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1

Accountants prefer the commercial reality of a transaction to a strictly legal approach. Which accounting principle is being applied?

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

3. Financial accounting (A Level)  →  3.2. Regulatory and ethical considerations

Open

2

There is great uncertainty about the continuance of a business. This has caused the proprietor to make a large reduction in the valuation of the year-end inventory. Which accounting principle does this illustrate?

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

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

Open

3

The cash book of a business shows a credit balance of $12 500 at 30 June. Bank charges of $2000 have not yet been entered in the cash book. A cheque for $20 000 received from a debtor, and a cheque for $3000 paid to a creditor have been entered in the cash book, but have not yet been shown...

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

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

Open

4

Closing inventory has been overvalued. What is the effect on the financial statements?

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)  →  1.4. Reconciliation and verification

Open

5

At the year end a company discovers that some inventory is damaged. This inventory originally cost $2000 and to replace it would now cost $1900. It would normally sell for $2400 but can now only be sold for $2200 if repairs costing $400 are undertaken. At what value should the damaged inventory be shown...

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

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

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

Open

6

A club charges each of its 100 members an annual subscription of $12. At the end of a year four members had not paid their annual subscription. What will be the entries in the financial statements for subscriptions?

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

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

Open

7

How should goodwill be treated by a limited company?

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

3. Financial accounting (A Level)  →  3.3. Business acquisition and merger

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

Open

8

A company issues for cash 50 000 shares of $5 each at a premium of $15 each and $300 000 4 % debentures. By what amount will the net assets of the company increase?

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

4. Cost and management accounting (A Level)  →  4.4. Investment appraisal

Open

9

An extract from Bumble Ltd's balance sheet shows the following. $000 ordinary shares of $0.25 each share premium retained earnings The company makes a rights issue of 1 share for each 4 held at a price of $0.30 per share. All shares are taken up. What will the new balance sheet show?

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

Open

10

A business paid $10 000 for waste disposal in the year. The opening prepayment was $1500 and the closing accrual was $2000. What was the charge for waste disposal for 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

11

The non-current assets of a business are shown...

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

Open

12

Which transaction would increase the current assets of a business?

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

Open

13

The following summarised information has been taken from the balance sheet of a partnership. $ non-current assets 42 000 capital accounts 36 000 current accounts 5 000 current liabilities 7 000 non-current liabilities 15 000 What is the amount of current assets?

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

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

Open

14

What is the main use of a computerised age analysis of debtors?

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

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

Open

15

A manufacturing company has the following balances at its year end. $ closing inventory of raw materials 24 500 direct manufacturing wages 162 800 purchases of raw materials 85 200 supervisors’ wages 44 000 opening inventory of raw materials 27 800 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

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

Open

16

A partnership provides the following financial information for the year ended 30 June 2011. $000 profit from operations bank interest payable interest credited to current accounts drawings partnership salaries What is the residual balance of profits to be appropriated between the partners?

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

Open

17

A new business was established with opening capital of $20 000. At the end of the first year, assets less liabilities were $26 000. The owner withdrew $7000 as drawings during the year and this resulted in a bank overdraft of $5000 at the end of the year. What was the profit during the first year?

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 annual accounts of a business include the following. $ revenue 160 000 opening inventory 10 000 closing inventory 14 000 Inventory turnover is 10 times. What is the gross profit?

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

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

19

A company’s profit from operations was $128 000. Interest payable was $8000. The following amounts were included in the company’s balance sheet. $ non-current assets 485 000 net current assets 27 000 non current liabilities 80 000 How much is the return on the total capital employed?

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

Open

20

A business has $10 000 in the bank and buys inventory for $6000 paying by cheque. What is the effect of this on its current ratio and quick (acid test) ratio?

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

21

The following data is available at the end of a financial year. opening inventory $60 000 purchases $420 000 closing inventory $80 000 mark up 25 % trade receivables turnover 50 days Sales are all on credit and accrue evenly over the year. What is the amount of trade receivables at the end of the year (to the nearest $500)?

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

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

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

Open

22

Which cost will decrease as production is increased?

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

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

Open

23

A business sells its product for $50 a unit and has variable costs of $30 per unit. Its fixed costs for this year were $200 000. Next year, fixed costs are expected to be $260 000. How many more units will have to be sold next year to make the same profit as this year?

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

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

Open

24

A business has sales of $250 000, fixed costs of $50 000 and a contribution / sales ratio of 30 %. What is the profit?

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

25

A business provides the following information for a month. actual direct labour hours worked actual overhead expenditure $88 000 budgeted direct labour hours budgeted overhead expenditure $90 000 What is the amount of the overhead over / under recovery?

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

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

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

Open

26

The following information is provided by a company for a month. actual direct labour hours worked budgeted direct labour hours budgeted overhead expenditure $80 000 overheads under-recovered $12 000 What is the amount of the actual overhead expenditure?

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

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

Open

27

What do the break-even charts show regarding the profitability of and risk attaching to products 1 and 2?

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

Open

28

Which graph shows the fixed cost per unit produced in a manufacturing process?

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

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

Open

29

A company’s sales are made evenly over a year (360 days). 10 % of the sales are for cash, debtors total $26 700 and the trade receivables turnover period is 30 days. What are the total sales (cash and credit) for the year?

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

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

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

Open

30

A business sells goods at a mark up of 33.3 %. Information for a year is given. $ revenue 600 000 opening inventory 53 000 closing inventory 68 000 What are the total purchases 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

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

Open