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Preparing Financial Statements

Preparing Financial Statements

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Published by: AUDITOR97 on Nov 15, 2009
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05/18/2010

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PreparingFinancialStatements
(International Stream)
PART1THURSDAY 8 DECEMBER 2005QUESTION PAPER
Time allowed
3 hoursThis paper is divided into two sectionsSection A
ALL 25 questions are compulsory and MUST beanswered
Section B
ALL FIVE questions are compulsory and MUST beanswered
Do not open this paper until instructed by the supervisorThis question paper must not be removed from the examinationhallThe Association of Chartered Certified Accountants
   P  a  p  e  r   1 .   1   (   I   N   T   )
 
Section A – ALL 25 questions are compulsory and MUST be attempted
Please use the Candidate Registration Sheet provided to indicate your chosen answer to each multiple choice question.Each question within this section is worth 2 marks.
1
The following information is available for a sole trader who keeps no accounting records:
$
Net business assets at 1 July 2004186,000Net business assets at 30 June 2005274,000During the year ended 30 June 2005:Cash drawings by proprietor68,000Additional capital introduced by proprietor50,000Business cash used to buy a car for the proprietor’s wife,who takes no part in the business20,000
Using this information, what is the trader’s profit for the year ended 30 June 2005?A
$126,000
B
$50,000
C
$86,000
D
$90,000
2
Evon, a limited liability company, issued 1,000,000 ordinary shares of 25c each at a price of $1·10 per share, allreceived in cash.
What should be the accounting entries to record this issue?A
Debit:Cash$1,100,000Credit:Share capital$250,000Share premium$850,000
B
Debit:Share capital$250,000Share premium$850,000Credit:Cash$1,100,000
C
Debit:Cash$1,100,000Credit:Share capital$1,100,000
D
Debit:Cash$1,100,000Credit:Share capital$250,000Retained earnings$850,0002
 
3
P and Q are in partnership, sharing profits equally.On 1 January 2005, R joined the partnership and it was agreed that from that date all three partners should shareequally in the profit.In the year ended 30 June 2005 the profit amounted to $300,000, accruing evenly over the year, after charging abad debt of $30,000 which it was agreed should be borne equally by P and Q only.
What should be the partners’ total profit shares for the year ended 30 June 2005?
PQR$$$
A
95,00095,000110,000
B
122,500122,50055,000
C
125,000125,00050,000
D
110,000110,00050,000
4
At 1 July 2004 a limited liability company’s capital structure was as follows:
$
Share capital 1,000,000 shares of 50c each500,000Share premium account400,000In the year ended 30 June 2005 the company made the following share issues:1 January 2005A bonus issue of one share for every four in issue at that date, using the share premium account.1 April 2005A rights issue of one share for every ten in issue at that date, at $1·50 per share.
What will be the balances on the company’s share capital and share premium accounts at 30 June 2005 as aresult of these issues?
Share capitalShare premium account$$
A
687,500650,000
B
675,000375,000
C
687,500150,000
D
687,500400,000
5Which of the following factors could cause a company’s gross profit percentage on sales to fall below the expectedlevel?
1Understatement of closing inventories.2The incorrect inclusion in purchases of invoices relating to goods supplied in the following period.3The inclusion in sales of the proceeds of sale of non-current assets.4Increased cost of carriage charges borne by the company on goods sent to customers.
A
3 and 4
B
2 and 4
C
1 and 2
D
1 and 33[P.T.O.

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