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1

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

2

A business starts trading on 1 May 2011. The table shows rent paid on the premises. date period $ 2 May 2011 1 May – 30 Jun 1 000 3 Jul 2011 1 Jul – 30 Sep 1 500 2 Oct 2011 1 Oct – 31 Dec 1 500 4 Jan 2012 1 Jan – 31 Mar 1 560 1 Apr 2012 1 Apr – 30 Jun 1 560 Which figure should be shown...

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

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

Open

3

Which asset is often revalued in a business’s accounts?

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

Open

4

The principle of prudence in the preparation of financial statements is practised through the application of which action?

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

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

Open

5

What is evidence that a company’s financial statements are true and fair?

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

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

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

Open

6

The following items appear in the books of a builder. $ rent of own home 3 000 rent of builder’s yard 2 500 housekeeping expenses 2 000 overalls loose tools equipment 3 000 lorries 1 500 rates on business premises rent of business premises 3 500 assistant’s wages 3 000 What is the total business expenditure?

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

7

At 31 March 2012, a business’s bank statement shows that its bank account is overdrawn by $10 136. Further information is as follows. $ cheques drawn, not presented 4 998 cheques paid in, not credited 5 896 bank interest charged, not in cash book What is the correct bank overdraft to be shown...

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

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

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

Open

8

A business has a draft profit for the year of $84 000. It is discovered that the closing inventory was overvalued by $4000 and that discounts received of $1500 were treated as an expense. What is the corrected profit for the year?

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

9

Information about a business is given. $ production overheads 23 000 opening inventory of raw materials 3 000 purchases of raw materials 35 000 closing inventory of raw materials 2 000 production wages 33 000 production supervisor’s salary 2 000 What is the prime cost?

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

10

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

11

In which account should a partner’s drawings appear in the partnership’s end-of-year financial statements?

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

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

Open

12

The table shows the assets and liabilities of a club. $ non-current assets 10 000 cash at bank 6 400 electricity owing rent prepaid subscriptions: in arrears 5 700 in advance 3 800 How much is the accumulated fund?

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

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

Open

13

A company purchases a product that costs $120. The company expects to make a gross profit margin of one-third. What is the company’s mark-up?

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

14

The table shows transactions relating to a product during July. units $ (per unit) purchased sold Of the remaining units, 8 are damaged and therefore worthless. What is the profit for July?

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

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

Open

15

The table shows the capital and reserves for a company. $000 ordinary shares of $1 fully paid 8 % preference shares of $1 fully paid share premium account general reserve retained earnings What is the value of each ordinary share if valued on a balance sheet (net assets) basis?

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

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

Open

16

The following information is given in the financial statements of Primecrop Limited. $ ordinary shares 1 200 000 6 % preference shares 250 000 general reserve 120 000 retained earnings 710 000 8 % debentures 400 000 What is the value of ordinary shareholders’ funds?

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

Open

17

A business has noticed a significant increase in its trade receivables collection period. What would be the most appropriate action to help the firm improve its liquidity position?

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

18

Which accounting ratio is used to assess working capital management?

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

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

Open

19

The following are extracts from a company’s financial statements. $ profit for the year before finance charges 100 000 issued share capital 200 000 reserves 80 000 non-current liabilities 260 000 What is the company’s return on capital employed?

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

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

Open

20

Owusu Limited has a constant level of annual sales and a constant gross margin. Each year the inventory increases. What effect does this have on inventory holding and inventory turnover?

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

21

Which item accounts for the difference between the current and liquid ratios?

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

22

Arun wishes to invest in a business with a skilled workforce which will make a profit in each of the next five years. Which aspect of financial statements helps Arun to decide where to invest?

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

Open

23

A company is going to sell a surplus non-current asset. Which term describes the net book value of the non-current asset in respect of the decision to sell?

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

Open

24

What usually makes up the total cost of a manufactured product for inventory valuation purposes?

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

4. Cost and management accounting (A Level)  →  4.2. Standard costing

Open

25

The actual output for a business is lower than that forecast. Which costs would normally still be the same as forecast?

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

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

Open

26

Ehsen Nadeen manufactures one product, the miji. Each miji has a selling price of $10 and variable costs of $8 and annual fixed costs total $12 000. Ehsen wishes to make a profit of $14 000 a year. How many mijis should Ehsen make each year?

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

Which costing method is most suitable for fixing a selling price and which for deciding whether to make or buy in a product?

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

Open

28

A business provides the following data. output level direct labour hours 8 500 9 250 total overheads $123 250 $124 563 The variable overhead cost is $1.75 per direct labour hour. What is the fixed overheads cost when 8500 labour hours are used?

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

4. Cost and management accounting (A Level)  →  4.2. Standard costing

Open

29

A business uses absorption costing. Which cost is used to value finished inventory?

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

The manufacture of which product is best suited to job costing?

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

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

Open