Question

Q1 - Which financial statement is prepared according to cash basis of accounting:

a. Cash Flow Statement

b. Income Statement

c. Balance Sheet

d. Retained earnings Statement

Q2 - ............... is a present obligation that grew out of a past event and will require a future sacrifice to extinguish the obligation.

a. Unearned Revenue

b. Equity

c. Expense

d. Liability

Q3 - Days ‘sales uncollected ratio is

a. Average receivable/ credit sales

b. Accounts receivable/ net credit sales* 365 days

c. Credit sales/ average receivable

d. Accounts receivable/ total average assets.

Q4 - Assume that bank statement balance on June 30, 2020 is 20,500 SR and balance of cash in the general ledger on June 30, 2020 is 15,500 based on the following information, what is the adjusting entry to reconcile balances of cash?

The bank add interest income 1000 SR

Deposit in transit of 5,000 SR.

The bank returned a customer’s NSF check for 500 SR received as payment on account receivable.

Outstanding checks totaled 2,000.

a. Debit NSF check 500, credit cash.

b. Debit NSF check for 500, credit cash.

c. Debit interest income 1000 SR, cash 500 SR. Credit cash 1000 SR, accounts receivable 500 SR

d. Debit cash 1000 SR, accounts receivable 500 SR, Credit Interest income 1000 SR, cash 500 SR.

Q5 - According to the indirect method of reporting cash flow from operating activities, decreases in current assets are:

a. Subtracted to net income

b. Added to net income

c. Multiplied by net income

d. Divided by net income

Q6 - Which one of the following is the result of total cost of an asset less accumulated depreciation?

a. Par Value

b. Book Value

c. Salvage value

d. Market value

Q7 - A company reported net income of SR 35,000 for the year. During the year, accounts receivable increased by SR 7,000, accounts payable decreased by SR 3,000 and depreciation expense of SR 8,000 was recorded. Net cash provided by operating activities for the year is

a. SR 33,000

b. SR 47,000

c. SR 53,000

d. SR 37,000

Q8 - Unearned revenue is initially recognized with a:

a. Debit to sales

b. Credit to revenue

c. Credit to unearned revenue

d. Debit to revenue

Q9 -  Assume that a company’s Net income is SR 10,000, Depreciation SR 3,000, A/R increased by SR 2,000, A/P increased by 4,000, Sale of Machinery SR 5,000, Purchase of Equipment SR 3,000, Common stock issued SR 15,000 and dividends paid SR 1,000. What would be the net cash from Investing and financing activities

a. SR 21,000 and SR 2,000 respectively

b. SR 13,000 and SR 2,000 respectively

c. SR 10,000 and SR 8,000 respectively

d. SR 2,000 and SR 14,000 respectively

Answer 1

1.) There are 3 statements in financial reporting i.e

Revenue statement, Balancesheet, Cashflow statement.

Among the revenue statement and balancesheet are prepared on accruel basis and cash flow statement are prepared on cash basis.

2) liability is a present obligation that grew up from past events

3) Days sales uncollected ratio =

( Accounts receivable ÷ net credit sales ) *365 days

4) Ans is D.

5) in indirect method of cashflows decrease in current assets are added to the net income.

6) book value = total cost of asset - accumulated depreciation.

7) 53000

8) b i.e credit to revenue

9) Net cashflows from investment activities = 2000

From fianncing activities. = 14000.