Financial Accounting · Topic 6 quiz

Capital and Revenue Transactions Quiz

Work through 25 multiple-choice questions, one at a time. Submit each answer for feedback. At the end, review your score and see which concepts to revisit.

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1. Which cost normally forms part of a qualifying machine’s initial cost?
2. How is routine servicing normally treated?
3. What does a customer advance normally create before service delivery?
4. How do you record a cash borrowing?
5. How does a sole trader’s capital contribution affect profit?
6. What happens when a customer pays a previously recorded invoice?
7. When does depreciation generally start under IAS 16?
8. Which cash flow category usually includes cash paid for equipment?
9. Which cash flow category normally includes loan proceeds?
10. How is an unpaid purchase of equipment reflected at the purchase date?
11. A qualifying machine costs 12000, delivery 500 and installation 1000. What is its initial cost if both additional costs qualify?
12. A machine costs 12000, has a residual value of 2000 and is depreciated straight-line over five years. What is one full year’s depreciation?
13. A machine with a carrying amount of 10000 sells for 10750 with no selling costs. What is the disposal gain?
14. A qualifying machine costs 14000, delivery 600 and installation 1000. What is its initial cost if both additional costs qualify?
15. A machine costs 14000, has a residual value of 2000 and is depreciated straight-line over five years. What is one full year’s depreciation?
16. A machine with a carrying amount of 11600 sells for 12450 with no selling costs. What is the disposal gain?
17. A qualifying machine costs 16000, delivery 700 and installation 1000. What is its initial cost if both additional costs qualify?
18. A machine costs 16000, has a residual value of 2000 and is depreciated straight-line over five years. What is one full year’s depreciation?
19. A machine with a carrying amount of 13200 sells for 14150 with no selling costs. What is the disposal gain?
20. A qualifying machine costs 18000, delivery 800 and installation 1000. What is its initial cost if both additional costs qualify?
21. A machine costs 18000, has a residual value of 2000 and is depreciated straight-line over five years. What is one full year’s depreciation?
22. A machine with a carrying amount of 14800 sells for 15850 with no selling costs. What is the disposal gain?
23. A qualifying machine costs 20000, delivery 900 and installation 1000. What is its initial cost if both additional costs qualify?
24. A machine costs 20000, has a residual value of 2000 and is depreciated straight-line over five years. What is one full year’s depreciation?
25. A machine with a carrying amount of 16400 sells for 17550 with no selling costs. What is the disposal gain?
Show the answer key
  1. Directly attributable installation Installation prepares the machine for use.
  2. Expense as incurred Routine servicing maintains existing operation.
  3. A liability The business owes the customer goods or services.
  4. Debit Cash and credit Loan Payable Borrowing increases cash and liabilities.
  5. It has no direct effect An owner contribution increases equity directly.
  6. Cash rises and receivables fall Collection settles an existing receivable.
  7. When the asset is available for use Availability for intended operation determines the start date.
  8. Investing Acquiring a long-term asset for cash is generally an investing activity.
  9. Financing Borrowing changes the entity’s financing.
  10. As a non-cash transaction No cash has moved at the purchase date.
  11. 13500 Add the purchase price and directly attributable costs to get 13500.
  12. 2000 Deduct residual value, then divide the depreciable amount by five.
  13. 750 Subtract the carrying amount from proceeds. The gain is 750.
  14. 15600 Add the purchase price and directly attributable costs to get 15600.
  15. 2400 Deduct residual value, then divide the depreciable amount by five.
  16. 850 Subtract the carrying amount from proceeds. The gain is 850.
  17. 17700 Add the purchase price and directly attributable costs to get 17700.
  18. 2800 Deduct residual value, then divide the depreciable amount by five.
  19. 950 Subtract the carrying amount from proceeds. The gain is 950.
  20. 19800 Add the purchase price and directly attributable costs to get 19800.
  21. 3200 Deduct residual value, then divide the depreciable amount by five.
  22. 1050 Subtract the carrying amount from proceeds. The gain is 1050.
  23. 21900 Add the purchase price and directly attributable costs to get 21900.
  24. 3600 Deduct residual value, then divide the depreciable amount by five.
  25. 1150 Subtract the carrying amount from proceeds. The gain is 1150.