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1

When valuing inventory for inclusion in the financial statements, its selling price is ignored if it is higher than its cost price. Which concept is being applied in this situation?

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

2

Why is depreciation provided on a non-current asset?

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

Open

3

The accounting year of a business ends on 31 December. An office building with a useful life of 40 years was purchased on 1 January 2010 for $400 000. It is expected to have no residual value. Depreciation is charged using the straight-line method. The office building was revalued on 1 January 2018 for $480 000. What will be the net book value of the office building at 31 December 2019?

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

Open

4

A new machine is purchased at a price of $75 000. In addition, delivery and installation cost is $2500. The business depreciates all non-current assets at a rate of 20% per annum using the straight-line method. By how much would depreciation decrease the profit for the year?

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

Open

5

The sales ledger control account of a business had a closing balance of $21 650. This did not agree with the total of the sales ledger balances. The following errors were discovered. Discount allowed of $1460 was entered in the debit of the sales ledger control account. A sales invoice of $1200 to J Ravi had been entered in the account of J Rajid. A contra to the purchase ledger had been entered in the sales ledger correctly as $600 but in the sales ledger control account as $900. What is the correct balance of the sales ledger control account?

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

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

Open

6

A bank reconciliation statement shows a credit balance of $400 in the cash book and a balance in hand of $100 in the bank statements. The bank reconciliation statement includes unpresented cheques of $700 in addition to cheques banked and not yet credited in the bank statements. What is the total of cheques banked and not yet credited?

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

Open

7

A suspense account was opened when a trial balance failed to balance. It was then discovered that returns of $200 had been correctly entered in the supplier’s account but debited in the sales returns account. This was the only error. What was the balance on the suspense account before this error was corrected?

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

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

Open

8

At the end of its financial year a business had trade receivables of $16 000 and a provision for doubtful debts of $640. The provision is to be maintained at 5%. Which amount is shown...

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

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

A business provided the following information about general expenses for the year ended 31 March 2019. $ accrued at 1 April 2018 3 975 prepaid at 1 April 2018 2 450 payments made for the year ended 31 March 2019 47 700 accrued at 31 March 2019 6 360 prepaid at 31 March 2019 5 825 What was the amount for general expenses to be included in the income statement for the year ended 31 March 2019?

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

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

Open

10

A business provides the following information. debit $ credit $ prepaid expenses 4 620 accrued expenses 8 125 bank balances 14 920 3 612 trade payables 18 148 loan (10 years) 15 000 What is the total for current liabilities?

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

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

Open

11

A company provided the following information about an item of inventory. $ production cost 103 000 delivery cost to be incurred 1 000 expected selling cost expected selling price 102 000 What is the correct inventory valuation?

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

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

12

Goodwill is adjusted in partners’ accounts when there is a change in the profit sharing ratio. How is this recorded?

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

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

Open

13

X, Y and Z were in partnership sharing profits and losses in the ratio 5 : 3 : 2 respectively. The capital account balances before any adjustments were $40 000, $30 000 and $20 000 respectively. Z retired from the partnership. X and Y continued in partnership, sharing the profits and losses in the ratio 3 : 2 respectively. Net assets were to be revalued upwards by $10 000. What was the capital account balance for partner X following Z’s retirement?

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

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

Open

14

L and M are business partners sharing profits and losses in the ratio 2 : 1. On 31 December 2018, their capital and current accounts showed the following credit balances. L $ M $ capital account 200 000 100 000 current account 40 000 30 000 At 1 January 2019, M transferred his private motor vehicle to the partnership. This motor vehicle originally cost $15 000. Its current market value is $8000. Both partners made drawings of $20 000 each. What was the total of each partner’s capital and current accounts after the changes?

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

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

Open

15

Which items may be recorded in a Statement of Changes in Equity?

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

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

Open

16

The equity of a company included the following: $ ordinary shares of $1 each 1 500 000 share premium account 600 000 The market price of one share was $1.50. The company made a fully subscribed rights issue of 500 000 ordinary shares at $1.20 per share. What was the balance on the ordinary share capital account and share premium account after the issue?

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

Open

17

A company provides the following financial information at the end of the financial year. $000 retained earnings at the start of the year profit for the year ordinary dividends paid during the year ordinary dividends proposed payable in the next financial year transfer to general reserve What is the amount of retained earnings at the end of the financial year?

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

Open

18

Which accounting ratio could not be used to assess the ability of a business to pay its trade payables?

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

Open

19

A sole trader has provided the following information. revenue for the year $240 000 average inventory $25 000 mark-up 50% What was the rate of 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

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

Open

20

A business provided the following information. gross margin 20% $ sales 275 325 opening inventory 25 450 closing inventory 55 975 What were the total purchases?

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

21

An employee is paid $20 an hour basic pay for working 8 hours a day. Overtime is paid at the rate of a time and a half. A bonus is also paid of $40 for each unit produced in excess of 10 units a day. Yesterday the employee worked 10 hours and produced 11 units. What was the employee’s pay for the day?

Open

22

The following information relates to one accounting period. opening inventory 40 000 units closing inventory 44 000 units absorption cost profit $284 000 marginal cost profit $250 000 What was the overhead absorption rate per unit during the accounting 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

23

A business uses the weighted average cost (AVCO) method of inventory valuation. date units $ per unit 1 September purchased 4.00 10 September purchased 4.80 21 September sold What was the cost of each unit sold?

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

24

What may cause the under 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

25

Which changes would result in a fall in 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

26

Last month a business sold 10 000 units and made a total contribution of $60 000. Fixed costs were $10 000. This month the sales volume fell by 20% and its contribution per unit fell by 10%. Fixed costs were unchanged. By how much will its profit fall this month compared to last month?

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

A business has provided the following information. $ total fixed costs 12 500 unit selling price unit variable cost Fixed costs and unit selling prices are expected to remain unchanged. Which percentage increase in variable costs would result in a break-even quantity of 5000 units?

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

28

The following information is available for a product. selling price per unit $25 total fixed costs $30 000 break-even point 5000 units What is the contribution to sales (C/S) ratio?

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

Open

29

Which cost will increase as production decreases?

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

Open

30

Which statements concerning a budget are correct?

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

Open