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1

What might stop financial statements showing a true and fair view?

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

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

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2

A company’s financial year ends on 31 December. On 1 April 2015, the following payments relating to a new machine were made. $ purchase cost 50 000 installation 10 000 Machinery is depreciated at 20% on cost per annum, calculated from the date of purchase. What was the depreciation of the new machine for the year ended 31 December 2015?

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

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

Open

3

A business purchased a motor vehicle on 1 January 2012 for $24 000. The estimated useful life of the motor vehicle was four years and the estimated residual value at the end of four years was $8000. The business depreciates motor vehicles at 25% per annum using the reducing balance method. No depreciation is charged in the year of disposal. The motor vehicle was sold on 31 July 2015 for $12 000. What was the profit on the sale of the motor vehicle?

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

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

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4

A building was purchased for $500 000. The following costs were also incurred. $ adapting the new building 50 000 legal fees for the building purchase 5 000 cleaning the building 4 000 salary of building manager 20 000 What was the capital cost of the building?

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

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5

Which statement about the sales ledger control account is correct?

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

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

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6

In which book of prime entry is the contra between the sales ledger control account and the purchase ledger control account recorded?

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

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

Open

7

A business omitted discounts allowed of $700 from its trial balance. During the year a machine had been sold for cash of $500 but the only accounting entry made was a debit in the bank account. What is the balance on the suspense account before these errors are corrected?

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

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

Open

8

In an income statement carriage outwards of $5000 has been treated as carriage inwards. Carriage inwards of $3000 has been treated as carriage outwards. What are the effectof these errors on the profit?

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

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

Open

9

A company received interest of $8800 during the financial year. Interest of $700 was due at the beginning of the year and $850 at the end of the year. Which entry appeared in the interest received account to make the transfer to the income statement?

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

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

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10

Katrina commenced business on 1 January 2015. For the year ended 31 December 2015, the following information is available. $ drawings 53 500 profit for the year 62 700 revenue 1 500 000 expenses 875 000 What was the cost of sales for the year?

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

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

Open

11

The following information is available for rent and rates. $ prepaid rent at the start of the year accrued rates at the start of the year rent and rates income statement amount prepaid rent at the end of the year accrued rates at the end of the year What is the amount paid for rent and rates 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

12

The directors of a company are completing the financial statements for the year ended 30 April 2016. They discover that the inventory at 1 May 2015 was over-valued by $50 000. What are the effects of correcting this error?

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

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

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

Open

13

X and Y were in partnership sharing profit and losses equally. They then admitted Z into the partnership and profits and losses were still shared equally. The following transactions took place. Z introduced capital of $50 000. Goodwill was valued at $30 000. No goodwill account is kept in the books of account. X took a computer from the business at a value of $3000. After these transactions had taken place, the balance on X’s capital account was $60 000. What was the opening balance on X’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

14

A and B were in partnership sharing profits and losses equally when they decided to retire. Details of the realisation are shown...

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’s profit from operations has increased by 10% in a year, whilst its gross profit has only increased by 5%. Which factors could explain this?

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

16

A company has 1 000 000 ordinary shares of $1 issued at $2.50. It also has a 5% debenture of $300 000. Profit from operations for the year was $465 000. The directors paid an 8% ordinary share dividend during the year. By which amount did the retained earnings increase during the year?

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

Open

17

A company issues 100 000 new $1 ordinary shares at a premium of $0.20 each. Which effect does this have on the statement of financial position?

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

Open

18

The trial balance on 31 December 2015 showed the following information. $ ordinary share capital ($1 shares) 500 000 retained earnings 300 000 On 1 January 2016 the directors created the general reserve of $70 000. At the same time 200 000 ordinary shares were issued for $300 000. By which amount did the total reserves increase on 1 January 2016?

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

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

Open

19

A company wants to increase its return on capital employed in the short term. Which course of action will achieve this?

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

Open

20

Which item is included in the current ratio but not the liquid (acid test) ratio?

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

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

Open

21

A business has prepared the following information for the year ended 30 April 2015. $ $ revenue 220 000 opening inventory 25 000 purchases 120 000 closing inventory (31 000) cost of goods sold 114 000 gross profit 106 000 What was the inventory turnover?

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

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

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

Open

22

An employee works a standard 40-hour week. In that time he is expected to make 200 complete units. He is paid a bonus of $10 for every hour saved in production. For week 25 he worked 44 hours and produced 250 units. How much was his bonus payment for week 25?

Open

23

A business was started on 1 January. The purchases and sales of inventory for January were as follows. date purchases sales 4 January 3 at $200 each – 13 January – 2 at $400 each 26 January 3 at $250 each – 28 January – 2 at $400 each The business used the first in first out (FIFO) method of inventory valuation. What was the gross profit for January?

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

24

A manager is preparing a quotation for Job 88. A specialised technician is hired to work for this job only. He will use machinery that the company already owns. Which statement is correct about expenses for Job 88?

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

25

Budgeted overhead expenditure was $180 000 and budgeted labour hours were 12 000. Actual overheads amounted to $196 000 and actual labour hours were 12 200. What was the under or over absorption of overheads?

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

26

Why might a business use marginal costing?

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

Open

27

A business provided the following information for the past two months. month number of labour hours total overheads $ February 64 000 918 000 March 76 000 1 062 000 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

Open

28

A company uses marginal costing. Which costs are included in its inventory valuation?

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

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

The break-even sales of a company are 1000 units when the variable costs are $30 000 and fixed costs are $20 000. What is the profit if 70 units above the break-even point are sold?

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

Who should be on the budget committee?

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

Open