QCAA Accounting External Practice Exam

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• Which statement best describes profitability ratios?
• Under accrual accounting, when is revenue recognized?
• Balance day adjustment and reversing entries:
• If actual materials usage is 1,100 units, standard usage is 1,000 units, and standard cost is $5 per unit, what is the usage variance?
• What does the Profit or Loss Summary represent after the period, prior to posting to Capital?
• The purpose of Balance Day Adjustments aligns with which accounting concept?
• Which Balance Day Adjustment Account represents revenue earned but not yet received?
• What is the goal for the Quick Ratio?
• How is gross profit calculated?
• Earnings per share represents the profit earned on each share.
• Which statement about sole traders is true?
• Which statement best describes capitalizing interest on a qualifying asset?
• Net income is the starting point on which financial statement for the cash from operating activities?
• In the cash conversion cycle formula, which period is subtracted?
• Define margin of safety and provide its formula.
• Turnover of Accounts Payable indicates how efficient a company is at paying its accounts payable.
• How is Turnover of Inventories calculated?
• Dividends per Ordinary Share is calculated as which of the following?
• Which accounts are closed to the Profit or Loss Summary during closing entries?
• What is the formula for Gross Profit Margin?
• Which item is typically classified as a non-current asset?
• Which journal entry records an accrued expense at period end?
• Which type of analysis is used to identify changes and trends in account balances over multiple years?
• Which statement correctly lists the three sections of the cash flow statement and the primary sources of cash for each?
• Which description best matches the debt-to-equity ratio?
• Which qualitative characteristic ensures information is complete and unbiased?
• What is the effect of capitalizing interest on a qualifying asset?
• The EBITDA Margin is calculated as EBITDA ÷ Total Revenue. Which interpretation is correct?
• Which statement best describes the Monetary Unit (Monetary Policy) Assumption?
• Which statement describes a benefit of vertical analysis?
• Which expression correctly defines Dividends Yield Ratio?
• The Equity Ratio is defined as which of the following?
• Distinguish between the direct method and indirect method for presenting cash flows from operating activities.
• The Debt Ratio is defined as which of the following?
• Under accrual accounting, when is revenue recognized?
• Which of the following would typically be disclosed in notes to financial statements?
• Which statement describes the Drawings account in closing entries?
• Which of the following best describes what liquidity ratios measure?
• Which components does the statement of changes in equity typically show movements in?
• Which factor is identified as complicating comparisons because it can involve corporate events that change the entity?
• Which statement best describes a balance day adjustment?
• Purchasing an asset affects which two areas in financial reporting?
• Capital expenditures have two effects: they increase which asset on the balance sheet and appear as cash outflows in which section of the cash flow statement?
• Net Profit Margin measures profitability as Net Profit divided by Net Sales. What is true about a higher Net Profit Margin?
• What is the purpose of bank reconciliation and its typical adjustments?
• Which definition best describes the recoverable amount used in impairment testing?
• What does a comparative financial statement provide?
• Depreciation under the revaluation model is based on the asset's new fair value after revaluation, and increases may go to the Revaluation Reserve; subsequent depreciation uses the revalued amount.
• A materials price variance of 2,500 unfavourable is recorded under standard costing. Which journal entry is correct?
• What is the primary purpose of ratio analysis?
• When a present obligation exists but a reliable estimate cannot be made, what should be disclosed?
• Under the revaluation model, where is any increase in asset value typically recognized?
• The Debt to Equity Ratio is defined as which of the following?
• What is the purpose of correcting errors in financial records?
• If a company is expected to be liquidated in the near future, which accounting principle is at risk?
• Under the percentage-of-completion method for long-term contracts, revenue is recognized based on:
• Where is the reconciliation between accrual-based net profit and cash movements found?
• What is the primary purpose of the cash conversion cycle formula?
• If a company’s debt-to-equity ratio increases, what is the most likely impact on financial risk?
• Which of the following is a benefit of ratio analysis?
• Which step comes last in the Complete Accounting Process?
• What does the debt-to-equity ratio tell us about a business?
• How is Turnover of Accounts Receivable calculated?
• State the break-even point formula in units and in dollars.
• What components make up the cash conversion cycle?
• What does a Profit and Loss statement show?
• In a company, which statement about liabilities is true?
• Times Interest Earned indicates a company's ability to...
• Which statement correctly describes straight-line depreciation?
• Which item is NOT typically included in a master budget?
• What is the purpose of the allowance for doubtful accounts?
• What does a higher gross profit percentage indicate?
• Which item is typically disclosed under notes as events after the reporting period?
• When can interest capitalization occur for a qualifying asset?
• After closing entries, what happens to the balance of the Profit or Loss Summary account?
• What does a comparative financial statement typically present for analysis?
• In the Complete Accounting Process, which is the first step?
• When prices rise, which costing method typically yields the lowest cost of goods sold and the highest net income?
• What are the journal entries for declaring and paying a dividend?
• Which two ratios are commonly used to assess liquidity?
• When is an impairment loss recognized for non-current assets?
• A non-current asset costs 60,000, residual value 0, life 5 years. What is annual depreciation under the straight-line method?
• What is a trial balance and what does it indicate if it fails to balance?
• What is the typical goal for the Current Ratio?
• Return on Owner's Equity is calculated by Net Profit ÷ Average Owner's Equity × 100. Which option correctly states what this ratio shows?
• Stability ratios collectively assess which of the following?
• Cash accounting records revenues and expenses how?
• Can a trial balance balance even if there are errors in the financial statements?
• What is the purpose of the Income Summary account in the closing process?
• Which depreciation method yields the same expense each year?
• In make-or-buy decisions under incremental analysis, which costs are relevant?
• What is the purpose of inventory adjustments?
• Which option is NOT a section of the Statement of Cash Flows?
• Which of the following is NOT a category used in ratio analysis?
• Which statement best describes the Accounting Period Concept?
• Under the direct write-off method, what is the effect when a specific uncollectible account is written off?
• How is Turnover of Accounts Payable calculated?
• In make-or-buy decisions, which costs are considered irrelevant?
• Which is a common fraud red flag in accounting?
• Interpret a current ratio of 1.5:1. What does this indicate about liquidity?
• Which ratio indicates what proportion of every dollar of assets has been paid for by the owner?
• Which Balance Day Adjustment Account is used to record expenses paid in advance?
• What is the objective of financial reporting according to the conceptual framework?
• Which item is listed as a factor that complicates comparisons of financial statements?
• What is the purpose of the cash flow statement?
• Which statement best describes the Going Concern Principle?
• Which of the following lists the core ethical principles relevant to accounting practice?
• What is the purpose of closing entries?
• Under absorption costing, which costs are included in product cost?
• Which statement best describes ratio analysis?
• What is the key difference between absorption costing and variable costing?
• After a revaluation increases an asset's value, which statement about depreciation is true?
• How is a revaluation surplus recognized?
• Under LCNRV, how is NRV defined?
• Discounting a notes receivable with a bank results in which of the following?
• In benchmarking within an industry, which outcome is considered a primary benefit?
• Which statement best describes how ratio analysis is useful for internal and external stakeholders?
• How is the quick ratio calculated and what does it measure?
• Which of the following describes accrual basis accounting?
• The rate of return on total assets indicates which of the following?
• Which statement best describes the Accounting Entity Assumption?
• What is the dividend payout ratio and how is it calculated?
• Which qualitative characteristic ensures information is understandable and clear to users?
• Under accrual accounting, when are expenses recognized?
• Net cash from operating activities focuses on which of the following?
• Which statement describes horizontal analysis?
• What is the formula for the Current Ratio?
• Which of the following is listed as an expense category in the statement of profit or loss?
• How is cash flow from operating activities calculated in the indirect method?
• Distinguish between cash basis and accrual basis accounting.
• Which statement best distinguishes a sole trader from a company?
• Reversing entries are...
• In depreciation, what does residual value represent?
• Describe the difference between the allowance method and the direct write-off method for bad debts.
• Which item is typically corrected in the error-correction process?
• Reversing entries are made when?
• Which expression represents Earnings Per Share (EPS) as defined in the material?
• Net income flows into which component on the balance sheet?
• Revenue from barter transactions should be recognized at what value?
• Which ratio analysis benefit is most associated with benchmarking performance?
• How is GST treated in financial statements in Australia?
• Why is segregation of duties a key internal control?
• Net Profit Margin is calculated as Net Profit ÷ Net Sales × 100. What does a higher percentage indicate?
• What is the correct formula for the Price to Earnings (P/E) ratio?
• On admission of a new partner, how is the capital of existing partners adjusted?
• Which accounts are closed to the Capital account after closing entries?
• Which activity includes cash flows from buying and selling long-term assets?
• Under the Historical Cost Principle, assets are initially recorded at the amount paid at acquisition.
• Balance Day Adjustments are adjustments made to what?
• The EBITDA Margin ratio is defined as EBITDA divided by Total Revenue. Which statement is true?
• Which item would typically be added to the bank statement balance during a bank reconciliation?
• Which statement is true about a company according to the provided material?
• Net profit based on accrual accounting and net cash from operating activities:
• If the inventory conversion period is 60 days, the receivables collection period is 40 days, and the payables deferral period is 25 days, what is the cash conversion cycle?
• What does a liquidity ratio test?
• Which item is typically classified as a non-current asset?
• Which statement best describes the Accounting Period concept?
• Which of the following best defines vertical analysis?
• Which item falls under Owner's Equity?
• When is a provision recognized for a contingent liability?
• The Shareholder Equity Ratio is defined as which of the following?
• What are typical components of Owner's Equity for a company?
• Under a perpetual inventory system, if the net realizable value is lower than cost, what is recognized?
• Which of the following is a typical limitation of financial statements?
• What happens if a reversing entry is required?
• Which item is typically added back to net income when calculating cash flow from operating activities using the indirect method?
• Which expression represents the Quick Ratio as defined in the material?
• How should assets and liabilities be classified on the balance sheet?
• If the Dividends Yield Ratio is too high, what might it indicate?
• Which accounts are closed in the closing process, and to which account are they closed?
• What are the two types of depreciation?
• What information does the statement of changes in equity provide?
• In a bank reconciliation, which item would typically be added to the bank statement balance?
• Which statement describes a benefit of horizontal analysis?
• What is the purpose of a Financial Statement?
• Which statement best describes the Historical Cost Principle?
• What is a possible treatment of goodwill on the admission of a new partner?
• Provide the adjusting entry for accrued revenue earned but not yet billed.
• EBITDA Margin equals EBITDA ÷ Total Revenue. What does a higher EBITDA margin imply?
• The 'lower of cost and net realizable value' principle requires what in relation to inventory values?