Mandatory test 1_Solution

Q1

A company purchases an asset for 1000. What is the change in profit from this transaction?

A1

No change, as it doesn’t make the company richer or poorer, they are just exchanging money for an
asset.

Q2
You are given the following information: Sales for 2012 were 2000, costs were 500 On the 31/12-
2012 current assets were 300, debt was 700, equity was 200. What was fixed assets on the 31/12

A2

The accounting equation states that:

Assets = Equity + Liabilities

Fixed Assets + Current Assets = Equity + Long Term Liabilities + Current Liabilities

X + 300 = 200 + 700

X = 600

Q3

Which statement is correct:

1-The profit and loss statement shows us how much richer/poorer the company has become during
the year

2-The profit and loss statement usually tells us how much cash the company has generated during
the year

3-The balance sheet doesn’t always have to balance, especially if the company has a loss

4-The profit for the year must always equal the change in cash in the balance sheet

A3

Q4
For a company you are told the following: Total fixed assets are 1500, current assets are 900 and
cash is 200 What is total assets

A4
1500+900 = 2400

Q5

A company has a long term loan of 1000. During the year they repay the loan with 300. Before they
paid the loan the company had a profit of 500. What is the company's profit after they repay the
loan?

A5

500, no change

Q6

A company sends an invoice to a customer for 1000, with a credit period of 30 days. Which
alternative is correct?

1-Current assets both increase and decrease by 1000, leaving no net change.

2-Current assets increase by 1000, and equity increases by 1000.

3-Current assets increase by 1000 and current liabilities increase by 1000.

4-Current assets increase by 1000 and equity reduced by 1000.

A6