---

---

1

A company has issued shares at a premium. For what purpose may the balance on the share premium account be used?

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

Open

2

The accounting year end for a company is 31 October. The table shows the company’s telephone bill received on 2 December for the three months ended 30 November. $ telephone calls to 30 November rental of equipment for the period from 1 September to 30 November _____ total telephone bill Which accrual should the company make in the accounts for the year ended 31 October?

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 item should be treated as capital expenditure?

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

Open

4

A loan due for repayment in 20 months’ time has been included as a current liability. What will be the effect when this is corrected?

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

Open

5

The following items of expenditure take place during the first month of a transport business. $ rent 1 000 insurance of building 1 300 insurance of vehicle road tax purchase of vehicle 15 000 number plate for vehicle painting of vehicle in company colours wages for lorry driver wages for painting vehicle What is the total capital expenditure?

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

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

Open

6

A manufacturer has paid $3000 for electricity from his private bank account. The electricity charges are apportioned as follows: % factory sales office private Which entries for electricity are necessary in the business accounts?

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

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

Open

7

A business sells its freehold premises to a bank and agrees to repurchase them in five years’ time. The business continues to use the premises on lease from the bank. The premises remain in the balance sheet of the business. What is the reason for this accounting treatment?

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

Open

8

A company excludes from its Balance Sheet machinery for which spare parts are no longer obtainable. Which concept is being applied by the company?

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

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

Open

9

A company’s financial year ends on 31 December. At 31 December Year 1 the company carried forward a debit balance of $36 200 on the Rent account. During Year 2 payments made for 12 months’ rent, to 31 March Year 3, were $157 200. What is the amount of rent to be charged against profit in the year ended 31 December Year 2?

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

The following errors in the accounting records have been found and corrected: a purchase invoice for $250 was omitted from the books of account a sale for $120 to X was debited to the account of Y the sales day book was over-added by $100 The gross profit for the year before correcting the errors was $60 200. What is the correct gross profit for the year?

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

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

Open

11

A business provides information: $ opening creditors 20 000 cash paid to creditors 110 000 purchases on credit 120 000 balances set-off against sales ledger discount received What is the closing creditors balance?

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

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

Open

12

Which items are included in prime cost?

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

13

What appears as a credit 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

14

Under which heading should negative Goodwill be included in a company’s Balance Sheet?

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

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

Open

15

Why is a provision for depreciation made in accounts?

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

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

Open

16

A building cost $340 000 several years ago. At 30 June 2004 the accumulated depreciation on the building was $47 600 and it was decided to revalue the building to its market value of $560 000. What will be the balance on the Revaluation Reserve?

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

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

X and Y are sole traders. On 1 October 2004 they agreed to form a partnership which would take over the assets of the separate businesses. At 30 September 2004 the following information was available: X $ Y $ Goodwill 15 000 12 000 machinery 25 000 18 000 stock and debtors 8 000 3 000 cash at bank / 10 000 (4 000) What was the total of the tangible assets taken over by the partnership?

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

3. Financial accounting (A Level)  →  3.3. Business acquisition and merger

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

Open

18

A company made a bonus issue of shares on the basis of 1 for every 3 held. The directors wish to keep the reserves in the most flexible form. Balance Sheet extract (before bonus issue) $000 capital and reserves ordinary shares $0.20 each share premium revaluation reserve retained profits What will be the position after the bonus issue?

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

Open

19

A limited company has an authorised share capital of $750 000 and an issued share capital of $450 000 in $1.00 ordinary shares. It makes a 1 for 3 rights issue of shares at $2.00 per share which is fully taken up. What is the balance on the share capital account following this transaction?

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

Open

20

A company with an issued share capital of $200 000 of $1.00 ordinary shares makes a bonus issue of one $1.00 ordinary share for every five already held. It also issues $80 000 debentures at a discount of 5 %. The company has a bank balance of $40 000 before the issues. What is the bank balance after the issues?

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

Open

21

A business increases its provision for doubtful debts. What is the effect on the current and acid test ratios?

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

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

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

Open

22

Which accounting ratio is used to assess working capital management?

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

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

23

A company’s gross profit ratio for the year ended 31 December 2003 was 25 %. This increases to 28 % for the year ended 31 December 2004. What could have been responsible for the increase?

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

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

Open

24

Given below are extracts from a company's Profit and Loss Account and Balance Sheet for last year. Profit and Loss Account $000 net profit before interest and tax interest paid (20) net profit before taxation taxation (60) dividends (10) retained profit for year Balance Sheet $000 net assets 1 000 long term loan (100) share capital and reserves What is the return on total capital employed?

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

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

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

Open

25

The diagram shows a break-even chart. X number of units $ What is indicated by X?

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

26

The data given relates to a small business. $ $ sales 6 000 variable costs 4 500 fixed costs 5 400 profit What is the contribution to the sales ratio?

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

What is the reason for overhead absorption in a manufacturing business?

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

28

‘Contribution’ is an important feature of marginal costing. How can the total contribution from a given activity be calculated?

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

Open

29

The budget for a product is shown...

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

A company uses a predetermined direct labour rate of $5.40 per hour to absorb production overhead. Each unit of product manufactured requires four direct labour hours. The following information is available for a period: actual production overhead $518 400 under-absorbed production overhead $32 400 What was the actual output of the product in the period?

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