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1. This is an extract from Karnals trial balance for the year end 30th June 20x9.

Opening Inventory Closing Inventory Purchases Carriage Inwards Distribution Cost Administration Salaries Depreciation $19,500 $22,250 $325,000 $8,250 $28,125 $96,750 $31,400

Depreciation is split equally between cost of sales and distribution expenses. What should be the cost of sales figure shown in Karnals income statement for the year ended 30th June 20X8? $ __________ 2. The income statement for the year ended 31st May 20X6 showed $15,000 for insurance. Payments for insurance during the year totaled $17,500, and there was a prepayment for insurance at 1st June 20x5 of $1,250. What is the prepayment for insurance as at 31st May 20x6? $ __________ 3. A Co. owns 90% of the shares in B Co. and 30% of shares in C Co. None of the C Cos other shareholders have a controlling interest. What relationships do B Co. and C Co. have with A Co.? Subsidiary B Co. C Co. 4. Semple uses FIFO for inventory valuation. Transactions during July 20x6 were as follows Received (Units) 3rd July 10th July 16th July 21st July 26th July 300 170 120 Unit Price $ 50 55 200 52 160 Sold (Units) Associate

Semple had no inventory at the beginning of July. What value should be recorded for the inventory at 31st July? $ __________

5. ABC has profit before tax of $100,000 Depreciation is $45,000; there was an increase in inventories of $10,000, a decrease in receivables of $15,000 and a decrease in payables of $8,000. Using the indirect method, what is the cash flow from operating activities? $ __________ 6. At the end of the month following balances are extracted from the day books: The purchase day book total is $4,500. The purchase return day book total is $200. The cash payments book has total payments to credit suppliers of $3,000 and settlement discounts received totaling $150. The opening balance on the accounts payables control account is $2,300. What is the balance on the accounts payables control account at the end of the month? $ __________ 7. Which of the following transactions have been correctly recorded? a. Sales returns b. Contra agreement with With branch and Co. c. Owner withdraws goods For own use d. Irrecoverable debt recovered Dr. Sales accounts Dr. Personal account in sales ledger Dr. Purchase account Cr. Return inwards account Cr. Personal account in Purchases ledger Cr. Capital account

Dr. Cash account

Cr. Receivable expense

8. A manufacturing business calculated cost of its closing inventory as follows:

Direct Material Cost Direct Labour Cost Share of storage cost for finished goods Share of indirect factory overheads Share of selling costs

$ 200,000 180,000 20,000 60,000 85,000 545,000

According to IAS-2 inventories, what figures should be used as the cost of closing inventories? a. b. c. d. $440,000 $545,000 $200,000 $380,000

9. FNZ Co. wrote off a debt of $4,500 as irrecoverable in January but in February received $2,000 relating to this write off. What is the double entry to record the money they have received? a. b. c. d. Dr. Receivables ledger control account $2,000 Dr. Bank $2,000 Dr. Irrecoverable debt expense $2,000 Dr. Bank $2,000 Cr. Bank $2,000 Cr. Receivables ledger control account$2,000 Cr. Bank $2,000 Cr. Irrecoverable debt expense $2,000

10. JOHN reduces his inventory levels by $12,000 during the year and makes sales of $540,000. His mark-up cost is 20%. What are his purchases during the year? $ __________ 11. On 1st Jan 20x6 a business purchased a motor vehicle. The vehicle cost $10,000 and has a residual value of $2,000. Depreciation is calculated using the reducing balance method at 20% per annum. Which of the following should appear in the trail balance as at 31st December 20x7? a. b. c. d. Depreciation expense Accumulated Depreciation Accumulated Depreciation Motor Vehicle Dr. $2,000 Dr. $3,600 Cr. $3,600 Dr. $8,000

12. A company made the following payments for computer rentals. $4,500 for the 3 months ended 28th February 20x8. $9,450 for the 6 months ended 31st August 20x8. $10,200 for the 6 months ended 28th February 20x9. What should the charge for computer rental be in the income statement for the year ended 31 st December 20x8? $ __________ 13. H Co. acquired 70% of the ordinary share capital of S company on 1st January 20x9. At that date, S Co.s retained earnings were $10,000 and its share capital was $40,000. The fair value of non-controlling interest was $12,000, resulting in the goodwill at acquisition of $10,000. What was the purchase consideration paid by the H Co. at 1st January 20x9 on the acquisition of S CO.? $ __________ 14. MAGDA purchased some raw material inventory from a supplier at a purchase price of $ 2,000. The raw materials have been converted into finished goods inventory by the process. The process cost $3,500 made up of $2,000 direct labour, $1,200 electricity cost and $300 attributable production overheads. The finished goods will be sold for $8,000.

What is the value of finished goods inventory to be shown in MAGDAs financial statement. $ __________ 15. Which of the following items reported as a movement in retained earnings in the statement of financial position? Yes No Non current asset revaluation surplus Ordinary dividends paid 16. A company purchased a non current asset on 1st January 20x6 for $80,000. The Co. depreciates non currents assets on a straight line basis over 5 years. On 1st January 20x7 a modification costing $10,000 was made to the non currents asset to extend its useful life by 1 year and routing maintenance costing $5,000 was also carried out. Which amount should be charged for depreciation for the year to 31st December 20x7? a. b. c. d. $16,667 $17,400 $21,000 $14,800

17. MOSS acquired 90% of ordinary share capital of HOLME Co., when HOLME Co. shares had a market price of $2.20 per share. The fair value of non controlling interest at the date of acquisition was $22,000. At the date of acquisition the equity section of HOLMEs Co.s statement of financial position was as follows. $ 100,000 68,000 12,000 180,000

Share Capital ($1 shares) Retained earnings Revaluation reserves What is the value of good will on acquisition of HOLME Co.? a. b. c. d. $62,000 $40,000 $52,000 $18,000

18. MNO has 400,000 $1 ordinary shares at 1st January 20x4, and balance on share premium account is $235,000. On 31st March 20x4 50,000 ordinary shares were issued at $2.50 each. On 30th September 20x4 there was a one for three bonus issue, utilizing the share premium account. What is the balance on the share premium account as at 31st December 20x4? $ __________

19. A business has the balance at the bank $2,500 at the start of the month. During the month, it paid for materials invoiced at $1,000 less trade discount of 20% and settlement discount of 10%. It received a cheque from credit customer in respect of an invoice for $200, subject to a settlement discount of 5%. What is the balance at the bank at the end of the month? a. b. c. d. $1,980 $1,900 $1,970 $1,700

20. DROTA Co. acquired 90% of STEFAN Co. for $360,000 on 1st January 20x6. At that date STEFAN equity was as follows. $ Ordinary shares Retained earnings Total Equity 100,000 220,000 ---------320,000 ======

Good will on the acquisition was STEFAN was $100,000. What is the fair value of NCI in STEFAN Co. at acquisition? a. b. c. d. $140,000 $60,000 $40,000 $80,000

21. EGRET, limited liability Co., made a profit before tax of $235,000 for the year ended 30th June 20x8. The tax charged for the year was $84,500 and the Co. transferred $10,000 for profit to a general reserve. It paid a final ordinary dividend of $38,000 for the prior year on 18th May 20x8 which had been proposed on 1st July 20x7 and on 1st July 20x8, a final dividend of $39,500 for the current year was proposed. No interim dividends were paid or proposed. What amount in EGRETs retained earnings reserves increased by for the year ended 30 th June 20x8? $ __________ 22. A company is preparing its final accounts for the year ended 31st December 20X8 and has not included telephone bill received in January 20x9, relating to phone calls made in December 20x8, in the final accounts. If the cost is recorded in the financial statements for the year to 31 st December 20x9 how will the net profit is affected for 20x8 and 20x9?

a. b. c. d.

20x8 20x8 20x8 20x8

overstated understated understated overstated

20x9 20x9 20x9 20x9

understated overstated understated overstated

23. Which of the following is an underlying assumption of the IASBs conceptual framework? a. b. c. d. Materiality Comparability Timeliness Going Concern

24. A Co. spend $20,000 researching a new rubber moulding technique, $30,000 developing a new tyre which will go into production in one years time and $40,000 developing a dye for tyres which will be used in future years as a marketing tool as it is unlikely to be commercially viable. Which amounts should be expensed in income statement and capitalized in statement of financial position in relation to these transactions in accordance with IAS 38 intangible assets? a. b. c. d. Income statement $90,000 Income statement $90,000 Income statement $60,000 Income statement $50,000 Statement of financial position Nil Statement of financial position $20,000 Statement of financial position $30,000 Statement of financial position $40,000

25. IAS 27 consolidated and separate financial statements states that control can usually be assumed when the parents owns more than half (over 50%) of the voting power of an entity unless it can clearly be shown that such owner ship does not constitutes control. In which TWO of the following situations would control exist when the parent owns less than 50% of the voting power of the entity? a. The parent has owned shares in the entity since incorporation. b. The parent has power to govern the financial and the operating policies of the entity by statute or under an agreement. c. The parent has power to appoint or remove a majority of the members of the board of directors. d. There is only one other investor in the shares of the entity. 26. Rent paid of $200 has been credited to the rent expense account. The debit side of the trial balance has been over cast by the $100. The yearend bank balance of $860 at the bank has been entered on the trial balance as a debit of $680. What is the debit balance of suspense account as a result of these errors? $ __________ 27. Which organization is directly responsible for developing, in the public interest, a single set of high quality, understandable and enforceable global accounting standards? a. IFRS interpretation committee b. IFRS advisory council

c. IFRS foundation d. International Accounting Standard Board 28. A fire in the offices of OYEZ media on 22nd March 20x6 destroyed various accounting records. From the records that were salvaged, the following credit sales information relating to the period from the 31st December 20x5 until 22nd March 20x6 is available. 1. 2. 3. 4. Cash received for credit customers $76,100 Contra entries with payables ledger $3,400 Discount allowed to credit customers $5,200 Interest charged on overdue accounts $3,200

On 31st December 20x5, the trade receivables amounted to $65,800 and on 22nd March 20x6 they were $69,400. What is the credit sale revenue for the period from 31st December 20x5 until 22nd March 20x6? $ __________ 29. The statement of financial position of a business as at 31st December 20x6 shows the followings. Buildings Cost Less accumulated Depreciation Carrying amount $ 90,000 36,000 ---------54,000 ======

On 1st January 20x7 the buildings were revalued to $150,000 but there remaining useful life was not changed. It was decided to incorporate this revaluation in the accounts. The firm has been depreciating the building over 50 years on a straight line basis. What is the depreciation charged for the year ended 31st December 20x7? a. b. c. d. $3,800 $7,500 $3,000 $5,000

30. Charlies Machinery at cost ledger account is as follows. Machinery Cost 20X6 1st January 1st April $ 500 200 20x6 1st February Disposal st 1 March Disposal 31st December Bal c/d $ 300 100 300

Bal b/d Bank Addition

The companys policy is to charge depreciation at 20% pa using the straight line method. A full year charge is made in the year of acquisition and none in the year of disposal. None of the assets have been held for more than five years. What is the depreciation charged for the year ended 31st December 20x6? $ __________ 31. Anna purchases goods from Brenda on credit. Anna subsequently finds that the goods are faulty and returns them to Brenda. How should the returned goods be recorded by Anna? a. b. c. d. Dr. Accounts Payable Dr. Returns Inwards Dr. Accounts Receivables Dr. Returns Outwards Cr. Returns Outward Cr. Accounts Receivables Cr. Returns Inwards Cr. Accounts Payables

32. Below is the data from the financial statements of smith for the year ended 31st December 20x9. $000 1,300 400 -------1,700 ------820 20 -------840 --------

Credit purchases Cash purchases Total purchases

Trade payables Accrued interest Total Payables

What is the trade payables payment period for the Smith for the year ended 31st December 20x9? a. b. c. d. 230.2 days 176.1 days 235.8 days 180.4 days

33. Joseph makes credit sales of $12,400 and cash sales of $900, before any discounts. He receives sales returns of $500 and allows trade discounts of $70. What amount should be recorded as sales revenue in the income statement? a. b. c. d. $13,300 $12,800 $13,730 $12,730

34. Beryl has forgotten to record the decrease of $18,000 in her receivables allowance in her accounts for the year ended 31st December 20x9 How will Beryls profit for the year and net assets at the yearend be affected by this? a. b. c. d. Profit overstated Profit understated Profit understated Profit overstated Net assets overstated Net assets understated Net assets overstated Net assets understated

35. The accounts payable ledger control account of a business showed a balance at the yearend of $285,000. This did not agree with the total of the list of purchase ledger balances at the year end and subsequent checking found that 1. Discounts received of $3,000 had been entered on the wrong side of the control account. 2. Returns outwards had been overstated by $10,000. What will be the balance on the accounts payable ledger control account following correction of the above errors? a. b. c. d. $288,000 $292,000 $269,000 $289,000

36. Return on capital employed (ROCE) can be broken down into two key accounting ratios. Which of the following make up ROCE? a. b. c. d. Profit margin and net asset turnover. Profit margin and gearing. Current ratio and net asset turnover. Gearing and current ratio.

37. Mary has shares in a limited liability company and has paid for them in full. She has owned the shares for many years company has gone into liquidation and is being wound up. What is the limit of Marys liability? a. b. c. d. An amount to be determined by the courts Marys share of the companys debts The amount paid for the shares The cumulative value of all dividend income received

38. Which of the following statements regarding events after the reporting period is true? a. Adjusting events are those events that provide additional evidence of conditions existing at the reporting date b. Adjusting events concern conditions which only exist between the reporting date and date of financial statements are approved by the directors

c. Non-adjusting events must always be disclosed in the notes to the financial statements d. Non-adjusting events provide additional evidence of conditions existing at the reporting date 39. What type of information does the gearing ratio provide to the users of financial statements? a. b. c. d. Financial structure of the business Gross margin earned on revenue Whether current assets cover current liabilities Efficiency of the business in using its resources

40. According to IAS-1, presentation of financial statements, which TWO of the following items MUST be presented on the face of the income statements? a. b. c. d. Finance costs Disposal of investments Tax expense Write down of property, plant and equipment to recoverable amounts

41. Which two statements are true of the duality concept? a. b. c. d. The number of debit and credit entries must be equal The value of debit and credit entries must be equal Each transaction has both debit and credit entries Each transaction must have only two entries

42. The Jack Group has purchased 35% of voting share capital of Vera Co. How should the investment in Vera Co be accounted for in the consolidated statement of financial position of the Jack Group? a. b. c. d. Include the investment at cost plus 35% of Vera Cos retained earnings Add the assets and liabilities of Vera Co to those of Jack Group Include the investment at cost plus 35% of Vera Cos post acquisition retained earnings Include the investment in Vera Co at cost in non assets

43. ABC purchased an item of machinery on 1st January 20x3 for $40,000 and expected its useful life to be eight years. On 1st January 20x6 a review of the condition of the machinery indicated that its useful life is likely to be only two years from 1st January 20x6. What should the depreciation charge be in the income statement for the year ended 31st December 20x6? $ __________

44. Are the following events which occurred between the reporting date and the date when the financial statements are authorized by the directors, adjusting or non-adjusting events? Adjusting Making a new issue of shares. Purchasing a new motor vehicle. Selling inventory providing evidence that the value has reduced since the year end due to accident damage arising post year end. Receiving a letter from the government informing them that the business has been fined $ 10,000 for a pollution incident during the financial year. 45. Are the following statements true or false? True Bonus issues of share capital are a useful way of raising finance. A bonus issue of share capital will cause the market value of each share to decrease. 46. Josephs final trial balance did not balance and he set up a suspense account for the difference. He then discovered that rent of $500 paid by cheque has been credited to both the bank account and the rent account. Which of the following journal entries will correct this? a. b. c. d. Dr. Rent account $1,000 Dr. Rent account $1,000 Dr. Suspense account $1,000 Dr. Rent account $500 Cr. Suspense account $1,000 Cr. Bank account $1,000 Cr. Rent account $1,000 Cr. Suspense account $500 False Non-Adjusting

47. The following are extracts from the income statement of Burke Co and its 100% owned subsidiary Dickson Co. for the year ended 31st December 20x1. Burke Co. $ 110,000 (82,500) -----------27,500 ======= Dickson Co. $ 75,000 (52,500) ----------22,500 =======

Revenue Cost of sales

During the year Burke Co. sold goods costing $12,000 to Dickson Co. for $15,000. Dickson Co had sold these goods on to third parties prior to the year end. What should be the revenue and cost of sales recorded in Burke Co.s consolidated income statement for the year ended 31st December 20x1? a. b. c. d. Revenue $170,000, Cost of sales $120,000 Revenue $173,000, Cost of sales $120,000 Revenue $170,000, Cost of sales $123,000 Revenue $173,000, Cost of sales $123,000

48. The debit and credit columns, of XYZs trial balance did not agree. A debit balance of $25,950 was entered in a suspense account and the following errors were subsequently identified. 1. A cheque received for $1,900 had been correctly posted to the cash account and posted to the receivables ledger as $9,100. 2. Rent paid of $6,500 had been posted correctly to the cash account and posted to the rent expense account as $650. 3. No entries had been made to reflect a cash sale of $1,000. What is the remaining debit balance on the suspense account after making adjustments for the above errors? $ __________ 49. Which FOUR of the following would be included in the consolidated statement of comprehensive income? 1. 2. 3. 4. 5. 6. Share of profits of associate Sales made to subsidiaries Non-controlling interest Dividends from subsidiary Revenue of parent and subsidiary Dividends from external investments

50. Why would the following items be identified when preparing bank reconciliation? It is on the bank statement but not In the cash book A direct debit An unpresented cheque 51. A company calculates its accounts payable payment period as follows, Closing trade payables x 365 Purchases It is in the cash book but not on the bank statement

Which of the following factors will cause the accounts payables payment period in days to be higher compared to previous years? 1. An extension of the credit period offered to its customers 2. Poor long-term financial management resulting in the use of extended trade credit from suppliers 3. Two major suppliers offering significant cash discount for early payment. a. b. c. d. 1 and 3 only 2 only 2 and 3 only 1, 2 and 3

52. Marsden has dispatched some goods to a customer, but the customer has rejected the goods because they are faulty Which document should Marsden issue for the return of the faulty goods? a. b. c. d. Debit note Invoice Credit note Remittance advice

53. Which TWO of the following items should be debit balances on a trial balance? a. b. c. d. Irrecoverable debt expense Discounts received Accumulated depreciation Loan to customer

54. City Co. prepared the following for cash from operating activities. $000 Profit from operations Depreciation Loss on disposal Increase in provision for negligence claim Increase in receivables Increase in inventory Increase in payables 2,380 520 (75) 30 (50) 40 50 -------2,895 =====

The following criticism of the calculation have been made 1. The loss on disposal should be added back not deducted. 2. Increase in receivables inventory and payables should all be added. 3. Increase in provision for negligence claim should be deducted not added Which of the above criticisms are correct? a. b. c. d. 1 only 1 and 3 2 only 2 and 3

55. JKL, a limited liability company, has 300,000 50c ordinary shares issue at 1st January 20x5. On 31st 20x5 200,000 shares were issued for $1.25 each. On 30th September 20x5 there was a two for five bonus issue. What is the balance of JKLs share capital as shown on the face of the statement of financial position as at 31st December 20x5?

a. b. c. d.

$700,000 $770,000 $350,000 $560,000

56. A companys income statement for the year ended 31st March 20x0 showed the following. $000 1,200 (200) 1,000 (400) 600

Profit from operations Finance cost Profit before tax Income tax expense Profit after tax

Extracts from its statement of financial position at 31st March 20x0 showed the following: $000 8,000 1,200 ---------9,200 ====== 2,000

Share capital Retained earnings Equity Non current Liabilities 10% Loan notes What is the return on capital employed for the year ended 31st March 20x0? a. b. c. d. 10.7% 8.9% 6.5% 5.6%

57. Are the following statements about non-current assets true or false? True When non-current assets are sold, the cost and accumulated depreciation relating to the assets are eliminated from the ledger accounts. When land is revalued upward, the deprecation charge will increase. 58. Which of the following statements is correct? a. b. c. d. The sales day book is part of the double entry system. The accounts receivable control account contains details of individual customer accounts. The accounts receivables control account always agrees to the accounts receivable ledger. A book of prime entry is one in which an initial record of transactions is made. False