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ACCA Knowledge Level — free MCQ practice

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ACCA Knowledge Level subjects

Financial Accounting (112)

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Ratio AnalysisStatement of Cash FlowsThe Mechanics of the Accounting ProcessInventory ValuationAsset, Liability and Equity AccountsFinancial StatementsAccounting EquationBonds PayableThe Accounting EquationIntroducing Accounts and BalancesShare Capital and DividendsAdjusting Entry AccountsPayroll LiabilitiesAccrual Basis Of AccountingDouble EntryNon-Current LiabilitiesStatement Of Financial PositionAccounting ConceptsCurrent LiabilitiesDepreciationDisposal of Non-Current AssetsFinancial RatiosMerchandising Business BasicsMerchandising Income StatementNotes Payable and InterestReceivablesReceivables and Bad DebtsTreasury Shares and Equity SectionAccounting CycleAccruals And Prepayments

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Into which one of the five account categories does the Cash account fall?Read the answer and worked solution →A repair shop earns money by fixing a customer's machine. Which account is most appropriate to record this income from providing a service?Read the answer and worked solution →A business has total revenue of $48,000 and total expenses of $52,000 for a month. What is the result for that month?Read the answer and worked solution →In the journal, the terms "debit" and "credit" most precisely refer to which of the following?Read the answer and worked solution →

Worked practice questions

Into which one of the five account categories does the Cash account fall?

  1. Expense
  2. Liability
  3. Revenue
  4. Asset
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Correct answer: D. Asset

1. The five account categories are assets, liabilities, equity, revenue, and expenses. 2. An asset is anything of value that a business owns. 3. Cash records the money a business possesses, which is something it owns. 4. Therefore Cash is classified as an asset, not a liability, revenue, or expense. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.1 "Introducing Accounts and Balances", p.11_

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A repair shop earns money by fixing a customer's machine. Which account is most appropriate to record this income from providing a service?

  1. Cash
  2. Accounts Payable
  3. Fees Earned
  4. Wages Expense
Show answer and solution

Correct answer: C. Fees Earned

1. Income from a business doing the activity it is set up to do is revenue. 2. Fees Earned is the account used to record income generated from providing a service. 3. Cash records money held, not the act of earning revenue, so it is ruled out. 4. Accounts Payable is a liability and Wages Expense is a cost, so neither records service income. 5. Therefore Fees Earned is the correct revenue account. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.1 "Introducing Accounts and Balances", p.11_

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A business has total revenue of $48,000 and total expenses of $52,000 for a month. What is the result for that month?

  1. Net loss of $4,000
  2. Net income of $4,000
  3. Net income of $100,000
  4. Net loss of $100,000
Show answer and solution

Correct answer: A. Net loss of $4,000

1. Net income is calculated as $\text{Revenue} - \text{Expenses}$. 2. Substitute: $48{,}000 - 52{,}000 = -4{,}000$. 3. A negative result means expenses exceeded revenue, which is a net loss. 4. The loss equals $4{,}000, ruling out the $100,000 options that wrongly add the figures. 5. Therefore the month shows a net loss of $4,000. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.2 "Net Income—A Critical Amount", p.12_

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