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1

A non-current asset costs $250 000 and has a useful economic life of 25 years. The estimated residual value is $10 000. Depreciation is provided on a straight line basis. After 10 years the asset is sold for $120 000. Disposal costs of $20 000 are incurred. What is the loss on disposal?

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

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2

Goods that had previously been purchased on credit have been returned to the supplier. How should this be recorded in the purchaser’s books of account?

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

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3

On 1 January 2012 a business had prepaid rent of $50. During 2012, it made three rent payments of $250 each. On 31 December 2012, the business owed $200 rent for 2012. The business owner only charged the rent payments made during 2012 in the income statement. What is the effect on 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

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

Open

4

A computer used for demonstration to customers was treated as capital expenditure. The following year a customer purchased the computer in the ordinary course of business. Which entries are needed to adjust the cost of sales?

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

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

Open

5

The table shows information about a business. $ provision for doubtful debts at 1 January 2012 trade receivables at 31 December 2012 (after writing off a bad debt of $30) 15 000 charge to income statement for bad and doubtful debts for year ended 31 December 2012 (including the bad debt written off) What is the total percentage provision that has been made for doubtful debts at 31 December 2012?

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

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

Open

6

The following information is extracted from the statement of financial position of a business. $ bank loan (repayable 2019) 16 200 bank loan interest owing 1 880 bank overdraft 11 600 capital 20 710 drawings 19 100 inventory 14 610 prepayments 1 420 trade payables 14 110 trade receivables 9 050 What is the value of the net 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

7

A business sells computers. When they value their inventory they exclude the value of the inventory that is over one year old, as they may be obsolete. Which accounting principle does this demonstrate?

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

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

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

Open

8

When preparing a bank reconciliation statement, the following information is available. $ bank balance shown...

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

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9

The following financial information has been extracted from the books of account. $ bad debts written off 7 000 cash from credit customers 925 000 credit sales 900 000 opening trade receivables 300 000 discounts allowed 10 000 discounts received 25 000 increase in provision for doubtful debts 9 000 returns inwards 8 000 returns outwards 5 000 What is the closing balance on the sales ledger control account?

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

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

Open

10

Discount received of $280 has been incorrectly posted to the credit of the discount allowed account. Which entry must be made to the discount received account to correct the error?

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

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

Open

11

A trader provides the following financial information for the year. $ direct costs 210 000 indirect costs 55 000 increase in work in progress 7 000 raw materials taken for own use 2 000 Which figures should appear in the manufacturing account?

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

Open

12

Which item appears in a company’s income statement?

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

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

Open

13

The table shows the following balances for a business. start of year $ end of year $ inventory 6 000 9 000 trade payables 8 000 10 000 Total payments to trade payables were $20 000. What is the cost of sales for the year?

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

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

Open

14

X and Y are in partnership sharing residual profits and losses in the ratio 7 : 3. Their fixed capital accounts have balances of X $40 000; Y $60 000. Interest is allowed on these at the rate of 10% per year. X is paid a salary of $40 000 per year. Profit for the year was $200 000. What was the division of profits between the partners?

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

Open

15

X, Y and Z are in partnership, sharing profits, X 40%, Y 20% and Z 40%. Existing goodwill is shown...

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

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

Open

16

A trader provides the following information. $ opening inventory 6 000 closing inventory 4 000 purchases 15 000 He uses a uniform gross profit margin of 20%. What was the sales figure for the trading period?

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

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

17

A club supplies refreshments for its members at a uniform gross profit margin of 30%. The following information is available. $ receipts 62 000 opening inventory 10 000 purchases 45 000 What is the value of closing inventory?

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

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

18

Y sells goods to X on credit. Details of X’s account are as follows. $ trade discount closing balance opening balance payment received contra to purchases ledger What was the value of sales?

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

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

Open

19

The following information has been taken from the books of accounts of a limited company for the year ended 31 December 2012. $ bank loan interest for the year 1 650 bank overdraft interest for the year 2 150 ordinary dividends paid during the year 8% debenture taken out on 1 October 2012 30 000 What are the total finance costs in the income statement for the year ended 31 December 2012?

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

Open

20

A company has 1 000 000 ordinary shares of $1 issued at $2.50. It also has a 5% debenture of $300 000. Profit from operations for the year was $465 000. The directors paid an 8% ordinary dividend during the year. What is the retained profit for the year?

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

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

Open

21

The following information was extracted from the books of a trader. $ revenue for the year 126 000 purchases for the year 87 000 opening inventory 9 000 closing inventory 12 000 What is the rate of inventory turnover?

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

22

A company wishes to improve its current ratio and its liquid (acid test) ratio. How can this be done?

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

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

Open

23

Which of the following measures a business’ average credit period?

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

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

Open

24

Which expense would be classified as a variable cost of a furniture manufacturer?

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

25

A company has the following annual costs. $ purchases of raw materials during the year 53 000 wages and salaries: production staff 110 000 administration staff 56 000 production overheads 16 000 administration expenses excluding wages 42 000 selling and distribution overheads 34 000 What is the total indirect cost for the 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

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

Open

26

Which statement is correct?

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

Which statements about absorption costing are correct?

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

Open

28

An accountant prepared the following break-even chart. sales volume (millions of units) costs and revenues ($m) sales revenue total costs fixed costs budget The budgeted sales volume is 4.5 million units. Which profit can be anticipated at this level?

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

Open

29

Which statement best describes job costing?

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

Open

30

Which item would appear in a cash budget?

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

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

Open