2011 Paper F3 QandA Sample

Practice Questions and Answers
Tony Surridge Online Limited, 2011
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ACCA Paper F3: Financial Accounting (International)
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ACCA Paper F3:

FINANCIAL ACCOUNTING
(INTERNATIONAL)
Published by Tony Surridge Online Limited in 2011
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No snowflake in an avalanche ever feels

responsible.
Voltaire
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Copyright statement
For the ladies only
10 Golden Rules for a Computer-based Examination
Computer Based Exams
ACCA Paper F3
Financial Accounting
(International)
Syllabus
The structure of the syllabus
Intellectual levels
Learning hours
Guide to exam structure
Guide to examination assessment
Aim
Main capabilities
Relational diagram of main capabilities
Rationale
Detailed syllabus
Approach to examining the syllabus
+AddVance
Study Guide
A
B
C
D
E
F
The content and purpose of financial reporting

The qualitative characteristics of financial information and the fundamental bases of
accounting
The use of double-entry and accounting systems
Recording transactions and events
Preparing a trial balance
Preparing basic financial statements
Your Study Material

The syllabus outline and our Questions and Answers pathway through it Click here
In ADDITION there are THREE tests. Click below.
Tests
Diagnostic Test 1
Questions
Answers
Diagnostic Test 2
Questions
Answers
Diagnostic Test 3
Questions
Answers
Where shall I begin, please your majesty? he asked. Begin at the beginning, the king
said gravely, and go on till you come to the end: then stop.
Lewis Carroll
Through the Looking-Glass
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The syllabus outline and our pathway through it .

Syllabus
section
Main topic
Pages
Questions
Answers
The context and purpose of financial reporting
22
36
The qualitative characteristics of financial

information and the fundamental bases of
accounting
45
48
The use of double-entry and accounting systems
50
71
Recording transactions and events
85
112
Preparing a trial balance
131
154
Preparing basic financial statements
174
203
Diagnostic Test 1
223
241
Diagnostic Test 2
247
265
Diagnostic Test 3
274
286
This free sample shows the first 16 questions and answers of Diagnostic Test 3
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(International)
DIAGNOSTIC TEST - 3
QUESTION PAPER
Time allowed: 2 hours
All FIFTY questions are compulsory and MUST be attempted
Do NOT attempt this test until you are ready for the test.
Paper F3
+AddVance
Your business pays B Smith (a supplier) $300.00.

Your accounts manager asks you for $10 urgently in order to buy a box of paper.
You pay B Boston $200.
D Jay pays you $100.
You send W Whythe (a customer) an invoice for 250.
You receive an invoice from C Jeans for $550.
S Samuels (a customer) returns goods to the value of $50.
You return goods to A Green to the value of $400.
A
B
C
D
E
F
Petty cash book

Cash book
Sales returns day book
Sales day book
Purchase returns day book
Purchases day book
(2 marks)
Sales tax is:

Charged by businesses on taxable supplies.
A direct tax levied on sales of goods and services.
An indirect tax levied on the sales of goods and services.
Administered by the Treasury.
(2 marks)
How is closing inventory incorporated in the financial statements?

Debit: balance sheet
Debit: income statement
Credit: income statement

Credit: balance sheet
(1 mark)
When adjusting profit before tax to arrive at cash generated from operations, a decrease in
receivables is added to profit before tax. Is this statement:
A
B
1
2
3
4
5
6
7
8
A
B
4
Which books of prime entry the following transactions would be entered into.
A
B
C
D
3
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False
True
(1 mark)
During a period, Cee Co has the following transactions on receivables control account. Sales
$125,000, cash received $50,000, discounts allowed $2,000. The balance carried forward is
$95,000. What was the opening balance at the beginning of the period?
A
B
C
D
$20,000 debit
$18,000 debit
$22,000 debit
$22,000 credit
(2 marks)
1
2
3
4
Cash.
Inventories.
Salaries and wages.
Receivables and payables.
A
B
C
D
1, 2 and 4
2 and 4
2, 3 and 4
1, 2, 3 and 4
(2 marks)
Debit cash $3,000, credit purchases $3,000.

Debit non-current assets $3,000, credit cash $3,000.
A
(1 mark)
Profits for the year are $65,000. A, B and C share profits in the ratio 2:2:1. Opening balances
on their current accounts were $15,000, $12,000 and $10,000 respectively. If each partner
had drawings of $10,000, what is the closing balance on Bs account?
$26,000
$18,000
$28,000
$16,000
(2 marks)
What is the double entry to record a credit sale of $30?

A
B
C
D
11
(2 marks)
What is the double entry to record a purchase of office tables for $3,000?
A
B
C
D
10
$78,000
$55,000
$58,000
$52,000
Which of the following accounting items may have control accounts in the nominal ledger?
A
B
9
A business has opening payables of $75,000 and closing payables of $65,000. Cash paid to
suppliers was $65,000 and discounts received $3,000. What is the figure for purchase?
A
B
C
D
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Debit sales $30, credit cash $30.

Debit cash $30, credit sales $30.
Debit sales $30, credit receivables $30.
Debit receivables $30, credit sales $30.
(2 marks)
The balance on an expense account will go to the I & E account. However, the balance on a
liability account is written off to capital.
A
B
No
Yes
(1 mark)
12
Which of the following statements regarding non-current asset accounting is correct?

A
B
C
D
13
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Non-current assets should be re-valued to reflect rising prices.

All non-current assets should be re-valued each year.
Non-current assets may be re-valued at the discretion of management. Once re-valuation
has occurred it must be repeated regularly for all non-current assets in a class.
Management can choose which non-current assets in a class of non-current assets
should be re-valued.
(2 marks)
A company has a provision for warranty claims b/f of $50,000. It does a review and decides
that the provision needed in future should be $45,000. What is the effect on the financial
statements?
A
B
C
D
Income statement
Increase expenses by $5,000
Increase expenses by $5,000
Decrease expenses by $5,000
Decrease expenses by $5,000
Balance sheet
Provision $45,000
Provision $50,000
Provision $45,000
Provision $50,000
(2 marks)
14 MASs trial balance includes the following items: non-current assets $50,000, inventory
$15,000, payables $10,000, receivables $5,000, bank $110,000, allowance for receivables
$1,000.
What is the figure for current assets?

A
B
C
D
15
(2 marks)
A company issues 50,000 $1 shares at a price of $1.25 per share. How much should be
posted to the share premium account?
A
B
C
D
16
$134,000
$170,000
$180,000
$129,000
$60,000
$50,000
$62,500
$12,500
(2 marks)
In the published accounts of CeeJay Co, the profit for the period is $7,000,000. The balance
of retained earnings at the beginning of the year is $1,000,000. If dividends of $5,000,000
were paid, what is the closing balance of retained earnings?
A
B
C
D
$8,000,000
$3,000,000
$1,000,000
$2,000,000
(2 marks)
10
17
(1 mark)
Purchase price plus import duties plus transport costs less trade discount.
Purchase price less trade discount.
Purchase price plus transport costs less trade discount.
Purchase price less import duties less trade discount.
(2 marks)
Receivables ledger
Nominal ledger
General ledger
Trade accounts receivable
(2 marks)
$30,000 loss
$10,000 loss
$10,000 profit
$30,000 profit
(2 marks)
Which of the following headings is not a classification of cash flows in IAS 7?

A
B
C
D
23
Debit receivables ledger (As account) $200, credit sales $200

Debit receivables $200, credit sales $200
A business has net assets of $70,000 at the beginning of the year and $80,000 at the end of
the year. Drawings were $25,000 and a lottery win of $5,000 was paid into the business
during the year. What was the profit for the year?
A
B
C
D
22
(2 marks)
Individual customer accounts are kept in which ledger?

A
B
C
D
21
The customer goes bankrupt.

A customer pays part of the account.
The invoice is not yet due for payment.
An invoice is in dispute.
What is included in the cost of purchase of inventories according to IAS 2?

A
B
C
D
20
What is the double entry to record a credit sale of $200 to A?

A
B
19
An irrecoverable debt arises in which of the following situations?

A
B
C
D
18
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Investing
Operating
Financing
Administration
(2 marks)
What is a journal used for?

A
B
C
D
To make adjustments to the double entry.

To correct errors and clear suspense account.
To correct errors.
To correct errors and post unusual transactions.
(2 marks)
11
24
AyBee Co has development expenditure of $500,000. Its policy is to amortise development

expenditure at 2% per annum. Accumulated amortisation brought forward is $20,000. What is
the charge in the income statement for the years amortisation?
A
B
C
D
25
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$9,600
$20,000
$10,000
$400
(2 marks)
Given the facts in question above, what is the amount shown in the balance sheet for
development expenditure?
A
B
C
D
$490,000
$470,000
$500,000
$480,000
(2 marks)
26 Which of the following are common reasons for differences between the cash book and the
bank statements?
27
1
2
3
4
Contra entries
Errors
Timing differences
Omissions
A
B
C
D
2 and 3
1, and 3
1, 2 and 4
2,3 and 4
(2 marks)
Which of the following items are non-current assets?

1
2
3
4
Inventory
Land
Machinery
Bank loan
A
B
C
D
2 only
2 and 3
1, 2 and 3
2, 3 and 4
(2 marks)
12
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28
29
Which of the following statements regarding depreciation is correct?
A change in the chosen depreciation method is a change in accounting policy which

should be disclosed.
Depreciation charges must be based upon the carrying value of an asset (less residual
value if appropriate).
All non-current assets must be depreciated.
Straight line depreciation is usually the most appropriate method of depreciation.

(2 marks)
What must be done with a suspense account before preparing a balance sheet?
A
B
C
D
30
Include in liabilities
Include in assets
Write it off to capital
Clear it to nil
(2 marks)
All petty cash claims are automatically paid from petty cash.
Is this statement:
A
B
31
(1 mark)
When a cash purchase of $117.50 is made (including sales tax at 17.5%) the entries are:
A
32
False
True
Debit
Credit
Cash
Purchases
117.50
Debit
Debit
Credit
Purchases
Sales tax
Cash
100.00
17.50
Debit
Credit
Purchases
Cash
117.50
Debit
Debit
Credit
Cash
Sales tax
Purchases
100.00
17.50
117.50
117.50
117.50
117.50
(2 marks)
Which of the following is not a book of prime entry.

A
B
C
D
Sales day book

Journal
Purchase day book
Sales invoice
(2 marks)
13
33
(2 marks)
To issue IFRSs
To enforce IFRSs
(1 mark)
Sales returns of $220 have inadvertently been posted to the purchase returns, although the
correct entry has been made to the accounts receivable control. A suspense account needs
to be set up for how much?
A
B
C
D
36
$14,400
$13,900
$14,000
$14,100
What are the objectives of the IASB?

A
B
35
Heating paid during the year is $14,000. There was an opening accrual b/f of $500. A bill for
the quarter ended 31 January 2010 was $900. What is the heating charge in the income
statement for the year ended 31 December 2009?
A
B
C
D
34
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$220 debit
$220 credit
$440 debit
$440 credit
(2 marks)
Ceeta has the following opening balances on its ledger accounts.
A
Trade account receivable
Fixtures
Bank account
Loan
$
5,000
2,000
1,200
4,000
(a)
What is the total assets figure?
A
B
C
D
$8,200
$6,200
$4,000
$2,000
(b)
What is the opening figure for capital?
A
B
C
D
3,200
2,000
8,200
4,200
(2 mark)
14
37
Opening inventory closing inventory + purchases

Opening inventory + closing inventory purchases
Opening inventory purchases + closing inventory
Purchases closing inventory + sales
(2 marks)
A business usually has a mark-up of 20% on cost of sales. During a year, its sales were
$90,000. What was the cost of sales?
A
B
C
D
39
Which of the following is the correct formula for cost of sales?

A
B
C
D
38
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$18,000
$75,000
$15,000
$72,000
(2 marks)
A trial balance may still balance if some of the balances are wrong.
A
Is this statement correct?
A
B
40
No
Yes
(1 mark)
A company has the following extract from a balance sheet.
Share capital
Share premium
Loan stock
2010
$000
2,000
500
750
A
2009
$000
1,000
Nil
1,000
What is the cash flow from financing activities for the year?
A
B
C
D
41
$1,250 outflow
$1,750 outflow
$1,250 inflow
$1,750 inflow
(2 marks)
A bank statement shows a balance of $1,200 in credit. An examination of the statement

shows a $500 cheque paid in per the cash book but not yet on the bank statement and a
$1,250 cheque paid out but not yet on the statement. In addition the cash book shows deposit
interest received of $50 but this is not yet on the statement. What is the balance per the cash
book?
A
B
C
D
$500 overdrawn
$500 in hand
$1,900 overdrawn
$1,900 in hand
(2 marks)
15
42
(2 marks)
As an asset in the balance sheet

It does nothing
By way of note
A
(2 marks)
IFRSs to be used for consolidated financial statements.

IFRSs to be used for all financial statements.
(1 mark)
Sales tax is due on all sales. Is this statement correct?

A
B
46
Details of goods returned to suppliers

Details of goods returned by customers
Suppliers invoices
Customers invoices
What happened in 2005 for listed companies in the EU?

A
B
45
How does a company account for a contingent asset that is not probable?
A
B
C
44
What is the purchase returns day book used to record?

A
B
C
D
43
MAIN PAGE
No
Yes
(1 mark)
A company has the following information about property, plant and equipment.
Cost
Accumulated depreciation
Net book value
2010
$000
750
250
500
2009
$000
600
150
450
Plant with a net book value of $75,000 (original cost $90,000) was sold for $30,000 during the
year.
What is the cash flow from investing activities for the year?
A
B
C
D
47
$95,000 outflow
$210,000 outflow
$210,000 inflow
$95,000 inflow
(2 marks)
A company has a balance on share premium account of $50,000 and on retained earnings of
$75,000. Issued share capital is 400,000 25cents shares. The company decides to make a
bonus issue of one for one. What are the closing balances on share premium and retained
earnings?
A
B
C
D
Share premium
$25,000
$10,000
Nil
($50,000)
Retained earnings
Nil
$15,000
$25,000
$75,000
(2 marks)
16
48
49
Which of the following items are non-adjusting events?

1
Inventory destroyed by flood two days before the balance sheet date.
Fall in value of an investment between the balance sheet date and the date the financial
statements are finalised.
A customer goes bankrupt.
A
B
C
D
1 only
2 only
3 only
None of the above
(2 marks)
Which of the following items is an intangible asset?

A
B
C
D
50
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Van
Land
Buildings
Patents
(2 marks)
Irrecoverable debts are $5,000. Trade accounts receivable at the year end are $120,000. If an
allowance for receivables of 5% is required, what is the entry for irrecoverable debts and
allowance for receivables in the income statement?
A
B
C
D
$10,750
$6,000
$5,000
$11,000
(2 marks)
17
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THE END OF
DIAGNOSTIC TEST 3
18
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(International)
DIAGNOSTIC TEST - 3
ANSWER GUIDES
Paper F3
+AddVance
19
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OVERVIEW OF ANSWERS FOR

DIAGNOSTIC TEST 3
Question
number
Marks
available
Question
number
Marks
available
26
27
28
29
30
31
32
33
34
10
35
11
36
12
37
13
38
14
39
15
40
16
41
17
42
18
43
19
44
20
45
21
46
22
47
23
48
24
49
25
50
Total marks available :

Time allowed
:
Answer
Answer
90
2 hours
SCROLL SCREEN BY SCREEN TO SEE EACH ANSWER INDIVIDUALLY
20
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1
2
3
4
5
6
7
8
B
A
B
B
D
F
C
E
Cash book
Petty cash book
Cash book
Cash book
Sales day book
Purchases day book
Sales returns day book
Purchase returns day book
Correct
Only sales tax registered traders can charge sales tax.
Incorrect, the consumer has a choice as to whether or not to consume so sales tax is only
chargeable when this choice is exercised.
Incorrect, sales tax is administered by the tax authorities.
DEBIT:
CREDIT:
True
Inventory in hand (balance sheet)

Closing inventory (trading account)
Q
Q
Balance b/f (bal figure)

Sales
RECEIVABLES CONTROL
$
22,000
Cash
125,000
Discounts allowed
Balance c/f
147,000
$
50,000
2,000
95,000
147,000
If you had answer D, you reversed the double entry and so produced a payables control
account. In answer A, you omitted the discounts allowed figure; while in answer B you put
discounts allowed on the debit instead of the credit side of the control account.
6
C
Bank
Discount received
Closing payables
PAYABLES CONTROL
$
65,000
Opening payables
3,000
Purchases (bal fig.)
65,000
133,000
$
75,000
58,000
.
133,000
21
MAIN PAGE
C
A
$
Drawings
10,000
Closing bal 31,000
41,000
B
$
10,000
28,000
38,000
CURRENT ACCOUNTS
C
$
10,000
Opening bal
13,000
Profits 2:2:1
23,000
A
$
15,000
26,000
41,000
B
$
12,000
26,000
38,000
C
$
10,000
13,000
23,000
10
11
When an expense account is balanced off, the balance is transferred to the income
and expense account. When a liability account is balanced off, the balance is carried
forward to the next accounting period.
12
Correct
Incorrect, non-current assets may be reduced in value as well as being increased.
Non-current assets may be revalued, there is no requirement to do so in IAS 16.
Incorrect, all non-current assets in a class must be revalued.
13
I & E account
Balance c/f
PROVISION ACCOUNT
$
5,000
Balance b/f
45,000
50,000
$
50,000
.
50,000
Note: We are debiting provision account $5,000 and so crediting income statement
$5,000. Therefore, we are decreasing expenses.
14
D
Current assets
Inventory
Receivables (5,000 - 1,000)
Bank
15
16
$
15,000
4,000
110,000
129,000
(50,000 x 25 cents) = $12,500
Q
$000
Retained earnings
Opening balance
Profit for the period
Dividends paid
Closing balance
1,000
7,000
8,000
(5,000)
3,000
The Answers are continued in the full edition

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Practice Questions and Answers

Tony Surridge Online Limited, 2011

ACCA Paper F3: Financial Accounting (International)

Practice Questions and Answers

ACCA Paper F3: Financial Accounting (International)

ACCA Paper F3:

Tony Surridge Online Limited

Tony Surridge Online Limited, 2011

Practice Questions and Answers

ACCA Paper F3: Financial Accounting (International)

No snowflake in an avalanche ever feels

Tony Surridge Online Limited, 2011

Practice Questions and Answers

ACCA Paper F3: Financial Accounting (International)

The content and purpose of financial reporting

Your Study Material

Tony Surridge Online Limited, 2011

Practice Questions and Answers

ACCA Paper F3: Financial Accounting (International)

The syllabus outline and our pathway through it .

The context and purpose of financial reporting

The qualitative characteristics of financial

The use of double-entry and accounting systems

Recording transactions and events

Preparing a trial balance

Preparing basic financial statements

Tony Surridge Online Limited, 2011

Practice Questions and Answers

ACCA Paper F3: Financial Accounting (International)

Tony Surridge Online Limited, 2011

Practice Questions and Answers

Your business pays B Smith (a supplier) $300.00.

Petty cash book

Sales tax is:

How is closing inventory incorporated in the financial statements?

Credit: income statement

ACCA Paper F3: Financial Accounting (International)

Tony Surridge Online Limited, 2011

Practice Questions and Answers

Debit cash $3,000, credit purchases $3,000.

What is the double entry to record a credit sale of $30?

ACCA Paper F3: Financial Accounting (International)

Debit sales $30, credit cash $30.

Tony Surridge Online Limited, 2011

Practice Questions and Answers

ACCA Paper F3: Financial Accounting (International)

Which of the following statements regarding non-current asset accounting is correct?

Non-current assets should be re-valued to reflect rising prices.

What is the figure for current assets?

Tony Surridge Online Limited, 2011

Practice Questions and Answers

Which of the following headings is not a classification of cash flows in IAS 7?

Debit receivables ledger (As account) $200, credit sales $200

Individual customer accounts are kept in which ledger?

The customer goes bankrupt.

What is included in the cost of purchase of inventories according to IAS 2?

What is the double entry to record a credit sale of $200 to A?

ACCA Paper F3: Financial Accounting (International)

An irrecoverable debt arises in which of the following situations?

What is a journal used for?

To make adjustments to the double entry.

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Practice Questions and Answers

ACCA Paper F3: Financial Accounting (International)