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1

A business purchases a new van. The table shows the purchase invoice details: $ purchase price 13 000 delivery charge sign writing road tax tank of fuel How much should be debited to the motor van account?

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

1. Financial accounting (AS Level)  →  1.2. The accounting system

Open

2

A company has completed arrangements for the closure of part of its business next year. What should the company create in this year’s accounts for the closure costs?

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

Open

3

The journal entry ‘Debit Subscription Income, Credit Creditors’ was made in the accounting records of a club. What does this represent?

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

1. Financial accounting (AS Level)  →  1.2. The accounting system

Open

4

A business makes a provision for doubtful debts equal to 5 % of its debtors. At 31 March 2003 net debtors were shown...

1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

4. Cost and management accounting (A Level)  →  4.3. Budgeting and budgetary control

Open

5

At the end of year 1 a company had a debit balance of $760 on its Rent Payable account. Payments for rent in year 2 totalled $10 600 and at the end of the year rent prepaid was $1290. How much rent was charged against profit in year 2?

1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

Open

6

Businesses anticipate losses but not profits in preparing their annual accounts. Which accounting concept is being applied here?

1. Financial accounting (AS Level)  →  1.2. The accounting system

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods

Open

7

What is an example of the application of the concept of accounting for substance over form?

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets

Open

8

The following information is extracted from the books of a company. $000 freehold premises at cost provision for depreciation of freehold premises The premises are revalued at $180 000. Which entries are required in the company’s books to record the revaluation?

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements

Open

9

A Suspense account has a balance of $450 debit. What has caused this balance in the Suspense account?

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

1. Financial accounting (AS Level)  →  1.4. Reconciliation and verification

Open

10

Motor vehicles purchased for $530 000 at the start of the year have been incorrectly depreciated for the whole year using the straight line method at 10 % instead of 25 %. Ledger balances after the entries have been posted: motor vehicles at cost $530 000 provision for depreciation $53 000 Which entries will correct the error?

1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

Open

11

How may net profit be calculated?

1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements

1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

Open

12

A manufacturer has stocks of: finished goods work-in-progress raw materials Which stocks will appear in the Manufacturing account?

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

Open

13

What is a factory overhead expense in a Manufacturing account?

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

4. Cost and management accounting (A Level)  →  4.1. Activity based costing (ABC)

2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods

Open

14

The wages of staff employed in getting goods into a saleable condition have been debited in the Profit and Loss Account. What is the effect of this error?

1. Financial accounting (AS Level)  →  1.4. Reconciliation and verification

1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

Open

15

A company has two items in stock which require to be repaired before sale. cost $ selling price $ repair costs $ item 1 5 260 7 600 item 2 2 360 2 450 What is the total stock value of these items?

2. Cost and management accounting (AS Level)  →  2.1. Costs and cost behaviour

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods

Open

16

A business does not keep proper accounting records. The following information is available at the start of the year. a motor car valued at $2500 stocks which cost $4000 with a sale value of $6000 bank overdraft of $500 a loan to a friend from the business bank account $1000 What is the Capital account balance at the start of the year?

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

Open

17

Which statements are true about debentures and ordinary shares?

1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements

Open

18

A company makes a 1 for 4 bonus issue of ordinary shares. What will happen to share capital and shareholders funds?

1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements

Open

19

The table shows information from a company’s accounts. $ 000 Turnover Gross profit Profit before interest and tax Profit after tax Fixed assets Current assets Debentures Current liabilities What is the return on total capital employed?

3. Financial accounting (A Level)  →  3.1. Preparation of financial statements

1. Financial accounting (AS Level)  →  1.6. Analysis and communication of accounting information

1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements

Open

20

A company has a high liquidity ratio. Which of the following will reduce liquidity?

1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements

1. Financial accounting (AS Level)  →  1.6. Analysis and communication of accounting information

Open

21

A company has revalued its fixed assets upwards during the most recent accounting period. What will be the effect of this?

1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets

1. Financial accounting (AS Level)  →  1.5. Preparation of financial statements

Open

22

Which statement correctly expresses the relationship between return on capital employed, net asset turnover and profit margin?

1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets

1. Financial accounting (AS Level)  →  1.6. Analysis and communication of accounting information

Open

23

The following information has been calculated from the accounts of a business. days taken to pay creditors days taken by debtors to pay stock turnover in days What is the cash operating cycle?

3. Financial accounting (A Level)  →  3.5. Analysis and communication of accounting information

1. Financial accounting (AS Level)  →  1.6. Analysis and communication of accounting information

2. Cost and management accounting (AS Level)  →  2.1. Costs and cost behaviour

Open

24

The following information is given for a business at 31 December 2004. current ratio 3.6 : 1 $ average stock 12 000 debtors 4 000 creditors 5 000 What was the value of stock at 1 January 2004?

3. Financial accounting (A Level)  →  3.5. Analysis and communication of accounting information

1. Financial accounting (AS Level)  →  1.3. Accounting for non-current assets

Open

25

A particular cost is classified as ‘semi-variable’. Which effect will a 20 % reduction in activity have on the unit cost?

2. Cost and management accounting (AS Level)  →  2.1. Costs and cost behaviour

4. Cost and management accounting (A Level)  →  4.1. Activity based costing (ABC)

Open

26

The following information relates to a product. $ fixed costs 72 000 desired profit 30 000 selling price per unit variable cost per unit How many units must be produced and sold to cover fixed costs and make the desired profit?

2. Cost and management accounting (AS Level)  →  2.1. Costs and cost behaviour

2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods

Open

27

The diagram shows a break-even chart. number of units costs and revenues W X Y Z $ Which line represents the margin of safety?

2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods

Open

28

The following information applies to X Ltd. output sales $ 000 profits $ 000 What is the contribution to sales ratio?

3. Financial accounting (A Level)  →  3.5. Analysis and communication of accounting information

2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods

Open

29

What may result in an under-absorption of fixed overhead?

2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods

4. Cost and management accounting (A Level)  →  4.3. Budgeting and budgetary control

4. Cost and management accounting (A Level)  →  4.1. Activity based costing (ABC)

Open

30

What are major assumptions in contribution / sales (c / s) analysis?

2. Cost and management accounting (AS Level)  →  2.1. Costs and cost behaviour

2. Cost and management accounting (AS Level)  →  2.2. Traditional costing methods

Open