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Question 1:

A company decides to create a provision for discount on debtors at 2% of its debtors, which amount to ?300,000. What is the amount of the provision?

6000 4000 10000 8000

Question 2:

A company has a provision for bad debts at 5% of its debtors, which amount to ?200,000. What is the amount of the provision for bad debts?

15000 5000 20000 10000

Question 3:

The straight-line method assumes that the value of the asset:

Decreases uniformly over its useful life Decreases more rapidly in the early years Remains constant Increases over time

Question 4:

Which method of depreciation charges the same amount each year?

Depletion method Straight-line method Written down value method Annuity method

Question 5:

Account sales in consignment accounting is prepared by:

The carrier The consignee The consignor The buyer

Question 6:

The proforma invoice in consignment is used to:

Serve as a legal invoice for the consignment Bill the consignee for goods sold Indicate the price at which goods are to be sold Record the actual cost of goods sold

Question 7:

In the books of the consignor, unsold stock on consignment is valued at:

Lower of cost or market price Cost price Market price Selling price

Question 8:

A company purchased equipment for ?800,000 with an estimated life of 8 years and a salvage value of ?80,000. Using the sum-of-the-years'-digits method, what is the depreciation expense in the third year?

120000 140000 160000 100000

Question 9:

A consignor sends goods to a consignee, who sells them for ?400,000. The consignor had incurred shipping costs of ?30,000. If the consignor's profit is ?70,000, what was the cost of the goods?

300000 350000 330000 370000

Question 10:

In consignment accounting, the valuation of closing stock is important for:

Determining the consignee's commission Calculating the consignor's profit or loss Estimating the market value of the goods Setting the selling price of the goods

Quiz: Financial Accounting