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1

What would be treated as part of the capital cost of the purchase of a 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

Open

2

In the books 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

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

Open

3

A company’s net profit is $20 000. Capital receipts of $5000 have been treated as revenue receipts. Capital expenditure of $4000 has been treated as revenue expenditure. What is the correct net profit figure?

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

At the beginning of the year a business has a provision for doubtful debts of $2600. At the year end the provision is to be 5 % of trade debtors. The balance on the debtors’ control account at the year end is $69 200, before writing off a bad debt of $480. The business operates a separate bad debts account. What is the entry in the Profit and Loss Account for the provision for doubtful debts?

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

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

Open

5

A company has issued non-cumulative preference shares and ordinary shares. Which statement is correct?

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

Open

6

The following information relates to a company’s fixed assets at 31 December: cost price $ disposal value $ motor vehicles 25 000 18 000 equipment 48 000 36 000 fixtures and fittings 12 000 5 000 The company has a serious cash shortage and will cease to trade within the next two months. What is the total value for fixed assets in the company’s Balance Sheet at 31 December?

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

Open

7

What is the calculation for capital employed?

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

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

Open

8

A trader buys stock costing $6000. He is entitled to trade discount at 10 % and cash discount of 5 %. On the same day he discovers that he can only sell the stock for $5000. Which amount should he record as the purchase price of the stock?

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

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

Open

9

A trial balance fails to agree. The debits exceed the credits. Which single error in the general ledger would cause the difference?

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

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

Open

10

A cheque for payment of wages of $214 has been debited to the purchases account as $241. A suspense account is created. What are the correcting entries?

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

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

Open

11

A bank statement shows a credit balance of $8360. Comparison with the cash book reveals: • Cheques totalling $18 725, sent to suppliers, have not been presented. • Cheques totalling $16 223, received from customers, have not been credited by the bank. • Bank charges of $124 have not been entered in the cash book. What is the correct cash book balance?

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

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

Open

12

The balance on a sales ledger control account is $40 000. The following items are then discovered: $ total of sales day book understated discounts allowed not entered in sales ledger control account 1 200 bad debts written off not recorded in sales ledger control account provision for doubtful debts 2 500 What is the total of the balances in the sales ledger?

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

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

Open

13

What is the normal treatment of life membership subscriptions?

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

Open

14

A business owner suspects a loss of cash has occurred. He provides the data shown...

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

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

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

Open

15

A club’s treasurer has calculated that there is a deficit in the Income and Expenditure account. How is this described in the Income and Expenditure account?

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

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

Open

16

X has not kept proper records for his business. Between 31 December 2004 and 31 December 2005 his net assets had increased by $30 000. On 1 January 2005, X brought into the business his private car which had cost $12 000 but now has a re-sale value of $8000. Drawings for the year ended 31 December 2005 were $16 000. What was X’s profit for the year ended 31 December 2005?

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

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

Open

17

Hilary and Lee commenced in partnership on 1 January 2005. There was no partnership agreement concerning the division of interest on the loan or of profits. Hilary $ Lee $ capital contributions loan to partnership – At the year end, 31 December 2005, net profit before the loan interest was $8850. What would be Hilary’s share of the profit?

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

Open

18

An extract from the accounts of a manufacturing company shows: $ direct factory labour 476 200 indirect factory labour 52 470 factory supervisor’s salary 18 200 opening stock of raw materials 21 500 heat, light and power 22 600 purchases of raw materials 184 300 depreciation charge for factory machinery 16 700 factory cleaning costs 18 300 closing stock of raw materials 17 900 What is the prime cost of production?

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

19

A director-owned company needs additional funds. Which method of finance might lead to a reduction of the director’s control of the business?

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

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

Open

20

Which statement is correct?

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

Open

21

A company balance sheet shows the following: $000 $1 ordinary shares retained earnings 10 % debentures 1 200 net assets 1 200 A fully subscribed 1 for 4 rights issue at $2 per share is made and 50 % of the debentures are repaid at par. What are the net assets following these changes?

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

Open

22

The table shows extracts from a company’s Balance Sheets at 31 December 2004 and at 31 December 2005. 31 December 2004 $m 31 December 2005 $m ordinary shares of $1 each share premium account On 1 July 2005 there was a bonus issue of 1 ordinary share for every 10 held. On 1 October 2005 there was a rights issue. There were no other reserve balances. How much cash was received from the issue of shares in the year ended 31 December 2005?

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

Open

23

A business has a current ratio of 1.75 : 1 and a quick (acid test) ratio of 1 : 1. The business sells stock on credit at its usual mark-up. What is the effect of this on the current ratio and quick (acid test) ratio?

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

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

Open

24

During the year ended 31 March 2006 a business made sales of $560 000 of which 25 % were for cash. The trade debtors at 31 March 2005 were $52 000 and at 31 March 2006 they were $56 000. What is the debtors’ collection period based on average debtors?

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

Open

25

The following data is available: this year $ last year $ credit sales 60 000 50 000 credit purchases 40 000 28 000 creditors 10 000 16 000 debtors 12 000 8 000 Which statement is correct?

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

Open

26

A company’s Profit and Loss Account showed a profit before interest of $128 000. Interest paid was $8000. The table shows amounts included in the company’s Balance Sheet. $ fixed assets 485 000 net current assets 27 000 amounts falling due after one year: Debentures 80 000 How much is the return on the total capital employed?

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

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

Open

27

What is a variable production cost for a manufacturer?

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

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

28

Existing fixed overheads are $100 000, unit selling price is $10 and unit variable costs are $5. Fixed overheads are expected to increase by $20 000. What is the new break-even sales volume?

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

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

Open

29

A business manufactures 175 units of a product a month. The following total information is available for the month: $ sales income variable costs fixed overheads What is the break-even point in units?

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 department makes radios. The production at the end of the month was 1000 units, of which 600 units were completed and 400 units were 50 % complete. production costs for the month $ materials 60 000 labour 30 000 departmental overheads 10 000 What is the cost per unit?

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