ACCA Paper F3 Financial Accounting (International Stream) On-line Final Mock Examination

Question Paper Time allowed All questions are compulsory and MUST be attempted 2 hours

Instructions:
Please attempt this exam under test conditions and attach the frontsheet complete with your name and address to your script. The completed package should be sent to BPP Marking Department. Take a few moments to review the notes on the inside of this page titled, ‘Get into good exam habits now!’ before attempting this exam.

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ACF3FM10(J) INT

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The following steps are recommended for answering multiple choice and objective test questions.

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Note down how long you should allocate to each question. For this paper you will be answering 50 questions in 120 minutes, so you will be spending on average 2.5 minutes on each 2 mark question and 1 minute on 1 mark question. Remember however that you will not be expected to spend an equal amount of time on each of them and that some can be answered instantly but others will take time to work out. Attempt each question. Read the question thoroughly. To answer a multiple choice question read the four options and see if one matches your own answer. Be careful with numerical questions, as the distracters are designed to match answers that incorporate common errors. If you are unsure of your answer • • • Re-read the question to ensure you understand it and are answering the requirement Eliminate any obviously wrong answers Consider which of the remaining answers is the most likely to be correct and select the option

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If you are still unsure, continue to the next question. Likewise if you are nowhere near working out which option is correct after a couple of minutes, leave the question and come back to it later. Revisit questions you are uncertain about. When you come back to a question after a break you often find you are able to answer it correctly straight away. If you are still unsure have a guess. You are not penalised for incorrect answers, so never leave a question unanswered!

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All FIFTY questions are compulsory
1. G Co has made annual purchases of $116,000 and over the same period its inventories have risen by $16,000. Assuming that G Co enjoys a gross profit margin of 12.5%, what is the total value of credit sales if cash sales account for 15% of turnover? A B C D 2. $67,750 $95,625 $97,143 $140,625 (2 marks) On 31 May 2008 the balance on Dean’s receivables ledger control account was $21,480. During the month of May, the following transactions had occurred: $ Cash sales Credit sales Payables ledger contra Sales returns Discounts allowed Discounts received Cheques received from credit customers Refunds paid to credit customers 4,160 19,950 1,025 105 910 720 20,370 490

What was the balance on the control account on 1 May 2008? A B C D $19,290 $21,190 $23,450 $24,430 (2 marks)

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The balance on Daniel’s payables ledger control account on 1 February 2008 was $3,590. During the month the following transactions occurred: $ Returns inwards Returns outward Cash paid to suppliers Purchases on credit 460 310 5,390 6,260

The cash paid included an amount of $1,150 in full settlement of an invoice for $1,170. What should appear as the balance on the payables ledger control account on 28 February 2008? A B C D $3,980 $4,130 $4,150 $4,750 (2 marks) 4. The following figures were extracted from the records of Duncan & Co as at 30 June 2008: $ Receivables ledger control account Total per listing of receivables ledger balances 20,770 20,320

Which of the following errors could have led to this discrepancy? A B C D A credit note for $450 was omitted from the sales day book The receivables ledger column in the cash receipts book which totalled $4,830 was posted to the receivables ledger control account as $4,380 An invoice for $270 was entered in the sales day book as $720 A credit balance of $225 in the receivables ledger was listed as a debit (2 marks)

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the company purchased a new van for a cash payment of $15. What is the net book value of motor vehicles as at 30 September 2008? A B C D 6.120 (2 marks) 5 .260 $68. The balance sheet of Denzil Limited as at 1 October 2007 included the following: Cost Motor vehicles $ 98.055 $14.120 overstated by $2. The period end cash account shows a balance of $14.780 $56.500 and overvalued his inventory at 30 June 2008 by $620.400 plus the trade in allowance on an old van which had cost $14.160. This does not agree to the bank statement. $55.950.640 During the year.340 $60. The company made a loss of $1.000 Accumulated Depreciation $ 31.680 on the trade in and the total depreciation charge on motor vehicles for the year was $20.045 (2 marks) Craig undervalued his inventory at 1 July 2007 by $1. As a result his profit for the year ended 30 June 2008 was A B C D understated by $880 overstated by $880 understated by $2.5. What is the balance on the bank statement? A B C D 7.855 $15.360 Net book value $ 66.000 and had a net book value at 1 October 2007 of $6.100 (2 marks) Amy Banks has been trading for 5 months.550 $14. $14.100. Further analysis shows that: (i) (ii) iii) the bookkeeper has forgotten about a $10 monthly direct debit a cheque for $350 from a customer has been returned by the bank as dishonoured further cheques amounting to $495 have been received but not yet cleared by the bank.

632 $2. The following transactions were recorded in the books of Arthur Co during one week in August 2008: $ Purchases on credit (excluding sales tax) Sales on credit (including sales tax) Payment to suppliers Purchase of a motor car (including sales tax) 5.167 credit (2 marks) 6 .350 750 2. Dogma Ltd had the following balances on the trial balance as at 31 December 2008: $ Receivables Specific allowance at 1 January 2008 General allowance at 1 January 2008 The accountant then discovered the following: The specific allowance related to J James who has since paid his debt in full. A general allowance of 2% of all remaining receivables is to be maintained.063 credit at the beginning of the week what is the balance at the end of the week? A B C D $2.500 9. What is the total allowance for receivables at 31 December 2008? A B C D $1.310 5.765 $2. Sales tax on motor vehicles cannot be reclaimed. If the balance on the sales tax control account was $2.647 (2 marks) 90. There is some uncertainty concerning two customers who owe $225 and $625 respectively and it is decided that an allowance should be made against these balances.627 4.875 Sales tax is at a rate of 17.5%.760 6. A debt relating to F Smith of $500 is considered irrecoverable and should be written off.615 $2.8.961 credit $1.042 credit $1.084 credit $2.

166 credit $1.520 A specific allowance is to be made against two customer balances totalling $3.10. Is the above statement correct? A B Yes No (1 mark) 11. Which of the following items should be included when calculating the cost of an item of inventory? A B C Selling price Carriage in Carriage out (1 mark) 13. Which of the following is not an example of the accounting concept of accruals? A B C Depreciation Writing inventory down from cost to NRV Prepayments (1 mark) 12.874 credit $1. Magpie Ltd has reviewed its receivables ledger for the year ended 31 May 2008 and has provided you with the following information: (i) (ii) (iii) (iv) Receivables at the year end are $108. The following adjustment should be made to bad debts expense in the income statement: A B C D $1.874 debit (2 marks) 7 .166 debit $1. A change in accounting policy requires the prior year financial statements to be restated but the correction of an error is recorded in the year that the error is discovered.200 A general allowance of 5% should be made against all remaining balance The allowance for receivables at 31 May 2007 was $7.300.

075 $15. The corrected cashbook balance at 31 July 2008 for Solo Co should be: A B C D 15.006 Cr (2 marks) The bookkeeper at Tinto Ltd is having difficulty reconciling the payables ledger with the payables ledger control account (PLCA) at 31 May 2008.059 Cr $36. The bookkeeper at Solo Co has been trying to perform the bank reconciliation for the month to 31 July 2008 and has discovered the following differences: Unrecorded lodgements Outstanding cheques $24. A purchase invoice for $325 (excluding sales tax) has been omitted from the payables ledger. $30.030 Items on the bank statement not in the cash book: Date 15 Jul 08 29 Jul 08 2 Aug 08 Description Direct debit Interest charged Direct debit Amount $ 409 324 302 In addition it has been discovered that a credit entry of $350 has been entered as a debit entry in the cashbook in error.757 Cr $31. The current balance on the cashbook is $29. Sales tax is calculated at a rate of 15%.057 Cr $30. A credit note for $700 (excluding sales tax) has been entered twice in the payables ledger.324 Cr.025 an increase of $1. Dealing with the above issues should result in the following adjustment being made to the payables ledger balance: A B C D a decrease of $439 an increase of $765 an increase of $1.14.179 (2 marks) 8 . The following problems have been identified: 1 2 3 The PLCA column in the cashbook has been undercast by $439.

712 612 5.133 (1 mark) 18.16.845 $19. Darth and Obi are in partnership and share profits in the ratio 3:2:1. The closing inventory for the period should have been: A B $14.712 Cr $ 9 . Lola.325 during the 10 months ended 31 July 2008.167 $30.100 5.300. They made sales of $92. The journal entry to correct this is: Dr $ A Sales Sales tax RLCA B RLCA Sales tax Sales C Sales Sales tax RLCA D RLCA Sales tax Sales 6. In addition Obi and Darth have an annual salary of $30.000 each. A cash sale of $5.712 (2 marks) 5.000. How much of the profit for the year is appropriated to Obi? A B $27.712 including sales tax at 12% has been treated as a receipt from a credit customer in error.100 612 5.712 685 6. Hawaii & Co started trading on 1 October 2007 and has a gross profit margin of 24%. however.397 5.000 (1 mark) 17. During the year ended 31 August 2008 the partnership made a profit of $43. and know that the purchases made during the same period were $89. they lost details of the inventory counted at the end of the period.397 685 5.

The bookkeeper at Magic Carpet has prepared the trial balance as at 30 June 2008. By the year ended 31 December 2007 Hurdy had paid interest of $7. If he were to use weighted average inventory valuation method as compared to a first in.000 in respect of the debentures.500 $3.500 $3. Over the last financial year. however the bookkeeper is still not confident that all the entries are correct.500 Cr Interest No adjustment is necessary (2 marks) $3. the purchase price of Puffin’s main manufacturing components has been falling consistently. Hurdy Ltd issued $150.000 of 7% debentures on 1 May 2007.500 $875 $875 21. This could be due to: 1 2 3 A B C D items not being entered in the accounting records incorrect analysis omission of an accrual 1 only 1 and 2 2 and 3 all of the above (2 marks) 20.19. The trial balance balances. The adjustment required at the end of the year is: A Dr Interest Cr Accruals B Dr Interest Cr Accruals C D Dr Prepayments $ 3. first out (FIFO) method this would result in A B C D a lower inventory asset on the balance sheet but higher cost of sales a lower inventory asset on the balance sheet and lower cost of sales a higher inventory asset on the balance sheet and higher cost of sales a higher inventory asset on the balance sheet but lower cost of sales (2 marks) 10 .

22.270 had been included as a credit on the payables ledger listing. The discrepancy was eliminated after adjustments were made for the following errors identified by the reconciliation: (i) (ii) the discounts received column in the cash payments book had been undercast by $1. The total column of the final month’s cash payments book was miscast before it was posted to the nominal ledger.710 (2 marks) In a company’s cash flow statement. Cash paid for the purchase of a van was debited to the motor expenses account.630 $14. a debit balance of $2. None of the above (i) and (ii) (ii) only All of the above (2 marks) 23.630 $23. The payables ledger balances of Lyric Co at 31 March totalled $18. plant and equipment during the year will be A B C shown as an adjustment to cash generated from operations disclosed under cash flows from investing activities entirely excluded (1 mark) 11 . which did not agree to the balance on the payables ledger control account. Which of the following errors would result in a trial balance imbalance? (i) (ii) (iii) A B C D No opening inventory journal has been posted although the closing inventory adjustment has been made correctly. $12. What was the original balance on the payables ledger control account prior to the reconciliation? A B C D 24.630 $13.000. a revaluation of property.170.

plant & equipment for $2.000 8% preference shares of $1 each. Depreciation charged in the income statement for the year was $1.008 . plant & equipment @ NBV 13.000 during the year.376 + 1.316 . The directors resolved to transfer $12.192 + 1. If retained earnings brought forward on 1 January 2008 were $212.5.000 (2 marks) If the owner of a business takes goods from inventory for his own personal use.656 + 2.000.25.000 to a plant replacement reserve and have paid an interim dividend of $6.376 Cash flows from investing activities $ .658 2007 $ 6. $103. 2008 $ Property.3. the accounting concept or principle to be considered is the A B C prudence principle accruals concept separate entity concept (1 mark) 12 .000 ordinary shares of 10c each and 100.192 and property.656 . The following information relates to James Co.694 During the year ended 30 June 2008. the business disposed of property.000. What are the effects on the following? Cash generated from operations $ A B C D 26. which has a June year end.000 $267.316 that resulted in a net loss of $184.000.000 $345. + 1.000 $321.1. A B C D 27. plant & equipment were revalued by $5.5. Profit for the year 2008 amounted to $135.340 (2 marks) An entity’s issued share capital consists of 500. calculate the balance of retained earnings carried forward at 31 December 2008.

422 (2 marks) 30. The cost of transporting the machine to the company's premises is $212. What is the net book value of the machine which should be shown in the balance sheet at the end of the first year? A B C D $2.960 $3.130 $3.28. X Co purchases a machine for $3. In order for the information in financial statements to be reliable it should possess the following characteristics: A B C Neutrality Consistency Both of the above (1 mark) 13 . Financial accounts differ from management accounts in that they A B C D are prepared monthly for internal control purposes contain details of costs incurred in manufacturing are summarised and prepared mainly for external users of accounting information provide information to enable the trial balance to be prepared (2 marks) 29. After its first week in use it breaks down and repair costs are $175 and $200 for a maintenance contract for future repairs.700.282 $3. The costs of pre-operational testing are $190. X Co depreciates machines at 20% on a reducing balance basis with a full year’s charge in the year of acquisition.

645 4. A Dr Cash Dr PLCA Dr Discounts received Cr RLCA Cr Discounts allowed B Dr Cash Dr RLCA Dr Discount allowed Cr PLCA Cr Discounts received C Dr Cash Dr PLCA Dr Discounts allowed Cr RLCA Cr Discounts received D Dr PLCA Dr Discounts allowed Cr RLCA Cr Cash Cr Discounts received 4.055 150 1.380 150 2.500 and $25.000 of additional capital to the business.300 respectively. What profit or loss was made by the business in 2007? A B C D $1.230 to its suppliers.080 150 5.31. Discounts received and allowed were $150 and $180 respectively. and withdrew $8.645 4.500 for his personal living expenses.300 loss $3.380 180 6. A business has net assets at 31 December 2006 and 31 December 2007 of $26.300 loss (2 marks) 14 . During the year ended 31 December 2007 the proprietor of the business: (a) (b) introduced $11.695 180 32.300 profit $1. What double entry should it record? The business received payments from its customers of $5.080 150 1.735 1. A business has the following transaction to post.700 loss $18.875 and made payments of $4.405 180 4.645 150 (2 marks) 1.645 2.

000 Failure to record the purchase of new plant and machinery cost $5. A sole trader who runs a newsagents business makes up his accounts each year to 31 May.000 payable quarterly in advance on the following dates: 1 February. The rent for the previous year from 1 February 2006 had been $16. His rent is payable quarterly in advance on 1 January.000. 1 May. $6.600 3.000. occupies premises whose rent is fixed every year on 1 February. His annual rental for the calendar years 2006 and 2007 was $4. 1 April.200 In preparing his accounts for the year ended 31 May 2008 what would be the charge to the income statement for rent and rates? A B C D 35. a butcher. 1 July and 1 October.000 $19.333 $18.400 respectively but on 1 January 2008 this was increased to $6. What is his charge for rent for the year ended 31 December 2007? A B C D $20. 1 August.070 $8.666 $21.800 and $5.500 as $15. Local authority rates for the last three years have been: 2006/07 2007/08 2008/09 $ 3.900 4. On 1 February 2007 his annual rent was fixed at $20. Which of the following errors would give rise to a difference on an entity’s trial balance? A B C D Undercast of the sales day book by $1. The rent for the year from 1 February 2008 is fixed at $24.000 per annum.000 The posting of a payment of $2.333 (2 marks) 15 .000 for directors fees to the nominal ledger account for office salaries Recording the opening balance on an investment account of $11.100 (2 marks) 34. 1 November.33.100 $7. Rates are paid each year in advance in two equal instalments on 1 April and 1 October.600 (2 marks) Jones.750 $9. Jones always pays rent on time.

500 Wellington dispatches all goods to customers within 5 working days. At the end of the year. it has the following items in inventory: Item Waterproof Jackets Green Wellies Woolly Hats Cost $ 21.455 $64.36.900 Sales price $ 47.300 27.832 $63. Distribution costs borne by the company amount to 5% of the cost of the item. $62.000 27.450 15. Wellington Co is an internet company which sells wet weather hiking gear. inventory should be recorded at: A B C D 37. At the year end.650 (2 marks) Which of the following items would appear in the ‘cash flows from financing activities’ section of a cash flow statement? (i) (ii) (iii) (iv) A B C D repayment of bank loan purchase of shares (in an unrelated company) bonus issue of shares dividend received (i) only (i) and (ii) (i).200 16.027 $64. (ii) and (iii) all of the items (2 marks) 16 .

500 1.500 4.38.400 per annum .608 at 1 January 2007). Joshua is a budding businessman who operates from two retail outlets.850 $33. Premises 1 $ Rent owed 30 June 2007 Rent prepaid 30 June 2007 Rent paid in the year Rent owed at 30 June 2008 Rent prepaid at 30 June 2008 How much is his rental expense? A B C D $29. both of which are rented.848 $5.600 capital and agreed to share profits as follows: Interest on capital Salary Profit sharing ratio . He gives you the following information.672 at 31 December 2007 ($1. $2.11% per annum .504 $10.Roberts.032 (2 marks) 39. Joshua is preparing his accounts for the year ended 30 June 2008 but is not sure how much to include in his income statement for rental expense.904 $7.880.950 (2 marks) 700 14.750 Premises 2 $ 17 .Roberts 1/3 The profit for the year to 31 December 2007 was $14.050 $31. Originally.900 17.000 3.150 $31. Hills and Roberts are partners in a racing business. they each contributed $9.Hills 2/3 . How much did Hills draw from the business during the year to 31 December 2007? A B C D $4. Hills’ current account showed a credit balance of $3.

745 debit $1. whereas revenue expenditure is used in the period when it is incurred. Revenue expenditure is shown in the income statement.400 The balances brought forward at 1 January 2008 for receivables and the allowance for receivables were $105.800 2.900 71. Capital expenditure must be depreciated. whereas capital expenditure is shown in the balance sheet.100 5. Interest on drawings in the books of a partnership has the same effect as debenture interest in a limited company.745 credit $1. The balance on the current accounts in a partnership is equivalent to the balance on the retained earnings in a limited company. Assuming Lolly Co requires a closing allowance of 5% of receivables.000 and $8. (2 marks) 42.000 respectively.300 4. the bad and doubtful debts expense for the year will be: A B C D $1. Which of the following statements is true? A B C D Partners’ salaries have the same effect in the accounts of a partnership as have directors’ salaries in the accounts of a limited company. Capital expenditure relates to expenses that will benefit the business on a continuing basis.990 debit $1. $ Credit sales Returns outwards Cash received Discounts received Credit notes issued 97. Lolly Co had the following transactions during the year ended 31 December 2008. whereas revenue expenditure isn’t. (2 marks) 41. Which of the following sentences BEST describes the difference between capital and revenue expenditure? A B C D Capital expenditure is always where a business acquires a new non-current asset.990 credit (2 marks) 18 . whereas revenue expenditure is when it pays for rates.40. Loans made by partners to their business are treated identically to loans made by sole traders to their business.

000. Payments totalling $113 were posted to the telephone expense account as $311 and proceeds for the disposal of a non-current asset of $1.43.000 $14.769 were posted to the disposals account as $1.680 (2 marks) 19 . Connor’s bookkeeper is inexperienced and made the following errors in September. Depreciation is charged on a straight line basis.600 and began charging depreciation on the assumption it would have a useful life of 8 years after which its residual value would be $3. Hawk’s financial year end is on 31 March. The depreciation charge for this machine in the year ended 31 March 2008 is A B C D $8. Hawk realised on 1 April 2007 that he would only use the machine for a further two years.320 $13. The entries required to correct this are: A Dr Suspense Cr Disposals Cr Telephone B Dr Disposals Dr Suspense Cr Telephone C Dr Disposals Dr Telephone Cr Suspense D Dr Telephone Cr Suspense Cr Disposals 198 171 27 (2 marks) 27 198 225 27 171 198 225 27 198 44.500 $17.796. He purchased a machine on 1 April 2004 for $44.

000 700 5. 2007 $ $1 Ordinary shares Share premium account 1. its total useful life was revised to 4 years and the straight-line basis of depreciation was maintained.000 an increase of $500 a decrease of $500 a decrease of $1. 2. A B C D 47.000 in 2006 and the useful life was estimated to be 5 years. In 2008.200 $3. trade discounts conversion costs incurred further costs to completion 2 2 and 3 1 and 2 all of the above (2 marks) Pot Co purchased an item of machinery for $10. Guy Ltd has the following share capital for the years 2007 and 2008.45.800 2008 $ 5.800 1. with no residual value.300 $3.900 $Nil (2 marks) Which of the following costs is included in the definition of the cost of inventory? 1.000 (2 marks) 20 . The effect of this revision on the profit for 2008 was: A B C D an increase of $1. 3. the company had an issue of shares at full market price after a 1 for 3 bonus issue.700 During the year. and depreciation was provided on the straight-line basis in 2006 and 2007. What amount appears in the cash flow statement under “Cash flows from financing activities”? A B C D 46. $3.

Which of the following material events after the balance sheet date would be adjusted for in the financial statements? A B The discovery of a material error in the financial statements The announcement of the closure of part of the business after the year end (1 mark) 50 Consider the following statements: 1 2 Laboratory equipment purchased for the purpose of carrying out research and development is an intangible non-current asset Capitalised development costs must be amortised over a period which matches to the expected sales revenue Which of the statements are false? A B C 1 only 2 only Neither statement (1 mark) 21 .48. Which of the following criteria must be met if a provision is to be recognised in the financial statements? 1 2 3 A B C D The entity has a possible obligation arising out of a past event or transaction It is possible that an outflow of economic resources will be required to settle the obligation A reliable estimate of the obligation can be made 1 and 3 only 2 and 3 only 3 only All three (2 marks) 49.

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Practise as many questions as possible. take a few minutes to consider what you did well and what you found difficult. London W12 8AA Tel: 0845 0751 100 (for orders within the UK) Tel: +44 (0)20 8740 2211 Fax: +44 (0)20 8740 1184 24 www. Read questions carefully. Contact your tutor for further help. Understanding the subject? Y/N Remembering the notes/text? Y/N Note here any thoughts on your performance which could help you on the big day. Practise questions under strict timed conditions.bpp. especially those you were unsure of. Use this as a basis to focus your future study on effectively improving your performance. Review your notes/text. Quiz yourself constantly as you study.com/learningmedia . Content Did you struggle with: Interpreting the questions? Y/N Learn subject jargon (look at key terms in your Study Text). Aldine Place. Work through easier examples first. You need to develop your memory as well as your understanding of a subject. ® BPP House.Student self-assessment Having completed this exam. Common problems Timing and planning Did you finish too early? Did you overrun? Y/N Y/N Future emphasis if you answer Yes Go back and check your answers. Focus on allocating your time better. If you get behind move on.

ACCA Paper F3 Financial Accounting (International Stream) On-line Final Mock Examination Commentary and solutions ACF3FM10(J) INT .

3 What went wrong? OK. you’re not going to get 100% correct. learn from your mistakes. Your Study Text provides you with assistance by highlighting these terms and definitions. Learning as many of these as you can will help save you time in the exam which you can use to answer questions that require more thought. 2 Question spotting Avoid the temptation to question spot or to assume certain areas of the syllabus will be examined in a particular way. but pay attention when you consistently get certain areas of the syllabus wrong. 1 Terminology This paper tests your understanding of a large number of key terms and definitions. and try not to repeat them! Solutions 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 C C B B C A D B B B B B B B D 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 A B B D D D C C C D C C C C A 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 C C D D B A A B D C D B B B A 46 47 48 49 50 C D C A A 2 .Guidance on improving your exam performance To help improve your performance you should focus on these key areas. Ensure you are able to answer questions across the syllabus in a number of question styles as this will maximise the number of questions that you will be able to attempt successfully. This is your cue to revise these areas fully.

130 9. 3 .850 $ 3. B Payables Ledger Control Account $ 310 5.000 – 16.850 $ 1.950 490 43.143 2. C Receivables Ledger Control Account $ 23.590 6.refunds Payables ledger contra Sales returns Discounts allowed Bank Balance c/d Returns Bank Discount received C/d 4.025 105 910 20.480 43.5% Sales ∴ Cost of sales 100 114.5 ) 116.000 x 87. D would result in receivables ledger total being $450 higher than the RLCA.000 ∴ Credit sales = 114.5% 12.260 9.890 ∴ Balance b/d Credit sales Bank .Workings 1.390 20 4. B B/d Purchases A and C would affect both the RLCA and the total of the receivables ledger balances.370 21.286 (100.450 19.890 3. C Sales Cost of sales Gross profit 100% 87.286 x 85% = 97.

880 B/d Additions .550 14. A B/d Depreciation $ 14.460 Disposals (W) C/d NBV = $103.360 20.5.500 overstatement 620 overstatement 2.Trade in (W) Disposals (W) C/d Accumulated Depreciation $ 7. (W) Disposal Cost ∴ Accumulated depreciation NBV ∴ Trade in allowance Loss on disposal 6.100 51.000 15.680 Cash Account $ 14.950 Bal b/d 5 months direct debit Dishonoured cheque Bal c/d 14.480 117. C Cost $ 98.400 4.840 43.620 51.950 ∴ Balance per bank statement Outstanding lodgements Balance per adjusted cash account 7.550 4 .620 = $60.950 $ 50 350 14.880 – $43.Bank .840) 6.000 (7.260.880 $ 14.000 103.120 $ β 14.160 4. D $ 1.460 $ 31.480 1.055 495 14.880 117.

627 x 17.050 Sales tax on purchases (5.008 2.350 Bad debt expense Cash received C/f 500 750 89.5) 10.042 3.250 $1.8.063 987 3. B B This is an example of prudence.615 9.760 x 17.765 Closing allowance for receivables at 31. 11.765 = $2.08 is: $850 + $1.350 Adjusted receivables Less specific allowance ($225 + $625) General allowance @ 2% $ 89.100 (850) 88. B A C The selling price relates to the net realisable value of inventory rather than the cost. B Sales tax control account $ 1. 5 .050 $ 2.5%) Balance c/d Balance b/d Sales tax on sales (6. This is a selling and distribution expense and not part of the cost.100 90.5/117.12.350 90. 12. B Receivables B/f 90.

000 (2.320 5.757) 14. A Lola $ (8.325 ×76% Nil* 89. 6 .000 (17.000 Salary Share of loss Profit for the year 17.266 8. B Sales COS Gross profit COS: Opening inventory Purchases Closing inventory 100% 76% 24% $ 92.179 16.500) (8.324) (409) (324) (700) (30.333 Obi $ 30.300) 1.13.000 (5.325 70. B Balance per cash book Direct debit Interest charged Correction of error (2 x $350) 15.167 Closing inventory is therefore $19.133.266) Opening allowance Increase required $ 108.300 ? 70.667) 24.466 (7. D Adjustment (1) (2) (3) PLCA (439) (439) Payables ledger 374 805 1.833) 27. * Note there is no opening inventory as this is the first year of trading.167 = 92.520 (3.500) Darth $ 30.166 $ (29.200) 105.167 Total $ 60. B Receivables Less: specific allowance General allowance @ 5% Required closing allowance ($3.200 + $5.000) 43.

100 612 5.000 Nil 21.712 5.000 7. (i) (omitting a journal) and (iii) (debiting an expense instead of debiting non-current assets) would not affect the balance of debits and credits.712 19. Using weighted average would therefore give a higher closing inventory value and a lower cost of sales figure.000 x 7% x 8/12 = Interest paid No adjustment required $ 7.100 (5. Prices are falling and so the FIFO closing inventory value would be lower than a weighted average price which would include the higher materials costs from earlier in the year. B Did: Dr bank Cr RLCA Should Dr bank Cr sales Cr sales tax Adjustment Dr RLCA Cr sales Cr sales tax 5. 7 .. 22.. D Under FIFO the closing inventory relates to the most recent purchases. giving an imbalance.712 5.712 × 100/112) 612 5.712 5. C (ii) would result in the credit entry (posted from the total column) differing from the total of debit entries (posted from the analyses columns) . 20. D D Interest due $150.18.

000) Balance c/d 27.658 17. 28.000 13.376 c/f 1. C C Balance b/d Profit for the year 347.23.656 17. shares Preference dividend (8% x $100.500 5.694 Disposals @ NBV (W) 2.350 26.000 8. C Retained earnings $ 12.350 (W) Proceeds Loss on disposal NBV at date of disposal Cash flows from investing activities Cash generated from operations $ 2.000 $ 212.630 14.630 CPB undercast Balance c/d ∴ Balance b/d Total of payables ledger balances Debit listed as credit (2 × $2.000 Transfer to plant reserve Interim dividend on ord.192 + $184 = $1.170 (4. plant & equipment @ NBV b/f Revaluation ∴ ADDITIONS 6. D Property.316 184 2.630 $ 18.316 = ($3.000 Depreciation 5.000 347.630 $ 14.630 14.000 321.656) + $2.000 8 .000 6. C PLCA $ 1.340) outflow = $1.540) 13.000 135. C Revaluations do not involve cash movements and so are excluded from the cash flow statement.500 = ($5.192 13. 25.270) Balance per adjusted control account 24.

06 Decrease in net assets Less additional capital Plus drawings Loss for year 25.500 (3.07 Net assets @ 31.875 – 4. A C Dr Cash (5. D D This is the only one where debits will not equal credits.500 (1.055 150 32.102 × 20%) NBV 3.282 (820) 4.29.12.950 Rent 5. C $ Net assets @ 31.230) Dr PLCA (4.900 × 10 12 + 4.230 + 150) Dr Discounts allowed Cr RLCA (5.200) (11.875 + 180) Cr Discounts received 1.700 + 212 + 190) Dep’n @ 20% (4.12.102 30.400 × 7 12 + 6.600 9 .645 4. 34.380 180 6.000) 8. 31.000 × 5 12 5.300 26.200 × 2 12 3. $ Rates 3. C Cost to be capitalised is (3.700) 33.650 9.

968 Hills’ current account ∴ Drawings $ 1.000 + ( × 5.000) = 19.666 3 3 36.065 1.200 16.576 b/f Appropriation 1.608 7.000 + 5.827 + 15. B 1 2 ( × 4.832.705 27.576 c/f 10 . A B Hills Roberts Total $ Interest on capital Salary PSR Total profit for the year 1.35.827 15.935 25.056 6.456 6.968 9. 37.400 3. 38.112 2.450 15.000) + 5.300 + 25.880 5.400 10.368 14. A Cost Sales price Dist’n costs NRV $ Jackets Wellies Hats 21.056 2.300 $ 47.373 795 $ 45.672 9.900 Inventory is valued at the lower of cost and NRV and is: 21.912 7.500 $ 1.705 = 62.000 27.000 + 5.912 $ 2.904 3.

100 202.000 1.950 40.255 6.000 97.500 Paid in the year Less rent owed at 30 June 2007 Less rent prepaid at 30 June 2008 Add rent prepaid at 30 June 2007 Add rent owed at 30 June 2008 Total = $33.150 71.800 5.900 1. 41.255 8.000 (3.750 24.100 6.400 125. C D B Receivables b/f Sales 105.300 11 .300 $ Receivables General allowance @ 5% Allowance needed Opening allowance Decrease in allowance (credit to income statement) 125.500) (700) Premises 2 $ 17. D Premises 1 $ 14.800 4.300 202.39. 42.745 Cash rec’d Credit notes ∴c/f 9.

800 600 2.15.600 .796 113 113 1.600 Net book value (44. of year BI 1:3 basis* End of year Increase due to mkt issue 1.000 2.400 5. B Accumulated depreciation at 1 April 2007: 44.3.769 1.300 * must come from reserves as b/f share premium is nil. 46. B Did: Dr telephone Cr bank Dr bank Cr disposal account Should: 311 113 1.769 1.3. A Share capital SPA = $13.000 2 45.600 .000 8 x 3 = $15.000 .600 + $700 = $3. C 12 .600) = $29.43.000 New depreciation charge 29.769 27 171 198 Dr telephone Cr bank Dr bank Cr disposal account Adjustment: Dr disposal account Dr suspense Cr telephone 44.000 $ Beg.600 $ 700 700 Proceeds received: $2.

000 1.000 * 2 2. 49.4. D $ Original dep’n charge (10.000) 48.47. C A A 13 . 50.000 ÷ 5 yrs) Revised charge 10.000 .000 3.000 Additional charge = reduction in profit (* Depreciation charged 2 × 2.

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