TOPIC 1

1. Financial accounting is:

a) Software to manage a company
b) An information system for Business decision-making
c) An International standard to control companies
d) All the above are correct
2. Which of the following users is more interested in profitability?
a) Stockholders
b) Creditors
c) Employees
d) Suppliers
3. Which of the following users is more interested in liquidity?
a) Stockholder
b) Creditor
c) Employees
d) Suppliers
4. Which is not a financial statement?
a) Balance Sheet
b) Income Statement
c) Ledger
d) Cash Flow
5. The activity of raising funds for the company is known as
a) Investing
b) Operating
c) Financing
d) None of the above is correct
6. The activity of purchasing the necessary assets is known as:
a) Investing
b) Operating
c) Financing
d) None of the above is correct
7. The statement which reports the economic and financial situation is:
a) The Income Statement
b) Cash Flow
c) Changes in Net Equity
d) Balance Sheet
8. Which of the financial statement reports the net result of the period that is
composed of the revenues and expenses of the period except all revenues and
expenses which must be recognized directly in equity:
a) Income Statement
b) Balance Sheet
c) Cash Flow Statement
d) Notes
9. Which statement provides information about inflows and outflows of cash and cash
equivalents, classifying them in business activities and reporting net variation of cash
flow at a given period:
a) Income Statement
 b) Balance Sheet
c) Cash Flow Statement
d) Changes in Net Equity
10. Which statement reports the total changes in internal finance?
a) Income Statement
b) Balance Sheet
c) Cash Flow Statement
d) Changes in Net Equity

TOPIC 2

1. Apple group, a Technological business traded in NY Exchange market, must report its
consolidated financial statements following:
a) IFRS adopted by EU
b) IFRS
c) USGAAP
d) SGAP
2. Inditex group, fashion retail business, traded in European exchange markets, must
report its consolidated financial statements following:
a) IFRS adopted by EU
b) IFRS
c) USGAAP
d) SGAP
3. Inditex company, traded in European exchange markets, must report its individual
annual accounts following:
a) IFRS adopted by EU
b) IFRS
c) USGAAP
d) SGAP
4. A Spanish company has the following data over two consecutive periods: Total
assets 2,500,000, Net Sales 4,500,000, and an average of 75 people employed. Select
the correct answer:
a) The company must follow the SGAP
b) The company must use the SMEs SGAP
c) The firm can use the SMEs SGAP
d) The firm can use IFRS adopted by UE
5. A service provided by a delivery company in December 2012, but collected in January
2013, is a service revenue of 012, due to the following principle:
a) Prudence
b) Accrual
c) Offsetting
d) Materiality
6. Due to the prudence principle, if a company has a plot of land that cost 100,000, and
its market value is now 150,000, the company:
a) Should register a benefit for 50,000
b) Must register the likely loss for 50,000
c) Should register a benefit for 100,000
d) Should register neither benefit nor losses
 7. A company A has a receivable of 10,000 with company B and at the same time,
company A owes 12,000 to company B. Following offsetting principle, the company
must report:
a) A receivable of 10,000 in the Asset and a Payable of 12,000 in the liabilities
b) A payable of 2,000 in the payable
c) A receivable of -2,000 in the assets
d) Any answer is correct
8. Recognition of an asset entails simultaneous recognition of a:
a) Decrease of an asset
b) increase of a liability
c) revenue
d) all the answers are correct
9. Recognition of a liability entails simultaneous recognition of a:
a) Decrease of an asset
b) Increase of a liability
c) Increase of an expense
d) All the answers are correct
10. The amount for which an asset can be exchanged, or a liability settled , between
knowledgeable, willing parties in an arm´s length transaction is:
a) Historical cost
b) Fair value
c) Amortised cost
d) Net realizable value
11. An investment in shares of other companies has a price in the Spanish exchange
market (bolsa de de valores) of 2,000, this is:
a) Historical cost
b) Fair value
c) Amortised cost
d) Net realizable value
12. An investment in shares of other companies has a price in the Spanish exchange
market (bolsa de valores) of 2,000, the sale commission is worth 50. The 1,950 is the:
a) Historical cost
b) Fair value
c) Amortized cost
d) Net realizable cost
13. Carrying amount is also known as:
a) Book value
b) Accounting value
c) Net value
d) All the answers are correct

TOPIC 3

1. Which of the following item is not an asset?

a) Building
b) Account receivable
c) Account payable
d) Cash
2. Which of the following items is a property, plant and equipment?
 a) Building
b) Account receivable
c) Account payable
d) Cash
3. Liabilities are:
a) Present obligations arising from future events
b) Past obligations arising from paste events
c) Future obligations arising from past events
d) Present obligations arising from past events
4. Obligations with others for goods, supplies, and services purchased on open account
are:
a) Account receivable
b) Account payable
c) Note payable
d) Note receivable
5. The portion of net income, which is retained by the corporation rather than
distributed to its owners a dividend is known as:
a) Capital
b) Reserves
c) Profit of the period
d) Grants and donations
6. A business has the following items: cash 10,000; vehicles 40,000; bank loan 20,000;
profit for the period 5,000. The amount of capital should be:
a) 15,000
b) 20,000
c) 25,000
d) 30,000
7. A business has the following items: assets 100,000; liabilities 40,000, equity 50,000.
It means:
a) The company has more economic resources than financial resources
b) The firm does not have enough financial resources to finance its assets
c) The stockholders should invest more money in the business
d) There is an accounting error
8. A characteristic of current assets is:
a) Assets associated with the company’s normal operating cycle
b) They are expected to be sold, consumed or fulfilled within the operating cycle
c) Assets are expected to mature or be sold or fulfilled in the short term
d) All answers are correct
9. Which is not a current asset in a supermarket?
a) Food
b) Account receivable
c) Delivery truck
d) Money in the bank account
10. Which is a non-current asset in a supermarket?
a) Food
b) Cash
c) Cash registers
d) All answers are correct
 11. Which is a typical current liability in business?
a) Bank loan
b) Loan with suppliers
c) Provisions
d) All answers are correct
12. The loss of the period:
a) Increases liability
b) Decreases liability
c) Increases Equity
d) Decreases Equity

TOPIC 4

1. What do we mean by debiting an account?

a) Making an entry on the debit side of the account, that is on the left side
b) Making an entry on the credit side of the account, that is on the right side
c) Any entry practiced both on the debit side or the credit side
d) Liquidating the account in order to calculate the balance
2. If an account presents a debit balance, it means:
a) Debit side>Credit side
b) Debit side>=Credit side
c) Debit side< Credit side
d) Debit side<=Credit side
3. According to debit and credit procedures for liabilities, increases in these elements
are registered in:
a) An entry on the debit side
b) An entry on the credit side
c) Depends on the particular element
d) Depends on the amount
4. What do liabilities account include?
a) Property, rights and other resources economically controlled by the enterprise
b) Initial shareholder contributions, reserves and the profit or loss of the year
c) Current obligations arising as a result of past events
d) None of the above options is correct
5. When a loan is settled, registration must be:
a) On the loan account on the credit side
b) On the loan account on the debit side
c) On the cash account on the debit side
d) None of the above options is correct
6. Purchasing a car on credit, registration must be:
a) On the car account on the credit side
b) On the car account on the debit side
c) On the payable account on the debit side
d) None of the above options are correct
7. If the stockholders make a contribution of capital, this accounting record should
enter:
a) On common stock on the debit side
b) On common stock on the credit side
c) On cash account on credit side
 d) None of the above options are corrects
8. What does it mean to close an account?
a) Calculate the balance account
b) Making an annotation for the amount of the balance on the side with the largest
sum of entries
c) Making an annotation for the amount of the balance on the side that sums the
least amount
d) None of the above options is correct
9. If a company pays 15,000 euros in cash to the suppliers, this accounting record
should be entered:
a) On the supplier account debit side
b) On the supplier account credit side
c) On the cash account credit side
d) Both a) and c) are correct
10. If a loan presents a credit balance for 20,000 euros, that means:
a) The company has a debt of 20,000 euros
b) The company has 20,000 in its current account
c) The company owns 20,000 euros
d) Both b) and c) are correct

TOPIC 5

1. Which of these items mut NOT be registered as an intangible asset

a) Software
b) Company culture
c) License
d) patent
2. Which of the following is not a necessary characteristic for an item to be classified as
property, plant and equipment?
a) Usually subject to depreciation
b) Characterized by physical substance
c) Can be used in operations for at least 5 years
d) Not acquired for resale
3. Calculate capital at the period ending, knowing the following information in the
Balance sheet: “building” 200,000 euros; “reserves” 80,000 euros; “Bank loans”
100,000 euros, “Long term investments in shares” 50,000 euros; “account
receivables” 25,000 euros; “Account Payable” 55,000 euros; “cash” 30,000 euros.
a) 60,000 euros
b) 70,000 euros
c) 80,000 euros
d) 90,000 euros
4. An automobile manufacturer presents the following information. Which is NOT an
asset for this business?
a) Trademark
b) Commitment to purchase vehicles after a month
c) Factory
d) inventory
5. If you want to know the financial resources of a company, you must look in:
a) The left part of the balance sheet called “ASSETS”
b) The right part of the balance sheet called “EQUITY AND LIABILITIES”
c) Cash-flow
d) Income statement
6. Which of following items is a current asset:
a) Account receivables
b) Brand
c) Note payable
d) capital
7. Select the correct answer using the following items: net sale 10,000 euros; cost of
good sold 2,000 euros; salaries 2,500 euros; financial revenues 500; financial
expenses 1,500. Income tax 1,300
a) Operating result 9,500 euros. Financial result + 1,000. Net income 9,200 euros
b) OR 5,500 euros. FR -1,000 euros. Net income 3,200 euros
c) OR 5,500, FR -1000. Net income 4,500 euros
d) OR 5,500 euros. FR +2,000. Net income 6,200
8. Which is an item of the financial result
a) Purchase of merchandise
b) Salaries
c) Interest of bonds
d) Bank commission
9. An exceptional revenue from the sale of a property, plant or equipment, shall be
registered in:
a) Operating result
b) Financial result
c) Exceptional result
d) All the answers are correct
10. A company has the following inflows and outflows: money received from customers
100,000 euros; money paid to suppliers 30,000 euros; 50,000 euros paid for the
purchase of a car; stockholder contributions 80,000 euros; paid 25,000 euros to pay
back a loan. Cash at the beginning of the period 2,000 euros (C-F means Cash flow)
a) Operating C-F 70,000; investing C-F +50,000. Financial C-F +55,000; C-F at ending
period 177,000.
b) Operating C-F -70,000; investing C-F -50,000. Financial C-F +55,000; C-F at ending
period -63,000
c) Operating C-F 70,000; investing C-F -50,000. Financial C-F +55,000; C-F at ending
period 77,000.
d) Operating C-F 70,000; investing C-F -50,000. Financial C-F -55,000; C-F at ending
period -33,000.
11. Issuing shares in exchange for money is a (n):
a) Operating activity
 b) Financial activity
c) Investing activity
d) All answers are correct
12. The “statement of recognized income and expense” is a part of:
a) Balance sheet
b) Income statement
c) Change in net equity
d) notes
13. Changes arising from transactions with equity holders or owners of the company
should be reported in:
a) Change in net equity
b) Income statement
c) Cash flow statement
d) None are correct
14. Which of the following must be reported in the notes:
a) Basis of presentation of annual accounts
b) Activity of the company
c) Long-term employee benefits
d) All answers are correct

TOPIC 6

1. The journal entry that “turns around” the closing entry is the:
a) Inventory entry
b) Turn around entry
c) Opening entry
d) Closing entry
2. The opening entry in an old company is:
a) CREDIT the balances of assets and DEBIT the balances of liabilities and equity
b) DEBIT the balances of assets and CREDIT the balances of liabilities and equity
c) DEBIT the balances of assets and equity and CREDIT the balances of liabilities
d) CREDIT the balances of assets and liabilities and DEBIT the balances of equity
3. The last issue of the accounting cycle is:
a) Making the annual accounts
b) Making the trial balance
c) Closing entry
d) adjustments
4. Posting means:
a) Registering the transactions in the journal
b) Transferring the journal information to the ledger
c) Making the adjustments in the journal
d) Balancing the accounts
5. Which of the following is a principal adjustment:
a) Depreciation and provisions
b) Accrual adjustments
c) Estimating the value of merchandise variation
d) All answers are correct
6. The trial balance reports:
a) The transactions of the company in chronological order
 b) All debits and credits for each of the accounts
c) The cash flow of the period classified by operating, investing and financial
activities.
d) A list of the entire chart of account of the company, each of the accounts with the
sum of debits, the sum of credits
7. Which of following errors may you find using a trial balance:
a) A transaction is not journalized
b) Incorrect accounts are used in journalizing or posting
c) Offsetting errors are made in recording the amount of a transaction
d) Only posted a part of the journal information
8. Cash account has the following information at the end of the period

570 cash
Initial balance 1,000
200 500

Debit balance: 700

a) The company has 700 euros in cash at the end of the period
b) The business paid 20 euros in cash
c) The firm charged 500 euros in cash
d) There is an accounting error
9. Interpret the following accounting entry in the journal
a) The company sold a vehicle, charging 5,000 in cash and 5,000 on account
b) The business purchased a vehicle, paying 5,000 in cash and 5,000 signing a note
payable for 5,000
c) The firm sold the vehicle, charging 5,000 in cash and accounting a revenue for
5,000
d) There is an accounting error
10. A company has a debt balance in the profit loss of the period account, this means:
a) The company has got losses
b) The business has got benefits
c) The firm has not get benefits or losses
d) There is an accounting error
11. When closing temporary accounts, the company:
a) Close revenues and expense accounts and obtains the net income of the period
b) Closes assets, liabilities and equity and obtains the net income of the period
c) Finishes the journal entries
d) All answers are correct
12. The accounting cycle lasts:
a)365 days from Jan 1st to Dec 31st
b) 1 semester
c) 365 days
d) all answers are correct
13. The accounting cycle is compulsory
a) Only for SME
b) Only for Big business
c) Only for listed companies
d) For every company
TOPIC 7

1. Gross profit is calculated by the following formula

a) sales revenues – operative expenses
b) sales revenues + financial income – cost of good sold
c) sales revenues – cost of good sold
d) sales revenues + operative expenses + financial result – income expense

2. In the initial valuation goods included in inventories should be measured at

a) Production cost
b) Purchase price
c) Market value
d) A and b are correct
3. Select the WRONG answers
a) The account “sales returns and similar transactions” should usually have debit
balance
b) Freight costs assumed by the seller reduces the account “merchandise sold”
c) Freight costs assumed by the buyer increases the account “merchandise
purchased”
d) “rappels on sales” should usually have debit balance
4. If the account “changes in inventories of merchandise” has a debit balance, it means
a) Final inventory is lower than beginning inventory
b) Final inventory is higher than beginning inventory
c) Final inventory is equal to beginning inventory
d) All answers are correct
5. Obtain the gross profit with the following data: net sales = 120,000; net purchases
30,000, initial inventory 25,000, final inventory 35,000
a) 80,000
b) 90,000
c) 100,000
d) 110,000
6. Select the correct answer with the following data: BI= 100, Cost of good purchased=
50; COGS= 25, sales = 200
a) Cost of good available for sale = 150 euros
b) Ending inventory = 125 euros
c) Gross profit = 175 euros
d) All answers are correct
7. A company has the following information: BI= 1,000 units, purchases= 500 units;
sales= 250 units. The ending inventory is:
a) 1,250 units
b) 1,500 units
c) 750 units
d) unknown
8. Select the correct answer. Following a periodic system
a) Traditionally used for merchandise with high unit values
 b) Company maintains detailed record of the cost of each inventory purchase and
sale
c) Company determines cost of a good in each sale transaction
d) Company does not keep records of the goods on hand. It only knows it at the end
of the period
9. Valuation allowances shall be made when
a) The net realizable value exceeds the purchase price or production cost of
inventories
b) The purchase price or production cost of inventories exceeds the net realizable
value
c) The net realizable value exceeds the value of use of inventories
d) The purchase price or production cost of inventories exceeds the value of use of
inventories
10. Let´s assume you are the CFO of a company. You want to report the highest profit
possible. If inventory prices have fallen during the period, you would calculate the
final inventory following
a) Value in use
b) Cost average method
c) FIFO
d) Amortised cost

1. In the annual report, where would a financial statement reader find out if the company’s
financial statements give a fair depiction of its financial position and operating results?

d. Auditor’s report

2. Which accounting assumption assumes that an enterprise will continue in operation long
enough to carry out its existing objectives and commitments?

d. Going concern assumption

3. The net income reported by Johnny’s Car Repair Shop for the year was

b. $45,000

4. The purchase of an office building by issuing long-term notes payable should be reported as
a

d. noncash investing and financing activity.

5. If beginning capital was $25,000, ending capital is $37,000, and the owner's withdrawals
were $23,000, the amount of net income or net loss for the period was:

b. net income of $35,000

6. The deferred income tax liability:

a. Represents income tax payments that are deferred until future years because of temporary
differences between GAAP rules and tax accounting rules.

7. A company normally sells it products for $20 per unit, which includes a profit margin of 25%.
However, the selling price has fallen to $15 per unit. This company's current inventory consists
200 units purchased at $16 per unit. Replacement cost has now fallen to $13 per unit.
Calculate the value of inventory at the lower of cost or market.

b. $2,600.

8. A measure of profitability is the

c. return on assets ratio.

9. Working capital is a measure of

b. liquidity.

10. The difference between the balance of a plant asset account and the related accumulated
depreciation account is termed

c. book value.

11. A company purchased a POS cash register on January 1 for $5,400. This register has a
useful life of 10 years and a salvage value of $400. What would be the depreciation expense
for the second-year of its useful life using the double-declining-balance method?

c. $ 864.

12. Which of the following is not an activity listed in the statement of cash flows?

b. Funding Activities

13. Net present value is negative when

b. the present value of cash outflows is greater than the present value of cash inflows.

14. Which of the following is an example of a deferral?

c. Recording prepaid rent

15. A company began the accounting period with $50,000 in owner’s capital, ended with
$75,000 in owner’s capital, and the owner withdrew $30,000 during the period for personal
use. What was the company’s net income or loss for the period?

a. $55,000 net income

16. Deciding whether to record a sale when the order for services is received or when the
services are performed is an example of a

c. recognition issue.