2nd round model exam for accounting and finance students

392

2nd round model exam for accounting and finance students

choose the best answer

1 / 100

Both auditing and accounting are concerned with financial statements. Which of the following

2 / 100

“Some risk cannot be diversified away and is due to the overall exposure of an investment to movements in the economy.” This quote is referring to:

3 / 100

Suppose on January 1, 2021 Sally Company sold merchandise which worth Birr 150,000 on account terms 2/10, n/30, and FOB destination to Sony Company. On January 8, the buyer returned a portion of the goods worth Birr 5000 as they were found to be the wrong model. What will be the entry to record return of merchandise under perpetual inventory system?

4 / 100

One of the following is true about fair value measurement if there is a quoted price in an active market for an identical asset or liability

5 / 100

Suppose Company A has a machine costing 1,000,000. Tax depreciation for special purpose statement amounted to 500,000 and derereciation expense for general purpose statement amounted to 300,000. If the effective tax rate of company A is 30 %, identify the correct statement according to IAS 12

6 / 100

According to IAS 41 an entity recognize a biological asset except

7 / 100

What is Financial Leverage?

8 / 100

One of the following is not criteria to capitalizingcosts incurred at development phase

9 / 100

One of the following is not true about liability

10 / 100

  Cash includes all except one:

11 / 100

Moon Company uses Activity-based costing for Product X and Product Y. The total estimated overhead cost for the parts administration activity pool was $550,000 and the expected activity was 2000 part types. If Product Y requires 1200 part types, the amount of overhead allocated to product Y for parts administration would be:

12 / 100

IFRS suggests trade-offs between ___________ and ________for selection ofmeasurement principles; historical cost principle or fair value principle.

13 / 100

Suppose Texas Corporation issued $1000, 000 of 10% term bonds on January 1, 2019, due on January 1, 2024, with interest payable annually. Investors require an effective-interest rate of 12%. Based on the given information answer question number 27-29. What is the present value of the bond on January 1, 2019

14 / 100

An entity recognizesgoods or services receivedin a share-based payment transaction:

15 / 100

  Identify the CORRECT statement about employment income tax as applied in Ethiopian tax law

16 / 100

Which of the following is not true about opinion on financial statements?

17 / 100

The ___________ is the government’s official annual report prepared and published as a matter of public record.

18 / 100

The total good will using proportionate (partial) method is:

19 / 100

For equity-settled share-based payment transactions for employee services, the fair value of the equity instruments is measured:

20 / 100

Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of____________________ except

21 / 100

A cost that would be classified as part of both prime costand conversion cost would be: 

22 / 100

Equity investments acquired by a corporation which accounted for recognizing unrealized holding gains or losses as other comprehensive income

23 / 100

Assume for the year 2020 Lexy Corporation’s financial statements reported the following: Net income: $ 100, 000, depreciation expense: 10,000, increase in account receivable: 30,000 and decrease in account payable amounts: 15,000. What will be the amount of net Cash provided by Operating Activities?

24 / 100

Assume the profit before tax of XYZ, a corporate firm is Br. 22.5 million. How much money should be paid by XYZ as a business income tax?

25 / 100

The period at which share based payment entitlement satisfied

26 / 100

A favorable price variance for direct materials indicates that:

27 / 100

Assets classified as non-current in accordance with IAS 1 presentation of Financial Statements _________ they meet the criteria to be classified as held for sale in accordance with IFRS 5.

28 / 100

When designing audit procedures tracing of source documents to the customers subsidiary ledger and subsequently to the general ledger is done to satisfy what assertion

29 / 100

Suppose Zema Manufacturing Company for the year 2015 have direct material cost- 20 % of prime cost and Conversion cost- Br. 450,000 and if factory overhead is 50 % of direct labor cost. Based on the given information answer question 49-5149. What is the balance of direct material cost?

30 / 100

In the month of June, department X had 10,000 units in beginning work in process that were 70% complete. During June, 40,000 units were completed and transferred into production from another department. At the end of June, there were 5,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The total cost for materials was $450,000 and conversion was $400,000. What was the unit conversion cost in June?

31 / 100

   If selling price per unit is $200, variable costs per unit are $120, total fixed costs are $2,000, the tax rate is 30%, and the company sells 40 units, net income is:

32 / 100

On January 1, Walif Corp. acquired 80% of Metek Corp.’s $10 par common stock for $975,000. The remaining 20% of this stock is held by YOM Co., an unrelated party. On the acquisition date for this business combination, the carrying amount of Metek’s net assets was $1 million. The fair values of the assets acquired and liabilities assumed were the same as their carrying amounts on Metek’s balance sheet except for plant assets (net), the fair value of which was $100,000 in excess of the carrying amount. The fair value of the non-controlling interest is 20% of the fair value of the acquirer’s net assets at the acquisition date. (No exceptions to the recognition or measurement principles apply.) For the year ended December 31, Metek had net income of $190,000 and paid cash dividends totalling $125,000. In the December 31 consolidated balance sheet, the non-controlling interest is reported at

33 / 100

According to the bird-in-hand theory, investors prefer:

34 / 100

  The use of pre numbered checks in disbursing cash is an application of the principle of:

35 / 100

Which one of the following is not true

36 / 100

Time value of money explains that:

37 / 100

“Do not put all your eggs in one basket” related to the concept of

38 / 100

If the fair value of the property on April 30, 2022 was 3 million, what was the effect? (assume the entity use fair value model)

39 / 100

If a merchandise sold on account is returned because of defects, the seller may issue____ to signify acceptance of merchandise returned from buyer

40 / 100

AD Corporation signed a three-month, zero-interest-bearing $152,205 note on November 1, 2015 for the purchase of $150,000 of inventory. The adjusting entry made at December 31, 2015 will include a

41 / 100

Sony Inc., has a target capital structure of 35% debt and 65% common equity, with no preferred stock. The before-tax cost of debt is 8%, and its marginal tax rate is 40%. The current stock price is =$22.00. The last dividend was D_0 =$2.25 and it is expected to grow at a 5% constant rate. What is weighted average cost of capital (WACC)?

42 / 100

Which of the following is not one of the steps used in assigning costs to individual jobs?

43 / 100

The most difficult type of misstatement to detect fraud is based on:

44 / 100

One of the following is true about plant property equipment

45 / 100

Which of the following can be a criterion for the acceptance of a project?

46 / 100

If companies fails to make adjustments for prepayments initiallyrecorded as an asset,what will be the effect except

47 / 100

A factor used to systematically link an indirect cost to a cost object is called

48 / 100

Assume Commercial Bank of Ethiopia agrees to lend Br.5, 000,000 on January 1, 2022, to Saba Co. If Saba signs a Br.5, 000,000, 10 percent, six-month note. What will the balance of cash expected to payable by Saba company on maturity period

49 / 100

  Which of the following statement is correct?

50 / 100

Which matters will not be included in the audit strategy?

51 / 100

Suppose on January 1, 2023 Zemen Company receives Br.120, 000 cash advance applicable for the next six month rent. What will be the entry on the book of Zemen on January 1, 2023?

52 / 100

If overhead is under applied, then:

53 / 100

  Which of the following statements about the risk-return tradeoff is true?

54 / 100

   Liu Electronics budgeted sales of $400,000 for the month of November; cost of goods sold is equal to 65% of sales. Beginning inventory for November was $80,000 and ending inventory for November should be $72,000. How much are the budgeted purchases for November?

55 / 100

Assume AA co. pays br.600, 000 to purchase 75% of the shares of DK co. The fair value of 100% of DK co. identifiable net assets is br.400, 000. (Assume published FV of minorities’ br.200, 000). Based on the given information answer the following question no. 80and 81

56 / 100

__________ are obligation on a bank or other depository institutions to maintain a specified proportion of total assets in liquid form.

57 / 100

ABC Metal Factory, VAT registered company, sold 50,000 units of corrugated iron sheets at VAT exclusive price of birr 500 per unit for the month of January. It has purchased 20,000 Kg. iron sheets at VAT inclusive price of Birr 60 per Kg. from DW metals raw material supplier. The factory has also imported chemicals worth of birr 2 million (including C.I.F and other duty excluding VAT for metal production in the month of January. Moreover, the company had a VAT refund of birr 75,600 for the previous month. Determine whether VAT payable (VAT refund) take place for the given month

58 / 100

Which one of the following is within the scope of IAS 41?

59 / 100

Identify the Incorrect statement/s about categories of tax payers

60 / 100

  _______________ implies that a financial instrument can be exchanged for any other asset and logically, the so formed asset may be transferred back into the original financial instrument.

61 / 100

All of the following items are debited to Work-in -process account except

62 / 100

An entity owns a number of herds of cattle. Where should the change in fair value of herds of cattle be recognized in the financial statements

63 / 100

What is the optimal capital structure?

64 / 100

  Suppose an exporter of powder tea spice has an access of two markets in Ethiopia for transacting tea spice. The first market located at Markato with daily trading volume of ten thousand Sacks of tea spice and selling price of Br. 30,000 per sack. While the second market is located at Saris has daily trading volume of 1,000 sacks with selling price of Br. 35,000 per Sack. The transportation cost amounted to Br.500 and Br 1000 for the first and second market respectively. And also selling cost of Br. 2000 and Br. 3000 for the first and second market respectively. Based on the given information what will be the fair value of the spice in accordance with IFRS 13?

65 / 100

The probability that the economy will experience a recession next year is 30%, while the probability of moderate growth or rapid expansion are 50% and 20%, respectively. The stock Firm A is expected to return 5%, 15%, or 20%, depending on whether the economy experiences a recession, moderate growth or rapid expansion, respectively. Calculate the expected return and standard deviation for firm A.

66 / 100

One of the following is true about research and development costs under GAAP and IFRS

67 / 100

A gain or loss arising from the re-measurement of an investment property should

68 / 100

Which of the following depreciation methods considersalvage value in computing the depreciation base of the asset except?

69 / 100

Which of the following use current financial resources measurement focus?

70 / 100

All the things equal, diversification is most effective when

71 / 100

The Capital Asset Pricing Model (CAPM) is primarily used to:

72 / 100

Under IFRS, cash and cash equivalentsare reported:

73 / 100

One of the following is not necessarily deducted as business expense to arrive at taxable business income

74 / 100

  Identify the false statement related to the term cost

75 / 100

A valuation base requiring assessment of the price that is fair between the two knowledgeable and willing parties

76 / 100

Assume New Generation Post Graduate College owned a building that has been used for delivering education service located at Jemo. The building had original cost of 4 million at the time of acquision, January 1, 2015 and useful life of 20 years. The national education policy requiring the post graduate applicants necessarily pass an entrance exam (GAT test). During the year 2022 most of the applicant fails to pass the exam as a result the college fails to get applicants for post graduate program. Consequently, on April 30, 2022 the college decided to rent the building located at Jemo and deliver education service at head office only located at Megenagna. Based on the given information answer question number 18 and 19(Use SLM)What was the Carrying value of the asset if the building depreciated up to April 30, 2022

77 / 100

Assume on December 1, 2022 Zemen Company purchase merchandise which worth Birr 500,000 on account terms 3/15, n/45, and FOB shipping point from Lulit Trading. On December 15, the company made full payment for Lulit Trading. What will be the entry to record settlement of liability under periodic system?

78 / 100

What is the balance of direct labor cost?

79 / 100

Identify the correct composition of cost classification on the basis of relation to production process

80 / 100

Management’s designs and implementation of internal controls focused concepts are

81 / 100

  Beta measures:

82 / 100

  If you need $12,000 in one year, how much do you have to deposit today if the interest rate is 10%?

83 / 100

Which of the following is not a characteristic of a joint operation?

84 / 100

One of the following is incorrectly matched

85 / 100

When 20,000 units are produced, fixed costs are birr 16 per unit. Therefore, when 40,000 units are produced fixed costs will:

86 / 100

What basis of accounting would the Enterprise Fund use?

87 / 100

What is the balance of amount amortized on January 1, 2021

88 / 100

Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to

89 / 100

Suppose KK Company acquired 60% of XX Company at Br. 3,000,000. Based on the given information, what is the implied value?

90 / 100

   In the case of a bank overdraft:

91 / 100

In Ethiopia, who is responsible for regulating companies’ financial reporting?

92 / 100

  In order to construct a riskless portfolio using two risky stocks, one would need to find two stocks with a correlation coefficient of _________.

93 / 100

A cash-settled share-based payment transaction is a share-based payment transaction in which the entity acquires goods or services by incurring a liability to transfer cash or other assets to the supplier of those goods or services for amounts that are based on:

94 / 100

Which of the following statements is false?

95 / 100

Which of the following best describes systematic risk?

96 / 100

As per IFRS 17 contractual service margin

97 / 100

At December 31, Sandafa Corp. owned 80% of Jote Corp.’s common stock and 90% of Chancho Corp.’s common stock. Jote’s net income for the year was $200,000 and Chancho’s net income was $400,000. Combined financial statements are being prepared for Chancho and Jote in contemplation of their sale to an outside party. In the combined income statement, combined net income should be reported at Chancho and Jote had no inter-entity ownership or transactions during the year.

98 / 100

What is the balance of interest expense on December 31, 2019

99 / 100

Identify the false statement related to equity settled share based payment

100 / 100

ABC Company sells its only product for birr 19 per unit, variable production costs are birr 13 per unit, and selling and administrative costs are birr 4.50 per unit. Fixed costs for 10,000 units are birr 5,000. The contribution margin is:

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