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1

In the books of account of Y, how could a credit entry of $500 in X’s account have arisen?

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

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

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

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2

A business paid $5750 during its trading year for advertising. Part of this amount included $500 in respect of the next financial year. Which effects would the correct treatment of the $500 have on the 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

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

Open

3

A rents its building to B. At 31 December 2011, B owed $4500 for rent. At 31 December 2012, B had paid $3200 in advance. During the year A had received $17 100 in rental from B. What is the rental income to be shown...

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

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

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

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4

The draft financial statements of a business show a profit for the year of $64 000 before taking account of the following. the reduction of the provision for doubtful debts by $300 the purchase of office stationery costing $2400 which has not been entered in the records; only one sixth of this stationery was used by the year end 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

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

Open

5

What does the application of the accounting principle of consistency ensure?

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

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

Open

6

A trader recently purchased a non-current asset for his business at a cost of $6500. A friend told him he could buy a similar asset on-line for $5000. The trader is now unsure how to value the asset in the books of account. Which principle should the trader apply?

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

Open

7

At the financial year end of a business the following information is available. $ debit balance on the bank statement unpresented cheques lodgements not yet credited by the bank bank charges and interest charged not yet entered in the cash book What is the current balance in the cash book?

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

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

Open

8

Which error would result in the creation of a suspense account?

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

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

Open

9

Who is most likely to use an age analysis of debtors?

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

Open

10

An error of reversal is made when recording the payment of a telephone bill for $500. Which journal entries are required to record the correction of this error?

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

Open

11

What is included in the cost of production?

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

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

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

Open

12

The summarised statements of financial position for a business for two years are as follows. year 1 year 2 $ $ non-current assets 9 000 12 000 current assets 6 000 8 000 less current liabilities (5 000) (6 000) net assets 10 000 14 000 The drawings in year 1 were $5000 and in year 2 $3000. What is the profit for 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

13

The wages of staff employed in manufacturing goods have been debited in the income statement. 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

14

During the year ended 31 December 2012 a business made a profit of $31 000. A dividend of 8% was paid on the 200 000 ordinary shares of $0.50 each, and $12 000 was transferred to general reserve. The retained earnings of the business on 31 December 2012 amounted to $68 000. What was the balance of retained earnings on 1 January 2012?

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

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

Open

15

X and Y have been in partnership for some years sharing profits in the ratio of 3 : 2. Z joins the partnership and introduces cash of $40 000. The profit-sharing will now be X - 40%, Y - 30% and Z - 30%. Goodwill is valued at $60 000. After joining the partnership, what is the balance of Z’s capital account?

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

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

Open

16

Which statement about a receipts and payments account is correct?

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

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

Open

17

A business sells some inventory for $80 on credit. This originally cost $50. How does this affect the statement of financial position?

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

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

Open

18

A vehicle is sold for $1000. It had cost $6000 and $2800 depreciation had been provided on it. What is the profit or loss on disposal?

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

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

Open

19

A company has ordinary shares of $1 each. Each year it pays a dividend of 10% of the nominal value of the shares. It now wishes to raise a further $120 000 by an issue of shares. This would bring in additional profit of $10 000 and dividends paid would increase by $2500 a year. At which price should the company issue the new shares to maintain the percentage of dividend?

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

Open

20

An extract from a statement of financial position is as follows. $ ordinary share capital 50 000 general reserve 10 000 retained earnings 4 000 10% debentures 20 000 What is the value of the shareholders’ funds?

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

Open

21

A company had a trade receivables collection period of 80 days in 2011 and 100 days in 2012. Total revenue was the same for both years. Which statement explains the change?

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

22

A company’s financial statements show the following. $ profit from operations 160 000 finance charges 40 000 ordinary share capital 500 000 retained earnings 250 000 debentures 300 000 What is the return on capital employed?

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

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

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

Open

23

The following information has been taken from a statement of financial position. $ non-current assets 150 000 capital and reserves 170 000 current liabilities 5 000 What is the current ratio?

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

Open

24

A company has ordered a new machine, to be delivered in six months. In the short term, the machine hours will be a limiting factor. It has made the following calculations. product X product Y product Z contribution per unit made $24 $12 $20 machine hours used per unit What will be the most profitable ranking order for production?

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

Open

25

The following data is available for the production department of a manufacturing company. Overheads are absorbed on a direct labour hour basis. direct labour hours total overhead costs $ budgeted 96 000 242 880 actual 97 600 253 760 What is the over or under absorption of overheads for the period?

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)

Open

26

The following information applies to a business. output sales $ profits $ 750 000 100 000 1 000 000 250 000 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

27

A business produces one product. The following details are available for the budgeted production of 150 000 units. $ selling price per unit 1.20 variable cost per unit 0.70 fixed cost per unit 0.20 What is the break-even point in sales value?

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

A business provides the following information. month number of machine hours overheads $ April 34 000 493 000 May 67 000 625 000 The variable overhead rate per machine hour was $4. What was the monthly fixed overhead cost?

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

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

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

Open

29

Which business would use a job costing system of accounting?

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

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

Open

30

A company plans to make the following payments in June 2014. an insurance premium for the 12 months from 1 July 2014 the payment for equipment to be delivered in April 2014 and which will start production in May 2014 In which months will these appear in the cash budget for 2014?

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

Open