MT - Business case - KPMG entrance test

SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn KPMG ENTRANCE TEST Full name: Test: Total question: Time: 35 MCQs 30 minutes I. ACCOUNTING (10 questions) 1. A company receives rent from a large number of properties. The total received in the year ended 30 April 20X7 was $481,200. The following were the amounts of rent in advance and in arrears at 30 April 20X6 and 20X7: 30 April 20X6 30 April 20X7 $ $ Rent received in advance 28,700 31,200 Rent in arrears (all subsequently received) 21,200 18,400 What amount of rental income should appear in the company’s statement of profit or loss for the year ended 30 April 20X7? A. $486,500 B. $460,900 C. $501,500 D. $475,900 2. Which of the following statements is/are correct? (i) A statement of cash flows prepared using the direct method produces a different figure to net cash from operating activities from that produced if the indirect method is used (ii) Rights issues of shares do not feature in a statement of cash flows (iii) A surplus on revaluation of a non-current asset will not appear as an item in a statement of cash flows (iv) A profit on the sale of a non-current asset will appear as an item under cash flows from investing activities in the statement of cash flows. A. i and iii only B. iii and iv only C. ii and iv only D. iii only Page 1 of 12 3. SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn Xena has the following working capital ratios: 20X7 Current ratio 1.2:1 Receivable days 75 days Payable days 30 days Inventory turnover 42 days 20X6 1.5:1 50 days 45 days 35 days Which of the following statements is correct? A. Xena’s liquidity and working capital has improved in 20X7 B. Xena is receiving cash from customers more quickly in 20X7 than in 20X6 C. Xena is suffering from a worsening liquidity position in 20X7 D. Xena is taking longer to pay suppliers in 20X7 than in 20X6 4. A company’s statement of profit or loss for the year ended 31 December 20X6 showed a net profit of $83,600. It was later found that $18,000 paid for the purchase of a motor van had been debited to the motor expenses account. It is the company’s policy to depreciate motor vans at 25% per year on the straight-line basis, with a full year’s charge in the year of acquisition. What would the net profit be after adjusting for this error? A. $106,100 B. $70,100 C. $97,100 D. $101,600 5. At 31 December 20X6 the following require inclusion in a company’s financial statements: (i) On 1 January 20X6 the company made a loan of $12,000 to an employee, repayable on 1 January 20X6, charging interest at 2% per year. On the due date, she repaid the loan and paid the whole of the interest due on the loan to that date. (ii) The company paid an annual insurance premium of $9,000 in 20X6, covering the year ending 31 August 20X7. (iii) In January 20X7 the company received rent from a tenant of $4,000 covering the six months to 31 December 20X6. For these items, what total figures should be included in the company’s statement of financial position as at 31 December 20X6? A. Current assets $10,000 B. Current assets $22,240 C. Current assets $10,240 D. Current assets $16,240 Current liabilities $12,240 Current liabilities $ nil Current liabilities $ nil Current liabilities $ 6,000 Page 2 of 12 SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn 6. Which TWO of the following errors would cause the total of the debit column and the total of the credit column of a trial balance not to agree? (i) A transposition error was made when entering a sales invoice into the sales day book (ii) A cheque received from a customer was credited to cash and correctly recognised in receivables (iii) A purchase of non-current assets was omitted from the accounting records (iv) Rent received was included in the trial balance as a debit balance A. i and ii B. i and iii C. ii and iii D. ii and iv 7. Annie is a sole trader who does not keep full accounting records. The following details relate to her transactions with credit customers and suppliers for the year ended 30 June 20X7: $ Trade receivables, 1 July 20X6 130,000 Trade payables, 1 July 20X6 60,000 Cash received from customers 686,400 Cash paid to suppliers 302,800 Discounts allowed 1,400 Discounts received 2,960 Contra between payables and receivables ledgers 2,000 Trade receivables, 30 June 20X7 181,000 Trade payables, 30 June 20X7 84,000 What figure should appear for purchases in Annie’s statement of profit or loss for the year ended 30 June 20X7? A. $325,840 B. $330,200 C. $331,760 D. $327,760 8. Which of the following statements are TRUE of limited liability companies? (i) The company’s exposure to debts and liability is limited (ii) Financial statements must be produced (iii) A company continues to exist regardless of the identity of its owners A. i and ii only B. i and iii only C. ii and iii only D. i, ii and iii Page 3 of 12 9. SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn Which of the following explains the imprest system of operating petty cash? A. Weekly expenditure cannot exceed a set amount B. The exact amount of expenditure is reimbursed at intervals to maintain a fixed float C. All expenditure out of the petty cash must be properly authorised D. Regular equal amounts of cash are transferred into petty cash at intervals 10. Which of the following calculates a sole trader’s net profit for a period? A. Closing net assets + drawings – capital introduced – opening net assets B. Closing net assets – drawings + capital introduced – opening net assets C. Closing net assets – drawings – capital introduced – opening net assets D. Closing net assets + drawings + capital introduced – opening net assets Page 4 of 12 II. SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn AUDITING (10 questions) 11. Independent auditing can best be described as: A. A branch of accounting B. A discipline that provides assurance regarding the results of accounting and other functional operations and data C. A professional activity that measures and communicates financial and business data D. A regulatory function that prevents the issuance of improper financial information 12. Which of the following best describes the primary reason an independent auditor reports on financial statements? A. To give stockholders some assurance that any fraudulent activities will be detected. B. To identify a poorly designed internal control structure that may produce unreliable financial statements. C. To provide expertise to clients, which may not be totally knowledgeable of prevailing VAS. D. To add credibility where appropriate, since the client may not be perceived as objective with respect to its own financial statements. 13. The fact that errors and/or omissions in certain relatively insignificant account balances would not affect an auditor's decision when reporting on the financial statements as a whole relates most closely to which major audit concept? A. Materiality B. Audit risk C. Management assertions D. Reasonable assurance 14. Audit evidence: A. May only be gathered from parties, which are external to the client to be reliable. B. May only be gathered from the client to be reliable since the client is the most knowledgeable source of information. C. May only be gathered from computerized sources to avoid human error. D. Can be gathered from many sources and is not limited to the underlying accounting data. 15. The most favorable type of audit report opinion for the client to receive is: A. Qualified B. Unqualified C. Full assurance D. Exceptional 16. The study and practice of auditing is unlike other areas in accounting because it: A. Requires the memorization of formulas and patterns. B. Requires the knowledge of GAAP. C. Requires common sense and some creativity. D. Is required by law for all companies in the United States. Page 5 of 12 SAPP Academy 6 Floor, No 2, Trai Ca Valley, Truong Dinh street, Ha Noi Tel 096 972 94 63 Sapp.edu.vn SAPP Academy No. 20, 198 alley, Xa Dan street, Ha Noi Tel: 0166 7703 493 Sapp.edu.vn 17. Which of the following management assertions is generally of greatest importance in the audit of inventory? A. Existence B. Completeness C. Rights and Obligations D. Presentation and Disclosure 18. To exercise due professional care, an auditor should: A. Attain the proper balance of professional experience and formal education. B. Critically review the work performed and judgment exercised by those assisting in the audit. C. Examine all available corroborating evidence supporting management's assertions. D. Design the audit to detect all instances of illegal acts. 19. Which of the following statements best describes an auditor’s responsibility to detect errors, fraud and illegal acts? A. The auditor should study and evaluate the client's internal control system and design the audit to provide reasonable assurance of detecting all errors and fraud. B. The auditor should consider the types of errors and fraud that could occur and determine whether the necessary internal controls are prescribed and are being followed. C. The auditor should assess the risk that errors and fraud may cause the financial statements to contain material misstatements and design the audit to provide reasonable assurance of detecting material errors and fraud. D. The auditor should assess the risk that errors and fraud may cause the financial statements to contain material misstatements and determine whether the necessary internal controls are prescribed and are being followed satisfactorily. 20. The concept of materiality as it applies to a financial statement audit: A. Relates primarily to the audit fees involved. B. Generally, involves less professional judgment for public companies. C. Is determined, in part, based on how financial statement users may be influenced in making decisions. D. Relates primarily to the quantity of audit procedures performed. Page 6 of 12