Chapter 22: MULTIPLE CHOICE QUESTIONS
Chapter 2: Argument of financial position and income statement
| (1) | Which of the following is the bookkeeping equation |
AAssets â€" Liabilities â€" Capital = Drawings + Turn a profit
BAvails = Liabilities â€" Capital + Profit â€" Drawings
CAvails â€" Liabilities â€" Capital = Profit â€" Drawings
DAssets + Liabilities = Capital + Turn a profit â€" Drawings
| (2) | Which of the following statements is true? |
AThe income argument illustrates a business’ financial position.
BThe income argument includes dividends paid
CThe income argument illustrates the business’ financial performance
DThe income statement has to show the results for i year
| (3) | What is included in the argument of financial position of a business? |
ACapital, drawings, assets and liabilities
BCapital, dividends paid, sales and assets
CAssets, liabilities, profit on disposals of not-current avails and introduced capital letter
DDividends paid, assets, discounts and liabilities
| (iv) | Which of the post-obit is wrong? |
AThe statement of financial position and income statement class office of the financial statements of a business organization
BThe argument of fiscal position illustrates the accounting equation
CThe income statement illustrates the accounting equation
DThe argument of fiscal position and income statement illustrate the financial position and performance of the business
| (v) | Which statement is non truthful? |
AInventory is shown on the income statement and in the statement of financial position
BExpenses should be included on the income statement
CInventory should be included on the argument of financial position only
DReceivables are included in electric current avails on the statement of financial position
Chapter iii: Double entry bookkeeping
| (6) | Which of the following is right? |
| (vii) | A credit balance on a ledger account indicates: |
Aan asset or an expense
Ba liability or an expense
Can corporeality owing to the system
Da liability or revenue
| (8) | The double entry system of bookkeeping normally results in which of the following balances on the ledger accounts? |
| (nine) | The main aim of accounting is to: |
Amaintain ledger accounts for every asset and liability
Bprovide fiscal information to users of such data
Cproduce a trial residual
Drecord every financial transaction individually
| (10) | A Debit entry could lead to: |
Aan increase in assets or a decrease in expenses
Ban increase in sales or an increase in liabilities
Ca decrease in sales or a decrease in assets
Da decrease in liabilities or an increase in expenses
| (11) | A credit entry could lead to: |
Aan increase in assets or increase in liabilities
Ban increase in expense or an increment in share upper-case letter
Can increase in liabilities or an increment in share capital
Dan increase in liabilities and a decrease in sales
Affiliate four: Inventory
| (12) | Tracey’s business sells three products â€" A, B and C. The post-obit information was available at the twelvemonth-cease: |
The value of inventory at the year-cease should be:
A$675
B$670
C$795
D$550
| (13) | An inventory record carte du jour shows the following details: |
What is the value of inventory at 31 January using the FIFO method?
A$1,125
B$725
C$975
D$one,000
| (xiv) | What would exist the outcome on a business’ profit, which has been calculated including inventory at toll, of discovering that one of its inventory items which price $7,500 has a net realisable value of $eight,500? |
Aan increase of $8,500
Ban increase of $1,000
Cno effect at all
Da decrease of $1,000
| (fifteen) | According to IAS ii Inventories, which of the following costs should be included in valuing the inventories of a manufacturing visitor? |
(ane)Carriage outwards
(2)Depreciation of factory constitute
(three)Carriage inwards
(4)General administrative overheads
AAll four items
Bi, 3 and 4 only
Ci and ii only
D2 and 3 but
| (16) | The closing inventory of 10 amounted to $116,400 excluding the following two inventory lines: |
- 400 items which had cost $iv each. All were sold later on the argument of fiscal position date for $three each, with selling expenses of $200 for the batch.
- 200 different items which had cost $30 each. These items were constitute to be defective at the statement of financial position engagement. Rectification work after the statement of fiscal position amounted to $1,200, after which they were sold for $35 each, with selling expenses totalling $300.
Which of the following total figures should announced in the statement of financial position of Ten for inventory?
A$122,300
B$121,900
C$122,900
D$123,300
Chapter five: Sales tax
| (17) | All the sales of Gail, a retailer, were made at a price inclusive of sales tax at the standard rate of 17.5% and all purchases and expenses bore sales taxation at the standard rate. For the iii months ended 31 March 2005 gross sales were $23,500, purchases were $12,000 (cyberspace) and expenses $800 (cyberspace). |
How much is due to the tax authority for the quarter?
A$1,260
B$ane,400
C$1,594
D$1,873
| (18) | The sales account is: |
Acredited with the full of sales made, including sales tax
Bcredited with the total of sales made, excluding sales tax
Cdebited with the total of sales made, including sales tax
Ddebited with the full of sales made, excluding sales tax
| (19) | If sales (including sales tax) amounted to $27,612.50 and purchases (excluding sales tax) amounted to $18,000, the residuum on the sales tax account, assuming all items are subject to sales taxation at 17.5%, would be: |
A$962.50 debit
B$962.50 credit
C$1,682.10 debit
D$ane,682.10 credit
| (20) | A business organization commenced with majuscule in cash of $ane,000. Inventory costing $800 net of sales tax at 17.v% is purchased on credit. One-half of this inventory is and then sold for $1,000 plus sales revenue enhancement, the customer paying promptly in greenbacks. |
The bookkeeping equation after these transactions would show:
Aassets $one,775 less liabilities $175 equals capital $i,600
Bavails $2,775 less liabilities $975 equals capital $1,200
Cavails $2,575 less liabilities $800 equals capital letter $1,775
Davails $ii,575 less liabilities $975 equals upper-case letter $1,600
Chapter 6: Accruals and prepayments
| (21) | The electricity account for the year ended 30 April 2005 was equally follows: |
Which of the following is the appropriate entry for electricity?
| (22) | The year terminate of Lansdown is 31 December. The company pays for its electricity by a continuing society of $100 per calendar month. On i January 2005 the statement from the electricity supplier showed that the company had overpaid by $25. Lansdown received electricity bills for the four quarters starting on one Jan 2005 and ending on 31 December 2005 for $350, $375, $275 and $300 respectively. |
Which of the following is the right entry forelectricity in Lansdown’s income statement and statement of financialposition for the yr catastrophe 31 December 2005?
| (23) | At ane Jan 2005, Michael had a prepayment of $200 in respect of rent. He paid $1,200 on 1 March 2005 in respect of the year ended 28 Feb 2006 |
What is the charge to the income statement in respect of rent for the year ended 31 December 2005?
A $one,400
B $1,200
C $1,100
D $1,300
| (24) | At 31 December 2003, Tony had accrued $240 in respect of light and rut for the quarter catastrophe 31 December 2003. In January 2004 he discovered that he had under-accrued past $10. |
The bills for the adjacent iv quarters were as follows (q.eastward. = quarter ended):
Tony ever accrues for expenses based on the last bill.
What is the charge to the income statement in respect of light and heat for the 15-calendar month period ended 31 March 2005?
A $one,160
B $i,150
C $930
D $920
| (25) | Jotter paid for during the year amounted to $one,350. At the beginning of the yr there was an inventory of stationery on hand of $165 and an outstanding stationery invoice for $80. At the end of the year there was an inventory of stationery on hand of $140 and an outstanding stationery invoice for $seventy. |
The stationery figure to be shown in the income argument for the year is:
A $1,195
B $ane,335
C $i,365
D $1,505
Affiliate 7: Irrecoverable debts and allowances for receivables
| (26) | At 30 April 2005, Gareth has a receivables balance of $50,000 and an allowance for receivables of $800. Following a review of receivables, Gareth wishes to write off an irrecoverable debt of $1,000 and adapt his allowance to v% of receivables. |
What will be the adapted balance of the assart for receivables?
A $1,650
B $ii,450
C $2,500
D $iii,450
| (27) | As at 31 March, Phil had receivables of $82,500. Following a review of receivables, Phil has decided to write off the following irrecoverable debts: |
Phil would like to provide against a specific debt of $250 andbased on past feel, make a general allowance at two% of receivables.The electric current balance on the allowance for receivables account is $2,000.Phil also received $300 from a debt that had been previously beenwritten off.
What is the charge to the income statement in respectof irrecoverable debt expense and the entry on the statement offinancial position for net receivables at 31 March?
| (28) | At the start of the twelvemonth Joe had an assart of $700 against receivables. During the yr $450 of this amount went bad and $150 was received; the balance remained unpaid at the year end. Another amount of $170 went bad. At the twelvemonth-terminate information technology was decided to provide for a new debt of $240. |
What was the full irrecoverable debt expense for the year?
A $170
B $260
C $410
D$710
| (29) | Doris currently has a receivables balance of $47,800 and an allowance for receivables of $i,250. She has received $150 in respect of half of a debt that she had provided against. She now believes the other half of the debt to exist bad and wishes to write it off. She likewise wishes to maintain her assart at 2% receivables. |
What is the full charge to the income statement in respect of these items?
A $150 debit
B $150 credit
C $300 debit
D $300 credit
| (30) | At the year stop, Harold has a receivables balance of $100,000 and an assart for receivables of $5,000. He has not nonetheless deemed for a receipt of $500 in respect of a debt which he had previously provided against or a receipt of $1,000 in respect of a debt which had been written off in the previous yr. Harold wishes to maintain his assart for receivables at 7% of receivables. |
What balances will exist shown in hisstatement of financial position at the twelvemonth-end for receivables and theallowance for receivables?
| (31) | James has been advised that one of his customers has ceased trading and that it is most certain that he volition not recover the balance of $720 owed by this customer. |
What entry should James make in his general ledger?
| (32) | Gordon’s receivables owe a total of $80,000 at the year end. These include $900 of long-overdue debts that might all the same be recoverable, but for which Gordon has created an allowance for receivables. Gordon has also provided an allowance of $1,582, which is the equivalent of 2% of the other receivables’ balances. |
What all-time describes Gordon’southward allowance for receivables as at his year end?
A a specific allowance of $900 and an additional assart of $1,582 based on past history
B a specific allowance of $1,582 and an additional allowance of $900 based on past history
C a specific assart of $ii,482
D a general allowance of $2,482
Chapter 8: Noncurrent assets
| (33) | At 1 January 2005, Mary has motor vehicles which cost $15,000. On 31 Baronial 2005 she sells a motor vehicle for $5,000 which had originally cost $8,000 and which had a NBV of $four,000 at the date of disposal. She purchased a new motor vehicle which cost $ten,000 on 30 November 2005. |
Her policy is to depreciate motor vehicles at arate of 25% pa on the straight-line basis, based on the number ofmonths’ ownership.
What is the depreciation charge for the year ended 31 December 2005?
A $3,750
B $3,291
C $iv,250
D $three,500
| (34) | Which of the following all-time explains what is meant by ‘majuscule expenditure’? |
Aexpenditure on non-current assets, including repairs and maintenance
Bexpenditure on expensive avails
Cexpenditure relating to the issue of share capital
Dexpenditure relating to the acquisition or improvement of noncurrent avails
| (35) | A non-electric current asset was purchased at the beginning of Twelvemonth 1 for $two,400 and depreciated by 20% pa past the reducing-rest method. At the start of Year 4 it was sold for $1,200. |
The result of this was:
A a loss on disposal of $240.00
B a loss on disposal of $28.lxxx
C a profit on disposal of $28.80
D a turn a profit on disposal of $240.00
| (36) | Giles bought a new auto from away. The machine cost $100,000 and delivery and installation costs were $7,000. Testing it amounted to $v,000. Training employees on how to apply the machine cost of $1,000. |
What should be the toll of the machine in the company’s statement of financial position?
A $100,000
B $107,000
C $112,000
D $113,000
| (37) | Joseph’s machinery cost business relationship showed a balance of $5,000 at 1 January 2005. During the year he had the following transactions: |
Joseph depreciates machines at a rate of 10% pa on the straight-line basis based on the number of months’ ownership.
What is the depreciation charge in respect of machinery for the year ended 31 December 2005?
A $545
B $540
C $510
D $630
| (38) | B acquired a lorry on 1 May 20X0 at a toll of $thirty,000. The lorry has an estimated useful life of four years, and an estimated resale value at the terminate of that time of $6,000. B charges depreciation on the straight-line basis, with a proportionate charge in the period of acquisition. |
What will the depreciation accuse for the lorry exist in B’due south 10-month accounting period to 30 September 20X0?
A $iii,000
B $2,500
C $ii,000
D $5,000
Chapter 9: From trial balance to financial statements
The following is the extract of Jessie’s trial balance equally at 31 Dec 2005:
The following notes are provided:
(i) Buildings are depreciated at 2% pa on a directly-line basis.
(two) Establish and mechanism is depreciated at 25% pa on a reducing balance footing.
(iii)Additional irrecoverabledebts of $3,200 were discovered at the twelvemonth end. It has been decided tomake an allowance for receivables of v% on the adjusted receivables atthe yr end.
(iv)The monthly rental charge is $three,000.
(v)The insurance charge for the twelvemonth is $24,000.
Using the to a higher place information attempt the following questions.
| (39) | The depreciation charge for buildings for the year and the net book value (NBV) at the year-end will be: |
| (twoscore) | The depreciation charge for establish and machinery for the year and the NBV at the twelvemonth-stop will be: |
| (41) | The total irrecoverable debt expense for the year and the closing net receivable balance volition be: |
| (42) | What is the charge for rent and insurance for the year and the closing accrual and prepayment? |
Chapter ten: Books of prime entry and control accounts
| (43) | Which of the following is not the purpose of a receivables ledger command business relationship? |
A A receivables ledger control account provides a check on the arithmetics accuracy of the personal ledger
B A receivables ledger control business relationship helps to locate errors in the trial balance
C A receivables ledger control account ensures that in that location are no errors in the personal ledger
D Control accounts deter fraud
| (44) | Which one of the following is a book of prime entry and part of the double-entry organization? |
A the journal
B the niggling cash book
C the sales day book
D the buy ledger
| (45) | On 1 January 2005 the balance of receivables was $22,000. Calculate the closing receivables later on taking the post-obit into consideration: |
A $thirty,000
B $23,000
C $12,000
D $28,000
Chapter eleven: Control account reconciliations
| (46) | A receivables ledger control account had a endmost balance of $8,500. It independent a contra to the buy ledger of $400, only this had been entered on the incorrect side of the command account. |
The correct balance on the control account should be:
A $7,700 debit
B $8,100 debit
C $viii,400 debit
D $8,900 debit
| (47) | The receivables ledger control account at 1 May had balances of $32,750 debit and $1,275 credit. During May sales of $125,000 were fabricated on credit. Receipts from receivables amounted to $122,500 and cash discounts of $550 were immune. Refunds of $1,300 were fabricated to customers. The closing credit balance is $2,000. |
The closing debit balances at 31 May should exist:
A $35,175
B $35,675
C $36,725
D $34,725
| (48) | A supplier sends y'all a statement showing a rest outstanding of $fourteen,350. Your own records show a residuum outstanding of $xiv,500. |
The reason for this difference could exist that:
A The supplier sent an invoice for $150 which y'all accept not yet received
B The supplier has allowed you $150 cash discount which you had omitted to enter in your ledgers
C Y'all accept paid the supplier $150 which he has non even so deemed for
D Yous take returned goods worth $150 which the supplier has not yet deemed for
| (49) | A credit residue of $917 brought forrad on Y’s account in the books of Ten means that: |
A X owes Y $917
B Y owes 10 $917
C X has paid Y $917
D X is owed $917 by Y
| (50) | In a receivables ledger control account, which of the following lists is composed only of items which would appear on the credit side of the account? |
A Greenbacks received fromcustomers, sales returns, irrecoverable debts written off, contrasagainst amounts due to suppliers in the accounts payable ledger
B Sales, cash refunds to customers, irrecoverable debts written off, discounts immune
C Cash received from customers, discounts allowed, interest charged on overdue accounts, irrecoverable debts written off
D Sales, cash refunds tocustomers, involvement charged on overdue accounts, contras confronting amountsdue to suppliers in the accounts payable ledger
Chapter 12: Depository financial institution reconciliations
| (51) | The following data relates to a depository financial institution reconciliation. |
(i)The depository financial institution balance in the greenbacks book earlier taking the items below into account was $5,670 overdrawn.
(two)Banking concern charges of $250 on the depository financial institution statement have not been entered in the cash book.
(iii)The banking concern has credited the account in error with $twoscore which belongs to another customer.
(iv)Cheque payments totalling $325 take been correctly entered in the cash volume but accept not been presented for payment.
(v)Cheques totalling $545 have been correctly entered on the debit side of the greenbacks volume only have not been paid in at the bank.
What was the balance as shown past the bank statement earlier taking the items above into account?
A $5,670 overdrawn
B $5,600 overdrawn
C $5,740 overdrawn
D $vi,100 overdrawn
| (52) | At 31 August 2005 the residue on the company’s cash book was $iii,600 credit. Examination of the bank statements revealed the post-obit: |
- Continuing orders amounting to $180 had not been recorded in the cash book.
- Cheques paid to suppliers of $1,420 did not appear on the banking company statements.
What was the balance on the bank statement at 31 August 2005?
A $5,200 overdrawn
B $five,020 overdrawn
C $ii,360 overdrawn
D $3,780 overdrawn
| (53) | An organisation’due south cash book has an operating balance of $485 credit. The following transactions and then took place: |
- cash sales $1,450 including sales tax of $150
- receipts from customers of debts of $ii,400
- payments to payables of debts of $1,800 less 5% cash discount
- dishonoured cheques from customers amounting to $250.
The resulting balance in the banking company column of the cash book should be:
A $one,255 debit
B $one,405 debit
C $ane,905 credit
D $2,375 credit
| (54) | The cash book shows a depository financial institution balance of $v,675 overdrawn at 31 March 2005. It is subsequently discovered that a standing order for $125 has been entered twice and that a dishonoured check for $450 has been debited in the cash volume instead of credited. |
The right banking concern balance should be:
A $five,100 overdrawn
B $six,000 overdrawn
C $half dozen,250 overdrawn
D $6,450 overdrawn
| (55) | The effort beneath at a depository financial institution reconciliation statement has been prepared by Q Limited. Assuming the banking concern statement rest of $38,600 to exist correct, what should the cash book balance be? |
A $76,500 overdrawn, equally stated
B $5,900 overdrawn
C $700 overdrawn
D $5,900 greenbacks at bank
| (56) | Later on checking a business cash book against the bank statement, which of the following items could require an entry in the cash volume? |
(1)Bank charges
(two)A cheque from a customer which was dishonoured
(3)Cheque non presented
(4)Deposits not credited
(5)Credit transfer entered in bank argument
(6)Continuing order entered in bank statement.
A 1, 2, 5 and half dozen
B three and 4
C 1, three, 4 and 6
D 3, 4, 5 and 6
Chapter 13: Correction of errors and suspense accounts
| (57) | Faulty appurtenances costing $210 were returned to a supplier but this was recorded as $120 in the ledger accounts. |
What is the journal entry necessary to correct the error?
| (58) | A suspense account was opened when a trial balance failed to agree. The following errors were after discovered: |
- a gas neb of $420 had been recorded in the gas business relationship as $240
- discount of $50 given to a customer had been credited to discounts received
- interest received of $70 had been entered in the depository financial institution account only.
The original balance on the suspense account was:
A debit $210
B credit $210
C debit $160
D credit $160
| (59) | Molly starts up in business organisation as a florist on 1 Apr 2004. For the first vi months, she has a draft turn a profit of $12,355. |
On investigation you discover the following:
- Rent paid for the 12 months ending 31 March 2005 of $800 has non been recorded in the accounts.
- Closing inventory in the accounts at a cost of $one,000 has a net realisable value of $800.
What is the adjusted profit for the menstruum?
A $xi,355
B $11,755
C $12,155
D $12,555
| (60) | In an bookkeeping system where individual receivables and payables ledger accounts are maintained equally an integral role of the double entry, which of the following errors will not be identified by a trial residual? |
A overcasting of the sales day volume
B undercasting of the analysed cash book
C failure to transfer a not-electric current asset to the disposal account when sold
D transposition error in an individual receivables business relationship
| (61) | A trial residue has been extracted and a suspense account opened. 1 error relates to the misposting of an amount of $400, being disbelieve received from suppliers, which was posted to the wrong side of the discount received account |
What is the correcting journal entry?
| (62) | A visitor, Y, purchased some plant on 1 January 20X0 for $38,000. The payment for the establish was correctly entered in the cash book just was entered on the debit side of plant repairs account. |
Y charges depreciation on the direct-linebasis at xx% pa, with a proportionate charge in the year of acquisitionand assuming no bit value at the end of the life of the asset.
How volition Y’s profit for the twelvemonth ended 31 March 20X0 be afflicted by the mistake?
A Understated by $30,400
B Understated by $36,100
C Understated past $38,000
D Overstated by $1,900
| (63) | The trial residuum of Z failed to agree, the totals existence: |
A suspense account was opened for the corporeality of the difference and the following errors were found and corrected:
(i)The totals of the cashdiscount columns in the cash volume had not been posted to the discountaccounts. The figures were disbelieve immune $3,900 and discount received$five,100.
(2)A bank check for $19,000received from a customer was correctly entered in the cash book but wasposted to the customer’southward account equally $9,100.
What will the remaining balance on the suspense account be later the correction of these errors?
A $25,300 credit
B $7,700 credit
C $27,700 credit
D $v,400 credit
| (64) | The trial residuum of C did not agree, and a suspense business relationship was opened for the difference. Checking in the bookkeeping system revealed a number of errors. |
(1)$iv,600 paid for motor van repairs was correctly treated in the greenbacks book but was credited to motor vehicles asset account.
(2)$360 received from B, a customer, was credited in error to the account of BB.
(3)$9,500 paid for rent was debited to the rent account as $5,900.
(four)The total of the discount allowed column in the greenbacks volume had been debited in error to the discounts received business relationship.
(5)No entries had been fabricated to record a cash auction of $100.
Which of the errors above would require an entry to the suspense account as part of the procedure of correcting them?
A 3 and 4
B 1 and 3
C ii and 5
D 2 and iii
Chapter 14: Incomplete records
| (65) | Ashley started a business on 1 January 2005. He acquired the following assets: |
He likewise opened a business organization banking concern business relationship and paid in $4,000. At the end of the outset year of trading, he had the post-obit:
He had drawn $1,000 in cash during the period.
What was Ashley’s profit or loss for the year?
A $140 loss
B $140 profit
C $1,860 loss
D $one,860 profit
| (66) | George started a business concern by investing $10,000 into a business organisation depository financial institution account. At the end of his first year’due south trading he had earned a profit of $5,000 and had the following assets and liabilities: |
During the yr he had withdrawn $2,000 from the business organization.
How much farther uppercase had he introduced in the twelvemonth?
A $20,000
B $24,000
C $ten,000
D $14,000
| (67) | If Harry’s mark-upwards on cost of sales is xv%, what is his gross profit margin? |
A 12.5%
B 13.04%
C xv%
D 17.65%
| (68) | A sole trader had opening capital of $10,000 and closing capital of $four,500. During the period the owner introduced capital of $4,000 and withdrew $viii,000 for her own employ. |
Her profit or loss during the menses was:
A $nine,500 loss
B $1,500 loss
C $7,500 profit
D $17,500 profit
| (69) | From the following data, calculate the value of purchases: |
A $302,600
B $506,400
C $523,200
D $578,200
| (seventy) | Carol owns a shop. The merely information available for the yr ended 31 Dec 2005 is as follows: |
What were the purchases of the shop for the year?
A $xi,450
B $12,750
C $xiv,900
D $ten,600
| (71) | The following information is relevant to the calculation of the sales effigy for Alpha, a sole trader who does not go along proper accounting records: |
The effigy which should announced in Alpha’s income statement for sales is:
A $525,300
B $511,700
C $529,500
D $510,900
| (72) | A sole trader who does not keep full accounting records wishes to calculate her sales revenue for the twelvemonth. |
The information available is:
Which of the following is the sales revenue effigy for the year calculated from these figures?
A $117,600
B $108,000
C $210,000
D $140,000
| (73) | A business organisation compiling its accounts for the year to 31 January each yr pays rent quarterly in advance on 1 January, 1 Apr, i July and 1 October each yr. After remaining unchanged for some years, the rent was increased from $24,000 per yr to $thirty,000 per year as from 1 July 20X0. |
Which of the post-obit figures is the rentexpense which should appear in the income statement for the twelvemonth ended31 January 20X1?
A $27,500
B $29,500
C $28,000
D $29,000
| (74) | On 31 December 20X0 the inventory of V was completely destroyed past burn. The following data is available: |
(1)Inventory at 1 Dec 20X0 at cost $28,400.
(2)Purchases for December 20X0 $49,600.
(three)Sales for December 20X0 $64,800.
(4)Standard gross profit pct on sales revenue 30%.
Based on this data, which of the post-obit is the amount of inventory destroyed?
A $45,360
B $32,640
C $twoscore,971
D $19,440
Affiliate 15: Company accounts
| (75) | Geese’southward trial residual shows an overprovision in respect of income tax for the yr concluded 31 Dec 2004 of $five,000. Geese estimates that revenue enhancement liability in respect of the year ended 31 December 2005 will be $23,000. |
What is the tax charge in Geese’s incomestatement and the argument of financial position entry for the yearended 31 December 2005?
| (76) | The correct periodical entry to tape the result of 100,000 50c shares (fully paid) at an issue toll of $2.50 a share is: |
| (77) | A company has the following share capital: |
In addition to providing for the year’s preference dividend, an ordinary dividend of 2c per share is to be paid.
What are total dividends for the year?
A $140,000
B $380,000
C $440,000
D $760,000
| (78) | Revenue reserves are: |
A accumulated and undistributed profits of a visitor
B amounts which cannot be distributed as dividends
C amounts fix aside out of profits to replace revenue items
D amounts set aside out of profits for a specific purpose
| (79) | On ane April 2004 the residuum on B’southward accumulated profit account was $50,000 credit. The balance on 31 March 2005 was $100,000 credit. On 10 March 2005 dividends of $l,000 were declared in respect of the year ended 31 March 2005, payable on 31 May 2005. |
Based on this information, profit after tax (but before dividends) for the year ended 31 March 2005 was:
A Null
B $fifty,000
C $100,000
D $150,000
Chapter 16: Accounting standards
| (fourscore) | Jackson’s year cease is 31 December 2005. In February 2006 a major credit client went into liquidation and the directors believe that they volition not be able to recover the $450,000 owed to them. |
How should this item be treated in the fiscal statements of Jackson for the year ended 31 December 2005?
A The irrecoverable debt should be disclosed by note
B The financial statements are not afflicted
C The debt should be provided against
D The fiscal statements should be adjusted to reflect the irrecoverable debt
| (81) | A erstwhile employee is claiming compensation of $50,000 from Harriot, a limited liability company. The company’s solicitors have stated that they believe that the claim is unlikely to succeed. The legal costs relating to the claim are probable to exist in the region of $5,000 and will be incurred regardless of whether or non the claim is successful. |
How should these items be treated in the financial statements of Harriot Ltd?
A Provision should be made for $55,000
B Provision should exist fabricated for $50,000 and the legal costs should be disclosed by note
C Provision should be made for $five,000 and the bounty of $50,000 should exist disclosed past notation
D No provisions should be made but both items should be disclosed by notation
| (82) | Cowper has spent $xx,000 researching new cleaning chemicals in the year ended 31 Dec 2005. Information technology has also spent $40,000 developing a new cleaning product which will non go into commercial production until side by side year. The development project meets the criteria laid downward in IAS 38. |
How should these costs be treated in the financial statements of Cowper for the year ended 31 December 2005?
A $threescore,000 should exist capitalised as an intangible asset on the statement of financial position
B $xl,000 should becapitalised as an intangible asset and should be amortised; $xx,000should be written off to the income statement
C $40,000 should becapitalised as an intangible nugget and should not exist amortised; $20,000should be written off to the income argument
D $60,000 should exist written off to the income statement
| (83) | The directors of ABC estimated that inventory which had toll $50,000 had a cyberspace realisable value of $40,000 at thirty June 2005 and recorded it in the financial statements for the year ended 30 June 2005 at this lower value in accordance with IAS 2. They take since institute out that the internet realisable value of the inventory is only likely to exist $thirty,000. |
What adjustments, if whatever, should be made in the fiscal statements in respect of this inventory?
A No adjustments required
B Increment the value of inventory past $10,000
C Decrease the value of inventory by $10,000
D Decrease the value of inventory by $20,000
| (84) | Which of the post-obit items are non-adjusting items per IAS 10? |
(a)the event of new share or loan capital
(b)fiscal consequences of losses of non-current assets or inventory as a result of fires or floods
(c)information regarding the value of inventory sold at less than cost thus resulting in a reduction in the value of inventory
(d)mergers and acquisitions
(east)defalcation of a credit client.
A (a), (b) and (d)
B (c) and (e)
C (a), (d) and (eastward)
D (b), (c) and (e)
| (85) | Which of the following correctly describes how research and evolution expenditure should exist treated in accordance with IAS 38? |
A Research and development expenditure must exist written off to the income statement as incurred
B Research and development expenditure should be capitalised as an intangible asset on the argument of financial position
C Inquiry expenditureshould exist written off to the income statement; evolution expendituremust be capitalised equally an intangible asset provided that certaincriteria are met
D Enquiry expenditureshould be capitalised as an intangible asset provided that certaincriteria are met; development expenditure should be written off to theincome statement
| (86) | Who issues International Fiscal Reporting Standards? |
A The Auditing Practices Board
B The Stock Exchange
C The International Bookkeeping Standards Board
D The government
| (87) | Which of the following statements concerning the bookkeeping treatment of research and development expenditure are true, according to IAS 38 Intangible Assets? |
(i)If sure criteria are met, research expenditure may be recognised as an asset.
(2)Research expenditure, other than capital expenditure on research facilities, should exist recognised as an expense as incurred.
(iii)In deciding whetherdevelopment expenditure qualifies to be recognised equally an asset, information technology isnecessary to consider whether there will be adequate finance availableto complete the project.
(4)Development expenditure recognised as an nugget must be amortised over a menses not exceeding 5 years.
(v)The financial statementsshould disclose the total amount of enquiry and evolution expenditurerecognised equally an expense during the period.
A one, 4 and 5
B two, 4 and 5
C ii, 3 and 4
D 2, three and v
| (88) | IAS10 Events after the reporting period regulates the extent to which events after the reporting menstruum appointment should exist reflected in financial statements. |
Which of the following lists of such eventsconsists only of items that, co-ordinate to IAS10 should unremarkably beclassified equally non-adjusting?
A Insolvency of a debtorwhose business relationship receivable was outstanding at the argument of financialposition date, issue of shares or loan notes, a major merger withanother company
B Issue of shares or loan notes, changes in foreign exchange rates, major purchases of not-current avails
C A major merger withanother company, destruction of a major not-electric current asset by fire,discovery of fraud or error which shows that the financial statementswere incorrect
D Auction of inventory givingevidence about its value at the statement of financial position appointment,issue of shares or loan notes, destruction of a major not-electric current assetby burn down
Chapter 17: Argument of cash flows
| (89) | In the year concluded 31 Dec 2005, Lamb bought new vehicles from Warwick Motors with a listing price of $100,000 for $70,000 cash and an allowance against old motor vehicles of $30,000. The value of the vehicles taken in part substitution was $27,000. |
Lamb sold other vehicles with a cyberspace book value of $12,000 for $15,000 cash.
In Lamb’s statement of cash flow for the yearended 31 December 2005, how would the above transactions be presentedunder the heading ‘Investing activities’?
| (xc) | Baldrick has the post-obit balances in its statement of financial position as at 30 June 2004 and 30 June 2005: |
In the twelvemonth ended 30 June 2005 taxation of $550 was paid. The additional loan notes were issued on thirty June 2005.
What is the operating profit of Baldrick for the year ended xxx June 2005?
A $27,250
B $26,450
C $28,050
D $27,100
| (91) | At 31 December 2004, Topaz had provided $50,000 in respect of income revenue enhancement. At 31 December 2005, the company estimated that its income revenue enhancement bill in respect of the year would exist $57,000. The amount charged in the income statement for the year concluded 31 December 2005 in respect of income tax was $60,000. |
How much will announced in the statement of cash flows for the yr ended 31 December 2005 in respect of income tax?
A $fifty,000
B $53,000
C $57,000
D $threescore,000
| (92) | Evans had the following balances in its statement of financial positions as at xxx June 2004 and 2005: |
How much will announced in the cash period statement for the year ended xxx June 2005 under the heading of ‘Financing activities’?
A $cipher
B $10,000 inflow
C $thirty,000 inflow
D $40,000 arrival
The following information relates to Questions 93 and 94.
Scents had the following balances in its statement of fiscal positions as at 30 September 2004 and 2005:
| (93) | How much will appear in the argument of cash flows for the year concluded 30 September 2005 for the loan interest and preference dividend paid? |
A $10,000
B $12,000
C $16,000
D $32,000
| (94) | How much will appear in the statement of cash flows for the year concluded xxx September 2005 for the ordinary dividend paid? |
A $20,000
B $24,000
C $25,000
D $29,000
| (95) | IAS 7 Argument of cash flows requires the argument of cash flows prepared using the indirect method to include the calculation of internet cash from operating activities. |
Which of the following lists consists simply of items which could appear in such a calculation?
A Depreciation, increase in receivables, subtract in payables, proceeds of sale of found
B Increase in payables, decrease in inventories, profit on auction of plant, depreciation
C Increase in payables, depreciation, subtract in receivables, proceeds of sale of establish
D Depreciation, interest paid, equity dividends paid, purchase of plant
Chapter 18: Consolidated statement of financial position
| (96) | At the 1 January 20X2 Y caused 75% of the share capital letter of Z for $400,000. At that date the share capital of Z consisted of 600,000 ordinary shares of 50c each and its reserves were $l,000. |
The off-white value of NCI at the date of conquering was $100,000.
In the consolidated argument of financialposition of Y and its subsidiary Z at 31 Dec 20X6, what amountshould appear for goodwill?
A $150,000
B $137,500
C $55,000
D $110,000
| (97) | Skinny acquired 75% of the share capital Coltart for $35,000 on the 1 January 20X4. Details of the share capital and reserves of Skinny and Coltart at 31 December 20X6 are every bit follows: |
At the date of conquering Coltart had reserves of $10,000.
What figure should appear in the consolidatedstatement of financial position of Skinny and its subsidiary Coltart forreserves equally at 31 December 20X6?
A $41,250
B $42,750
C $43,250
D $43,750
| (98) | Austen acquired threescore% of the share uppercase of Dicken for $300,000 on 1 Jan 20X5. Details of the share majuscule and reserves of Austen and Dickens at 31 Dec 20X6 are equally follows: |
At the date of acquisition Dickens had reserves of $sixty,000. The off-white value of NCI at conquering was $80,000.
What figure should appear in the consolidatedstatement of financial position of Austen and its subsidiary Dickens forreserves as at 31 December 20X6?
A $180,200
B $209,000
C $290,200
D $110,000
| (99) | At the one January 20X5 Purves acquired eighty% of the share capital of Trollope for $100,000. At that engagement the share upper-case letter of Trollope consisted of fifty,000 $1 shares and reserves of $30,000. At the 31 December 20X6 the reserves of Purves and Trollope were every bit follows: |
The off-white value of NCI at acquisition was $75,000.
What figure should appear in the consolidatedstatement of financial position of Purves and its subsidiary Trollope,for non- decision-making involvement?
A $xvi,000
B $20,000
C $79,000
D $80,000
| (100) | At the 1 January 20X3 Y acquired lxxx% of the share capital of Z for $750,000. At that date the share capital of Z consisted of 600,000 ordinary shares of $1 each and its reserves were $fifty,000. |
The fair value of non-controlling involvement was valued at $150,000.
In the consolidated statement of financialposition of Y and its subsidiary Z at 31 Dec 20X6, what amountshould appear for goodwill?
A $250,000
B $184,000
C $138,000
D $92,000
Affiliate nineteen: Consolidated income argument
| (101) | X owns threescore% of the equity share majuscule of Y and 40% of the equity share upper-case letter of Z. The income statement of the three entities showed the following turnover for the yr ended 31 August 20X7: |
During the year X sold appurtenances to Y and Z for $2 one thousand thousand and $1million respectively. All appurtenances were sold on to third parties by Y and Zby the stop of the yr.
How much will be included in the consolidated income statement of the Ten group for Turnover for the year ended 31 August 20X7?
A $24m
B $21m
C $22m
D $28m
| (102) | Sat is the sole subsidiary of Shindo. The cost of sales figures for 20X1 for Saturday and Shindo were $eleven 1000000 and $10 million respectively. During 20X1 Shindo sold appurtenances which had toll $two million to Sabbatum for $3 1000000. Sat has not still sold whatever of these appurtenances. |
What is the consolidated price of sales figure for 20X1?
A $16 million
B $18 million
C $19 million
D $20 million
| (103) | Crunchy Co acquired 70% of the ordinary share upper-case letter of Nut Co six years agone. The post-obit data relates to Nut Co for the year concluded 30 June 20X3: |
What is the profit owing to the non-controlling interest in the consolidated income statement?
A $33,300
B $78,750
C $45,000
D $77,700
| (104) | K Co acquired threescore% of the ordinary share capital of Special Co five years agone. The following data relates to Special Co for the year concluded 30 September 20X3: |
What is the profit owing tot the non-controlling involvement in the consolidated income statement?
A $108,000
B $72,000
C $168,000
D $77,700
| (105) | P Ltd caused 60% of the ordinary shares of S Ltd several years ago when the reserves of S stood at $980. In the twelvemonth ended 31 July 20X7 P sold appurtenances to Southward costing $500 for $600.(twenty% mark upwards on price). At the yr end one-half of these goods nevertheless remained in inventory. |
What volition be the provision for unrealised turn a profit adjustment for the year ended 31 July 20X7, for the P group?
A Deduct $500 from the cost of sales
B Deduct $fifty from the cost of sales
C Add $50 to the cost of sales
D Add $100 to the cost of sales
| (106) | Which of the following statements regarding the method of consolidation is true? |
(ane)Subsidiaries are disinterestedness deemed
(2)Assembly are consolidated in full
A Neither statement
B Statement i but
C Both statements
D Statement 2 only
| (107) | Which of the post-obit statements rare true? |
(1)An associated undertaking is when a parent has command over the associate
(2)Assembly are equity accounted
(3)Subsidiaries are consolidated in full
(4)An associate is a non-controlling interest
A all of the above
B Statement 2 and iii only
C None of the above
D Argument 1 but
Affiliate xx: Interpretation of fiscal statements
The post-obit information relates to question 108 and 109.
| (108) | What is the return on upper-case letter employed for the years 20X5 and 20X6? |
| (109) | What is the total gearing for the years 20X5 and 20X6? |
| (110) | From the following information regarding the year to 31 August 20X6, what is the payables payment menses? |
A 41 days
B 48 days
C 54 days
D 57 days
| (111) | From the post-obit data regardinng the year to 31 March 20X6, what are the current and quick ratios? |
| (112) | Sale are $260,000. Purchases are $150,000. Opening inventory is $22,000. Closing inventory is $26,000. |
What is the inventory turnover?
A 6.ane times
B 10 times
C 7 times
D ten.8 times
Affiliate 21: The regulatory and conceptual framework
| (113) | When preparing financial statements under historic price accounting in periods of inflation, directors: |
A must reduce asset values
B must increase asset values
C must reduce dividends
D need make no adjustments
| (114) | If the owner of a concern takes goods from inventory for his own personal use, the accounting concept to be considered is the: |
A relevance concept
B capitalisation concept
C money measurement concept
D split up entity concept
| (115) | A ‘true and off-white view’ is 1 which: |
A presents the accounts in such a way as to exclude errors which would affect the deportment of those reading them
B occurs when the accounts have been audited
C shows the accounts of an organisation in an understandable format
D shows the assets on the statement of financial position at their current market price
| (116) | Which concept is followed when a business records the cost of a not-current nugget even though it does not legally ain information technology? |
A substance over form
B prudence
C accruals
D going concern
| (117) | The IASB Framework for the Grooming and Presentation of Financial Statements gives five characteristics that make fiscal information reliable. |
These v characteristics are:
A prudence, consistency, understandability, faithful representation, substance over form
B accruals footing, going concern concept, consistency, prudence, true and off-white view
C faithful representation, neutrality, substance over form, completeness, consistency, faithful and gratuitous
D gratuitous from material error, prudence, faithful representation, neutrality, completeness
| (118) | The accounting concept or convention which, in times of rising prices, tends to understate nugget values and overstate profits, is the: |
A going business concern concept
B prudence concept
C realisation concept
D historical toll concept
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