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1

A trader has prepared financial statements which include unpaid wages to her employees. Which accounting concept is being applied?

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

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

Open

2

On which basis will non-current assets be valued if the business is not a going concern?

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

Open

3

A business has a financial year end of 31 December. It depreciates its machinery on a month-by-month basis. It uses the straight-line method at 10% per annum. It bought a machine, cost $12 000, on 1 January 2019 and sold it on 31 March 2020. Which entries relating to this machine were made in the provision for depreciation of machinery account for the year ended 31 December 2020?

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

A business purchased a non-current asset for $500 000 with an expected life of 20 years. After that time it was expected to be sold for $100 000. It was depreciated using the straight-line method. The non-current asset was sold after 10 years for $120 000 with selling costs of $10 000. What was the loss on disposal?

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

Open

5

Which items are capital expenditure?

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

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

Open

6

A sales ledger control account showed a debit balance of $15 000. The following errors were discovered. Returns outwards, $200, had been credited in the sales ledger control account. A contra entry with the purchases ledger control account, $400, had been debited in the sales ledger control account. A customer balance, $300, had been written off in the sales ledger control account but no entry had been made in the sales ledger. Which figure for trade receivables should appear in the statement of financial position?

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

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

Open

7

The bank account had a debit balance of $5760 in the cash book at 31 May. The following items were identified when reconciling the bank account with the bank statement. $ amount not yet credited by bank bank charges dishonoured cheque unpresented cheque What was the amount shown...

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

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

Open

8

A trader maintains a full set of accounting records. Each month she issues many sales invoices. Where does she record an individual sales invoice?

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

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

Open

9

Brian had a service business which held no inventory. His current assets and current liabilities at 1 April were as follows. $ trade receivables 10 000 trade payables 6 100 bank overdraft 1 900 On that date he set off a sales ledger balance, $600, against a purchases ledger balance and then created a provision for doubtful debts of 5%. What was the value of his working capital after these adjustments?

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

Open

10

Frieda’s provision for the doubtful debts account for the year included a debit entry representing the change in the amount provided. The rate of provision for doubtful debts has not changed. What might have happened during the year to make this entry necessary?

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

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

Open

11

A trader’s income statement recorded sales, $10 000, and cost of sales, $7070. The trader had taken goods for his own use during the year, cost $280, selling price $410, but had omitted to record this. What effect did the omission have on the gross margin?

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

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

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

Open

12

William buys radios for $10 each and sells them for $15 each. His draft statement of financial position included a value of $1500 for inventory. His method of calculation of inventory was correct. He then found that 12 radios could only be sold for $8 each and 4 radios had been stolen. By how much should William reduce his inventory valuation?

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

A sole trader has not kept a full set of double-entry records. The following information relates to the business for the year ended 31 March 2021. $ sales 210 000 inventory at 1 April 2020 17 600 inventory at 31 March 2021 18 700 prepaid expense at 1 April 2020 expenses paid by cheque 11 900 All goods are marked up by 25%. What were the purchases and profit for the year?

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

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

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

Open

14

Which statement is correct in the absence of a partnership agreement?

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

Open

15

X and Y are in partnership sharing profits and losses equally. They have combined capital account balances of $200 000. Z was admitted as a partner. Non-current assets were revalued upwards by $30 000. Goodwill was valued at $20 000 but was not to be retained in the books of account. Following Z’s admission the total of the partners’ capital accounts was $270 000. How much capital did Z contribute?

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

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

Open

16

A company’s statement of financial position at 1 January 2020 included the following amounts. $ ordinary shares of $5 each 800 000 general reserve 80 000 retained earnings 120 000 The following transactions took place during the year ended 31 December 2020. The company issued a further 50 000 ordinary shares at a premium of $1 per share. The company’s land was revalued upwards by $130 000. The company paid a final dividend of $60 000. What were the total revenue reserves and capital reserves at 31 December 2020 after these three transactions?

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

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

Open

17

A company revalued its premises upwards. Which statement about the increase in value is correct?

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

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

Open

18

The table shows equity and liabilities of a company at 31 December 2020. $ ordinary share capital 750 000 6% debentures (2030) 150 000 bank loan (repayable 2024) 75 000 bank overdraft 110 000 mortgage on buildings (repayable 2021) 120 000 What is the total of non-current liabilities in the statement of financial position at 31 December 2020?

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

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

Open

19

The non-current asset turnover of a business improved between 2020 and 2021, even though the net revenue was the same for both years. What caused the improvement in the ratio?

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

Open

20

A business provides the following information. $ trade payables 39 540 opening inventory 15 450 closing inventory 32 780 credit purchases 184 600 credit sales 230 600 What is the trade payables turnover?

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

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

21

When a company produces 5000 units of a product it requires one supervisor. If production is increased beyond 5000 units then two supervisors are required. Which type of cost is this an example of?

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

22

A business employs 20 workers as production staff. Each worker is employed for 40 hours per week at a rate of $7.80 per hour. Bonus is calculated at 20% of basic rate pay per hour for each product manufactured above 120 units per employee. In a week, each employee produced 145 units. What were the total wages for the week?

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

Open

23

A business uses absorption costing to set its selling prices. Which overheads are accounted for by the use of the overhead absorption rate?

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

24

A business uses absorption costing and applies a mark-up of 50% when setting selling prices. Each unit of product X has a direct cost of $60 and a selling price of $150 and requires two hours of machine time. What is the overhead absorption rate per machine hour?

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

25

A business had no opening inventory. In one month it produced 4000 units and sold 3500 units. The following information is available. per unit $ selling price variable cost fixed cost How would inventory value and profit vary between using absorption costing and marginal costing?

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

Open

26

Which costs are part of the marginal cost of a product?

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

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

Open

27

A company provided the following information. $ variable costs 540 000 contribution 360 000 fixed production costs 100 000 fixed selling and distribution costs 320 000 What is its budgeted break-even sales revenue?

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

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

Open

28

Details for two products made by a company were as follows. product X $ product Y $ selling price per unit variable cost per unit The company could sell a maximum of 11 000 units of X and 9000 units of Y. However, the company cannot produce more than 10 000 units of X and Y together due to production constraints. Which production mix will maximise profits?

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

29

A manufacturer has a target profit of $80 000 per annum. Last year the business made a profit of $60 000 when 10 000 units were produced and sold. Contribution was $10 per unit. In order to achieve the target profit the plan is to increase advertising by $10 000 per annum. Variable cost per unit and selling price per unit will remain unchanged. What will be the total fixed cost if this plan is carried out?

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

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

Open

30

Which are advantages of a budgetary control system?

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

Open