Samoa Secondary Leaving Certificate — Accounting

Which accounting concept assumes that a Vaitele hardware shop will keep trading for the foreseeable future and will not be forced to close or sell off its assets?

• AHistorical cost concept
• BMoney measurement concept
• CMateriality concept
• DGoing concern concept

Sina's catering business completed a SAT 1,800 wedding job in November but will not collect the cash until January. Under the accrual basis, when is the SAT 1,800 recorded as revenue?

• AIn January when the cash is received
• BSplit equally between November and January
• CIn November when the work is earned
• DOnly when the owner withdraws the money

A Salelologa store bought a freezer for SAT 4,500 three years ago. Similar freezers now sell for SAT 6,200. Under the historical cost concept, at what amount is the freezer first recorded?

• ASAT 6,200, the current market price
• BSAT 5,350, the average of cost and market
• CSAT 0, because it is already three years old
• DSAT 4,500, the original purchase price

The matching concept requires that the cost of taro sold from a Fugalei stall is reported:

• AIn the same period as the sales revenue those taro helped generate
• BOnly in the period when the grower is paid
• CAs a deduction from owner's capital, never as an expense
• DIn the following year so profit is not understated

Conservatism (prudence) is applied when a shop:

• ARecords a hoped-for SAT 5,000 tourism boom as income before any bookings exist
• BIgnores a likely SAT 400 stock loss because the amount is uncertain
• CRecognizes a likely SAT 400 inventory write-down now, but does not record unrealized hold…
• DStops keeping any records of liabilities so the business looks stronger

The disclosure concept requires a business to:

• AHide all loan details from the bank so competitors cannot copy them
• BRecord only cash transactions and ignore credit purchases
• CValue every asset at current replacement cost
• DProvide complete, transparent financial information that users need to understand the sta…

The business entity concept means that SAT 200 taken from the shop till to pay the owner's home power bill should be recorded as:

• AShop electricity expense
• BA reduction in sales
• CDrawings (owner's withdrawal)
• DA prepaid asset of the shop

Which pair are both current assets of an Apia grocery?

• AShop building and long-term bank loan
• BInventory of canned goods and accounts receivable
• COwner's capital and sales revenue
• DAccrued wages and accounts payable

Which account is an expense in the Statement of Financial Performance of a taxi operator?

• AAccounts receivable
• BMotor vehicle (cost)
• CFuel and oil
• DBank loan principal

Tasi Taro Traders reports assets of SAT 36,400 and liabilities of SAT 14,800. What is owner's equity?

• ASAT 21,600
• BSAT 51,200
• CSAT 14,800
• DSAT 21,400

Losa's stall has assets SAT 20,000, liabilities SAT 6,000 and equity SAT 14,000. She then buys SAT 3,000 of inventory on credit. What are total assets after the purchase?

• ASAT 20,000
• BSAT 17,000
• CSAT 23,000
• DSAT 26,000

Which outlay is capital expenditure for Moana Guest Fale?

• AMonthly electricity for the guest rooms
• BWages paid to weekend cleaners
• CDetergent and toilet paper used this week
• DPurchase of a new commercial freezer expected to last eight years

Which user is an external user of a bakery's financial statements?

• AThe owner-manager reviewing weekly sales
• BThe shop supervisor checking the till
• CA BSP loans officer deciding whether to approve an overdraft
• DThe bookkeeper posting the cash receipts journal

A village store has a loyal customer base and a skilled baker, but neither appears as an asset on the Statement of Financial Position. Which concept explains this?

• AGoing concern
• BMoney measurement
• CDuality
• DConsistency

Leota Bakery depreciated ovens at 10% straight line for four years, then switched to 25% reducing balance in year 5 with no note or justification. Which concept is most clearly at risk?

• AConsistency
• BBusiness entity
• CHistorical cost
• DMoney measurement

A bookkeeper for a family store tells a cousin how much a named customer still owes, so the cousin can chase the debt privately. Which ethical duty is broken?

• AConfidentiality of client and customer information
• BThe going concern assumption
• CThe historical cost concept
• DThe need to bank cash daily

On 20 December a caterer receives SAT 9,000 cash for a New Year's Eve function that will be held on 31 December. The books close on 30 November. If the SAT 9,000 is recorded as November sales, which concept is violated?

• ABusiness entity, because the cash belongs to the owner personally
• BAccrual / realization, because the income has not yet been earned in November
• CHistorical cost, because cash is not an asset
• DMateriality, because SAT 9,000 is too small to record

The owner of Faleasiu Village Store pays a SAT 320 home power bill from the shop cheque account and codes it as shop electricity. What is the effect on the shop's reported profit if this is not corrected?

• AProfit is understated by SAT 320 because a drawing was treated as an expense
• BProfit is overstated by SAT 320 because a liability was ignored
• CProfit is unchanged because cash and expense both fall
• DProfit is overstated by SAT 640 because electricity is doubled

Pita Taxi Services buys a used van for SAT 28,000 and fills the tank with SAT 180 of petrol on the same invoice. How should the SAT 28,180 payment be classified?

• AThe whole SAT 28,180 is capital expenditure
• BThe whole SAT 28,180 is revenue expenditure
• CSAT 28,000 capital expenditure and SAT 180 revenue expenditure
• DSAT 180 capital expenditure and SAT 28,000 revenue expenditure

Opening capital is SAT 18,000. During the year the owner introduced SAT 4,000 extra cash, made a net profit of SAT 7,500, and withdrew SAT 2,200 drawings. What is closing capital?

• ASAT 29,500
• BSAT 27,300
• CSAT 21,500
• DSAT 11,300

The main purpose of a Statement of Financial Performance is to show:

• AAssets, liabilities and equity at one date
• BOnly the cash received and paid during the year
• CThe market value of the owner's house
• DIncome and expenses, and the resulting profit or loss for a period

Which item is a current liability?

• AAccounts payable to a copra buyer due next month
• BDelivery truck used every day
• CFive-year mortgage on the shop land
• DInventory of fishing line

Which item is a non-current asset on a hardware shop's Statement of Financial Position?

• ACash in the till
• BWages owing to staff
• CSales for the month
• DShop building

Gross profit is best described as:

• ASales minus all operating and finance expenses
• BCash collected minus cash paid
• CClosing capital minus opening capital
• DSales minus cost of goods sold

A limitation of the Statement of Financial Position is that it:

• AShows assets, liabilities and equity in one place
• BUses the accounting equation
• CReports many assets at historical cost and omits some valuable non-monetary items
• DIs prepared at a point in time

One function of the Statement of Financial Performance is to:

• AHelp users judge whether the business earned an acceptable profit from its operations
• BList every source document used during the year
• CReplace the need for a trial balance
• DShow only the cash in the bank on balance day

A church youth club that is not trading for profit is most likely to prepare which pair of statements?

• AManufacturing account and appropriation account
• BOnly a Statement of Financial Performance showing sales and cost of sales
• CA tax return listing VAGST output tax on tithes
• DReceipts and payments account, and an income and expenditure account

Drawings of SAT 1,500 cash by the owner are reported as:

• AAn operating expense in the Statement of Financial Performance
• BA current liability until the owner repays the shop
• CAn increase in sales returns
• DA deduction from capital in the equity section, not an expense

Apia Fresh Produce reports sales SAT 180,000 and cost of goods sold SAT 120,000. What is the mark-up percentage?

• A33.3%
• B50%
• C66.7%
• D150%

Nuanua Crafts has sales SAT 80,000 and cost of goods sold SAT 48,000. What is the gross-profit percentage?

• A40%
• B60%
• C66.7%
• D25%

A stall has sales SAT 80,000, administrative expenses SAT 12,000, selling expenses SAT 8,000 and finance expenses SAT 4,000. What is the expense percentage of sales?

• A15%
• B24%
• C30%
• D40%

Manu's Copra Shed: sales SAT 160,000, cost of goods sold SAT 64,000, administrative expenses SAT 32,000, selling expenses SAT 12,000, finance expenses SAT 8,000. What is the net-profit percentage?

• A60.0%
• B32.5%
• C27.5%
• D22.5%

Which pair of ratios both measure liquidity?

• AGross-profit percentage and mark-up
• BCurrent ratio and acid-test (quick) ratio
• CNet-profit percentage and return on capital
• DInventory turnover and expense percentage

Malae Hardware has current assets SAT 45,000 and current liabilities SAT 18,000. What is the current ratio?

• A2.5 : 1
• B0.4 : 1
• C2.0 : 1
• D1.5 : 1

Using Malae Hardware's figures — current assets SAT 45,000 including inventory SAT 15,000, current liabilities SAT 18,000 — what is the acid-test (quick) ratio?

• A2.50 : 1
• B1.67 : 1
• C0.83 : 1
• D3.00 : 1

Salelologa Store has current assets SAT 32,500 and current liabilities SAT 14,800. What is working capital?

• ASAT 47,300
• BSAT 14,800
• CSAT 17,700
• DSAT 17,300

Leota Bakery: opening inventory SAT 8,000, purchases SAT 52,000, closing inventory SAT 10,000. What is cost of goods sold?

• ASAT 50,000
• BSAT 70,000
• CSAT 54,000
• DSAT 34,000

Leota Bakery has sales SAT 120,000 and cost of goods sold SAT 50,000. What is gross profit?

• ASAT 50,000
• BSAT 170,000
• CSAT 70,000
• DSAT 54,000

On a trial balance, which item is a credit balance?

• APurchases
• BWages
• CSales
• DDrawings

A guest fale's room sales were SAT 90,000, SAT 108,000 and SAT 135,000 over three years. The best description of the sales trend is:

• ASales fell steadily each year
• BSales were unchanged after inflation
• CSales rose each year, by 20% then by 25%
• DSales doubled every year

A shop's net-profit percentage has fallen even though sales have grown. Which action is most directly aimed at improving financial performance?

• AIncrease mark-up slightly and cut avoidable selling costs without losing volume
• BStop banking cash so the till looks fuller
• CRecord the owner's drawings as purchases
• DIgnore slow-moving stock so inventory looks healthier

Which measure best indicates improved managerial effectiveness in a small Apia retailer?

• AThe owner takes larger drawings each month
• BInventory days fall while the gross-profit percentage is maintained
• CThe current ratio falls below 0.5 because payables are ignored
• DAll repairs are capitalized regardless of size

A rugby club's receipts and payments account differs from its income and expenditure account because receipts and payments:

• AInclude only cash movements and ignore accruals, prepayments and depreciation
• BAlways show a larger surplus than income and expenditure
• CRecord only non-current assets
• DAre prepared only when the club makes a profit

In a trading Statement of Financial Performance, wages of shop assistants are classified as:

• ACost of goods sold
• BAn operating (selling or administrative) expense after gross profit
• CA non-current asset
• DA current liability even when already paid

Leota Bakery: sales SAT 120,000, cost of goods sold SAT 50,000, wages SAT 18,000, rent SAT 9,000, electricity SAT 4,000, depreciation SAT 3,000, interest SAT 2,000. What is net profit?

• ASAT 70,000
• BSAT 34,000
• CSAT 86,000
• DSAT 36,000

Sales SAT 180,000 and cost of goods sold SAT 120,000 produce a mark-up of 50% and a gross-profit percentage of 33.3%. Why are the two percentages different?

• AMark-up uses cost as the base; gross-profit percentage uses sales as the base
• BOne of the percentages must contain an arithmetic error
• CMark-up always ignores closing inventory
• DGross-profit percentage includes operating expenses

A store has sales SAT 100,000, cost of goods sold SAT 62,000 and operating expenses SAT 30,000. Which recommendation best targets the thin SAT 8,000 net profit?

• AInvestigate high cost of sales and operating costs, then raise prices or cut waste while…
• BStop recording cost of goods sold so profit looks larger
• CTransfer SAT 8,000 from cash to drawings to improve the ratio
• DReclassify the SAT 30,000 expenses as non-current assets

Closing inventory is overstated by SAT 2,000. What is the effect on this year's financial statements if the error is not found?

• ACost of goods sold is overstated and net profit is understated by SAT 2,000
• BCost of goods sold is understated and net profit and current assets are overstated by SAT…
• CSales are overstated by SAT 2,000
• DLiabilities are overstated by SAT 2,000