Accounting-related questions:

1. This type of financial statement reports the financial performance of the business and is also called
profit or loss statement or statement of earnings.
a. Income Statement correct
b. Statement of Cash Flows
c. Statement of Financial Position
d. Statement of Changes in Owner’s Equity

2. This method records continuously or perpetually the movement of the merchandise and shows the
inventory balance at any point of time. Goods purchased are debited to an asset and goods sold are
debited to cost of sales every time a sale revenue is recorded.
a. Periodic Method
b. Perpetual Method correct
c. FIFO Method
d. LIFO Method

3. It is the ability of the business to pay for its short-term obligations. Short term creditors such as
suppliers and lenders (banks) are interested in this information.
a. Solvency
b. Profitability
c. Equity
d. Liquidity correct

4. It is the long-term liquidity and is measured based on the ability of the business to pay for long term
obligations when they fall due. This is obtained and by computing for the debt ratio and the equity
ratio.
a. Solvency correct
b. Profitability
c. Equity
d. Liquidity

5. This are represented by the acquisition and disposal of non-current assets such as plant, property
and equipment; payments and receipts from acquisition and sales of bonds and securities or interest
in joint ventures; cash advances or loans of officers and employees and other parties. (PAS 7.16)
a. Operating activities
b. Direct activities
c. Investing activities correct
d. Financing activities
6. It is known as paid in capital which represents the amount invested or contributed by owners. This
category is composed of share capital and share premium.
a. Accumulated profits
b. Contributed capital correct
c. Other comprehensive income
d. Retained earnings

7. It is a contract that gives the holder the right, but not the obligation, to subscribe to the entity’s
shares at a fixed or determinable price for a specific period.
a. Share Capital
b. Share Premium
c. Share Split
d. Share Option correct

8. As defined by IFRS 16, a ______ is a contract, or part of a contract, that conveys the right to use an
asset for a period of time in exchange for consideration.
a. Lease correct
b. Financial Liability
c. Non-financial Liability
d. Investment

9. It consists of obligations for expenses incurred on or before the end of the reporting period but
payable at a later date.
a. Provisions
b. Accrued Liabilities correct
c. Allowance for Bad Debts
d. Unearned Revenues

10. This is the date when the board of directors formally approves and announces the dividend. it is on
this date that the reduction in retained earnings is recognized in the accounts.
a. Date of declaration correct
b. Date of payment
c. Date of record
d. Date of dividend