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Chapter 16 - Decision Making 41. The principal weakness of the payback method for evaluating proposed investments is that it does not: A. provide a way of ranking projects in order of desirability. B. consider cash flows that continue after the investment has been recovered. C. result in an easily understood "answer". D. recognize.
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11.Sydney & Associates had the following assets and liabilities. Equity is:    $ Cash in hand 4 000 Bank overdraft11 000 Sundry creditors3 000 Inventory2 700 Sundry debtors8 100 Office furniture4 500 Loan from Perth Ltd12 000 Motor vehicles12 000 a.$8300. b.$27 300. c.$5300. d.$13 300. 12. The following balances were taken from the accounts of Adelaide Enterprises. 31 Dec. 2013   31 Dec. 2014 Assets$450 000$610.
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51.The period of time over which a non-current asset, such as a motor vehicle, is                                           expected to be used by the entity is known as its: a.carrying period. b.useful life. c.accumulated depreciation. d.working life. 52.The portion of a non-current asset, such as plant and equipment, which is transferred to                             an.
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51.The use of computers has been a breakthrough for the perpetual inventory system.                             Many retail businesses use optical-scan cash registers to read ____________. The                                           scanners record the sale and, at the same time, update the inventory records with the cost                             of the sale. a.price.
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Chapter 16 - Decision Making Multiple Choice Questions 1. The method of evaluating financial data that change under different courses of action is called: A. financial statement analysis. B. break-even analysis. C. incremental analysis. D. cost-benefit analysis. 2. Braizen, Inc. produces a product with a $30 per-unit variable cost and an $80 per-unit sales price. Fixed.
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11.The last step in the manual accounting cycle before financial statements are prepared                             is which of the following? a.Post the journals to the ledger b.Determine adjusting entries c.Prepare an adjusted trial balance d.Prepare a closing trial balance 12.It is correct that each balance day adjustment: a.affects either the income statement or the balance sheet. b.has.
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11.For HT Computers Ltd how many of the following are internal decision makers: bank manager, production manager, human resource manager, chief executive officer? a.1 b.2 c.3 d.4 12.Who of the following is not an external decision maker? a.Government regulator b.Shareholder c.Creditor d.Managing director 13.How many of the following decisions would be made by internal as opposed to external decision makers:.
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Chapter 16 - Decision Making 58.Marshall, Inc., produces three products but weekly demand for the three products exceeds the available amount of machine time. Following is information about each product:(a.) Determine how many units each of Product A, Product B, and Product C that Marshall, Inc., should produce each week assuming.
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21.Which of these is not recorded on a worksheet? a.Closing entries b.Drawings c.Adjusting entries d.Profit for the period 22.Which of these accounts is closed to the profit or loss summary account? a.GST outlays b.Depreciation expense c.Owner’s drawings d.Prepaid insurance 23.On a worksheet if the opening balance of the salaries expenses account was $7000, a               reversing entry for $800 was.
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31.Under the periodic inventory system an income statement cannot be prepared without               a/an ____________. It is only after a/an ___________ that the cost of sales can be               estimated. a.error check b.virus scan c.stocktake d.audit 32.In Australia, where most accounting is computerised, the use of the periodic inventory               system is declining. Which of.
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Multiple-choice questions 1.The job of the modern accountant is a challenging one. The most critical requirement is: a.neatness. b.punctuality. c.ability to manage change. d.ability to add up. 2.Which of the following has been the most influential in redefining the role of accountants as analysts and decision makers rather than as mainly number-crunchers? a.The collapse of major company.
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31.Michael purchased two vehicles for his business on 1 January 2014. These vehicles                             cost $70 000 each and have a useful life of 5 years with an expected residual of                                           $20 000 each. The adjusting entry for depreciation on 31 December 2014, using the              .
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Multiple-choice questions 1.The average length of time it takes for a retail business to acquire inventory, sell it to its customers and collect the cash owing is called the: a.accounting cycle. b.operating cycle. c.inventory turnover. d.accounting period. 2.The main difference between a service and a retail business is that service businesses: a.sell directly to consumers. b.buy and sell.
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Multiple-choice questions 1.Which of these does not normally provide an input into an accounting system? a.Bank deposit slip b.Sales invoice c.Invoice d.Managerial report 2.Which of these is not one of the three phases in the development of an accounting               system? a.Systems analysis b.Systems design c.Systems implementation and review d.Systems plan 3.How many of these are important considerations when developing a.
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41.On 1 July 2014 Tan Traders paid $600, representing a two-year insurance premium. The               $600 was initially recorded in the Insurance expense account. After adjustment at 31               December 2015, the close of the annual accounting period: a.insurance expense in the income statement is $600 and prepaid insurance in the.
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51.The accounting assumption that the business will continue indefinitely into the future is the ________________________ assumption. a.accounting period b.faithful representation c.understandability d.going concern 52.In comparison to historical costs, estimated market values are usually considered by accountants to be____________________ for decision making. a.more reliable but less relevant b.less reliable but more relevant c.more material but less comparable d.more.
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Chapter 16 - Decision Making Essay Questions54.The following production costs are provided for Glenislay Co., a manufacturer of PDA's.Manufacturing Costs:It has been determined that the PDA's could be purchased from Integrated Labs at a cost of $90 plus $5 shipping costs. Considering the offer from Integrated Labs, show whether Glenislay should.
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Chapter 16 - Decision Making 11. Relevant costs in decision-making: A. are future costs that represent differences between decision alternatives. B. result from past decisions. C. should not influence the decision. D. none of the above. 12. A cost is considered relevant if: A. it is positive. B. it is sunk. C. it makes a difference. D. it.
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21.GST collected on sales is accumulated in a liability account called GST collections                             and GST paid on purchases is accumulated in an account with a debit balance called                                           GST outlays. What type of account is GST outlays? a.Asset b.Expense c.Contra income d.Contra liability 22.B sold goods to A on credit.
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21.A collection of all the individual accounts for a particular business is referred to as: a.the general ledger. b.the master file. c.MYOB. d.the chart of accounts. 22.A listing of the complete ledger account titles and their related numbers is known as a/an: a.general ledger. b.master file. c.index. d.chart of accounts. 23.The true statement concerning the accounting period is: a.the length of.
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41.What is the correct order in which the steps for analysing transactions are carried out? i Decide what accounts are affected. ii Decide if the account type is increasing or decreasing. iii Apply the rules of debit and credit. iv Decide on the account type. a.i, ii, iii, iv b.iv, ii, i, iii c.i, iv, ii, iii d.i,.
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Multiple-choice questions 1.Which of the following statements is incorrect?: a.The liability of shareholders to contribute to the debts of an insolvent company is limited. b.A sole proprietorship is an accounting entity. c.Individual partners are personally liable for partnership debts. d.Partnerships are regarded as separate legal entities. 2. In order to avoid later disputes it is desirable.
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11.If the invoice price for services rendered to a client is $4246, including GST, how                                           much GST is to be collected from the client? a.$424.60 b.$467.06 c.$386.00 d.Nil 12.Which of the following need not appear on a tax invoice? a.The words ‘tax invoice’ b.The signature of the person authorising the invoice c.The date of issue.
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21.Which of the following is the true statement? a.Accounting information for decision making is concerned with the past. b.Internal and external users of accounting information generally require similar information. c.Non-accounting information is always more important in decision making than accounting information. d.Accountants are heavily involved in the budgeting process for a business entity. 22.Which type.
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41.Which assumption is the basis upon which the personal assets of the owner are excluded from the business’s balance sheet? a.Going concern b. Accrual basis c.Materiality d.Accounting entity 42.The assumption which requires transactions to be recognised in the accounting reports when they occur and not when the cash is received or paid is: a.accrual basis. b.accounting entity. c.faithful.
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Multiple-choice questions 1.The transactions below are from the records of Templestowe Picture Framers, the internal transaction is: a.cash sale. b.paid monthly rent on premises. c.credit sale. d.recorded depreciation on shop fixtures and fittings. 2.Which of these events would not be recorded by accountants? a.Received an order from a customer. b.The owner paid his daughter’s school fees from the.
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41.Under the perpetual inventory system an inventory variance can be calculated as the               difference between: a.the periods purchases and ending inventory balance. b.the ledger balance of the inventory account and the total of the physical stocktake. c.inventory at start less inventory at end. d.an inventory loss cannot be calculated using the perpetual inventory.
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Multiple-choice questions 1.Profit is measured as: a.income – expenses. b.assets – liabilities. c.current assets – current liabilities. d.debits – credits. 2.Rather than using the cash method accountants prefer to calculate profitability using               the: a.adjusted approach. b.accrual approach. c.permanent approach. d.non-current approach. 3.The two main accounting assumptions that underpin the accrual approach to profit               measurement are: a.going concern and accounting period. b.historical.
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51.J. Wood performed carpentry services for $7500. He received cash of $5000 with the balance to be received within 28 days. Ignoring GST, the transaction is recorded as               which of the following? a.DR Cash $5000; DR Accounts receivable $2500; CR Income earned $7500 b.DR Income earned $7500; CR Cash $5000; CR.
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31.A chronological record of all the transactions of an entity is provided in the: a.ledger. b.journal. c.balance sheet. d.trial balance. 32.A chart of accounts is a: a.planning device used by management to anticipate information flows through the accounting system. b.list of accounts receivable. c.chart showing the organisational structure of the firm. d.plan of the ledger listing account titles and.
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21.Accrued salaries is a: a.contra asset account. b.equity account. c.asset account. d.liability account. 22.Tan Traders is owed $350 interest on an investment which has not been received by 3l                             December 2014, the last day of the accounting year. The adjusting entry is which of                             the following? a.Debit bank $350; credit interest income.
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Chapter 16 - Decision Making 63.The following data have been collected by capital budgeting analysts at Condel Brothers Oil Co. concerning the drilling and production of known reserves at an off-shore location:(a.) Calculate the net present value of the proposed investment in the drilling and production operation. Ignore income taxes, and.
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Chapter 16 - Decision Making 69.Digital Devices, Inc. has received a special order to manufacture 10,000 CD ROM drives for an Italian computer manufacturer. Digital determines that the order will not affect its current domestic sales of CD ROM drives and because of the special nature of the order no sales.
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11.Financial reports prepared between the regular year-end reports are called: a.interim reports. b.audited reports. c.consolidated reports. d.trial balances. 12.A regular withdrawal of cash by the owner from the business is treated as a reduction in equity and is recorded in an account called: a.creditors. b.debtors. c.drawings. d.mortgage. 13.A separate ledger account is maintained for each: a.business transaction. b.day of business. c.item that appears.
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31.From the point of view of a business entity, a person or business to whom a debt is owed is known as a: a.debtor. b.creditor. c.debitor. d.bank. 32.The income statement reports the financial: a.position of an entity at a specific period of time. b.performance of an entity over a specified period of time. c.position of an entity over.
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11._________________are internal controls established to provide               general operational efficiency and adherence to prescribed policies, e.g. procedure                             manuals. a.Division of responsibility b.Accounting controls c.Administrative controls d.Programming controls 12.The limitation of internal control includes all of the following except: a.collusion. b.the size of the entity. c.human nature. d.separation of record keeping and custodianship. 13.Which of these is not a.
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41.Which adjustment would never require a reversing entry? a.Accrued revenue b.Accrued expense c.Prepaid income (cash received originally recorded in an income account) d.Depreciation 42.If a profit has been earned for the year, before the closing entries, the profit or loss                             summary account has a___________________ balance. a.debit b.credit c.positive d.negative 43.A trial balance taken out after the closing process.
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51.When reversing entries are used in the accounting system which of the following                                           categories of adjusting entries are always reversed? Accrued Expenses Accrued Revenue Depreciation a.Yes Yes Yes b.No No No c.Yes Yes No d.No No Yes 52.Which of the following statements relating to reversing entries is correct? a.Reversing entries are always necessary. b.There are.
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31.End of year records from Abbi's Boutique show:    $ Cash20 GST outlays35 Salaries payable10 Rent expense           100 Interest expense50 Prepaid rent30 Salary expense20 Rent collected in advance20 During the closing process the total debit to the profit or loss summary account would be: a. $90. b. $110. c. $80. d. $170. 32.Which statement relating to closing entries is incorrect? a.The closing process is simple with.
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Multiple-choice questions 1.In which order do these steps in the accounting cycle occur? I Prepare closing entries II Post to the ledger III Enter business transactions in the journal IV Prepare adjusting entries V Prepare financial statements a.I, II, III, IV, V b.III, IV, II, I, V c.IV, II, I, III, V d.III, II, IV, V, I 2.In which order do.
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11.Because income and expenses are accumulated for only one year they are known as: a.temporary accounts. b.permanent accounts. c.short-term accounts. d.yearly accounts. 12.Because the balance at the end of one accounting period becomes the opening balance at the start of the next period, balance sheet accounts are known as: a.temporary accounts. b.permanent accounts. c.long-term accounts. d.multi-period accounts. 13.Closing an account.
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31.The address of the website of the Institute of Chartered Accountants in Australia is: a.www.icaa.com.au. b.www.icaa.org.au. c.www.charteredaccountants.com.au. d.www.ICA.org.au. 32.Which of these is not a requirement for full membership of either of the major Australian professional accounting bodies? a.A recognised degree. b.Completion of the professional body’s graduate program. c.Government registration. d.At least three years of supervised work experience. 33.Which of these.
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Chapter 16 - Decision Making 56.The market price for low-end laser printers is well established at $400 per unit. ABC Technologies is considering entering this market and has enough available space in their plant to accommodate a new production line. However, several pieces of new manufacturing equipment would be required which.
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