1.
1 1__________ shows the overall financial performance
of the organization.
A)
Financial statement
B)
Balance sheet
C)
Income statement
D)
Statement of cash flows
The correct answer is A)
2.
2 Which one of the following is correct statement
A)
Capital is increase by expense and decrease by drawing
B)
Cash balance is increase by cash receipt and decrease by
expense
C)
Both revenue and Investment increase owner’s equity
D)
Revenue increase capital while investment decrease it
The correct answer is C)
3.
3 _____is the process of taking information from book of
original entry to journal
A)
Posting
B)
Recording
C)
Journalizing
D)
Posting
The correct answer is
C)
4.
4 _____ is the source document that tells the business how
much revenue to record.
A)
Purchase invoice
B)
Sales invoice
C)
Deposit ticket
D)
Book of record
The correct answer is B)
5.
5 One way to detect errors of inequality between Debit and
Credit is by preparing a _______
A)
Ledger
B)
Trial balance
C)
Journal
D)
Transaction
The correct answer is B)
6.
6 ________is the document that tells the business how much
and when to pay the vendor.
A)
Sales invoice
B)
Purchase invoice
C)
Book of report
D)
Book of order
E)
The correct answer is B)
7.
7 Assume that on August 31, the petty cash custodian request
check number 3 for $90 which one is
correct?
A)
Debiting list of expense and crediting cash in bank by $90.
B)
Debiting cash in bank and crediting expense by $90.
C)
Debiting cash in bank
and crediting petty cash fund by $90.
D)
Debiting list of expense and crediting petty cash fund by
$90.
The correct answer is D)
8.
8 Awash construction
makes a note receivable from sunshine construction on October 2, 2008 of 60 days $2500 payable at Dashen bank with
interest at 7%. When will be the due date of the note?
A)
October 2
B)
December 1
C)
December 3
D)
December 31
The correct answer is B)
9.
9 Based on question #8
what will be the maturity value?
A)
$2529.17
B)
$5229.17
C)
$7529.17
D)
$2929.17
The correct answer is A)
10.
10 All are Items recorded by the bank but not yet recorded
by the depositors, Except;
A)
Bank collection
B)
NSF
C)
Service charge
D)
Outstanding check
The correct answer is D)
11. 11 The inventory costing
method that is based on the assumption that costs should be charged against
revenue in the order in which they were incurred is:
A)
Gross profit method
B)
LIFO method
C)
Average cost method
D)
FIFO method
The correct answer is D)
12 At the
beginning of Year 1, the company’s inventory level was stated correctly. At the
end of Year 1, inventory was overstated by $2,000. Reported net income during
year 1 was $3,000. What should be the correct amount of net income in Year 1?
Ignore income taxes.
A)
$1,000
B)
$5,000
C)
$4,500
D)
$1,500
The correct answer is A)
12.
12 Atlanta Company’s
current year ending inventory is understated by $4,000. The effects of this
error on the current year’s cost of goods sold and net income respectively are:
A)
Understated, understated.
B)
Understated
overstated.
C)
Overstated, overstated.
D)
Overstated, understated.
The correct answer is D)
13. 13 Which one of the
following is an example of accelerated depreciation method?
A)
Straight line method.
B)
Uniform method
C)
Units of production method
D)
Double declining method
The correct answer is D)
14. 14 Under what
depreciation method(s) is the useful life of the
asset is expressed in terms of productive capacity asset, like Hours, Miles, and Number of units… etc.
A)
Double declining-balance method
B)
Units-of-production method
C)
Straight-line method
D)
Sum of the years digits method
The correct answer is B)
Assume the following information for question number 16
& 17.
Quality Company purchased plastic laminating equipment on
July 1, 2008, for $15,600. The equipment was expected to have a useful life of
three years, or 20,000 operating hours, and a residual value of $600. The
equipment was used for 3,000 hours during 2008.
15. 15
What is the amount of
depreciation expense for the years ended December 31, 2008 under the
straight-line method?
A)
$3,000
B)
$2,500
C)
$6,400
D)
$2,250
The correct answer is B)
16. 16
What is the amount of
depreciation expense for the years ended December 31, 2008 under the
units-of-production method?
A)
$2,250
B)
$6,400
C)
$5,000
D)
$3,000
The correct answer is A)
17. 17 Most Preferred Stocks
have the Following Distinctive Features except:
A)
Participating dividend right
B)
Preferred as to dividends
C)
Cumulative Dividend Right
D)
Common share
The correct answer is D)
18. 18 The application
(articles of incorporation) will not contains:
A) The address of the
corporation’s principal office
B) The name, purpose and
duration of the proposed corporation
C) Amounts, kinds and number
of shares of capital stock to be authorized
D) The
personal resource of shareholders
The correct answer is D)
19. 19 If two business men
form partnership business their investments are?
A)
Recorded in the name of the business
B)
Recorded in the name of each partner
C)
Recorded in the name of one partner
D)
All assets are recorded in the credit side
The correct answer is B)
20. 20
Partnership form of business is characterized by unlimited liability. Which
statement is not True?
A) Each
partner is individually liable to creditors for debts incurred by the
partnership.
B) If
a partnership becomes insolvent or fail to pay its liability, the partners must
contribute sufficient personal assets to settle the debts of the partnership.
C) Business
partners (both individually and as a group) are liable for all legal and
financial obligations of the partnership
D) The
debt will be levied if partnership is insolvent to pay the liability
The correct answer is D)
21. 21 From the following
alternatives are advantages of corporate form of organization except:
A) Greater
amount of capital can be raised
B) Continuity
of existence
C) Professional
management
D) Government regulation
exists-corporation
The correct answer is D)
22. 22 For what reason a
corporation reacquires (purchase) its own stock?
A) To hold the share for
inflation period
B) To reduce the number of
shareholders
C) To support the market
price of the stock by decreasing the Supply of stock available to the public.
D) To control the market in
monopoly
The correct answer is C)
v
Delta Corporation begun its operation on January 3, 2019,
and purchased $340,000 of merchandise during the year. If inventory at December
31, 1989 is $59,700; the cost of merchandise sold determined (computed) as
follows:
Assume, during 2020 Delta
Corporation purchased additional merchandise of $521,980, received credit
memorandum of purchased returns and allowances of $9,100, in addition ABC take
purchases discount of $2,525, and pays transportation costs of $17,400.
The purchases returns and allowances and discounts are deducted from the total
purchases to yield the net purchases, and the transportation costs are added to
the net purchases to yield the cost of merchandise purchased. The following is cost of merchandise
purchased for 1990.
23. 23
What is cost of merchandise sold for the period 2019?
A) 280,300
B) 527,755
C) 510,755
D) 340,000
The correct answer is A)
24.
24 Based on question # 24 what is cost of merchandise purchased at
period ended 2020?
A)
510,755
B)
527,755
C)
340,000
280,300
The correct answer is B)
25. In accounting system design__________ is affected
by management’s philosophy & operating style, organizational structure of
the enterprise, personnel policies and practices.
A)
Control environment
B)
Control procedures
C)
Accounting system
D)
Accounting Implementation
The correct answer is A)
26. 26 __________Is an integral part of the internal
control structure of an enterprise.
A)
Accounting Analysis
B)
Accounting system
C)
Data recording
D)
Accounting cycle
The correct answer is B)
27. 27 In payroll ___________
is the difference between the gross earning of an employee and the total of the
deductions.
A)
Basic salary
B)
Deduction
C)
Net pay
D)
Bonus
The correct answer is C)
28. 28 Which one can includes
all the others
A)
Allowance
B)
Basic salary
C)
Taxable income
D)
Gross earning
The correct answer is D)
29. 29 Which one is true when
merchandise inventory at the end of the period is overstated?
A)
Understate gross profit
B)
Overstate net income
C)
Understate total asset
D)
Understate owners’ equity
The correct answer is B)
30. 30 Which one of the
following statement is not true about fair value measurement?
A)
It is an orderly transaction,
B)
It is a distressed sale,
C)
It is a market based
measurement,
D)
It is determined by principal market
The correct answer is B)
31. 31 Which one of the following
assets can be both PPE and investment property at the time?
A)
Land and equipment
B)
Building and machinery
C)
Furniture and office equipment
D)
Land and building
The correct answer is B)
32. 32 A general purpose financial report which is
for primary users is prepared based on:-
A)
Relevance and faithful representation
B)
Timelines and understandability
C)
Predictive value and confirmatory value
D)
Completeness and accuracy
The correct answer is A)
33. 33
………….. Establishes the concepts
that underlie financial reporting.
A)
IFRS
B)
Fundamental qualities
C)
Conceptual framework
D)
IASB
The correct answer is C)
34. 34 Based on purpose plant
assets can be classified as:-
A)
PPE,non-current assets held for sale and investment property
B)
Fixed ,intangible and natural assets
C)
Current and noncurrent assets
D)
Identifiable and unidentifiable assets
The correct answer is A)
35. 35 A company keeps its
activity separate from its owners and other business unit. This assumption is:-
A)
Going Concern
B)
Monetary Unit
C)
Periodicity
D)
Economic Entity
The correct answer is D)
36. 36 A fund maintained to
facilitate a cash collection from customers is called:
A)
Petty cash fund
B)
Change fund
C)
Maintain bank account
D)
Imp rust fund
The correct answer is B)
v
Assume that ABC Company has paid a combined purchase price
of $1000, 000 on Jan 1, 2022, for the purchase of equipment and building. The
equipment’s market (sales) value is $300,000 and the building’s market (sales)
value is $900,000. Based on this information do question #8 and 9.
37. 37 Calculate the cost of
equipment.
A)
250,000
B)
500,000
C)
750,000
D)
1000,000
The correct answer is A)
38. 38 What is the cost of
building?
A)
250,000
B)
500,000
C)
750,000
D)
1000,000
The correct answer is C)
39. 39 Except one all of the
following are the main characteristics of intangible assets.
A)
They lack physical existence
B)
They are identifiable
C)
They are not monetary assets.
D)
They are monetary assets
The correct answer is D)
41. 40 Trademarks or trade
names, internet domain names, and non-competition agreements are examples of:
A)
Marketing-related intangible assets.
B)
Customer-related intangible assets.
C)
Artistic-related intangible assets.
D)
Contract-related intangible asset
The correct answer is A)
42. 41 All are correct about factoring of receivables
during without recourse (sale without guarantee) basis except.
A)
The factor assumes risk of collection issues
B)
Title of receivables has been transferred from transferor to
factor.
C)
The fee is higher
D)
The factor is responsible for preexisting sales return and
allowance
The correct answer is D)
43. 42 If the investor have
significance control over the investee and uses equity method, which one is
true about this type of investment?
A)
Net income and net loss increases investment account
B)
Net loss and net income decreases investment account
C)
Dividend decreases investment account
D)
Dividend increase investment account
The correct answer is C)
44. 43 The amount by which
the carrying amount of an asset exceeds its recoverable service amount.
A)
Impairment
B)
Impairment loss
C)
Depreciation
D)
Recoverable amount
The correct answer is B)
45. 44 Companies do not
adjust opening balance to reflect the change in principle. This approach of
recording and reporting accounting changes is….
A)
Report change in the past
B)
Report change retrospectively
C)
Report change currently
D)
Report change prospectively
The correct answer is D)
46. 45 Among the following
one is not true about advantages of accounting for leasing.
A)
Leases may contain less restrictive covenants than other
type of lending arrangements.
B)
Lease reduce risk of obsolescence to the lessor
C)
Lease payments are often fixed
D)
Lease reduce risk of obsolescence to the lessee
The correct answer is B)
47. 46 Changing the method of
accounting for subsidiaries and investment is……
A)
Change in reporting entity
B)
Change in accounting principle
C)
Change in accounting entity
D)
Change in accounting estimate
The correct answer is A)
48. 47 In determining the
present value of the lease payment, one is not important factor to be
considered.
A)
Minimum lease payment
B)
Executory cost
C)
Discount rate
D)
Minimum rental payment
The correct answer is D)
49. 48 Assume on may 1,2014
ABC company acquires 12,000 shares ( 40% ownership) of XYZ company common stock
at $50 per share plus 12,000 brokerage fee. Record purchase for investor.
A)
Investment in stock is debited by 600,000 and cash credited
by600, 000.
B)
Investment in stock is debited by 612, 000 and cash credited
by 612,000.
C)
Cash debited by 612,000 and investment in stock is credited
by 612,000
D)
Cash is debited by 480,00 and investment in stock is
credited by 480,000
The correct answer is B)
50. 49 Based on the above
question #14 assume on Dec. 31 2014, the investee reported net income of
400,000. Compute and record as per the investor record.
A)
Investment in XYZ stock debited by 772,000 and income of XYZ is credited by 772,000
B)
Income of XYZ is debited by772,000 and investment in XYZ
sock is credited by 772,000
C)
Investment in XYZ stock debited by 160,000 and income of XYZ is credited by 160,000
D)
Investment in XYZ stock is debited by 400,000 and income of
XYZ is credited by 400,000
The correct answer is C)
v
Nokia Company trades its used machine for a new model at
Apple Company. The exchange has commercial substance. The used machine has a
book value of $80,000 (original cost $120,000) and a fair value of $60,000. The
new model lists for $160,000. Apple gives Nokia a trade-in allowance of $90,000
for the used machine.
50
50 Based on the above information what is the cost of new
model?
A)
130,000
B)
140,000
C)
60,000
D)
90,000
The correct answer is A)
51
51 What is the amount of gain or loss for Nokia Company?
A)
30,000 gain
B)
20,000 loss
C)
20,000 gain
D)
30,000 loss
The correct answer is B)
52
51` Which one of the following liabilities has uncertain
timing and amount?
A)
Litigation
B)
Account payable
C)
Notes payable
D)
Dividend payable
The correct answer is A)
53
52 When a specific asset is not recognized as the asset of a
given company or organization?
A)
if the asset have future economic benefit
B)
if the asset is controlled asset
C)
if the asset have no future economic benefit
D)
if the asset does not have
court case
The correct answer is C)
54
53 When revenue as a contract with customers is recognized?
A)
When it is earned
B)
When its performance obligation is satisfied
C)
When it is received
D)
When it is deferred
The correct answer is B)
55
54 For agricultural asset inventory which one is the
appropriate valuation method?
A)
Lower of cost or lower of market method
B)
Lower of cost or net realizable value method
C)
Gross method
D)
Retail method
The correct answer is B)
56
55 Which of the following is correct about tax base?
A)
Total income (that can be taxed by a taxing authority and is
thus used to calculate tax liabilities owed by the individual or the
corporation.
B)
The amount of income
subject to tax after deduction of all expenses and other deductible items
allowed under Income Tax Proclamation.
C)
The amount of income tax payable (recoverable) in respect of
the taxable profit (tax loss) for the current period or past periods.
D)
The amount the entity expects to pay (recover) using
substantively enacted(endorse) tax rates
The correct answer is A)
57
56 An entity shall recognize the goods or services received
or acquired in a share-based payment transaction when
a.
Obtains the goods or as the services are received.
b.
Consumption of goods or services received
c.
Issuance of share for settlement
d.
Payments of acquisition
The correct answer is A)
58
56 A tax carryback can be defined as :
A)
is the amount by which tax credits available for utilization
exceed statutory limitations
B)
carrybacks an excess of tax deductions over gross income in
a year
C)
The amount by which tax credits available for utilization
exceed statutory limitations.
D)
an excess of tax deductions over gross income in a year
The correct answer is A)
59
58 When the goods or services received or acquired in a share-based
payment transaction do not qualify for recognition as assets, they shall be
recognized as:
a.
Liability
b.
Expense
c.
Deferred revenue
d.
Pre payments
The correct answer is B)
60
59 ______is calculated by finding the difference between the company's
taxable income and its account earnings before taxes, then multiplying that by
its expected tax rate.
a.
Deferred tax
asset
b.
Deferred tax liability
c.
Taxable temporary differences
d.
deductible
temporary difference
The correct answer is B)
61
60 A valuation approach that uses prices and other relevant
information generated by market transactions involving identical or comparable
assets, liabilities or a group of assets and liabilities is:
a.
Market Approach:
b.
Cost Approach:
c.
Income Approach
d.
Discounted Cash Flow Method
The correct answer is A)
61 Which of the following
is not an inputs for the Discounted Cash Flow ( DCF) method:
e.
Cash flows;
f.
Discount rate
g.
Terminal value
h.
Income level
The correct answer is D)
62
An entity shall recognize a biological asset or agricultural produce under following
conditions except
a.
the entity controls the asset as a result of past events;
b.
The cost or fair value of the asset cannot be measured
reliably.
c.
it is probable that future economic benefit its associated with the asset will
flow to the entity;
d.
The fair value or cost of the asset can be measured
reliably.
The correct answer is B)
63
Which of the following is true regarding the statement of
cash flows under U.S. GAAP?
a.
The statement of cash flows has two major sections—operating
and non-operating.
b.
The statement of cash flows has two major sections—financing
and investing.
c.
The statement of cash flows has three major
sections—operating, investing, and financing
d.
Statement of cash flows has three major sections—operating,
non-operating, and financing.
The correct answer is C)
64
For purposes of the statement of cash flows, under U.S. GAAP
interest paid is treated as:
A.
An operating activity in all cases.
B.
An investing or operating activity, depending on use of the
borrowed funds.
C.
Either a financing or an investing activity.
D.
.either an operating or financing activity, but treated
consistently from period to period.
The correct answer is B)
65
If an entity measures biological assets at their cost less
any accumulated depreciation or impairment losses at the end of the period, the
entity should Disclose:
a.
The cost method used;
b.
The useful lives or the depreciation rates used
c.
The fair value amounts
d.
The types and nature of biological asset
B)
66
A gain or loss arising on initial recognition of
agricultural produce shall be included
a.
Profit or loss Statements
b.
Statement of financial position
c.
On general purpose financial statements
d.
Statements of owners capital
The correct answer is A)
67
Which of the following information doesn’t require in
presentation and disclosure According to
IAS 41
a.
The aggregate gain or loss on initial recognition of
biological assets
b.
Description of each group of biological assets
c.
Distinguishing between consumable and bearer biological
assets
d.
Fair value consumable biological assets and bearer
biological assets.
The correct answer is D)
68
For equity-settled
share-based payment transactions, the entity shall measure the goods or
services received, and the corresponding increase in equity using:
a.
At fair value
b.
At carrying value
c.
At fair value less
cost to sell
d.
At its initial cot
The correct answer is A)
69
The amount of income tax payable (recoverable) in respect of
the taxable profit (tax loss) for the current period or past periods is :
a.
Current tax
b.
Income taxes payable
c.
Income taxes Expense
d.
Deferred Tax
The correct answer is A)
70
Which is not the common Asset valuation methods under income
approach:
a.
Discounted Cash Flow (DCF) Method;
b.
Relief from Royalty
(RFR) Method
c.
Multi-Period Excess
Earnings Method (MEEM);
d.
Comparable Transaction Multiple Method.
The correct answer is D)
71
Which of the following is not a tests for identifying operating segments
for which separate disclosure is required:
a.
A revenue test
b.
A profit or loss test
c.
An asset test
d.
An operating Expense test
The correct answer is D)
72
An operating segment is a component of an enterprise if:
a.
It engages in business activities from which it earns
revenues and incur expenses
b.
The chief operating decision maker not reviews its operating
results regularly.
c.
There is no performance and make resource allocation
decisions.
d.
There is not discrete financial information for users
The correct answer is A)
73 When the financial statements of a foreign
subsidiary one year after acquisition are consolidated with the parent company,
Retained Earnings is
a.
Translated at the current exchange rate.
b.
Re-measured at the current exchange rate.
c.
Re-measured at the historical exchange rate.
d.
Translated at the current exchange rate
The correct answer is D)
v
The following information is relevant for questions #76, 77
and 78:
Abyssinia Trading bills merchandise shipped to its branches
at a branch retail price (Br. 20 per unit). During the current year, the Home
Office shipped 10,000 units of inventory to its Dessie Branch. The year-end separate adjusted trial balances
of Dessie Branch shows an ending inventory balance of Br. 10,000, representing
500 units. The Home Office’s adjusted Trial Balance shows ending inventory of
Br. 50,000 and the Home Office cost of merchandise shipped to the branch was
Br. 120,000.
74
The amount of ending merchandise inventory to be reported in
the combined balance sheet of the home office and the branch should be
A)
60,000
B)
56,000
C)
54,000
D)
70,000
The correct answer is B)
75
The amount of realized gross profit of the home office that
resulted from sales made by Dessie Branch
is
A)
76,000
B)
110,000
C)
120,000
D)
80,000
The correct answer is A)
76
The year-end balance of the unrealized profit on merchandise
shipment account will be
A)
6,000
B)
76,000
C)
4,000
D)
80,000
The correct answer is C)
77
A branch journal entry debiting Home Office and crediting
Cash may be prepared for which type of transactions?
A)
The branch’s receipts of cash from the home office
B)
The allocation by the home office to the branch of expenses
incurred by the home office
C)
The branch’s acquisition for cash of plant asset to be carried
in the home office accounting records
D)
The home office transmittal of cash to the branch’s
The correct answer is C)
78
A business combination in
which a new corporation is created and two or more existing corporations are
combined into the newly created corporation is called a
a.
Merger.
b.
Consolidation.
c.
Purchase transaction.
d.
Pooling-of-interests.
The correct answer is B)
79
ABC Company paid $100,000
in fees to its accountants and lawyers in acquiring another company. ABC will treat the $100,000 as
a.
an expense for the
current year.
b.
a prior period adjustment
to retained earnings.
c.
additional cost to
investment of Florence on the consolidated balance sheet.
d.
a reduction in paid-in
capital.
The correct answer is C)
80
What portion of the balances of subsidiary stockholders'
equity accounts are not eliminated in preparing the consolidated balance
sheet?
A) Common stock
B)
Additional paid-in capital
C)
Retained Earnings
D)
Plant Asset
The correct answer is D)
81
Which of the following will be debited to the Investment
account when the equity method is used?
A)
Investee net losses.
B)
Investee net profits.
C)
Investee declaration of dividends.
D)
Depreciation of excess purchase cost attributable to
investee equipment.
The correct answer is B)
82
When merchandise is billed to a branch at a price in excess
of home office cost,
A)
The cost of goods sold reported by the branch is overstated
B)
The net income reported by the branch is overstated
C)
The ending inventories reported by the branch are
understated
D)
The cost of goods sold reported by the branch is understated
83
In the preparation of
consolidated financial statements, which of the following intercompany
transactions must be eliminated as part of the preparation of the consolidation
working papers?
a.
All revenues, expenses,
gains, deductions, receivables, and payables.
b.
All revenues, expenses,
gains, and deductions but not receivables and payables.
c.
Receivables and payables
but not revenues, expenses, gains, and deductions.
d.
only sales revenue and
cost of goods sold.
The correct answer is A)
84
Which of the following does not represent a primary
motivation for business combinations?
A)
Combinations as a vehicle for achieving rapid growth and
competitiveness.
B)
Cost savings through elimination of duplicate facilities and
staff.
C)
Quick entry for new and existing products into markets.
D)
Because larger firms
being less likely to fail.
The correct answer is D)
85
On July 1, 2019, Langano Corporation paid Br 340,000 for all
of DY Company's outstanding common stock. On that date, the costs and fair
values of DY's recorded assets and liabilities were as follows:
What amount should be
allocated to goodwill in the consolidated balance sheet, prepared after this
business combination?
A)
Br 0
B)
Br 25,000
C)
Br 70,000
D)
Br 45,000
The correct answer is B)
86
The rate of exchange for a currency with immediate delivery
and selling, or buying of the currency normally occurring within two business
days is :
A) Forward rate
B) Exchange rate
C) Spot rate
D) Domestic rate
The correct answer is C)
89.
On January 1, ABC Company paid Br1.6 million for 50,000
shares of XYZ’s common Stock, which represents a 40% investment. XYZ
distributed a dividend of Br 2 per share during the year and reported net
income of Br560, 000. What is the balance of the Investment in XYZ account in
ABC’s financial records at the end of year?
a.
Br1, 724,000.
b.
Br1, 784,000.
c.
Br1, 924,000
d.
Br1, 884,000
The correct answer is A)
90.
Which of the following is not of the advantages of
privatization?
A)
Greater efficiency and productivity of enterprises.
B)
Increased competition in the economy.
C)
Possibility of failure.
D)
Capital market development.
The correct answer is C)
91.
The proportionate Consolidation method of accounting is appropriate for:
A)
Joint ventures only.
B)
Joint ventures and Joint operation
C)
Joint operation Only
D)
Corporate joint ventures
The correct answer is C)
92.
In comparing financial and management accounting which one
of the following more accurately describes management accounting information?
A)
Historical, precise, useful
B)
Required ,estimated, precise
C)
Budgeted , informative , adaptable
D)
Comparable , verifiable , monetary
The correct answer is C)
93.
In computing cost of goods sold, which of the following is
the manufacturer’s equivalent to the merchandiser’s purchases?
A)
Total manufacturing costs to account for
B)
Direct materials used
C)
Total manufacturing costs incurred during the period
D)
Cost of goods manufactured
The correct answer is D)
94.
XYZ Company manufactures desks. The beginning balance of raw
material is $ 4,500; raw materials purchase of $ 29,600 was made during the
month. At month end, $ 7,700 of raw material was on hand and the company
incurred $ 12,000 for conversion. Raw material used during the period is
A)
$ 26,400
B)
$ 34,100
C)
$ 37,300
D)
$ 29,600
The correct answer is A)
95.
The material movement pricing method adopted when prices are
stable or when the materials are covered by price control orders.
A)
Highest in first out method
B)
Specified Price
C)
First in first out
method
D)
Average method
The correct answer is B)
96.
ABC Company starts
production on January 1, 2023 and the company estimated to produce 4,000 units
of product for the month ended January 31. The estimated direct labor cost per
unit for the period per unit is $ 4 and its estimated manufacturing overhead
per unit is $ 20 Calculate predetermined overhead rate for the product?
A)
$25/DLH
B)
$ 20/DLH
C)
$ 5/DLH
D)
$ 16/DLH
The correct answer is C)
97.
In manufacturing companies which uses job order costing
method the treatment of under applied manufacturing overhead is
A)
Added to cost of goods sold
B)
Deducted from cost of goods manufactured
C)
Deducted from cost of goods sold
D)
Added to cost of goods manufactured
The correct answer is
A)
98.
All of the following types of entities uses a process
costing system except?
A)
Chemicals industry
B)
pharmaceuticals industry
C)
Paper manufacturing industry
D)
Textile industry
The correct answer is D)
99.
The
joint cost allocation method that assigns joint production costs based on the
proportionate share of eventual revenues less
further processing costs and recommended to use is
A)
Net realizable value
method.
B)
Constant gross margin
percentage method
C)
Physical unit’s
method
D)
Sales-value-at-split-off method
The correct answer is A)
100.
When
materials are sent to manufacturing plant:
A)
Debited to account
payable and credited to cash
B)
Debited to account
receivable and credited to material
C)
Debited to work in
process and credited to material
D)
Credited to material and debited to finished good
The correct answer is C)
101.
A company’s beginning work in process inventory consists of
10,000 units that are 20% complete with respect to direct labor costs. A total
of 40,000 units are completed this period. There are 15,000 units in goods in
process, one-third complete for direct labor, at period-end. The equivalent
units of production (EUP) with respect to direct labor at period-end, assuming
the weighted average method, are
A)
45,000 EUP
B)
40,000 EUP
C)
5,000 EUP
D)
37,000EUP
The correct answer is A)
102.
If management wants the most accurate product cost, which of
the following costing methods should be used?
A)
Volume-based costing using departmental overhead rates
B)
Volume-based costing using a plant wide overhead rate
C)
Normal costing using a plant wide overhead rate
D)
Activity-based
costing
The correct answer is D)
103.
ABC Company produces two products at the split of point by
using joint cost of $ 44,000. During the period the management of ABC company
decides to make further process and produces 6000 units of product X and 4000
units of product Y by incurring separable cost of 20,000 and 30,000
respectively. The selling price for product X is $ 25 and for product Y is $
30. The joint cost allocated for product X using net realizable value method is
….
A)
$ 28,000
B)
$ 26,000
C)
$ 32,000
D)
$ 30,000
The correct answer is B)
104.
Which is the difference between the actual results and the
flexible- budget amount based on the level of output actually achieved in the
budget period?
A.
flexible budget
variance
B.
Static Budget Variance
C.
Fixed Budget Variance
D.
Sales Volume Variance
The correct answer is A)
105.
Which one of the following is arises solely from the
differences between the budgeted output level used to develop the static budget
and the actual output level used to develop the flexible budget.
A.
The sales-volume variances
B.
Static Budget Variance
C.
Flexible Budget Variance
D.
Overhead Variances
The correct answer is A)
106.
Why the unfavorable sales-volume variance could be arising?
A.
The overall demands of
the product is not growing at the rate that was anticipated
B.
Competitors are taking away market share from once company.
C.
If the Budget sales targets are set with careful analysis of
market conditions
D.
Quality problems developed that led to customer
dissatisfaction.
The correct answer is C)
107. Which of the following is the difference between the actual total quantity of input and the
standard total quantity allowed based on output; this difference reflects
standard mix and standard prices.
A.
The material yield variance
B.
The material mix variance
C.
Sales margin price
variance
D.
Planning Variances
The correct answer is A)
108.
Which of the following aren’t the strengths of the use of Standard costs?
A.
In the event managers are insensitive and when they make use
of variance reports in the form of a club the morale of the workers may suffer.
B.
It helps promote efficiency and economy.
C.
Standard costs facilitate accountability and fit naturally
in the integrated system of responsible accounting.
D.
It enables the simplification of bookkeeping.
The correct answer is A)
109.
Which of the following isn’t the involvement of Cash Budget?
A.
It predicts the effects on the
cash position at the given level of operations.
B.
It is highly affected by the level
of operations summarized in budgeted income statement.
C.
Cash budgets are very helpful for cash
planning and control.
D.
Cash budgets promote idle cash and
unexpected cash deficiencies.
The correct answer is D)
110.
Why Revenues or Sales Budgets the usual starting point for
budgeting?
A.
The production level and the inventory level and hence
manufacturing costs as well as non-manufacturing costs, generally depend on the
forecasted level of sales or revenues.
B.
The revenue budget is often the outcome of elaborate
information gathering and discussions among sales managers and sales
representatives.
C.
Many factors influence the Revenue or sales Budget.
D.
Because sales would be limited by the amount produced.
The correct answer is A)
111. Which is refers to any
management approach that involves setting some kind of targets, regularly
measuring variances between the original targets and actual outcomes, and
motivating people to reduce those variances.
A.Budgetary control
B. Budgeting
C. Budget
D.Planning
The correct answer is A)
112.
Which of the following refers to the problem encountered by
an organization when deciding whether a product or service should be purchased
from outside sources or manufactured internally?
A. The make or buy decision
B. Sell or process further
C. Keep or Drop Decision
D. Special-Order
Decisions
The correct answer is A)
113.
Which of the following is a technique that uses the degrees
of cost variability to measure the effect of changes in volume on resulting
profits?
A. Cost-volume-profit
analysis
B. Break-even Point Analysis
C. Margin of safety Analysis
D. Operating leverage
Analysis
The correct answer is A)
114.Why Knowledge of the break-even point is
useful?
A. To determine customer
preference.
B. To determine standard
cost for the product.
C. To decides whether to
introduce new product lines, change sales prices on established products, or
enter new market areas.
D. To verify market
opportunities of the companies
The correct answer is C)
115.Which of the following is incorrect
about assumption of Cost volume profit analysis?
A.
Selling price is constant
B.
The fixed element is constant in total over the entire
relevant range.
C.
In multiproduct
companies, the mix of products sold could be varying.
D.
The variable element is constant per unit.
The correct answer is C)
116.Tony company has equivalent unit cost of birr 10 for Direct
Material and birr 20 for Conversion cost
.if there are 2500 units in ending WIP , 100% complete to direct material and
40% for conversion cost. The total cost assigned to the ending WIP
A. Br 45,000
B. Br 55,000
C. Br 30,000
D. Br 40,000
The correct answer is A)
117. Which
is the main point on the basis of which private finance separated from public
finance:
A) Borrowings
B) Elasticity
of Finance
C) Satisfaction
of Human Wants
D) Engage in Similar Activities
The correct answer is B)
118. A
cannon of public expenditure which suggests that no public spending should be
made without the authorization of proper authority is;
A) Canon
of Equity
B) Canon
of Benefit
C) Canon of sanction
D) Canon
of Economy
The correct answer is C)
119.It implies that
the possibilities of imposing a tax should be taken into account from different
angles, i.e., its reaction upon on the tax payer.
A. Canon
of Elasticity
B. Canon
of Convenience
C. Canon
of Expediency
D. Canon
of Equality
The
correct answer is C)
120.The Ethiopian
tax system is:
A. Progressive
B. Regressive
C. Proportional
D. Regressive
The
correct answer is A)
121.Transfers
of financial resources between levels of government to support public spending
is;
A. Inter-governmental
transfer
B. Public debt
C. Public
revenue
D. Public expenditure
The correct
answer is A)
122.
In budgeting process of Ethiopia,
the budget evaluation begins at the institutional level by…….
A. External
auditor
B.
Internal
auditor
C.
Legislatures
D.
Executive
organs
The correct answer is B)
123.The types of tax
levied on sales of goods and services is
A. Turnover
tax
B. VAT
C. Excise
tax
D. Custom
duty
The correct answer is B)
124.Which of the
following is not a direct tax
category in Ethiopian tax system?
A. Employment
income tax
B. Business
income tax
C. Rental
income tax
D. Property tax
The correct answer is D)
125.Assume Mr. Ali
is an employee of Samara University. He received a basic salary of birr 9,500.
What could be the net pay for Mr. Ali?
A. 7605
B. 6175
C. 6940
D. 7100
The correct
answer is C)
126.Assume that ABC
Company purchased raw material for birr 10,000 from XYZ Company. ABC sold to
wholesaler for birr 12,000; wholesaler sold to retailer for birr 15,000;
retailer sold to final customer for birr 19,000. What is the tax liability paid
to the government?
A. 1500
B. 2250
C. 2850
D. 1350
The correct
answer is D)
127.It imposes a duty on public officials to be accountable
to citizens for raising public monies
and how they are spent.
A)
Accountability
B)
Stewardship
C)
Encumbrance
D)
Appropriation
The correct answer is A)
128. Account for financial resources segregated to pay
principal and/or interest on long-term general liabilities
A. Special revenue
funds,
B. Capital projects
funds
C. Internal service
funds
D. Debt service fund
The correct answer is D)
129.As per IPSAS 12 inventory should be stated at
A. Lower of cost and fair value
B. Lower of cost and net realizable value
C. Lower of cost and nominal value
D. Lower of cost and net selling price
The correct answer is B)
130.A government unit that engages in self-supporting
activities by providing goods and service to the public on a user charge basis
should be accounted for in what fund category?
A)
Governmental
fund
B)
Any
non-expendable fund
C)
Proprietary
fund
D)
Fiduciary
fund
The correct answer is C)
131.
Which
basis of accounting is used for the basic governmental function of state and
local government
1. Cash basis of accounting
2. Modified accrual basis of accounting
3. Accrual basis of accounting
4. Regulatory basis of accounting
The correct answer is
B)
132.An expense account appears in
A)
Special
revenue fund
B)
A
pension trust fund
C)
An
enterprise fund
D)
Debt
service fund
The correct answer is C)
133.Which of the following is a governmental fund
type, which focuses on current financial resources using the modified accrual
basis of accounting?
A)
A debt service fund
B)
Serial bond
C)
A
pension trust fund
D)
An enterprise fund
The correct answer
is A)
134.Which of the following isn’t true about General
capital assets are:
A)
Capitalized in the governmental activities accounts at
the government-wide level.
B)
Generally, depreciated at the government-wide level
C)
Debited to Expenditures in the appropriate
governmental fund.
D)
Credit to
expenditures in the appropriate government fund
The correct answer is D)
135. Capital assets used
in governmental activities are referred to as ----------------
A)
General capital assets
B)
A pension trust fund
C)
An enterprise fund
D)
Debt service fund
The correct answer is A)
136. How to assigning
Costs to General Capital Assets?
A)
Record
donated assets at fair value on date of gift.
B)
Asset
received from another fund, in which case use only fair value.
C)
Asset
received from another fund, in which case use only lower of book value.
D)
Asset
received from another fund, in which case use lower of book value or fair
value.
The correct answer is D)
137. the correct order in capital budgeting processes
A)
Idea generation-Estimation of cash flow-Evaluation-
Implementation - Selection- revision.
B)
Idea generation-Estimation of cash
flow-Evaluation-Selection-Implementation- revision.
C)
Idea generation- Evaluation- Estimation of cash flow -
Implementation - Selection-revision.
D)
Idea generation- Evaluation - Implementation - Estimation of
cash flow- Selection- revision.
The correct answer is B)
138.
What is the
present value of
a perpetuity of
Br. 20,000 per year
if the appropriate discount rate
is 5%?
A)
1,000
B)
400,000
C)
20,000
D)
10,000
The correct answer is B)
139. The followings are consequences of excess earnings for
corporation except;
A)
Common shares of the firm will become more desirable to
investors
B)
Demand for common share ownership will increase.
C)
The market price of common shares will fall.
D)
The resale price for common share increase
The correct answer is C)
Below there is financial data of XYZ
company for 20XX Year
Assets:
Cash 10,000
Marketable securities
4,000
Accounts receivable (net)
21,300
Inventories 25,800
Land and buildings 35,000
Plant and equipment
140,500
Accumulated depreciation
67,200
Net fixed assets 108,300
Liabilities and
stockholders’ equity
Accounts payable 22,000
Notes payable 15,000
Taxes payable 4,300
Mortgage bonds 770,000
Net sales for the period is Br.
169,300
Based on the above
information find answer the following question (select the most approximate
number)
140.
What is the amount of current ratio?
A) 1.48
B) 2.78
C) 1.65
D) 3.17
The correct answer is B)
141.
The preferred issue has a Br. 80 par value and pays an
annual dividend of Br. 6.40 per share. Similar-risk preferred stocks are
currently earning a 9.3% annual rate of return. What is the value of the
outstanding preferred stock?
A) Br 68.82
B) Br 68.00
C) Br 60.00
D) Br 6.82
The correct answer is A)
142.
An annuity for which the cash flows occur at the end of each
period
A)
Ordinary annuity
B)
Annuity due
C)
Deferred annuity
D)
Uneven cash flow
The correct answer is C)
143.
All of the above Sefa Chartered Accountants has developed
and copyrighted an accounting software program. He agreed
to sell the copyright
to Steel company for 6
annual payments of Br. 5,000 each. The payments are to begin 5 years
from today. If the annual interest rate is 8%, what is the present value of the
six payments?
A)
16,989
B)
16,000
C)
10,900
D)
18000
The correct answer is A)
144.Which financial manager decision is
deal with the left side of the basic accounting equation?
A)
Investment decisions
B)
Financing decisions
C)
Dividend decisions
D)
Saving decisions
The correct answer is A)
145.A Corporation has a Br. 1,000 par value
bond with an 8% coupon interest rate outstanding. Interest is paid semiannually
and the bond has 12 years remaining to its maturity date. What is the value of
the bond if the required return on the bond is 8%?
a.
1000
b.
1001
c.
1500
d.
900
The correct answer is A)
146._____ are financial markets in which
securities traded have maturities of one-year or less.
a.
Capital Market
b.
Money market
c.
Over-the-counter markets
d.
Primary Markets
The correct answer is B)
147. Mr. X deposited Br
15,000.00 in Bank on January 1 2000. At 13.5 percent semiannually compounding
then How much will Mr. X get on December
31, 2007?
A)
113,769.29
B)
88,314.77
C)
41,310.28
D)
36,396.72
The correct answer is A)
148. ______ The risk to the
firm of being unable to cover operating cost is assumed to be unchanged
a.
Cost of capital
b.
Business risk
c.
Financial risk
d.
Interest rate risk
The correct answer is B
149.The optimal capital structure has been
achieved when the:
A)
Debt-equity ratio is equal to one
B)
Weight of equity is equal to weight of debt
C)
Debt-equity ratio is such that cost of debt exceeds cost of
equity
D)
debt-equity ratio results in the lowest possible weighted
average cost of capital
The correct answer is D)
150. M&M proposition I
with no tax supports the argument that:
A)
Business risk determines the return on asset
B)
The cost of equity rises as leverage rises
C)
The debt-equity ratio of the firm is completely irrelevant
D)
Homemade leverage is irrelevant
The correct answer is C)
151. Which one of the
following states that a firm's cost of equity capital is directly related to
the firm's capital structure?
A)
Capital asset pricing model
B)
M&M Proposition I
C)
M&M Proposition II
D)
Efficient market hypothesis
The correct answer is C)
152.Which of the following is
incorrect about residual dividend approach?
A)
It creates reduction in the dollar amount which is paid to
investors.
B)
Reduces uncertainty for investors and provide them with
income.
C)
Dividends are paid with any remaining earnings generated by
the firm.
D)
Company management uses to fund capital expenditures with
available earnings before paying dividend.
The correct answer is B)
153.Which of the following is not an
assumption of the Modigliani and Miller dividend theory?
A)
There are perfect capital markets
B)
Investors do not behave rationally
C)
There are no floatation and transaction costs
D)
No investors are large enough to affect the market price of
shares
The correct answer is B)
154.Which type of dividend policy is
suitable for small investors and retired persons?
A)
Regular dividend policy
B)
Irregular dividend policy
C)
Stable dividend policy
D)
No dividend policy
The correct answer is A)
155. In managing cash and
other marketable securities, what should the managers primary concern?
A)
Maximization of profit
B)
Maximization of liquid assets
C)
Acceptable return on investment
D)
Liquidity and safety
The correct answer is D)
156.The economic order quantity:
A)
Determines the reorder point
B)
Determines the safety stock
C)
Is the lowest cost amount to order considering all costs
D)
Is the highest cost amount to order considering all costs
The correct answer is C)
157.
The key initial element in developing pro-forma statement
is:
A)
A cash budget
B)
An income statement
C)
A sales forecast
D)
A collections schedules
The correct answer is C)
158. Which one of the
following statement is correct about percentage of sales method of financial
forecasting?
A)
It is more detailed than cash budget approach
B)
It requires more time than a cash budget approach
C)
It assumes that balance sheet accounts maintain a constant
relationship to sales
D)
It Provides a month to month breakdown of data
The correct answer is C)
159.Firms generally choose to finance
temporary assets with short-term debt because:
A)
Matching the maturity of asset and liabilities reduce risk
B)
Short-term interest rates have traditionally been more
stable than long-term interest rates
C)
Sales remain constant over the year and financing
requirement also constant
D)
Long-term assets are financed by short-term debts
The correct answer is A)
160. What is the largest
source of short-term credit for small firms?
A)
Bank loans
B)
Commercial papers
C)
Installment loans
D)
Trade Credit
The correct answer is D)
161. The primary objective of
an audit is to:
A)
Detect all instances of fraud
B)
Ensure the accuracy of a company's financial statements
C)
Evaluate the company's management and internal control
structure
D)
Provide consulting
services to the company
The correct answer is B)
162. Any service that requires
a CPA firm to issue a report about the reliability of an assertion that is made
by another party is a(n):
A)
Accounting and bookkeeping service.
B)
Attestation service.
C)
Assurance service.
D)
Tax service.
The correct answer is B)
163. The audit process
typically involves which of the following steps?
A)
Planning, performing fieldwork, preparing financial statements
B)
Performing fieldwork, issuing an opinion, preparing tax
returns
C)
Planning, performing fieldwork, reporting findings
D)
Reporting findings, preparing financial statements, filing
tax returns
The correct answer is C)
164. Absence of reasonable
care that can be expected of a person in a set of circumstances.
A)
Credit alliance
B)
Gross negligence
C)
Ordinary negligence
D)
Contributory negligence
The correct answer is C)
165. Materiality is:
A)
The ability of a company to pay its debts
B)
The significance of an item in relation to the financial
statements
C)
A measure of a company's profitability
D)
The amount of cash a company has on hand
The correct answer is B)
166. Which of the following
would be an audit risk?
A)
The risk of a company being sued b
B)
The risk of a company's failure to comply with tax laws
C)
The risk that a company will go bankrupt
D)
The risk that an auditor will issue an incorrect opinion
The correct answer is D)
167. An auditor is required to
plan the audit to:
A)
Maximize the amount of audit evidence gathered
B)
Demonstrate their independence from management
C)
Ensure that the audit
is performed as quickly as possible
D)
Obtain sufficient
appropriate audit evidence
The correct answer is D)
168.An auditor is responsible for:
A)
Finding every error or fraud in a company's financial
statements
B)
Ensuring that a company complies with all laws and
regulations
C)
Expressing an opinion on the accuracy of a company's
financial statements
D)
Managing a company's financial resources
The correct answer is C)
169.
Which of the following types of documentary evidence should
the auditor consider to be the most reliable?
A)
A sales invoice issued by the client and supported by a
delivery receipt from an outside trucker.
B)
Confirmation of an account payable balance mailed by and
returned directly to the auditor.
C)
A check, issued by the company and bearing the payee’s
endorsement, that is included with the bank statements mailed directly to the
auditor.
D)
An audit schedule prepared by the client’s controller and
reviewed by the client’s treasurer.
The correct answer is B)
170. The essence of a financial report
audit is to:
A)
Examine individual transactions so that the auditor may
certify as to their validity.
B)
Determine whether the client's financial reports are fairly
stated
C)
Detect fraud.
D)
Assure the consistent application of correct accounting
procedures.
The correct answer is B)
171.When the financial statements are
fairly stated but the auditor concludes there is substantial doubt whether the
client can continue in existence, the auditor should issue a(an)
A)
Adverse opinion.
B)
Qualified opinion only.
C)
Unqualified opinion.
D)
Unqualified opinion with explanatory paragraph.
The correct answer is D)
172. The opinion paragraph of
a CPA’s report states: “In our opinion, except for the effects of not
capitalizing certain lease obligations, as discussed in the preceding
paragraph, the financial statements present fairly,” in all material respects,
. . . This paragraph expresses a(an)
A)
Unqualified opinion
B)
Unqualified opinion with explanatory paragraph
C)
Qualified opinion
D)
Adverse opinion
The correct answer is C)
173. Which of the following is
the risk that audit tests will not uncover existing exceptions in a sample?
A)
Sampling risk
B)
Non-sampling risk
C)
Audit risk
D) Detection
risk
The correct answer is D)
174. For which of the
following tests would an auditor most likely use attribute sampling?
A)
Selecting accounts receivable for confirmation of account
balances.
B) Inspecting
employee time cards for proper approval by supervisors.
C)
Making an independent estimate of the amount of a FIFO
inventory.
D)
Examining invoices in support of the valuation of fixed
asset additions
The correct answer is B)
175.Which of the following best illustrates
the concept of sampling risk?
A)
The documents related to the chosen sample may not be
available to the auditor for inspection.
B)
An auditor may fail to recognize errors in the documents
from the sample.
C)
A randomly chosen sample may not be representative of the
population as a whole for the characteristic of interest.
D)
An auditor may select audit procedures that are not
appropriate to achieve the specific objective
The correct answer is C)
176. An advantage of
statistical sampling over non-statistical sampling is that statistical sampling
helps an auditor
A)
Minimize the failure to detect errors and fraud.
B)
Eliminate the risk of non-sampling errors.
C)
Design more effective audit procedures.
D)
Measure the sufficiency of the audit evidence by quantifying
sampling risk
The correct answer is D)
177.A key internal control in the sales and
collection cycle is the separation of duties between cash handling and record keeping.
The objective most directly associated with this control is to verify that:
A)
Minimize the failu Cash receipts recorded in the cash
receipts journal are reasonable.
B)
Cash receipts are correctly classified.
C) Existing
cash receipts are recorded.
D)
Recorded cash receipts result from legitimate transactions.
The correct answer is C)
178. The accounting system
automatically obtains the unit price based on scans of bar codes for
merchandise sold. This control is most relevant to which transaction-related
objective for sales?
A)
Accuracy
B)
Occurrence
C)
Completeness
D)
Posting and summarization
The correct answer is A)
179. Which audit procedure is
most effective in testing credit sales for overstatement?
A)
Trace a sample of postings from the sales journal to the
sales account in the general ledger.
B)
Vouch a sample of recorded sales from the sales journal to
shipping documents.
C)
Prepare an aging of accounts receivable.
D)
Trace a sample of initial sales orders to sales recorded in
the sales journal.
The correct answer is B)
180. When evaluating the
adequacy of the allowance for uncollectible accounts, an auditor reviews the
entity’s aging of receivables to support management’s balance-related assertion
of
A)
Existence.
B)
Completeness.
C)
Valuation and allocation.
D)
Rights and obligations.
the correct answer is C
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