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1

Which concept is identified by the accounting equation assets = capital + liabilities?

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

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

Open

2

What are causes of depreciation on non-current assets?

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

Open

3

June purchased a new machine. She depreciated it at a rate of 40% per annum using the reducing balance method. After two years its net book value was $3600. What was the purchase price of the machine?

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

The following information relates to the motor vehicles of a business. 1 January 2018 $ 31 December 2018 $ net book value 398 000 480 000 During 2018 the following occurred. Additional motor vehicles costing $195 000 were purchased. A motor vehicle (original cost $80 000) was sold for $24 000 at a profit of $2000. What was the depreciation charge for 2018?

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

Open

5

A book-keeper compared the business bank statement with the cash book. He then updated the cash book and finally prepared a bank reconciliation statement. Why was the bank reconciliation statement prepared?

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

Open

6

On 31 December 2018, a business had the following balances. $ sales ledger 12 800 sales ledger control account 15 200 Which error explains the difference between the two figures?

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

Open

7

The provision for doubtful debts at 1 January 2018 was $1580. Trade receivables at 31 December 2018 were $44 750. This included a debt of $12 500, considered irrecoverable. The provision for doubtful debts was to be maintained at a rate of 5%. Which entry for doubtful debts was included in the income statement for the year ended 31 December 2018?

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

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

Open

8

Which statements about valuing inventory are correct?

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

9

A sole trader calculated a draft profit for the year of $56 750. He then discovered that discounts received of $580 and discounts allowed of $665 had been recorded on the wrong sides of their respective accounts. What is the correct 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

10

Which item will not appear in the income statement of a sole trader?

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

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

Open

11

X and Y are in partnership sharing profits and losses in the ratio 2 : 1. Z will be admitted with the following new arrangements. Profit and loss sharing ratio will be 2 : 1 : 2 respectively. Goodwill is valued at $90 000. Z will pay the partners for his share of the goodwill. How much will Z pay X?

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

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

Open

12

D, E and F are in partnership, sharing profits in the ratio 2 : 2 : 1. D is allowed an annual salary of $10 000. E has made a loan to the partnership on which the partnership pays interest of $5000 each year. Profit for the year before appropriation was $150 000. What was F’s total share of profit for the year?

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

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

Open

13

L and M had been in partnership sharing profits and losses equally. P was admitted to the partnership and the partners continued to share profits and losses equally. Goodwill was valued at $48 000 but the partners agreed that no goodwill account would be retained in the books of account. What were the accounting entries to record the goodwill?

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

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

Open

14

Which items do not appear in a statement of changes in equity?

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

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

Open

15

On 1 January a company’s equity included 100 000 $1 ordinary shares. The directors of the company then did the following: 1 March Made a rights issue of 20 000 ordinary shares at $1.25 each. The rights issue was fully subscribed. 1 June Made a bonus issue of 5000 ordinary shares. 1 July Paid an interim dividend of $0.10 on all of the shares in issue at that date. By how much did the bank account increase as a result of these transactions?

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

Open

16

The following balances are extracted from the books of J Limited. 30 April 2019 $ 30 April 2018 $ ordinary shares of $0.50 each 700 000 500 000 share premium 90 000 50 000 How many ordinary shares have been issued during the year ended 30 April 2019?

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

Open

17

Which action will increase a company’s current ratio?

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

Open

18

A trader wishes to set a selling price. How does he use a mark-up?

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

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

Open

19

The following information is available for the year ended 31 December 2018. $ revenue 800 000 cost of sales (175 000) gross profit 625 000 distribution costs (95 000) administrative expenses (35 000) profit from operations 495 000 finance costs (5 000) profit for the year 490 000 What was the operating expenses to revenue 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

20

On 1 January 2018 a business expected to have sales for the year ended 31 December 2018 of $450 000. Its non-current assets at that date were $306 000. On 1 July 2018 it purchased new machinery at a cost of $180 000, in order to increase its sales by an extra $20 000 each month. What was the rate of non-current asset turnover in 2018?

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

Open

21

A business uses the First In First Out (FIFO) method to value its inventory. The following inventory transactions took place during a month. There was no opening balance. date receipts issues units $ per unit units 1 July 15.50 6 July 15.60 10 July 20 July 15.80 25 July What was the value of inventory at the end of the month?

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

22

A business has two production departments: assembly and machinery. The following budgeted information is available. assembly machinery labour hours machine hours overheads $75 000 $80 000 What is the overhead absorption rate for the assembly department?

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

23

A shortage caused a business to pay more for its purchases of raw materials. What is the effect of this?

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

24

Which statement best describes a stepped fixed cost?

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

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

Open

25

A company produces less than it sells in a particular period. Which statement is correct?

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

Open

26

Which statements are true about the preparation of a break-even chart?

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

When a company had sales revenue of $600 000, its variable costs were $300 000. At the break-even point, its sales were $400 000. How much profit did it make when sales were $600 000?

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

28

A company provided the following information. total sales $400 000 production and sales 10 000 total costs $250 000 total fixed costs $60 000 What was 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

29

Last year a company sold 2000 units and made a contribution of $50 per unit. Profit, after deducting total fixed costs, was $60 000. This year: sales volume increased by 10% contribution per unit decreased by 5% total fixed costs increased by 25%. What was the company’s profit this year?

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

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

Open

30

Why do businesses prepare budgets?

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

Open