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1

When is it necessary to distinguish between revenue and capital expenditure?

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

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

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

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2

Rent is paid by a business monthly in advance on the first day of each month. The payments during this financial year have been as follows: – up to and including 1 June $500 per month – from 1 July thereafter $600 per month Which amountwill appear in the accounts for the year ended 31 October?

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

Open

3

The table gives information relating to the fixed assets of a business. $ net book value at the end of the year 25 000 net book value at the beginning of the year 16 000 depreciation charge for the year 5 000 additions at cost during the year 22 000 What is the net book value of disposals during the year?

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

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

Open

4

A trial balance at 30 June, before making end of year adjustments, showed: debit $ credit $ trade debtors 35 600 - provision for doubtful debts - 1 160 At 30 June, it was decided to write off a bad debt of $1600 and to make a provision for doubtful debts equal to 2 % of trade debtors. What was the total expense in the profit and loss account for bad and doubtful debts for the year ended 30 June?

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

A company has two fixed assets. Details are given in the table. asset date bought cost $ depreciation method residual value X 1 Jan, Year 1 10 000 straight line life 5 years $2000 Y 1 Jan, Year 1 20 000 reducing balance rate 20 % nil What is the depreciation charge for the year ended 31 December, Year 2?

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

Open

6

Which transaction applies the matching concept?

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

Open

7

The following debit balance appears on a trial balance after preparing the manufacturing account for the year. loose tools $18 000 What is this item?

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

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

Open

8

At the year-end a cash book shows a credit balance of $4800. The bank statement included bank charges of $25 which had not been included in the cash book. Cheque payments entered in the cash book before the year end to the value of $250 had not yet cleared the bank. How would the bank balance be shown...

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

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

Open

9

A company makes purchases from X Ltd and also sells goods to X Ltd. At the year-end the company owes X Ltd $500 and X Ltd owes the company $750. What are the correct entries to contra these amounts?

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

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

Open

10

The following information is taken from the books of a business at 30 April. $ total of sales ledger balances 84 000 balance on sales ledger control account 83 100 What could have caused the difference between the sales ledger balances and the sales ledger control account balance?

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

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

Open

11

When valuing stocks of finished goods on an absorption cost basis, which costs should be included?

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

Open

12

The information relates to the subscriptions of a club. in advance $ in arrears $ at the start of the year at the end of the year Cash received during the year was $3750. What was the subscription income for the year?

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

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

Open

13

A manufacturing company has the following information for the year ended 31 December. $ purchase of raw materials 58 000 wages of machine operators 97 000 depreciation on factory plant 15 000 opening stock raw materials 10 000 closing stock raw materials 8 000 wages of factory supervisor 18 000 factory light and heating costs 22 000 What is the prime cost for the year?

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

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

Open

14

How should stocks be valued in published accounts?

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

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

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

Open

15

Which item would not be found in the accounts of clubs and societies?

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

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

Open

16

What appears as a credit entry in the appropriation account of a partnership?

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

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

Open

17

The wages of staff employed in manufacturing goods 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

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

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

Open

18

The table shows extracts from the trial balance of a business at 31 December 2007. $ ordinary share capital 20 000 share premium 40 000 long term loan (repayable 2017) 30 000 bank overdraft 60 000 4 % preference share capital 50 000 7 % debentures 2012 70 000 What is the total of ‘creditors: amounts falling due after more than one year’ in the balance sheet?

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

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

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

Open

19

A company’s capital is $ ordinary shares of $1.00 each 200 000 share premium account 80 000 revenue reserves 160 000 Changes now to be made (in the order given) • A one for one bonus issue • A rights issue of 100 000 ordinary shares of $1.00 each at $1.40 per share The company wishes to maximise the amounts available to pay dividends. What will be the ordinary capital and reserves of the company?

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

Open

20

A company’s sales are made evenly over a year (360 days). 10 % of the sales are for cash. The debtor balance is $26 700 and the debtor collection period is 30 days. What are the total sales (cash and credit) for the year?

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

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

Open

21

A business has a gross profit to sales ratio of 40 %, and a net profit to sales ratio of 10 %. If the sales volume increases by 8 % which of the following will generally be true?

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

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

Open

22

Which of the following correctly shows the effect of a company increasing the value of its freehold property?

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

Open

23

What might cause working capital to fall?

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

Open

24

The following information has been taken from a recent balance sheet of a business. $000 fixed assets capital current liabilities What is the current ratio?

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

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

Open

25

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

26

Assuming all other factors remain unchanged, the break-even point of a business can be lowered by increasing its A budgeted sales B fixed costs C marginal costs D selling prices

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

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

Open

27

A company uses a predetermined direct labour rate of $5.40 per hour to absorb production overhead. Each unit of product manufactured requires four direct labour hours. The following information is available for a period. actual production overhead $518 400 under-absorbed production overhead $32 400 What was the actual output of the product in the period?

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

Open

28

The information relates to the production of 50 000 units of a product. per unit $ selling price variable costs contribution The fixed costs are $300 000. The margin of safety is 20 000 units. The unit selling price is increased by 10 %. What is the percentage increase in the margin of safety?

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

29

A company manufactures and sells a single product. At an output of 1000 units per month the budget shows $ selling price 120 000 variable cost 40 000 fixed cost 50 000 profit 30 000 Fixed costs are due to increase by $10 000 per month and the selling price will be increased to maintain the profit at $30 000. What is the effect on the break-even point to the nearest unit?

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

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

Open

30

A company sells two products, X and Y. X Y sales 1000 $ $ selling price per unit contribution per unit Which would increase the company’s profit by $10 000?

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

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

Open