---

---

1

A club’s income and expenditure account for 2006 showed rent and rates as $4000. On 31 December rent owing was $600 and rates paid in advance was $800. What was the amount shown...

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

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

Open

2

When preparing a sole trader’s annual accounts, no adjustments were made for prepayments at the end of the year. What is the effect of these omissions?

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

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

Open

3

A business prepares its accounts to 31 December. Insurance premiums paid were: date paid $ January 2006 paid for 6 months to 31 December 2005 July 2006 paid for 6 months to 30 June 2006 January 2007 paid for 6 months to 31 December 2006 March 2007 paid for 6 months to 30 June 2007 Which amount should be shown...

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

Open

4

Fixed assets of a company were: start of year 10 $ end of year 10 $ at cost 460 000 505 000 cumulative depreciation 215 000 237 000 net book value 245 000 268 000 During the year fixed assets costing $92 000 were purchased and fixed assets with a net book value of $16 000 were sold. What was the depreciation charge for the year?

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

Open

5

What is the purpose of providing for depreciation?

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

Open

6

A pocket calculator costs $9.50 and has a useful life of 5 years. The bookkeeper has decided to treat the purchase of the calculator as revenue expenditure. Which accounting principle has been applied?

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

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

Open

7

Which accounting treatments illustrate the use of the matching principle?

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

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

Open

8

In the books of a trader, discounts received of $1400 have been posted correctly in the suppliers’ accounts but debited in the discounts allowed account. 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

9

The bank statement of a business shows an overdraft of $250 at the year end. There are cheques written but not yet cleared by the bank amounting to $140. Lodgements not yet credited by the bank amount to $220. How would the balance in the cash book be shown...

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

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

Open

10

The trial balance totals are: debit $500 150 credit $500 000 Which error could have caused the difference?

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

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

Open

11

Partnership capitals are $60 000 for X and $90 000 for Y. The partnership agreement provides for interest on capitals at 10 % per annum, but makes no other financial provisions. Profits for the current year total $75 000. How will the total profits be divided between the partners?

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

Open

12

A business sells goods at cost plus 25 %. Information for a year is shown...

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

13

The following information relates to the annual membership subscriptions of a cricket club for the year ended 31 December. 1 January $ 31 December $ subscriptions in arrears subscriptions paid in advance Cash received during the year for subscriptions totalled $81 000. Which amount should be shown...

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

Open

14

Items cost $15 per unit. They are normally sold for $22. A damaged unit can only be sold at the normal selling price after modifications costing $14. The scrap value of the item is $7 per unit. How much should the damaged unit be valued at in the balance sheet?

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

The following items appear in the accounts of a manufacturing business. purchase of raw materials purchase of finished goods carriage inwards carriage outwards Which items will be included in the manufacturing account?

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

Open

16

The directors of a company are completing the accounts for the year ended 30 April 2007. They discover that the stock at 1 May 2006 was over-valued by $50 000. What is the effect of correcting this error in the accounts?

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

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

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

Open

17

A company issues 500 000 ordinary shares of $1 each for $3 each and 250 000 6 % debentures. By what amount will net assets of the company increase as a result of these transactions?

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

Open

18

A company’s balance sheet shows: $ share capital ordinary shares of $10 each 100 000 general reserve 60 000 profit and loss account 210 000 The company pays a dividend of $70 000, makes a bonus issue of 5000 ordinary shares and raises a debenture loan of $120 000. What will be the total of share capital and reserves after these transactions are completed?

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

Open

19

Which actions would increase the liquidity (acid test or quick) ratio of a business in the short term?

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

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

20

A company produces the following information concerning stock turnover (rate of stock turn). year 1 average stock $60 000 stock turnover 10 times year 2 average stock double last year cost of goods sold increased to $960 000 What will be the stock turnover in year 2?

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

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

21

The table shows information for a business at the year end. $000 average stock credit sales credit purchases total purchases trade creditors trade debtors What is the payment period for creditors (to the nearest day)?

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

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

Open

22

The accounts of a business show that it has increased its sales revenue by 50 % in one year whilst its cost of sales has increased by 60 % over the same period. What is the explanation for the change in profit margin?

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

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

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

Open

23

The table shows the capital structure of a company. $000 ordinary shares of $1 each share premium account retained profits 15 % loan stock (issued 5 years ago) Operating profits average $260 000 per annum. What is the return on shareholders’ funds?

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

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

Open

24

A company has sales of $192 000, fixed costs of $40 000 and a contribution / sales ratio of one- third. What are its profits?

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

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

Open

25

A firm sells its product for $10 per unit and has variable costs of $6 per unit. Its fixed costs for the year are: $ factory rent 30 000 other fixed costs 70 000 What is the break-even point?

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

What does the line XY show?

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

27

A business provides the following information: $ total fixed costs 10 000 unit selling price variable unit production costs 0.75 What is the total sales revenue needed to break even?

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

The total cost of making product X is shown...

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

Open

29

A company manufactures a product. Information for the last two years is as follows: year 1 $ year 2 $ variable unit costs 6.00 7.00 fixed overheads per annum 24 000 25 200 unit sales price 10.00 10.00 In both years, production has been at break-even level. What is the increase in production in year 2 compared with year 1?

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

30

The table shows figures for a week’s production. expected production 10 000 units expected production overhead $50 000 actual production overhead $60 000 under-absorption of overhead $5 000 What is the actual amount of production in the week?

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