Professional Documents
Culture Documents
KAPLAN PUBLISHING 1
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Pudsey wishes to set up a management consultancy business. It is important to him that his financial
information is not available to competitors.
Which type of business structure is most appropriate for Erin on the basis of confidentiality of
accounts?
A company
B sole trader
C either
D neither (1 mark)
2 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Esme started in business on 1 January 20X6, having won $250,000 on the lottery.
She used $100,000 of this money to pay off her mortgage and then invested the remainder in the
business. Esme took $100 per week from the business to cover living expenses, other than for
2 weeks in August when she took $500. At 31 December 20X6, the assets and liabilities of the
business were as follows:
$
Premises 45,000
Fixtures and fittings 75,000
Amounts owed by customers 2,300
Amounts owed to suppliers 10,000
Goods in stock 17,890
Gas bill outstanding 560
Cash at bank 1,200
What profit or loss did Esme make in her first year of trade?
A $12,970 profit
B $12,970 loss
C $13,170 loss
D $13,170 profit (2 marks)
Harry has prepared his draft financial statements for the year ended 31 May 20X7. He discovers that
he has capitalised repairs to the delivery van amounting to $235.
Ignoring depreciation, what is the effect of this error?
A Net assets and net current assets are $235 too high
B Profit and capital are $235 too high
C Net assets and capital are $235 too low
D Profit is $235 too low and net current assets are $235 too high (2 marks)
KAPLAN PUBLISHING 3
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Dolores purchases goods for resale with a price of $700. As she is a regular customer, the supplier
offers her a trade discount of 1%; she is also offered a settlement discount of 5% if she pays within
7 days, which she does.
What amounts should be recorded in the income statement?
Purchases Discounts received
A $700 $42
B $693 $35
C $658 $42
D $658 $35 (2 marks)
The correct double entry to record goods returned from a credit customer is
Dr Cr
A Returns outwards Receivables
B Receivables Returns outwards
C Receivables Returns inwards
D Returns inwards Receivables (1 mark)
4 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
KAPLAN PUBLISHING 5
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Chapter 4 Inventory
The closing inventory of Epsilon amounted to $284,000 at 30 September 20X4, the reporting date.
This total includes two inventory lines about which the inventory taker is uncertain.
1 500 items which had cost $15 each and which were included at $7,500. These items were
found to have been defective at the reporting date. Remedial work after the reporting date
cost $1,800 and they were then sold for $20 each. Selling expenses were $400.
2 100 items which had cost $10 each. After the reporting date they were sold for $8 each, with
selling expenses of $150.
What figure should appear in Epsilon's statement of financial position for inventory?
A $283,650
B $283,800
C $292,150
D $283,950 (2 marks)
According to IAS 2 Inventories, which of the following costs should be included in valuing the
inventories of a manufacturing company?
1 Carriage inwards.
2 Storage costs of finished goods.
3 Foreman’s wages.
4 General administrative overheads.
A All four items
B 1, 2 and 4 only
C 2 and 3 only
D 1 and 3 only (2 marks)
6 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Peanuts, a company, values its inventory using the first in first out method. At 1 May 20X6 the
company had 30 widgets in inventory, valued at $80 each.
During the year ended 30 April 20X7 the following transactions took place:
20X6
1 July Purchased 120 widgets @$120 each
1 November Sold 60 widgets
20X7
1 February Purchased 45 widgets @ $130 each
15 April Sold 72 widgets
What is the value of the company’s inventory of engines at 30 April 20X7?
A $8,010
B $6,360
C $7,732
D None of these figures (2 marks)
Having prepared draft accounts, Aurora reviews closing inventory. She discovers that some goods
included at cost of $2,300 can be sold for $2,350 after incurring selling costs of $75.
What effect will any required adjustment have on Aurora’s profits?
A Profit decreases by $75
B Profit decreases by $25
C No change to profit
D Profit decreases by $50 (2 marks)
Algernon starts trading on 1 July 20X6 and values inventory using AVCO on a periodic basis. What
is the value of inventory at the end of July after the following purchases and sales?
3 July Purchases 200 units @ $12 each
6 July Sales 50 units
10 July Sales 75 units
16 July Purchases 100 units @ $15 each
23 July Sales 60 units
A $1,680
B $1,577
C $1,500
D $1,495 (2 marks)
KAPLAN PUBLISHING 7
PAPER F3 (INT) : FINANCIAL ACCOUNTING
What are the correct journal entries to record inventory at the year end?
Opening inventory Closing inventory
A Dr Inventory (B/S) Dr Income statement
Cr Income statement Cr Inventory (B/S)
B Dr Income statement Dr Inventory (B/S)
Cr Inventory (B/S) Cr Income statement
C – Dr Inventory (B/S)
Cr Income statement
D – Dr Inventory (B/S)
Cr Purchases (1 mark)
Tipsee, a wine merchant, provides the following information about wines held in store at the year end:
Cost per bottle Selling price per Costs to sell per
bottle bottle
100 bottles Rioja $2.75 $10.99 $0.65
250 bottles Merlot $1.90 $4.99 $3.20
75 bottles Chablis $4.50 $3.99 –
500 bottles Pinot noir $3.20 $12.75 –
Tipsee has currently included all wines in her financial statements at cost. What effect will any
required adjustment have on profit and net assets?
Profit Net assets
A Reduce by $65.75 Reduce by $65.75
B Increase by $65.75 Reduce by $65.75
C Increase by $38.35 Increase by $38.35
D Reduce by $38.35 Increase by $38.35 (2 marks)
8 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
During the quarter ended 30 November 20X6, Bruce sells goods for $456,000 exclusive of 17.5%
sales tax and purchases goods for a tax inclusive price of $235,188. How much sales tax (to the
nearest $) is payable by Bruce in respect of the quarter?
A $38,642
B $44,772
C $32,887
D $26,757 (2 marks)
Chan purchased goods on credit for a net price of $780,000. How should Chan record this transaction,
assuming that he is registered for sales tax at 17.5%?
A Dr Purchases $780,000, Dr Sales tax $136,500, Cr Payables $916,500
B Dr Purchases $916,500, Cr Payables $780,000, Cr Sales tax $136,500
C Dr Purchases $780,000, Cr Sales tax $136,500, Cr Payables $780,000
D Dr Purchases $916,000, Dr Sales tax $136,500, Cr Payables $780,000 (2 marks)
At the start of January 20X7, Mikhail owed the tax authorities $12,900. On 15th January, he paid
$11,890 in respect of sales tax. He also recorded the following transactions in the month:
Sales inclusive of sales tax $253,800
Purchases exclusive of sales tax $157,920
What is the balance on Mikhail’s tax account at the end of January 20X7?
A $11,174 Cr
B $14,626 Dr
C $21,905 Cr
D $9,154 Dr (2 marks)
KAPLAN PUBLISHING 9
PAPER F3 (INT) : FINANCIAL ACCOUNTING
In the year to 31 December 20X8, Horatio received $49,200 rental income. The amounts of rent
received in advance and due in arrears were as follows:
31 Dec 20X8 31 Dec 20X7
$ $
Rent received in advance 2,400 2,600
Rent due in arrears 1,800 1,400
What figure for rental income should be recorded in the income statement for the year ended
31 December 20X8?
A $48,600
B $49,000
C $49,400
D $49,800 (2 marks)
Rent paid on 1 October 20X2 for the year to 30 September 20X3 was $12,000, and rent paid on
1 October 20X3 for the year to 30 September 20X4 was $16,000.
What figure for rent expense should be shown in the income statement for the year ended
31 December 20X3?
A $12,000
B $16,000
C $13,000
D $15,000 (2 marks)
A business compiling its accounts for the year to 31 January each year pays rent quarterly in advance
on 1 January, 1 April, 1 July and 1 October each year.
After remaining unchanged for some years, the rent was increased from $36,000 per year to $42,000
per year as from 1 July 20X3.
Which of the following figures is the rent expense which should appear in the income statement for
the year ended 31 January 20X4?
A $39,500
B $37,500
C $38,500
D $39,000 (2 marks)
10 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
A company has sublet part of its offices and in the year ended 30 November 20X3 the rent receivable
was:
Until 30 June 20X3 $8,400 per year
From 1 July 20X3 $12,000 per year
Rent was received quarterly in advance on 1 January, April, July, and October each year.
What amounts should appear in the company’s financial statements for the year ended 30 November
20X3?
Income statement Statement of financial position
Rent receivable
A $9,900 $2,000 in sundry payables
B $9,900 $1,000 in sundry payables
C $10,200 $1,000 in sundry payables
D $9,900 $2,000 in sundry receivables (2 marks)
Oscar’s draft income statement shows a profit of $129,800 for the year ended 31 December 20X7. He
realises that he has not taken the following into account:
There was an interest accrual at the end of the previous year for $270. This was not brought forward
into the current year’s accounts.
On 29 December 20X7 an interest premium of $780 was paid to cover the period from 1 December
20X7 to 30 November 20X8. This has not been recorded in the accounts.
What is Oscar’s revised profit?
A $130,245
B $130,785
C $129,465
D $130,005 (2 marks)
KAPLAN PUBLISHING 11
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Ariadne pays her rent in advance and insurance premiums in arrears. At 1 January 20X5, her rent
account showed a debit balance of $12,800 and her insurance account showed a credit balance of
$450.
During the year ended 31 December 20X5, Ariadne paid $89,000 to her landlord and $6,250 to her
insurer.
Included in the $89,000 paid to her landlord was a bill for $19,500 covering the period 1 December to
28 February.
On 7 January, Ariadne received a bill for insurance for $589 to cover the month of December.
What is the income statement charge for each of these items?
Rent Insurance
A $95,300 $6,389
B $88,800 $6,389
C $88,800 $6,111
D $95,300 $6,111 (2 marks)
A company has sublet part of its offices and in the year ended 30 November 20X8, rent receivable
was:
To 30 June 20X8 $12,000 pa
From 1 July 20X8 $15,000 pa
Rent was received quarterly in arrears on 1 January, April, July and October each year.
What amounts should appear in the company’s financial statements for the year ended 30 November
20X8?
Income statement Statement of financial position
Rent receivable
A $13,250 $2,500 sundry payables
B $13,250 $1,250 sundry payables
C $13,500 $2,500 sundry payables
D $13,750 $2,500 sundry receivables (2 marks)
12 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Profucius has prepared the following light and heat account for the year ended 31 August 20X6:
Light and heat expense
$ $
Prepayment b/f 1,200
Cash paid 9,540 Income statement (β) 10,100
Accrual c/f 1,760
_________ _________
11,300 11,300
_________ _________
Profucius has calculated the year end accrual based on the following information:
Profucius changed his payment arrangements with the utility provider during the year and as of
1 March 20X6 now pays light and heat in arrears on 31 January, 30 April, 31 July and 31 October
The bill for the year ended 31 October 20X6 was eventually received in November amounted to
$2,640.
What should be Profucius’ income statement charge for light and heat?
A $9,220
B $11,620
C $12,500
D $9,860 (2 marks)
Ollivander provides the following detail about his electricity account for the year ended 30 April
20X7.
$
Opening balance 340 Prepayment
Closing balance 500 Prepayment
Bills covering periods:
1 March 20X6 – 31 May 20X6 1,770
1 June 20X6 – 31 August 20X6 1,800
1 September 20X6 – 30 November 20X6 1,950
1 December 20X6 – 28 February 20X7 2,040
1 March 20X7 – 31 May 20X7 2,100
What cash amount did Ollivander pay for electricity during the year?
A $7,830
B $7,890
C $7,940
D $6,560 (2 marks)
KAPLAN PUBLISHING 13
PAPER F3 (INT) : FINANCIAL ACCOUNTING
At 30 September 20X2 a company’s allowance for receivables amounted to $38,000, which was five
per cent of the receivables at that date.
At 30 September 20X3 receivables totalled $868,500. It was decided to write off $28,500 of debts as
irrecoverable and, based on past experience, to keep the allowance for receivables at 5% of
receivables.
What should be the charge in the income statement for the year ended 30 September 20X3 for the total
of irrecoverable debts and the allowance for receivables?
A $42,000
B $33,925
C $70,500
D $32,500 (2 marks)
The allowance for receivables in the accounts of Beluga at 31 October 20X1 was $9,000. During the
year ended 31 October 20X2, irrecoverable debts of $5,000 were written off.
The receivables balance at 31 October 20X2 was $120,000 and, based on past experience, the
company wishes to set the allowance at 5% of receivables.
What is the total charge for irrecoverable debts and the allowance for receivables in the income
statement for the year ended 31 October 20X2?
A $2,000
B $3,000
C $5,000
D $8,000 (2 marks)
14 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
During her first year of trading, Gabriela made credit sales of $328,000. The following information is
also relevant:
• Credit customers paid her $298,700
• She wrote off a debt of $7,800 as irrecoverable
• At the year end Gabriela decided to make an allowance for 2% of outstanding receivables
What amount is shown on Gabriela’s statement of financial position in respect of receivables, and
what is the charge to the income statement for irrecoverable debt expense?
Receivables Irrecoverable debt expense
A $37,100 $8,542
B $37,100 $7,800
C $21,070 $8,230
D $21,070 $7,370 (2 marks)
After writing off irrecoverable debts, Ravinder has outstanding receivables of $238,750. He identifies
two specific amounts for which he wishes to make full allowance:
• $450 owing by Syed
• $1,200 owing by Sharmini
Ravinder also wishes to maintain a general allowance of 5% of outstanding receivables.
What amount is shown on Ravinder’s statement of financial position in respect of receivables?
A $225,080.00
B $225,162.50
C $225,245.00
D $237,100.00 (2 marks)
217,715 217,715
___________ ___________
KAPLAN PUBLISHING 15
PAPER F3 (INT) : FINANCIAL ACCOUNTING
At 31 May 20X6, Louis’ receivables account shows a balance of $137,000. He has identified the
following amounts which he wishes to write off:
$4,000 owed from George, who has been declared bankrupt
$450 from Tom, who has disappeared.
Louis also wishes to make an allowance for 2% of outstanding debt and discovers that as a result the
allowance is 10% greater than at the previous year end.
What is the balance on the irrecoverable debts expense account at the year end, to the nearest $?
A $4,691
B $4,699
C $4,715
D $4,724 (2 marks)
Alex wrote off a debt in the year ended 30 June 20X5. In the following year, this debt was paid. What
entry should Alex make to record the receipt?
A Dr Cash Cr Receivables
B Dr Cash Cr Irrecoverable debt expense
C Dr Receivables Cr Irrecoverable debt expense
D Dr Cash Cr Sundry income (1 mark)
At 30 September 20X0, Zach had an allowance for receivables of $37,000. During the year ended 30
September 20X1, he wrote off debts totalling $18,000, and at the end of the year, it is decided that the
allowance for receivables should be $20,000.
What should be included in the income statement in respect of irrecoverable debt expense?
A $35,000 Dr
B $1,000 Dr
C $38,000 Dr
D $1,000 Cr (2 marks)
16 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
A non-current asset was disposed of for $2,200 during the last accounting year. It had been purchased
exactly three years earlier for $5,000, with an expected residual value of $500, and had been
depreciated on the reducing balance basis, at 20% per annum.
What was the profit or loss on disposal?
A $360 loss
B $150 loss
C $104 loss
D $200 profit (2 marks)
Bernard purchased some plant and equipment on 1 July 20X3 for $40,000. The scrap value of the
plant in ten years' time was estimated to be $4,000. Bernard's policy is to charge depreciation on the
straight line basis, with a proportionate charge in the period of acquisition.
What should be the depreciation charge for the plant in Bernard's accounting period of twelve months
to 30 September 20X3?
A $720
B $600
C $900
D $675 (2 marks)
A car was purchased by Tyron for $12,000 on 1 April 20X1 and has been depreciated at 20% each
year straight line, assuming no residual value.
The accounting policy is to charge a full year’s depreciation in the year of purchase and no
depreciation in the year of sale. The car was traded in for a replacement vehicle on 1 August 20X4 for
an agreed figure of $5,000.
What was the profit or loss on the disposal of the vehicle for the year ended 31 December 20X4?
A Loss $2,200
B Loss $1,400
C Loss $200
D Profit $200 (2 marks)
KAPLAN PUBLISHING 17
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Fern’s plant and machinery ledger account for the year ended 30 September 20X2 was as follows:
Plant and machinery – cost
$ $
Balance b/f 381,200 1 June: Disposal account –
cost of asset sold 36,000
1 December: Cash – addition 18,000 Balance c/f 363,200
__________ __________
399,200 399,200
__________ __________
The company’s policy is to charge depreciation at 20% per year on the straight line basis, with
proportionate depreciation in years of purchase and sale.
What is the depreciation charge for the year ended 30 September 20X2?
A $74,440
B $84,040
C $72,640
D $76,840 (2 marks)
Which one of the following should NOT be accounted for as capital expenditure?
A Labour costs of employees engaged in the construction of a new non-current asset
B The costs of testing a new fishing boat for seaworthiness
C The cost of replacing carpets throughout the head office
D Stamp duty paid on the acquisition of a new factory (1 mark)
Tarbuck’s asset register has a balance of $179,800 at 31 December 20X5. His general ledger shows a
non-current asset balance of $203,000. After investigation, the following errors are identified:
A machine purchased on 1 May 20X5 at a cost of $12,000 has not been recorded in the register but
correctly dealt with in the general ledger.
Depreciation on an item of plant bought on 1/1/20X5 for $6,800 was credited to the repairs account in
error.
Tarbuck depreciates plant and machinery monthly at 10% straight line.
After adjusting for the above errors, what is the unexplained difference between the balances shown in
the asset register and general ledger?
A $11,200
B $11,720
C $10,520
D $11,320 (2 marks)
18 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
On 8 April 20X6, Diggers bought a machine for use in the production of farm equipment.
The following costs were incurred:
$
Purchase price 340,000
Sales tax 59,500
Delivery to factory 10,000
Factory modifications required to install machine 16,700
Extended 5 year warranty 20,000
What amount should be capitalised in the financial statements of Diggers?
A $366,700
B $426,200
C $350,000
D $370,000 (2 marks)
James acquired a machine on 30 June 20X3 for $100,000 and commenced depreciating it at 20%
straight line. On 1 January 20X6, James reviewed his depreciation methods and it was decided that the
reducing balance method at a rate of 25% would give a fairer presentation of the machine’s use. What
is the depreciation charge in respect of the asset for the year ended 31 December 20X6?
James charges depreciation on a pro rata basis.
A $10,000
B $12,500
C $12,305
D $10,547 (2 marks)
On 30 November 20X6, Vernon traded in an old delivery van for a newer model, making a loss on
disposal of the old van of $2,350. The van had been purchased on 1 December 20X4 for $30,000 and
was depreciated at 40% reducing balance.
What was the part exchange allowance given to Vernon?
A $27,650
B $15,650
C $8,450
D $3,650 (2 marks)
KAPLAN PUBLISHING 19
PAPER F3 (INT) : FINANCIAL ACCOUNTING
20 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
The following balances have been extracted from the accounts of Lawrence:
$
Sales 340,000
Purchases 177,800
Carriage in 10,980
Returns out 8,900
Discounts received 10,200
Discounts allowed 2,400
Expenses 95,430
Non-current assets – cost 120,600
Non-current assets – depreciation 35,600
Receivables 23,400
Inventory 20,220
Payables 18,600
Bank overdraft 14,600
Capital 56,000
Drawings ?
Lawrence is unsure of the exact amount that he withdrew from the business, although he is sure that
no errors have been made in his general ledger.
What amount has Lawrence withdrawn from the business?
A $55,030
B $3,870
C $33,070
D $15,270 (2 marks)
Which of the following items appear on the same side of the trial balance?
A Returns inwards and rental income
B Drawings and deferred income
C Opening inventory and returns outwards
D Carriage out and accrued income (2 marks)
KAPLAN PUBLISHING 21
PAPER F3 (INT) : FINANCIAL ACCOUNTING
The following receivables ledger control account has been prepared by a trainee accountant:
$ $
1 Jan Balance b/f 284,680 31 Dec Cash received from
31 Dec Credit sales 189,120 credit customers 179,790
Discounts allowed 3,660 Contras 800
Irrecoverable debts
written off 1,800
Sales returns 4,920 Balance c/f 303,590
__________ __________
484,180 484,180
__________ __________
What should the closing balance on the account be when the errors in it are corrected?
A $290,150
B $286,430
C $282,830
D $284,430 (2 marks)
What is the correct entry in the accounts arising from the following page from a purchase day book?
Gross Sales tax Net
$ $ $
Ives 940 140 800
Shelton 705 105 600
Allister 470 70 400
________ ________ ________
Debit Credit
A PLCA $2,115 Sales tax $315
Purchases $1,800
B PLCA $1,800 Purchases $2,115
Sales tax $315
C Purchases $2,115 Sales tax $315
PLCA $1,800
D Purchases $1,800 PLCA $2,115
Sales tax $315 (2 marks)
22 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Which of the following result in a debit entry to the pavables ledger control account?
1 Interest charged on late payment
2 Discounts received
3 Purchase returns
4 Contra with receivables
A All of them
B 1 and 2
C 2 and 4
D 2, 3 and 4 (2 marks)
Freddie maintains separate cash receipts and cash payments books. The discounts column in the cash
payments book for the month of October totals $2,450.
How should Freddie record this?
A Dr Discounts allowed Cr Receivables ledger control account
B Dr Pavables ledger control account Cr Discounts received
C Dr Receivables ledger control account Cr Discounts allowed
D Dr Discounts received Cr Payables ledger control account (1 mark)
KAPLAN PUBLISHING 23
PAPER F3 (INT) : FINANCIAL ACCOUNTING
You are provided with the following amounts for purchases and payables:
$
Payables at 1 April 20X6 32,677
Payables at 31 March 20X7 29,980
Credit purchases during year 348,750
Cash paid to suppliers 276,200
Contra with receivables ledger control account 33,400
Discounts received 17,500
What was the value of purchase returns?
A $18,953
B $59,347
C $91,147
D $24,347 (2 marks)
Elias operates an imprest system for petty cash. The following details are relevant:
$
Float 200
Voucher #1 – travel expenses 12.60
Voucher #2 – tea and coffee for staff kitchen 6.70
Voucher #3 – cheque cashed for employee 45.00
$10 was also received from an employee for postage.
What cheque was drawn for petty cash during the period?
A $19.30
B $64.30
C $54.30
D $9.30 (2 marks)
24 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Sonny is a supplier to Amie’s jewellery business. At 31 August Sonny sent a statement to Amie
showing a balance due of $7,500. On the same date, Sonny’s account in Amie’s records showed a
balance of $7,300.
Which of the following could account for the difference in full?
A The debit side of Sonny’s account in Amie’s ledger has been undercast by $200
B An invoice for $100 from Sonny has been treated as a credit note by Amie
C Sonny has issued a credit note to Amie for $200 but Amie has not yet received it
D The credit side of Sonny’s account in Amie’s ledger has been overcast by $200 (2 marks)
The balance on Anne’s receivables ledger control account does not agree with the total of the
individual accounts in the sales ledger. One of errors discovered was that an invoice of $25 issued to
Shwartz was not recorded in the sales day book.
How should this be corrected?
A Credit the receivables ledger control account with $25 and increase the ledger total by $25
B Debit the receivables ledger control account with $25 and increase the sales ledger total by
$25
C Credit the receivables ledger control account with $25 and decrease the ledger total by $25
D Debit the sales ledger account with $25 and decrease the ledger total by $25 (1 mark)
In reconciling the payables ledger control account to the payables ledger, the following errors were
identified:
1 The purchase day book had been overcast by $30.
2 A credit note for $15 received from a supplier had been credited to the supplier’s account in
the payables ledger.
How should these errors be corrected?
A Credit control account with $30 and decrease the total ledger balances by $45
B Credit control account with $15 and decrease the total ledger balances by $15
C Debit control account with $45 and decrease the total ledger balances by $60
D Debit control account with $30 and decrease the total ledger balances by $30 (2 marks)
KAPLAN PUBLISHING 25
PAPER F3 (INT) : FINANCIAL ACCOUNTING
A receivables ledger control account shows a balance of $345,600 (Dr). The total of the accounts in
the sales ledger is $351,200.
The difference may be explained by:
A The cash receipts book being undercast by $5,600
B The sales day book being overcast by $5,600
C A credit note for $2,800 issued to a customer being debited to her account in the sales ledger
D A discount allowed of $2,800 being recorded as a credit in the customer’s account (2 marks)
Amadeus received a statement of account from a supplier, Barolo, showing a balance to be paid of
$9,760. Amadeus’ payables ledger account for Barolo shows a balance due to Barolo of $3,240.
Investigation reveals the following:
1 Cash paid to Barolo $5,180 has not been allowed for by Barolo.
2 Goods returned by Amadeus $380 have not been recorded by Barolo.
3 Amadeus has not recorded a credit note for $120 issued by Barolo.
What is the discrepancy between Amadeus’ and Barolo’s records after allowing for these items?
A $11,440
B $1,840
C $840
D $1,080 (2 marks)
Which of the following items could appear on the credit side of a receivables ledger control account?
1 Cash received from customers.
2 Irrecoverable debts written off.
3 Increase in allowance for receivables.
4 Discounts allowed.
5 Sales.
6 Credit notes for goods returned by customers.
7 Cash refunds to customers.
A 1, 2, 4 and 6
B 1, 2, 4 and 7
C 3, 4, 5 and 6
D 5 and 7 (2 marks)
26 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Kenzie is reconciling her payables ledger control account to the list of individual balances in the
purchase ledger. The balances on each are as follows:
Control account $32,771
List of balances $27,988
She finds the following:
1 A cash payment listed correctly in the cash book at $279 has been transferred to the payables
ledger as $297.
2 Arkwright’s account showing a balance of $2,890 has been omitted from the list of balances.
3 The credit side of the control account has been overcast by $100.
What difference still requires explanation after adjusting for the above?
A $1,775
B $2,011
C $1,811
D $1,975 (2 marks)
Ines has accidentally recorded a supplier invoice for $450 as $45 in the purchase day book. What
adjustment is required to amend this?
Payables ledger control account Purchase ledger total
A Dr $405 Increase by $405
B Cr $405 Increase by $405
C Cr $405 No adjustment
D Dr $405 No adjustment (2 marks)
Which of the following will explain the balance on the receivables ledger control account being lower
than the total of the list of sales ledger balances?
A The sales day book was overcast
B The discounts column in the cash receipts book was overcast
C An invoice was not listed in the sales day book
D The debit side of the control account was overcast (1 mark)
KAPLAN PUBLISHING 27
PAPER F3 (INT) : FINANCIAL ACCOUNTING
In reconciling a business' cash book with the bank statement, which of the following items could
require a subsequent entry in the cash book?
1 Cheques presented after the date of the bank statement.
2 A cheque from a customer which was dishonoured.
3 An error by the bank.
4 Bank charges.
5 Deposits credited after the date of the bank statement.
6 Standing order payment entered in the bank statement.
A 2, 3, 4 and 6 only
B 1, 2, 5 and 6 only
C 2, 4 and 6 only
D 1, 3 and 5 only (2 marks)
The following bank reconciliation statement has been prepared for Omega by a junior clerk:
$
Overdraft per bank statement 68,100
Add: Deposits not credited 141,200
__________
209,300
Less: Outstanding cheques 41,800
__________
Which of the following should be the correct balance per the cash book?
A $167,500 overdrawn as stated
B $31,300 overdrawn
C $31,300 cash at bank
D $114,900 overdrawn (2 marks)
28 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Samuel’s bank statement showed a balance on 30 November of $2,670 Cr. Investigation reveals the
following:
1 The bank has accidentally credited Samuel’s account with a cheque for $230 made payable to
Sammel.
2 A cheque paid to a supplier for $1,000 has not yet appeared on the bank statement.
3 Bank charges for November amounted to $30.
4 A cheque for $70 was entered as a payment in the cash book instead of a receipt.
What was the balance on Samuel’s cash ledger account before any adjustments?
A $1,270
B $3,330
C $1,330
D $1,400 (2 marks)
Aarti is preparing her bank reconciliation at the end of July. Having adjusted for all unrecorded
differences, the cash book shows a revised balance of $1,889 Cr.
Aarti has also identified that adjustment is required in the bank reconciliation for the following items:
1 The bank has accidentally charged Aarti an overdraft arrangement fee of $50 which relates to
another customer.
2 Aarti received a cheque for $78 from a customer on 31 July and paid it into the bank
immediately but it has not yet appeared on the bank statement.
3 A cheque paid to a supplier for $900 remains unpresented.
What balance was shown on Aarti’s bank statement at 31 July?
A $2,661 Cr
B $1,117 Dr
C $2,661 Dr
D $1,117 Cr (2 marks)
Lily has received notification from the bank of a direct credit to her bank account. What entry should
be made for this in the bank reconciliation process?
A Debit to cash book
B Credit to cash book
C Increase to balance per bank statement
D Decrease to balance per bank statement (1 mark)
KAPLAN PUBLISHING 29
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Felix’s cash at bank account shows a balance on 31 December 20X8 of $15,233. Upon investigation,
Felix finds the following:
1 A monthly standing order for $250 has not been recorded in the accounts for the past two
months.
2 Cheques received but not yet banked amounted to $487.
3 A cheque received for $2,200 has been dishonoured by the bank.
4 The cashier has recorded the $76 replenishment of the imprest amount on the wrong side of
the cash at bank account.
What amount should Felix report for cash at bank in his statement of financial position?
A $12,381
B $12,371
C $12,868
D $13,381 (2 marks)
Ravinder’s bank ledger account shows a balance of $20 Cr. His bank statement shows a balance of
$60 Cr on the same date.
Which of the following will explain the difference in full?
A An unpresented cheque of $270, an uncleared lodgement of $340 and the misposting of $150
bankings from the till to the wrong side of the ledger account
B An unpresented cheque of $270, an uncleared lodgement of $380 and the misposting of $75
bankings from the till to the wrong side of the ledger account
C Unpresented cheques of $270, an uncleared lodgement of $340 and the misposting of $75
bankings from the till to the wrong side of the ledger account
D An uncleared lodgement of $380 and the misposting of $150 bankings from the till to the
wrong side of the ledger account (2 marks)
30 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
A trial balance has been extracted and a suspense account opened. One error relates to the mis-posting
of an amount of $200, being discounts received from suppliers. This was recorded on the wrong side
of the discounts account.
What will be the correcting journal entry?
A Dr Discounts account $200, Cr Suspense account $200
B Dr Suspense account $200, Cr Discounts account $200
C Dr Discounts account $400, Cr Suspense account $400
D Dr Suspense account $400, Cr Discounts account $400 (2 marks)
Gordon has posted the following journals to his accounts at the year end:
Dr Payables ledger control account $650
Cr Purchase returns $650
To correct the undercasting of the purchase returns day book.
Dr Carriage in $1,200
Cr Carriage out $1,200
To correct the misposting of carriage in costs
Dr Cash $4,000
Cr Suspense $4,000
To correct an error in the recording of a cash receipt.
Prior to recording these journals, Gordon’s profit was $102,780.
What is his revised profit?
A $102,230
B $103,430
C $106,130
D $99,430 (2 marks)
The following are errors made by Luisa in the preparation of her year end accounts. Which of them
will not result in an entry to the suspense account?
A The payment of wages has been credited to the staff costs account
B The opening balance on the rent account was not brought down
C The balance on the receivables account has been incorrectly extracted for inclusion in the trial
balance
D A cash sale has been recorded by debiting sales and crediting cash (1 mark)
KAPLAN PUBLISHING 31
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Raj, a doctor, has recorded the purchase of stationery by debiting non-current assets and crediting
cash.
What type of error is this?
A Error of original entry
B Error of commission
C Error of principle
D Extraction error (1 mark)
A trial balance shows total debits of $143,900 and total credits of $141,780.
After adjusting for the following errors, what is the balance on the suspense account?
1 A discount allowed of $78 was debited to the discounts received account.
2 A cash payment of $22 was debited to the cash account.
3 An opening prepayment of $280 has been omitted from the insurance account.
A $2,434
B $2,278
C $2,378
D $2,356 (2 marks)
32 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
The following errors have been identified in the preparation of Simpson’s accounts:
1 A cash sale of $340 has been credited to the cash account.
2 A receipt from a customer of $230 has been recorded in the accounts as $23
What journal will correct both errors?
Dr Cr
A Cash 887 Suspense 680
Receivables 207
B Cash 887 Sales 680
Receivables 207
C Suspense 680 Sales 680
Cash 207 Receivables 207
D Suspense 680 Cash 473
Receivables 207 (2 marks)
KAPLAN PUBLISHING 33
PAPER F3 (INT) : FINANCIAL ACCOUNTING
34 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
KAPLAN PUBLISHING 35
PAPER F3 (INT) : FINANCIAL ACCOUNTING
A business has compiled the following information for the year ended 31 October 20X2:
$
Opening inventory 386,200
Purchases 989,000
Closing inventory 422,700
The gross profit as a percentage of sales is always 40%
Based on these figures, what is the sales revenue for the year?
A $1,333,500
B $1,587,500
C $2,381,250
D The sales revenue figure cannot be calculated from this information (2 marks)
36 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Max has kept no accounting records for the year ended 31 May 20X6. He has, however been able to
provide the following information:
$
Capital at 1 June 20X5 334,000
Capital at 31 May 20X6 406,000
During the year ended 31 May 20X6:
Cash withdrawn from the business 90,000
Bingo winnings paid into business bank account 150,000
Goods taken from the business by Max – cost 15,000
– selling price 22,000
Max also remembers paying his income tax bill of $24,000 from the business bank account.
What is Max’s profit for the year?
A $27,000
B $58,000
C $34,000
D $51,000 (2 marks)
Westville has lost his sales ledger, and is trying to identify how much each customer owes him. Most
of the customers have confirmed their balance, although two - Grubb and Grouse are not sure off
theirs.
Westville has identified that:
• The total balance on the receivables ledger control account is $98,640.
• Other than Grubb and Grouse, customers have confirmed balances totalling $69,400.
• Grubb owed $21,000 at the start of the year.
• Invoices made out to Grubb for the year total $136,000; credit notes total $6,500.
• A review of the cash receipts book shows amounts received from Grubb of $126,500 and
discounts given of $4,300.
Assuming that the receivables ledger control account balance is correct, how much do Grubb and
Grouse owe?
Grubb Grouse
A $26,200 $3,040
B $26,200 can’t calculate from information available
C $19,700 $9,540
D $19,700 can’t calculate from information available (2 marks)
KAPLAN PUBLISHING 37
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Farmer is unsure of how much cash he took out of the farm shop till for his own use during the year
ended 31 December 20X5. He has established the following with respect to his ledger accounts:
1 January X5 31 December X5
$ $
Cash in till 230 300
Cash at bank 12,670 1,780
Sales (all for cash) 165,380
Wages paid in cash $1,000 per week
Cheques paid to suppliers $85,430
Discounts received $3,100
Standing order for rent $2,000 per month
The cash in till is banked weekly, retaining a float of $300.
What were Farmer’s cash drawings during the period?
A $14,770
B $11,670
C $14,840
D $7,010 (2 marks)
Kiera makes all of her sales for cash using a 25% gross margin. She has provided the following
information:
Cash in till at start of the year $2,300
Cash in till at end of year $1,800
Cash banked $88,400
Wages paid from till $9,200
Money taken by Kiera $8,900
Inventory at start of year $5,400
Inventory at end of year $4,800
What is Kiera’s purchases figure to the nearest $?
A $85,400
B $78,900
C $80,100
D $84,200 (2 marks)
38 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Chapter 16 Partnerships
P and Q are in partnership, sharing profits in the ratio 3:2 and compiling their accounts to 30 June
each year.
On 1 January 20X2 R joined the partnership, and from that date the profit-sharing ratio became P
50%, Q 25% and R 25%, after providing for salaries for Q and R as follows:
Q $20,000 per year
R $12,000 per year
The partnership profit for the year ended 30 June 20X2 was $480,000, accruing evenly over the year.
What are the partners’ total profit shares for the year ended 30 June 20X2?
P Q R
$ $ $
A 256,000 162,000 62,000
B 248,000 168,000 64,000
C 264,000 166,000 66,000
D 264,000 156,000 60,000 (2 marks)
Tom and Jerry are partners in a design business. Their statement of financial position shows total
assets of $340,800 and total liabilities of $130,788. The business has recently been valued at
$245,000.
What is the value of goodwill in the business?
A $34,988
B $95,800
C $114,212
D $245,000 (1 mark)
KAPLAN PUBLISHING 39
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Goran, Horace and Ivor are in partnership, sharing profits in the ratio 3:1:1, after charging salaries of
$20,000 per year each for Horace and Ivor. On 1 January 20X4 they agreed to change the profit
sharing ratio to 3:2:1 and to discontinue Horace’s salary. Ivor’s salary continued unchanged. The
partnership profit for the year ended 30 June 20X4 was $380,000, accruing evenly over the year.
How should the $380,000 profit be divided among the partners?
Goran Horace Ivor
$ $ $
A 192,000 104,000 84,000
B 192,500 103,333 84,167
C 209,000 101,333 69,667
D 209,000 111,333 89,667 (2 marks)
Priya, after having been a sole trader for some years, entered into partnership with Soraya on 1 July
20X2, sharing profits equally.
The business profit for the year ended 31 December 20X2 was $340,000, accruing evenly over the
year, apart from a charge of $20,000 for an irrecoverable debt relating to trading before 1 July 20X2
which it was agreed that Priya should bear entirely.
How is the profit for the year to be divided between Priya and Soraya?
P S
$000 $000
A 245 95
B 250 90
C 270 90
D 255 85 (2 marks)
40 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Pat, Ajay and Ted are in partnership running a tea shop in Greendale. The following information
relates to the year ended 30 June 20X7:
Pat Ajay Ted
$ $ $
Capital account b/f 20,000 30,000 50,000
Current account b/f 11,000 Dr 12,500 Cr 18,600 Cr
Drawings 9,700 12,000 15,200
The partnership agreement states that
• Pat and Ajay receive an annual salary of $6,000
• Interest on capital is provided at 5%
• Residual profits are shared in the ratio 2:3:4.
What is the credit balance on Pat’s current account at 30 June 20X7, if profits for the year amount to
$95,600?
A $23,767
B $5,989
C $25,767
D $3,767 (2 marks)
Oliver and Isabel are in partnership. The terms of their partnership agreement are as follows:
• Isabel to receive an annual salary of $12,000
• Interest on capital to be awarded at 3% pa
• Interest on drawings to be charged at 5% pa
• Residual profits to be shared equally.
On 1 January 20X6, Oliver loaned $50,000 to the business, with an agreed interest rate of 6%. On 1
July, Isabel withdrew $10,000 from the business, and Oliver withdrew $6,000. Both partners had a
balance of $50,000 on their capital account throughout the period.
How much of the $102,000 profit for the year ended 31 December 20X6 is appropriated to Oliver?
A $44,950
B $45,100
C $45,050
D $44,900 (2 marks)
KAPLAN PUBLISHING 41
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Johnnie, Jacinta and Jerome have been in partnership for several years, sharing profits in the ratio
4:1:3. Johnnie would like to spend less time working in order to pursue his painting hobby and to
reflect his lesser involvement, the profit sharing ratio is to be changed to 2:1:3.
The value of the goodwill is $144,000.
What is the net impact of the transaction on Jerome’s capital balance as a result of the transaction if no
goodwill account is maintained?
A $18,000 credit
B $18,000 debit
C $54,000 credit
D $54,000 debit (2 marks)
Spencer and Sanjit have decided to admit a new partner, Sorrel, to their business. Sorrell has agreed to
pay $60,000 for a sixth of the business. The net assets of the business at the admission date are
$300,000.
What is the value of the goodwill in the business?
A $nil
B $1,667
C $10,000
D $60,000 (2 marks)
42 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
The correct ledger entries needed to record the issue of 200,000 $1 shares at a premium of 30c, and
paid for by cheque, in full, would be:
A Dr share capital account $200,000
Cr share premium $60,000
Cr bank account $140,000
B Dr bank account $260,000
Cr share capital account $200,000
Cr share premium $60,000
C Dr share capital account $200,000
Dr share premium $60,000
Cr bank account $260,000
D Dr bank account $200,000
Dr share premium $60,000
Cr share capital account $260,000
(2 marks)
KAPLAN PUBLISHING 43
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Which of the following items must be disclosed in a company’s published financial statements
(including notes) if material according to IAS 1 Presentation of financial statements?
1 Finance costs.
2 Staff costs.
3 Depreciation expense.
4 Movements on share capital.
A 1 and 3 only
B 1, 2 and 4 only
C 2, 3 and 4 only
D All four items (2 marks)
The following is an extract from the ledger accounts of Forklift, a company, at the 31 May 20X7 year
end:
Income tax
$ $
1 March 20X7 Cash 25,600 31 May 20X6
Income statement 27,600
The estimated tax payable for the year ended 31 May 20X7 is $31,000.
What amounts should be disclosed in the 20X7 financial statements in respect of tax?
Income statement tax Income tax payable
charge
$ $
A 29,000 29,000
B 31,000 31,000
C 31,000 29,000
D 29,000 31,000 (2 marks)
44 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
The following items relate to SGL’ Ltd year ended 31 December 20X6:
1 A property was revalued to its current market value.
2 An ordinary dividend of 2c per share was proposed.
3 The final preference dividend was accrued.
4 Loan notes of $200,000 were issued.
5 SGL made a profit on disposal of shares in another company.
Which of these should be disclosed in the statement of changes in equity?
A 1 and 3
B 1, 2, 3 and 5
C 1 only
D 3, 4 and 5 (2 marks)
KAPLAN PUBLISHING 45
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Sydney, a company, makes a profit before tax in the year ended 31 October 20X6 of $214,500. At the
start of the year its retained earnings were $311,450. The following information is also relevant:
The estimated tax charge for the year is $35,700. The tax payable account shows a debit balance of
$2,450.
An interim dividend totalling $20,000 has been paid.
A final dividend for 20X6 of $15,000 has been proposed.
20X5’s final dividend of $14,500 was declared on 12 December 20X5 and paid on 3 January 20X6
What is the balance on Sydney’s retained earnings account at 31 October 20X6?
A $453,300
B $458,200
C $452,800
D $457,700 (2 marks)
A company issued 50,000 ordinary shares of 25c each at a premium of 50c per share. The cash
received was correctly recorded, but the full amount was credited to the ordinary share capital
account.
Which of the following journal entries is needed to correct this error?
Dr Cr
A Share premium $25,000 Share capital account $25,000
B Share capital account $25,000 Share premium $25,000
C Share capital account $37,500 Share premium $37,500
D Share capital account $25,000 Cash $25,000 (2 marks)
46 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Which of the following statements about research and development expenditure are correct?
1 Research expenditure, other than capital expenditure on research facilities, should be
recognised as an expense as incurred.
2 In deciding whether development expenditure qualifies to be recognised as an asset, it is
necessary to consider whether there will be adequate finance available to complete the project.
3 Development expenditure recognised as an asset should be amortised over a period not
exceeding five years.
A 1, 2 and 3
B 1 and 2 only
C 1 and 3 only
D 2 and 3 only (2 marks)
KAPLAN PUBLISHING 47
PAPER F3 (INT) : FINANCIAL ACCOUNTING
IAS 38 Intangible assets governs the accounting treatment of expenditure on research and
development. The following statements about the provisions of IAS 38 may or may not be correct.
1 If all conditions specified in IAS 38 are met, development expenditure may be capitalised if
the directors decide to do so.
2 Capitalised development costs are shown in the statement of financial position under the
heading of non-current assets
3 Amortisation of capitalised development expenditure will appear as an item in a company’s
statement of changes in equity.
Which of these statements are correct?
A All of them
B 1 and 2
C 2 only
D 2 and 3 (2 marks)
48 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Redbrick is a company specialising in the construction of office blocks. The accounts for the year
ended 30 November 20X5 are to be approved on 26 February 20X6. In the intervening period, the
following occur:
1 Redbrick is sued by an employee who was injured on site as the result of an accident on
5 December 20X5. The case is settled on 31 January 20X6.
2 A digger owned by Redbrick is sold on 16 December for significantly less than its carrying
value.
Are these adjusting or non-adjusting events?
Adjusting Non-adjusting
A 1 and 2 –
B – 1 and 2
C 1 2
D 2 1 (2 marks)
KAPLAN PUBLISHING 49
PAPER F3 (INT) : FINANCIAL ACCOUNTING
Bagz.com is preparing its statement of cash flowfor the year ended 30 June 20X7. The following is
reported in the statement of financial position:
20X7 20X6
$000 $000
8% Loan notes 270 430
Share capital 130 120
Share premium 430 440
What is the net cash flow from financing activities?
A $140,000 outflow
B $150,000 outflow
C $160,000 inflow
D $160,000 outflow (2 marks)
The profits of Grove Trading were $63,400. This was after charging depreciation of $2,700.
During the year, receivables decreased by $600, inventories increased by $2,500 and trade payables
increased by $900. Non-current asset purchases during the year amounted to $17,300 and there was a
loss on disposal of non-current assets of $3,000.
What was the increase in cash balances during the year?
A $40,800
B $46,800
C $50,800
D $52,800 (2 marks)
The following amounts have been calculated for inclusion in the statement of cash flowof House:
$
Net cash inflow from financing activities 145,000
Net cash outflow from investing activities 160,000
Increase in cash and cash equivalents 24,000
Income taxes paid 65,000
Interest paid 12,000
How much cash has been generated from operations?
A $86,000
B $104,000
C $39,000
D $116,000 (2 marks)
50 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
KAPLAN PUBLISHING 51
PAPER F3 (INT) : FINANCIAL ACCOUNTING
The following information is available about the non-current assets of River, a company:
B/f C/f
$ $
Carrying value 569,000 578,760
Revaluation reserve – 50,000
Disposals at cost 240,000
Accumulated depreciation on disposals 186,000
Depreciation charge for the year 98,000
How much cash has been invested in non-current assets during the year?
A $249,760
B $161,760
C $199,760
D $111,760 (2 marks)
Greengrass inc, sold a non-current asset at a profit during the year ended 31 May 20X7.
How is this transaction treated in Greengrass’ statement of cash flow?
Proceeds of sale Profit on disposal
A Cash inflow from Added to profit in the calculation of cash from
investing activities operating activities
B Cash inflow from Deducted from profit in the calculation of cash
investing activities from operating activities
C Cash inflow from Added to profit in the calculation of cash from
operating activities operating activities
D Cash inflow from Deducted from profit in the calculation of cash
operating activities from operating activities (2 marks)
In the course of preparing a company’s statement of cash flow, the following figures are to be
included in the calculation of net cash from operating activities.
$
Depreciation charges 980,000
Profit on sale of non-current assets 40,000
Increase in inventories 130,000
Decrease in receivables 100,000
Increase in payables 80,000
What will the net effect of these items be in the statement of cash flow?
A $890,000 addition to operating profit
B $890,000 subtraction from operating profit
C $1,070,000 addition to operating profit
D $990,000 addition to operating profit (2 marks)
52 KAPLAN PUBLISHING
LECTURER RESOURCE PACK – QUESTIONS
Which of the following explanations of prudence most closely follows that in IASB’s Framework for
the Preparation and Presentation of Financial Statements?
A The application of a degree of caution in exercising judgement under conditions of uncertainty
B Revenue and profits are not recognised until realised, and provision is made for all known
liabilities
C All legislation and accounting standards have been complied with
D Understatement of assets or gains and overstatement of liabilities or losses (1 mark)
The accounting basis or convention which, in times of rising prices, tends to understate asset values
and overstate profits, is the:
A going concern basis
B prudence convention
C realisation convention
D historical cost convention (1 mark)
Which of the following bodies deals with any uncertainty as to how IFRS’s should be applied?
A IASCF
B SAC
C IFRIC
D IASB (1 mark)
KAPLAN PUBLISHING 53
PAPER F3 (INT) : FINANCIAL ACCOUNTING
An asset is a resource ____1____ by an enterprise as a result of ______2_____ and from which future
_____3_____ are expected to flow to the enterprise.
What are the missing words or phrases?
1 2 3
A Controlled A transaction Revenues
B Owned A transaction Economic benefits
C Controlled Past events Economic benefits
D Owned Past events Revenues (2 marks)
______1________ requires that assets and liabilities are valued on the assumption that a business will
continue in operation for the foreseeable future.
______2________ is a threshold quality that is demanded of all information given in the financial
statements.
What are the missing words?
1 2
A Going concern Understandability
B Going concern Materiality
C Historical cost concept Understandability
D Historical cost concept Materiality (2 marks)
Development costs are only capitalised when certain criteria are met. This is an example of:
A Understandability
B Comparability
C Reliabilty
D Relevance (1 mark)
54 KAPLAN PUBLISHING