition of an internally generated goodwill.

B : incorrect because it is the future economic benefits arising from other assets acquired that are not capable of being individually identified and separately recognized.

C : correct because this is the definition given by the accounting standard.

D : correct because goodwill can be individually identified and separately recognized.

57. In a business combination, the acquiree is the part that:

Options

A : gives up control over the net assets acquired;

B : pays the acquisition consideration;

C : obtains control of the net assets of the other entity;

D : finances the business combination;

6. The cost of the asset is 60000 and depreciated at 12% p.a. using the written down method. at the end of three years, it will have a net book value of –

Options

A : 40888.32

B : 43888.90

C : 45322

D : 40000

7. The vehicle costs Rs. 150000; it charges 20% depreciation according to the written down value method estimate the value of the vehicle after depreciation at the end of three years.

Options

A : 68000

B : 56000

C : 78000

D : 76800

8. The loss on the sale of an asset is debited to

Options

A : Reserves

B : Depreciation fund

C : Profit & Loss account

D : Asset’s account

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