Question 1
The transaction “Depreciation of property” is a …
a. Profit affecting balance shortening
b. Profit neutral balance shortening.
c. Profit affecting balance extension.
d. Profit neutral asset swap.
Question 2
Which of the following statements is correct?
a. The transaction “Repayment of a bank loan with cash” is a profit-affecting balance shortening.
b. In a profit or loss statement structured by the cost of sales method you can find selling and distribution expenses.
c. None of the other mentioned answers is correct.
d. An impairment on a goodwill will have an impact on EBITDA.
Question 3
Because of hail damage a company car suffered a loss of 1,000 EUR that won’t be repaired. Which of the following postings represents the value decrease correctly?
a. D: D&A; C: Vehicle Fleet 1,000
b. D: Vehicle Fleet; C: Write-down of tangible assets 1,000
c. D: Write-down of tangible assets; C: Vehicle Fleet 1,000
d. D: Other operating expenses; C: Vehicle Fleet 1,000
Question 4
JUPITER company is selling a self-produced wardrobe to its customer for the price of 1,100 EUR (gross) on credit. For payment within 10 days JUPITER company grants a cash discount of 3%. The customer pays cash but not within the discount period. How to enter the customer’s payment after the discount period correctly?
Assumption: VAT (Value Added Tax): 10%
a. D: Cash 1,100 C: Accounts receivable from trading 1,000 C: VAT 100
b. D: Cash 1,100 C: Revenue (finished goods) 1,000 C: VAT 100
c. D: Cash; C: Trade accounts receivables 1,100
d. D: Cash; C: Revenue (finished goods) 1,100
Question 5
During the fiscal year, the owner of JUPITER company has done a one-time withdrawal of 5,000 EUR in cash. There has been no further transfer of cash between company and its owners in this fiscal year. What is the correct posting for closing the account ‘Private withdrawals’ at the end of fiscal year?
a. D: Private withdrawals; C: Private account 5,000
b. D: Private account; C: Private withdrawals 5,000
c. D: Closing balance sheet account; C: Private withdrawals 5,000
d. D: Private withdrawals; C: Closing balance sheet account 5,000
Question 6
During the current fiscal year all income from rent is generated by a warehouse which is rented out with a monthly rental income of 1,000 EUR. How has the account ‘Rental income’ to be closed at year end of fiscal year?
a. D: Closing balance sheet account; C: Rental income 12,000
b. D: Rental income; C: Income statement account 12,000
c. D: Income statement account; C: Rental income 12,000
d. D: Rental income; C: Closing balance sheet account 12,000
Question 7
An employee of JUPITER company obtains a gross salary of 2,500 EUR in January via bank transfer. He also lives in a free company housing with rental value of 500 EUR. Payroll tax rate is 15% and social security contributions amount to 20% for employers and employees each. Church tax rate is 10% on payroll tax amount and solidarity surcharges amounts to 5% of the payroll tax amount. What is the employee’s net salary in January, being transferred to his bank account?
a. 1,882.50 EUR
b. None of the other mentioned answers is correct.
c. 1,568.75 EUR
d. 1,382.50 EUR
Question 8
JUPITER company is buying a truck for the price of 85,000 EUR (net) via bank transfer. What is the respective posting?
Assumption: VAT (Value Added Tax): 10%
a. D: Bank; C: Vehicle Fleet 85,000
b. D: Bank 93,500 C: Vehicle Fleet 85,000 C: Prepaid VAT 8,500
c. None of the other mentioned answers is correct.
d. D: Bank; C: Vehicle Fleet 93,500
Question 9
On May 5th 20X1 JUPITER company has sold a company car at its residual value of 25,000€ to a fellow entrepreneur on credit. In case of payment within one week an early payment discount of 2 % is granted. The fellow entrepreneur pays on May 7th 20X2 via bank transfer. Which of the following postings represents the payment of the fellow entrepreneur correctly?
Assumption: VAT (Value Added Tax): 10%
a. D: Other receivables 27,500; C: Vehicle Fleet 25,000 C: VAT 2,500
b. D: Bank 26,950; D: VAT 50; D: Other operating expenses 500; C: Other receivables 27,500
c. D: Bank; C: Other receivables 26,950
d. None of the other mentioned answers is correct.
Question 10
When producing a wardrobe JUPITER company consumes paint with the value of 5,750 EUR. How to post this consumption?
a. D: Expenses for auxiliary materials; C: Finished goods (FG) 5,750
b. D: Expenses for Consumables; C: Consumables 5,750
c. D: Expenses for supplies; C: Finished goods (FG) 5,750
d. D: Expenses for supplies; C: Supplies 5,750
Question 11
When producing a table JUPITER company is consuming wood worth 1,000 EUR. Which of the following postings represents the business transaction correctly?
Assumption: VAT (Value Added Tax): 10%
a. D: Expenses for goods for resale 1,100 C: Raw materials 1,000 C: VAT 100
b. D: Expenses for raw materials; C: Finished goods 1,000
c. D: Expenses for raw materials; C: Raw materials 1,000
d. D: Raw materials; C: Finished goods 1,000
Question 12
Which of the following statements is correct?
a. An increase in annual depreciation has a negative effect on EBITDA.
b. A horizontal structural analysis is a type of dynamic liquidity analyses.
c. Capital structure ratios are part of the financing analysis
d. Capital structure ratios consider the revenues of a company.
Question 13
Calculate the current asset intensity and choose the correct answer.
Balance Sheet
- Non-current assets: 58,279€
- Current assets: 39,398€
- Total assets: 97,677€
- Equity: 45,377€
- Non-current liabilities: 21,357€
- Current liabilities: 30,943€
- Total capital: 97,677€
a. 87%
b. 40%
c. 82%
d. 41%
Question 14
Please calculate the free cash flow and choose the correct answer using the following information.
Cash Flows
- Gross cash flow: 13,258€
- Operating cash flow: 1,769€
- Investing cash flow: -2,966€
- Financing cash flow: 564€
a. 11,489€
b. -1,197€
c. -633€
d. 4,735€
Question 15
Calculate the return on investment and choose the correct answer.
Statement of profit or loss
- Revenues: 96,719
- Cost of sales: -56,186
- Gross profit: 40,533
- Selling expenses: -15,865
- Administrative expenses: -10,428
- Other expenses: -196
- EBIT: 14,044
- Financial result: -1,188
- PBT: 12,856
- Taxes: -2,882
- Profit: 9,974
Balance Sheet
- Non-current assets: 48,279
- Current assets: 39,398
- Total assets: 87,677
- Equity: 35,377
- Non-current liabilities: 21,357
- Current liabilities: 30,943
- Total capital: 87,677
a. 16.02
b. 11.38
c. 39.70
d. 14.66
Question 16
Which of the following statements is correct?
a. The return on investment can be defined as EBIT margin x Capital turnover.
b. The statement of profit or loss can be structured using historical cost method.
c. EBITDA is the bottom line of the profit or loss statement.
d. The IFRS Interpretations Committee is responsible to appoint the members of the International Accounting Standard Board (IASB).
Question 17
Which of the following statements is correct?
a. Cash sale of goods is a receipt but not an income.
b. Sale of goods on credit is a cash-inflow.
c. Receiving a pre-payment on a sale of goods in the subsequent period is a cash-inflow.
d. Cash sale of goods is a expense.
Question 18
Which of the following statements is wrong?
a. Management accounting has to follow certain legal requirements.
b. Financial accounting generates information for decision makers outside the company.
c. Representing a company’s net asset, financial situation and result of operations belongs to financial accounting.
d. Management accounting generates information for decision makers inside the company.
Question 19
Which is not a mandatory component of consolidated financial statements in accordance with IFRS?
a. Statement of changes in equity
b. Notes to the financial statement
c. Segment reporting
d. Statement of comprehensive income/statement of performance
Question 20
Which of the following statements is wrong?
a. Cash belongs to current assets.
b. Trade receivables belong to fixed assets.
c. Raw material belongs to current assets.
d. An office building belongs to fixed assets.
Question 21
Which of the following sub-cash flows is not part of the sub-cash flows in a statement of cash flows under IFRS?
a. Cash flow from operating activities.
b. Cash flow from business activities.
c. Cash flow from financing activities.
d. Cash flow from investing activities.
Question 22
The transaction “Purchase of wooden planks for 200 EUR on credit” is …
a. only an expenditure
b. an expenditure and an expense
c. a cash-outflow, an expenditure and an expense
d. only an expense
Question 23
The transaction “Purchase of raw materials via cash payment” is …
a. a cash-outflow and a receipt
b. a cash-outflow and an expenditure
c. only a receipt
d. only a cash-outflow
Question 24
The transaction “Repayment of a loan in the amount of 50,000 EUR” is …
a. only an expenditure
b. only a receipt
c. a cash-outflow and an expenditure
d. only a cash-outflow
Question 25
The transaction “Making the payment of a machinery, that is going to be delivered in the subsequent period” is …
a. only a receipt
b. only an expenditure
c. only a cash-outflow
d. a cash-outflow and an expense
Question 26
The operating result is formed by balancing …
a. cash-inflow and cash-outflow
b. income and expense
c. receipt and expenditure
d. performance and cost
Question 27
Select the correct definition for receipts.
a. Increase in value within a period (affecting net income)
b. Monetary value of a company’s delivered economic goods within a period.
c. Cash and cash equivalents that flow directly to the company within a period.
d. Monetarily assessed increase in value due to performance of services.
Question 28
The transaction “Impairment of a company car” is …
a. only an expenditure
b. a cash-outflow, an expenditure and an expense
c. an expenditure and an expense
d. only an expense
Question 29
The transaction “Sale of goods for 700 EUR on credit” is …
a. only a profit
b. only a receipt
c. only an expenditure
d. only an expense
Question 30
External accounting …
a. is determined by chartered accountants
b. is subject to legal rules
c. is customizable for each company
d. is designed by works council
Question 31
Which of the following statements is correct?
a. The IASB develops standards for enforcing accounting standards and is responsible for global enforcement coordination.
b. Both German GAAP and IFRS apply the concept of Other Comprehensive Income.
c. German GAAP is way more fair value oriented than IFRS.
d. The EU endorsement process is necessary because the IASB has no legislative power.
Question 32
Total Comprehensive Income consists of…
a. profit or loss and other changes in equity.
b. other profit or loss and net income.
c. other comprehensive income and profit or loss.
d. changes in equity from transaction with shareholders and profit or loss.
Question 33
The capital market-oriented company A developed a new blockchain-based accounting system. The project started on 01.01.20X1. Until the end of 20X3 the project employees checked the technical feasibility and developed and tested different blockchain approaches. During this time period the project caused costs of 1,500,000 EUR. Because of limited access to qualified employees, company A had to hire some IT consultants, that caused in total costs of 700,000 EUR in year 20X2 and 20X3. In 20X4, based on the know-how developed in the past years, the project team developed the blockchain-based accounting system. In this time period, the project caused costs of 500,000 EUR for patent registration fees and costs of 1,800,000 EUR for the final test of the system. Assume that it is probable that the future economic benefits that are attributable to the blockchain-based accounting system will flow to the entity. What are the initial costs that are recognized on the balance sheet for the blockchain-based accounting system? (2 Points)
a. 2,200,000 EUR
b. 2,300,000 EUR
c. No costs can be recognized.
d. 1,800,000 EUR
Question 34
What is the absolute difference in the Golden Balance Sheet Rule for a firm with 100% capitalization of R&D activities compared to a firm with 0% capitalization of R&D activities? Please calculate using the following information. Round your solution to the second decimal place.
- Total equity (excluding profit of the period): 9 Mio. €
- Total debt: 15 Mio. €
- Fixed Assets (excluding any capitalized R&D activities): 6 Mio. €
- Current Assets: 18 Mio. €
- Profit of the period (excluding any expensed R&D activities): 1.5 Mio. €
- R&D expense: 0.3 Mio. €
a. 0.013
b. 0.014
c. 0.012
d. 0.011
Question 35
The capital market-oriented company A buys and sells computer chips. During the year 20X1 the following transactions occurred:
- 10.01.20X1: Purchase of 400 computer chips for 40,000 EUR in total
- 01.03.20X1: Purchase of 200 computer chips for 30,000 EUR in total
- 13.07.20X1: Purchase of 900 computer chips for 80,000 EUR in total
- 20.10.20X1: Sale of 700 computer chips for 125,000 EUR in total
What is the absolute difference in the year’s profit between FIFO-Method and Weighted-Average-Method? (3 Points)
a. None of the other mentioned answers is correct.
b. 5,826.25 EUR
c. 9,425.66 EUR
d. 8,888.89 EUR
Question 36
Which of the following cost formulas for measuring inventories are permitted by German GAAP?
a. Only FIFO and Weighted Average Method.
b. Only FIFO and LIFO.
c. None of the other mentioned answers is correct.
d. Only LIFO and Weighted Average Method.
Question 37
JUPITER has the following products in its inventory. What is the correct value recognized in an IFRS balance sheet for the cupboard at the end of the fiscal year?
Sofa
- Selling price: 450€
- Replacement cost: 300€
- Cost of conversion (until now): 380€
- Remaining cost of completion: 40€
- Cost of packaging: 15€
- Cost of shipping: 10€
Cupboard
- Selling price: 350€
- Replacement cost: 470€
- Cost of conversion (until now): 250€
- Remaining cost of completion: 175€
- Cost of packaging: 15€
- Cost of shipping: 25€
a. 180€
b. 250€
c. 435€
d. 470€
Question 38
Which of the following statements is correct?
a. The net realizable value of inventories is assessed in each subsequent period.
b. FIFO is not in line with the aim of IFRS to provide a market-based view.
c. The initial measurement of Inventories is done at the lower value of cost and net realizable value (NRV).
d. In times of increasing prices, LIFO deflates the costs of goods sold.
Question 39
Some of the products sold by JUPITER are sold with warranties enabling customers to return faulty goods within 2 years of purchase. JUPITER will either repair the product or refund the sales value to the customer.
During the year 20X8 the sales value of products sold with such warranties totalled 300,000€. Based on past experience it is anticipated that 20% of these products will be returned under the terms of the warranty. Of the goods that are returned it is expected that 5% will be beyond repair and JUPITER will need to refund the full sales value to the customer. The remaining 95% of returned goods will be able to be repaired. The cost for JUPITER amount to 30% of the accumulated items sales price.
As at 31 December 20X7, JUPITER’s financial statements showed a provision of 14,000€ in respect of warranty costs. This was made up of 4,000€ in relation to goods sold during the year ended 31 December 20X6 and 10,000€ in respect of goods sold during the year ended 31 December 20X7. The warranty in respect of items sold during the year ended 31 December 20X6 has expired as at 31 December 20X8.
What is the amount of provision in the year ended 31 December 20X8?
a. 22,100€
b. 30,100€
c. 29,100€
d. 14,000€
Question 40
A former employee is claiming compensation of 50,000€ from JUPITER for wrongful dismissal. The company’s solicitors have stated that they believe that the claim is unlikely but not remote to succeed. The legal costs relating to the claim are likely to be in the region of 5,000€ and will be incurred regardless of whether or not the claim is successful.
How should these items be treated in the IFRS financial statements of JUPITER?
a. Provision should be recognised at the amount of 55,000€.
b. Provision should be recognised at the amount of 5,000€ and the compensation claim of 50,000€ should be disclosed in the notes.
c. Provision should be recognised at the amount of 50,000€ and the legal costs should be disclosed in the notes.
d. No provisions should be recognised but both items should be disclosed in the notes.
Question 41
An entity has to rectify a serious fault in an item of plant that it has constructed for a customer. The individual most likely outcome is that the repair will succeed at the first attempt at a cost of 400,000€, but there is a chance that a further attempt will be necessary, increasing the total cost to 500,000€.
What is the correct amount the provision should be recognised?
a. None of the other mentioned answers is correct.
b. 500,000€
c. 400,000€
d. 450,000€
Question 42
The capital market-oriented company A bought on 01.01.20X1 a new machine, which can just be used for producing specialized products. Therefore, the machine will not be used on a regular basis. Company A applies the cost model using the machine-hour method as depreciation method. The machine is 220,000 EUR (incl. 10% VAT). The contract includes a cashback of 2% of the purchase price in case company A pays the amount within 14 days. Company A transfers the money on 10.01.20X1 via bank account. The machine was used over the years as follows: year 20X1 250 hours, year 20X2 550 hours, year 20X3 250 hours, year 20X4 530 hours, year 20X5 350 hours, year 20X6 650 hours, year 20X7 220 hours. The residual value is assumed to be zero. What is the correct booking entry for the year 20X5? (2 Points)
a. D: Depreciation ; C: PPE 24,500
b. D: Amortization ; C: PPE 37,100
c. D: Amortization ; C: PPE 24,500
d. D: Depreciation ; C: PPE 37,100
Question 43
The capital market-oriented company A purchased a building on 01.01.20X1. The property is held for capital appreciation. The purchase price of the building is 5,000,000€. It is assumed that the total purchase price does not include any land portion and therefore everything relates to the building. The estimated useful life of the building is 50 years. It is assumed that there will be no residual value at the end of the useful life. An independent expert assesses the value of the building at the end of the fiscal year 20X1 and concludes that its value is 5,800,000€. At the end of the fiscal year 20X2 there is no change in the value of the building. At the end of the fiscal year 20X3, company A gets an offer to sell the building for 6,500,000€. After long discussions, company A accepts the offer and receives the selling price via bank account. Company A applies the cost model using the linear depreciation method. What are the booking entries in year 20X3 ignoring VAT? (3 Points)
a. D: Depreciation ; C: Investment Property 100,000; D: Bank 6,500,000 C: Investment Property 4,700,000 C: Income 1,800,000
b. D: Depreciation ; C: Investment Property 100,000
c. D: Investment Property ; C: OCI 700,000
d. D: Depreciation ; C: Investment Property 100,000; D: Bank 5,400,000 C: Investment Property 4,700,000 C: Income 700,000
Question 44
Under the revaluation model, the fair value of a property, plant, and equipment asset is higher than the carrying amount at the end of the fiscal year. Which of the following statements is correct?
a. The increase is always completely recognized in OCI.
b. The increase is always completely recognized in profit or loss.
c. There is not need for depreciation, the Property, plant, and equipment asset is measured at historical cost.
d. The increase in value is recognized in the OCI after reversing any impairments of previous periods.
Question 45
The GRI Framework mandates that…
a. A sustainability report should focus on business transactions and events that refer to the company’s sustainability profile
b. The company has to arrange its sustainability reporting in a way that promotes stakeholder comparisons between companies (“cross-sectional comparability”) while consistency over time is only a nice to have (“longitudinal comparability”)
c. All – even non-material – business transactions and events have to be disclosed (“completeness principle”)
d. The company provides a very wide set of structured economic disclosures which makes “pure” financial reporting (e.g., in line with the International Financial Reporting Standards) useless
Question 46
Which statement about the Global Reporting Initiative (GRI) is correct?
a. Due to international agreements, the sustainability targets are of overriding importance, the GRI standards have to be mandatorily applied by all companies who have issued equity or debt titles on a regulated capital market.
b. The GRI is a committee of the United Nations that was established to address business policies and strategies for enhancing environmental sustainability worldwide.
c. The standards of the GRI are enacted in the European Union through a so-called endorsement procedure. This means that the standards have to be applied by the affected companies (i.e., stock market listed companies) after the formal ratification and enactment by the European Union.
d. The GRI states about itself that GRI operates as an independent, international organization that supports companies and other organization taking responsibility for their impacts on the environment and the society by providing them a global common language to communicate those impacts.
Question 47
Which of the following statements on Robotic Process Automation (RPA) is not correct?
a. Automation Anywhere, Blueprism, and UiPath are vendors offering RPA solutions.
b. The benefits of RPA include 24/7 operations, cost reduction, and increased speed.
c. RPA is a software that emulates human interaction with digital systems to execute a business process.
d. RPA maps a company in its entirety in a timely manner to facilitate managers’ decision-making.
Question 48
Which of the following statements on Process Mining is correct?
a. Process Mining captures both digital and manual activities in a process.
b. Process Mining software requires event logs, i.e., the user must have access to relevant IT systems.
c. None of the other mentioned answers is correct.
d. Process Mining proposes the optimal process for a specific problem.
Question 49
Which of the following is not a financial liability?
a. Accounts payables.
b. Issuing a bond.
c. An option to sell shares.
d. A forward with negative value.
Question 50
Company A buys a corporate bond for 2,000,000 EUR with interest payment of 4% per year. They want to keep the corporate bond until maturity and the SPPI criterion is fulfilled. Further, the fair value option is not exercised. Thus, the bond is measured at …
a. fair value through OCI.
b. fair value through profit or loss.
c. amortized cost.
d. None of the other mentioned answers is correct.
Solutions
- a (Profit affecting balance shortening)
- b (In a profit or loss statement structured by the cost of sales method you can find selling and distribution expenses.)
- c (D: Write-down of tangible assets; C: Vehicle Fleet 1,000)
- c (D: Cash; C: Trade accounts receivables 1,100)
- b (D: Private account; C: Private withdrawals 5,000)
- b (D: Rental income; C: Income statement account 12,000)
- d (1,382.50 EUR)
- c (None of the other mentioned answers is correct.)
- d (None of the other mentioned answers is correct.) - Note: The payment date (20X2) is a full year after the sale (20X1), so the 2% early payment discount does not apply. The correct entry would be D: Bank 27,500; C: Other receivables 27,500.
- b (D: Expenses for Consumables; C: Consumables 5,750)
- c (D: Expenses for raw materials; C: Raw materials 1,000)
- c (Capital structure ratios are part of the financing analysis)
- b (40%)
- b (-1,197€)
- a (16.02)
- a (The return on investment can be defined as EBIT margin x Capital turnover.)
- c (Receiving a pre-payment on a sale of goods in the subsequent period is a cash-inflow.)
- a (Management accounting has to follow certain legal requirements.)
- c (Segment reporting)
- b (Trade receivables belong to fixed assets.)
- b (Cash flow from business activities.)
- a (only an expenditure)
- b (a cash-outflow and an expenditure)
- d (only a cash-outflow)
- c (only a cash-outflow)
- d (performance and cost)
- b (Monetary value of a company’s delivered economic goods within a period.)
- d (only an expense)
- b (only a receipt)
- b (is subject to legal rules)
- d (The EU endorsement process is necessary because the IASB has no legislative power.)
- c (other comprehensive income and profit or loss.)
- b (2,300,000 EUR)
- c (0.012)
- d (8,888.89 EUR)
- c (None of the other mentioned answers is correct.)
- b (250€)
- a (The net realizable value of inventories is assessed in each subsequent period.)
- b (30,100€)
- b (Provision should be recognised at the amount of 5,000€ and the compensation claim of 50,000€ should be disclosed in the notes.)
- c (400,000€)
- a (D: Depreciation ; C: PPE 24,500)
- a (D: Depreciation ; C: Investment Property 100,000; D: Bank 6,500,000 C: Investment Property 4,700,000 C: Income 1,800,000)
- d (The increase in value is recognized in the OCI after reversing any impairments of previous periods.)
- a (A sustainability report should focus on business transactions and events that refer to the company’s sustainability profile)
- d (The GRI states about itself that GRI operates as an independent, international organization that supports companies and other organization taking responsibility for their impacts on the environment and the society by providing them a global common language to communicate those impacts.)
- d (RPA maps a company in its entirety in a timely manner to facilitate managers’ decision-making.)
- b (Process Mining software requires event logs, i.e., the user must have access to relevant IT systems.)
- c (An option to sell shares.)
- c (amortized cost.)