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Refer to the Exhibit.
A company operates an AVCO system of inventory. Opening inventory at the beginning of the period was 400 units @ $6.50 per unit.
During the period, the following purchases and issues were recorded:
The amount charged to the company's income statement in the period is
A company purchases a piece of machinery for $180,000. It is estimated that the machinery will produce 450,000 units over its useful life of 10 years. The residual value at the end of 10 years is nil. After eight years, the machine has produced 340,000 units and is sold for $30,000.
The profit/loss arising on disposal of the asset is
The trial balance shows the debit total as $200 less than the credit total.
This could be due to:
“To assure shareholders that the stewardship of the organization was effectively carried out.”
What does this definition describe?
A company has a debt/equity ratio of 50%. If the company's total equity is $750,000, what is the gearing ratio for the company?
A trial balance should be extracted from the ledger accounts prior to preparing the final accounts because:
XYZ's computerized accounting system automatically updates the non-current asset register when additions to property, plant and equipment are made A machine costing $120,000, with a useful life of five years and an estimated residual value of $12,000 is acquired at the year end.
Which of the following statements is correct in relation to the recording of this asset in the non-current asset register?
Refer to the Exhibit.
A company is preparing its accounts to 30 April 2006. The latest telephone bill received by the company was dated 31 March and included call charges for the quarter 1 December to 28 February. The amount of the bill for call charges (excluding VAT) was $960. Most of the company's telephone bills are for similar amounts.
Which of the following journal entries should be made to the company's accounts at 30 April 2006?
The journal entries which should be made to the company's accounts at 30 April 2006 is
A company had disposed of a non-current asset for $4,000 during the financial year. The asset had an original cost of $24,000 and a loss on disposal of $2,000 was recorded in the accounts.
The accumulated depreciation for the non-current asset was $
Which one of the following would not be classified as an efficiency ratio?
A company started the year with an allowance for receivables of $2,500.
During the year, an $800 bad debt was written off and a debt of $350 that had been written off as bad in the previous year was received in full. At the year end the allowance for receivables was $2,300.
The charge in the income statement for the year in respect of bad debts is $
The accounting concept to be considered when the owner of a business uses business funds to pay for his private household expenses, is the:
Entity V has a cost of sales of £23,850 for last year. Entity V's opening inventories for the year were £15,800, and its closing inventories were £3,570. Entity V had a gross profit margin of 240% for last year.
What was Entity V's inventories turnover figure to the nearest whole number for last year?
Refer to the exhibit.
The following information is available for a company:
The company has declared an ordinary dividend of $0.05 per share.
What is the total dividend payment to be made by the company?
A club received subscriptions during the year totaling £37500. Of these, £2400 related to the previous year and £1200 related to the following year.
There were subscriptions in arrears at the end of the current year of £750.
The subscriptions to be included in the income and expenditure account for the current year amount to
The balance on LMN's cash account at 31 December 20X6 is $108,000 (debit) On performing the monthly bank reconciliation the following is discovered.
• a payment of $2,000 made to a supplier has not yet appeared on the bank statement,
• an automated receipt from a customer for $5,000 has not yet been recorded in the cash book, and
• a pigment to a supplier of $1,500 was incorrectly recorded in the cash book as $1,050
The balance showing on the bank statement at 31 December 20X6 is
Refer to the exhibit.
Harvey commenced business with capital of $50,000. At the end of the first financial year, he has
What was the profit for the period?
DE has the following incomplete non-current register extract at 301 at December 20X7:
What is the useful economic life (UEL) (in years) of this asset which should be entered into the non-current asset register?
Refer to the Exhibit.
Ax minster Limited is calculating its irrecoverable debt charge and allowance for receivables for inclusion in its year-end accounts. The current allowance for receivables is $28,600 and it is estimated that this needs to be raised to $30,400. There are also bad debts of $3,600 which should be written off.
Which is the correct entry to be made to the accounts to record these transactions?
The correct entry to be made to the accounts to record these transactions is:
There are many types of fraud that can happen within a business. On example could be the theft of cash, concealing the theft by delaying banking or by making up the shortage from other sources.
What is this type of fraud called?
One of the main responsibilities of internal auditors is to check the operational systems within their organization to establish whether the system's internal controls are sufficient and in full operation.
Which THREE of the following are examples of internal controls?
Refer to the exhibit.
The following book-keeping errors were discovered:
1. A cheque for £900 received from a receivable, after deduction of 10% cash discount, had been correctly entered in the bank account and discounts allowed accounts, but only the actual amount received had been entered in the receivable's account
2. An invoice for £940, including VAT at 17.5%, had been correctly recorded in the purchases and VAT accounts, but only the net goods value had been entered into the payable's account.
Which of the following options provides the entries necessary to correct the above errors?
The answer is:
An invoice for stationery has been debited and credited to the correct accounts but has been duplicated.
This would result in:
The issue of a company's shares for more than their normal value results in the creation of a
MNO operates an imprest system to maintain a float of petty cash of 5100 At the end of the week the petty cash expense vouchers total $76 and there is $36 cash in the float. Which of the following, taken independently, would explain this difference of $10?
The draft accounts of KenDoo Ltd for the year ended 31 August 2006 showed a net profit of $10000.
During the audit, the following errors and omissions were discovered.
(a) Items valued at $3100 had been completely omitted from the closing stock figure.
(b) Accrual of electricity bill for $200 and insurance prepayment of $500 had been omitted.
(c) Equipment costing $12000, acquired on 1 September 2005, had been debited to the purchases acccount. (KenDoo Ltd depreciates equipment at 15% on the straight line basis).
Due to materiality, the directors of KenDoo Ltd agreed to adjust the accounts accordingly.
Incorporating the above adjustments, the revised net profit is
Refer to the exhibit.
The following information is available in respect of two companies that operate in the same market sector:
Which one of the following statements most accurately describes the companies' relative position?
Principles based accounting uses a conceptual basis to provide guidelines for preparing financial statements.
Which ONE of the following is an example of this approach?
Refer to the Exhibit.
A company operates a FIFO system of inventory valuation. The following information is available for the month of April:
The closing value of inventory at the end of the month of April is
Refer to the Exhibit.
A company had previously written off one of their receivables that had been declared bankrupt. The administrators of the bankruptcy have now sent a cheque to the company for the full amount originally outstanding. The company now needs to record this receipt.
Which of the following is the correct double entry?
The sales ledger control account shows a balance of £236,725, whilst the individual customer balances total £231,472.
One possible explanation for the difference between the two may bE.
Accountant P debited wages with £1,000 instead of £1,500, but credited sales with £1,500 instead of £2,000.
Which of the following kind of bookkeeping mistakes is this?
It underpins all accounting standards and provides the platform from which all future standards will be developed.
Which ONE of the following is described above?
ABC produces accounts to the year ended 31 December annually Extracts from the most recent financial statements are.
Which of the following ratios is a liquidity ratio?
Which ONE of the following deals with problems that arise with existing accounting standards?
Which ONE of the following is a possible explanation for a debit balance on the purchase ledger account of a supplier?
(i) An invoice has been posted twice
(ii) A credit note has been posted twice
(iii) A payment has been recorded against the wrong supplier account
(iv) A payment has been posted twice
(v) A contra was posted to the supplier account but not the customer account
(vi) Goods returned had been posted to the wrong supplier account
Refer to the exhibit.
A business has the following capital and long-term liabilities:
It calculates its gearing ratio as the proportion of debt to total capital.
At the end of the current year, its gearing ratio, compared with that of the previous year, is:
Refer to the Exhibit.
The sales day book for the last month, appeared as follows:
The entries which should be made in the ledger accounts are:
The answer is:
GG has the following statement of profit or loss extract for the year ended 31 December 20X3
What is the interest cover for GG for the year ended 31 December 20X3?
2.8 times
4.0 times.
4.5 times
3.5 times
ABC Limited had a gross profit margin of 55%, while a direct competitor, XYZ Limited, has a gross profit margin of 60%.
Which THREE of the following would be an acceptable explanation for this?
Mr UY has just had property P re-valued. Mr UY originally purchased property P for £560,000. It is now worth £780,000.
Which ONE of the following shows how this transaction should be recorded in Mr UY's property account?
DEF prepares its financial statements to 30 September each year On 1 March 20X5 DEF acquires an office and immediately rents it to a tenant charging $2,400 a quarter payable in advance.
The tenant pays $2,400 on each of the following days 1 March 20X5, 6 June 20X5, 4 September 20X5 and 1 December 20X5.
What is the liability reported in the statement of financial position relating to the rent at 30 September 20X5?
ABC produces accounts lo the year ended 31 December annually Extracts from the most recent financial statements are.
Calculate the average inventory days ratio for the year ended 31 December 20X4.
Give your answer to the nearest day
CDE, an entity registered for sales tax, purchases a piece of equipment for cash on 31 December 20X6 for $30,000 including sales tax. The sales tax rate is 20%. What is the journal entry required to record this transaction in the nominal ledger?
Place the labels in the corresponding position in the table below:
The IASB framework defines six characteristics of useful financial information.
Which one of the following is not one of these characteristics?
Refer to the exhibit.
Jordan has the following assets and liabilities at 1 January:
What is the capital balance at 1 January?
In a cash flow statement, which one of the following would not be found under the section "cash flows from financing activities"?
Non-current assets can be divided between intangible and tangible assets.
Which THREE of the following are intangible assets?
Which of the following is an example of where the materiality convention should be applied?
Refer to the Exhibit.
The following information is available relating to the non-current assets of Company X:
Non-current assets that had originally cost $225,000 and had a carrying value of $105,000 were sold during the year.
The figure for purchases of non-current assets to be shown in the statement of cash flows will be, to the nearest $1,000:
Which one of the following would not be considered one of the roles of a Financial Accountant?
Refer to the Exhibit.
Accounting information is required for a wide range of users both internal and external. Each user has a different need for the information.
Which of the following is the correct combination of user and need?
In relation to accounting coding systems in the computerized records of an entity, which of the following is true?
Refer to the Exhibit.
Which of the following items should be included in the valuation of inventory in a manufacturing company?
AB commenced trading on 1 January 20XS. introducing $50,000 cash and $15,000 of assets to the business. The profit earned and retained in the business for the year ended 31 December 20X6 was $160,000. AB's closing capital at 31 December 20X5 was $190,000.
What is the value of AB's drawings for the year ending 31 December 20X5?
Jasper has an opening capital balance at 1 January of $84,650 credit. During the period there was an increase in assets of $16,890 and an increase in liabilities of $22,480.
The balance on the capital account at the end of the period is:
Which of the following transactions would be classified as a capital transaction?
Refer to the exhibit.
The bookkeeper of Joshua Ltd has absconded with the petty cash. The following was available:
How much has the bookkeeper stolen during the year?
A ledger account is opened with a credit balance of $400. During the period the account is credited with $5,800 and debited with $6,500
What balance will open this account in the following period?
Refer to the Exhibit.
A company has the following transactions for an accounting period:
Closing inventory at the end of the period was $3,200 and gross profit was $16,400.
The opening inventory was therefore
A company's financial statements show a gross profit of $15 million. A major error in the inventory value system has been discovered resulting in an overstatement on opening inventory of $1.2 million and an understatement in closing inventory of $1.5 million.
What is the correct gross profit figure for the period?
Accounting codes are often used within a business.
Which of the following would describe the reason for this?
The purpose of charging the income statement with depreciation on non-current assets is:
Refer to the Exhibit.
Your organization bought a machine for £50,000 at the beginning of year 1, which had an expected useful life of four years and an expected residual value of £10,000; the machine was depreciated on the straight-line basis.
At the beginning of year 4, the machine was sold for £13,000
The total amount of depreciation charged to the income statement over the life of the machine, and the amount of profit or loss on disposal was:
The answer is:
Which of the following entries would result in the trial balance not agreeing?
(a) An invoice for £200 for electricity has been omitted from the ledgers
(b) A payment received from a customer has been posted to the accounts twice
(c) An invoice for repairs and maintenance has been charged to the non-current asset account
(d) A payment made to suppliers had been recorded in the cash book but not recorded in the supplier's account
Which of the following best explains what is meant by "capital expenditure"?
A company is preparing its accounts to 30 November. The latest gas bill received by the company was dated 30 September and included usage charges for the quarter 1 June to 31 August of $5,700 and a service charge of $1,200 for the quarter 1 October to 31 December. It is estimated that the gas bill for the following quarter will be a similar amount.
What will be the amount of the accrual shown in the accounts at 30 November 2006?
The external auditor seeks to provide an opinion on whether the accounts show a true and fair view
What is the international term for 'true and fair view'?
Which FOUR of the following should be categorised as a DEBIT (DR) when filling out a T-account?
Refer to the Exhibit.
Which of the following balances normally result from the double-entry system of book-keeping?
The answer is:
AB sold a machine for $15,000 The machine had originally cost $160,000 and al the dale of disposal had a carrying value of $26,000.
The journal entry lo record this disposal is:
A)
B)
C)
D)
After calculating your company's profit for the year, you discover that:
(a) A non-current asset costing £2,000 has been included in the purchases account; the asset has not been included in the closing inventory figure; nor has it been depreciated by the normal 25% per annum
(b) Closing inventory of raw materials, costing £500, have been treated as closing inventory of stationery.
These two errors have had the effect of.
Which one of the following statements best describes the usefulness of the income statement account of a company:
Refer to the Exhibit.
A company that is VAT-registered has the following transactions for the month of March.
All purchases were in respect of goods for resale and all items were subject to VAT at 17.5%.
Opening inventory was $16,200 and closing inventory was $18,400.
The movement on the VAT account for the period was:
Internal controls can be split between detect controls and prevent controls.
Which THREE of the following are prevent controls?
A company's payables days has reduced from 60 days to 55 days.
Which of the following could be a possible explanation for this?
Refer to the exhibit.
A company has the following equity balances at the beginning of the year:
During the year the company issued 100,000 new shares at $1.20 each
What are the equity balances after this issue?
A business has come to you for advice. There are about to start trading and want to ensure that they keep appropriate accounting records that will grow with their business, save time and produce useful information. They have already established books of prime entry.
Which of the following would you also suggest they use?
Different users have different needs from financial information. One of which is to know about the company's ability pay its debts
Which of the following users will have this need for information?
The Finance Director of EFG company has made the following statements regarding the recording of expenditure relating to the entity's property, plant and equipment (PPE) in the nominal ledger.
Which THREE of the following statements are true?
Refer to the Exhibit.
From the following information, calculate the value of sales for the period:
Value of sales is
Where a transaction is entered into the correct ledger accounts, but the wrong amount is used, the error is known as an error of
Refer to the Exhibit.
John Taylor commenced business on 1 March 2006, paying $1,000 cash into a business bank account. During the next month the following transactions took place.
The balance on the bank account at the end of the month is:
The record of how the profit or loss of a company has been allocated to distributions and reserves is found in the:
Refer to the Exhibit.
A company has the following chart of accounts:
The sales director of the northern region wants to know what the total sales of widgets are for the first quarter of the year.
Which code would he request for his report?
Below are a list of entries from FG's accounts, from the most recent accounting period:
Petty Cash £150 DR
Returns Outwards £310 CR
Purchases £820 DR
Sales £250 CR
FG started the period with a bank balance of £405 DR. The total bank account at the end of period was £1,065 DR
Which of the above items has been omitted from the bank account total?
STU has an accounting period end of 31 December 20X8 During the year STU paid $4,800 for business insurance to cover the year to 30 June 20X9 The amount paid for business insurance for 30 June 20X8 was $4,500.
What is the insurance expense to be recognized in the statement of profit or loss of STU for the year ended 31 December 20X8? Give your answer to the nearest $
A company has authorized capital of 100,000 5% preference shares of $2 each and 500,000 ordinary shares of $0.20p each. All of the preference shares have been issued, and 400,000 ordinary shares have been issued at $0.45p each.
Interim dividends of $0.10p per ordinary share, plus half the preference dividend have been paid during the current year. A final dividend of $0.20p per ordinary share is declared.
The total of dividends payable for the year is
A company's cashbook has an opening balance of £4,860 debit. The following transactions then took place:
(a) Cash sales - £23,500, including VAT of £3,500
(b) Receipts from customers - £18,600
(c) Payments to payables £12,400, less cash discounts of £240
(d) Bank Charges - £260
What will be the resulting balance in the cash book?
Refer to the exhibit.
ABC issued 200,000 $0.50 equity shares at a price of $1.80. This amount was received in cash
What is the correct journal to record this issue?
Which THREE of the following would be shown in the statement of changes in equity?
A company had a gross profit margin of 40%. Sales for the period were $280,000 and opening and closing inventories were $18,000 and $16,000 respectively.
Purchases for the period were therefore
TESTED 31 Oct 2025
