BA3 Special Revision Mock

Question 01

Calculate the capital balance of Graham from the following information.

$
Receivables 30,000
Motor vehicles 8,000
Payables 5,000
Fixtures 7,000
Stock of goods 12,000
Cash at bank (OD) 5,000

Question 02

Hans has an opening capital balance of $500,000(Cr) on 1st January 2016. During the year there was a
decrease in assets of $30,000 and an increase in liabilities of $10,000. His drawings amounted to $6,000.

What is the profit/(loss) for 2016?

Question 03

A sole trader is $8,000 overdrawn at her bank and receives $2,000 from a credit customer in respect of
its account.

Which elements of the accounting equation will change due to this transaction?
A Assets only
B Liabilities only
C Assets and Liabilities only
D Assets, liabilities and capital

Question 04
Bank Account
B/D 1,000
Sales 5,000 Salaries 2,000
Advertising 1,000
Electricity 3,000

What’s the movement in the account balance?

$ …………………………….Dr/ Cr

BA3 Nov. 2020 – BA3 Special Revision Mock – Mallik De Silva 1

Question 05

State whether each of the following statements are true or false

True False

A debit entry will increase capital

A credit entry will decrease liabilities

A debit entry will increase expenses

Question 06

On 1 August 2018 PQ had a receivable from a customer $6,000. During the month of August, PQ:

• Sold goods for $9,000 and offered a 4% discount for payment within the month.
• Customer returned goods valued at $850 which had been purchased in July 2018
• Received a cheque for payment of the goods delivered in August.

The balance on the customer’s account at the end of August 2018 is

$ Dr Cr

Question 07

Your organization sold goods to PQ for $800 less trade discount of 20 per cent and cash discount of 5
per cent for payment within 14 days. The invoice was settled by cheque 5 days later. The entry to record
the payment is:

B
.

C
.

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Question 08

CD operates the imprest system for petty cash. On 1 May was a float of $500. During May the cashier
received $50 from staff for using the photocopier and a cheque for $100 was cashed for an employee. In
May, cheques were drawn for $600 for petty cash. It was decided to increase the cash float to $700
from 1 June. How much cash was paid out by the cashier in May

$ ………………………

Question 09

The Non current asset register is an integral part of double entry. (True / False)

Question 10

N plc purchased a machine for $15,000. The transportation costs were $1,500 and installation costs
were $750. Testing charges amounted to $1,000. Staff training amounted to $2,000. The machine broke
down at the end of the first month in use and cost $400 to repair. N plc depreciates machinery at 10%
each year on cost, assuming no residual value.

What is the net book value of the machine after one year, to the nearest dollar?

A $13,500 B $18,225 C $15,525 D $16,425

Question 11

Drag and drop the correct options f rom the list below into the appropriate method of depreciation to f it the
asset type.
Straight-line depreciation Reducing-balance depreciation

A. Usef ul f or assets which provide equal benef it each year e.g. machinery.
B. Usef ul f or assets which provide more benef it in earlier years, e.g. cars, IT equipment.

Question 12

ABC bought machinery f or $300,000 on 1 July 2015, and has depreciated it at 10% per
annum by the reducing instalment method with a f ull year’s depreciation in the year of purchase and no
depreciation in the year of disposal.

What was the depreciation charge for the year ended 31 December 2017?

A $21,870
B $24,300
C $25,650
D $30,000

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Question 13

According to IAS 38 Intangible assets, which of the f ollowing statements about intangible assets are
correct?

1 If certain criteria are met, research expenditure must be recognis ed as an intangible asset.
2 If certain criteria are met, development expenditure must be capitalised.
3 Intangible assets must be amortised if they have a def inite usef ul lif e.

A 2 and 3 only
B 1 and 3 only
C 1 and 2 only
D All three statements are correct

Question 14

At 31 December 2015, Latham had a non-current asset which had cost $20,000 and on which
accumulated depreciation was $10,000.
Inf ormation collated f or an impairment review at that date identif ied that its f air value was $8,000 and
costs to sell were $1,000. The value in use of the non-current asset was $9,000.

Required:

What was the extent of impairment recognised in Latham’s f inancial statements at 31 December
2015?

Question 15

ABC has several employees and provided the f ollowing information f rom its payroll for the months of
March and April:
March Gross Salary Tax Social security Net pay
$2,400 $500 $100 $1,800
April Gross Salary Tax Social security Net pay
$3,000 $600 $150 $2,250

Tax and social security are payable to the government one month af ter they are deducted f rom
employees' salaries.

Required:

What was the total cash paid in April by ABC in relation to payroll costs?

$ ...................

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Question 16
$
Gross Salary 80,000
Employer’s NI 8,000
Employees NI 6,000
PAYE Tax 7,000

a) What is the wages expense?

b) What is the net salary?

Question 17

The sales account is:

A debited with the total of sales made, including sales tax

B debited with the total of sales made, excluding sales tax
C credited with the total of sales made, including sales tax
D credited with the total of sales made, excluding sales tax

Question 18

In the quarter ended 31 March 2002, X Ltd had VAT taxable outputs, net of VAT, of $200,000 and taxable
inputs, inclusive of VAT, of $92,000.

If the rate of VAT is 15%, how much VAT is due? …………………….Receivable / Payable

Question 19

A book of prime entry is one in which:

A the rules of double-entry bookkeeping do not apply

B ledger accounts are maintained
C transactions are entered prior to being recorded in the ledger accounts
D the personal accounts with customers and suppliers

Question 20

In which book of prime entry will a business record credit notes in respect of goods which have been s ent
back to suppliers?

A The cash book

B The purchase returns day book

C The purchase day book

D The sales returns day book

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Question 21

A payment from a Trade Receivable of $500 was posted as $50.

What’s the correcting entry?

Dr Cr
Description
$ $

Question 22

What are the transactions that af f ect the Trial Balance?

a) Omission if a Purchase Invoice

b) Payments to Suppliers was not posted f rom the cash book
c) An electricity invoice was Credited to cash book and electricity account
d) Purchase of a Motor Car debited to Furniture

Question 23

A credit sale was correctly accounted but duplicated. What’s the impact on

a) Profits overstated understated

b) Current Assets overstated understated

Question 24

Your cash book at 31 December 2019 shows a bank balance of $600 overdrawn. On comparing
this with your bank statement at the same date, you discover that

• a cheque for $57 drawn by you on 29 December 2019 has not yet been presented for
payment;

• a cheque for $92 from a customer, which was paid into the bank on 24 December 2019,
has been dishonoured on 31 December 2019.

• Direct deposit from a customer for $150 is yet to be recorded in the cash book.

The correct bank balance to be shown in the statement of financial position at 31 December
2019 is:

$.............. Favorable / Overdrawn

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Question 25

Adjusted Cash Book will include.

Standing Orders

Bank Charges

Dishonored Cheques

Unpresented Cheques

Unrealised desposits

Errors made by bank

Direct Debits

Question 26

Drag and drop words and values f rom the available list to complete the f ollowing two statements
regarding the disposal of a non-current asset as set out in IAS 16 Property, Plant and Equipment.

If the proceeds received on disposal are less than the c arrying amount at the date of sale,
the dif f erence is a _________________ which is treated as __________ when calculating the prof it
or loss f or the year.

If the proceeds received on disposal are more than the carrying about at the date of sale
the dif f erence is a ___________________ which is treated as _____________ when calculating the
prof it or loss f or the year.

Available words: prof it on disposal/loss on disposal/an expense/income

Question 27

JKL Co purchased a patent on 1 October 2013 f or $25,000. It expects to use the patent f or the next ten
years, af ter which it will have zero value. According to IAS 38 Intangible assets, what is the value of the
patent in JKL’s statement of f inancial position as at 31 December 2015?

$ ………………..

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Question 28

Question 29

Your purchase ledger control account had a balance at 1 May 2018 of $100,000 credit. During May, credit
purchases where $240,000,cash purchases were $8,000, and payments made to suppliers, excluding
cash purchases and af ter deducting cash discounts of $4,000, were $206,000, purchase returns were
$15,000. Contra entries with Sales ledger were $5,000

Question 30

When reconciling control accounts to lists of balances, a casting error in a daybook will require
adjustments:

A To both the control account and the list of balances

B To neither the control account nor the list of balances
C To the control account, but not the list of balances
D To the list of balances, but not the control account

Question 31

The following data is available from Robin’s business for 2011.

$
Sales 200,000
Sales Returns 10,000
Purchases 118,000
Purchase Returns 10,000
Gross Profit 60,000
Closing Stock 3,000

What’s the value of the opening stock?

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Question 32

Where is a discount received recognised?

A Statement of profit or loss

B Trading account
C Statement of financial position
D Trial balance

Question 33

An entity had a gross prof it for the year of $4,300, and also had the f ollowing items included in its trial
balance at the end of the year:

• Rent paid $1,000

• Interest paid $300

• Rent received $200

What was the entity's net prof it for the year?

A $3,000 prof it

B $3,200 prof it

C $5,600 prof it

D $5,800 prof it

Data for Question 34 & 35

ABC commenced business on 1 May 2010 and is charged rent at the rate of $15,000 per annum.

During the period to 31 December 2010 he actually paid $14,000.

Question 34

What should his charge in the statement of prof it or loss be in respect of rent?

Question 35

Prepare the relevant year end journal entry

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Question 36

Barney Ltd has the following details.

Dr Cr
$ $
Trade Receivables 40,000
Allowance for Receivables 6,000

• Bad Debts to be written off $ 10,000

• Allowance for Receivables 10%

How the above transactions would be recorded in ledger accounts.

Dr Cr
$ $

Trade Receivables
Bad Debts
Allowance for Receivables

Question 37

Allowance for Receivables Working capital

(increase, Decrease , No impact)
Increase
Decrease

Question 38

The following information relates to M Ltd:

At 30 September 2000 1999

£000 £000
Stock of raw materials 75 45
Work-in-progress stock 60 70
Stock of finished goods 100 90

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For the year ended 30 September 2000
£
Purchases of raw materials 300,000
Manufacturing wages 50,000
Factory overheads 40,000

The Factory cost of production in the manufacturing account for the year ended 30 September
2000 is £ ………………….

Question 39

List out the expenses should NOT be included in prime cost in a manufacturing account? (State all
items)

A Repairs to factory machinery.

B Direct production wages.
C Office salaries.
D Purchase of Raw Materials.

Question 40

Which of the f ollowing costs should be excluded from the cost of inv entory? Select all that apply.

A Purchase price
B Delivery costs
C Production overheads
D Non-production overheads
E Storage costs
F Selling costs

Question 41

CDE measures inventory using the f irst in, f irst out (FIFO) basis. Opening inventory comprised 10 units at
a cost of $4 per unit. During the accounting period, 30 units were purchased at a cost of $6, f ollowed by
issues of 12 units and a f urther 8 units.

What was the value of inventory at the end of the accounting period in accordance with IAS 2
Inventories?

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Question 42

Tony’s business had net assets of $50,000 as at 1st January 2012. During the year he introduced new
capital of $30,000 and made a prof it of $20,000. He did not have any cash drawings but goods drawn
amounted to $5,000

You are required to calculate his closing net assets?

Question 43

Question 44

The following information is available from C Ltd

2008 2009 ($’000)

Operating Prof it 500
+ Investment Income 80
Finance costs (30)
PBT 550
Inventories 50 40
Receivables 70 75
Payables 28 30

Operating Prof it includes

• Depreciation charges of $20,000
• Loss on Disposal of Assets $10,000

Tax paid amounts to $20,000

You are required to calculate cash generated f rom operations

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Question 45

A company has made a revaluation gain on one of its properties during the year.

Which THREE of the f ollowing statements are correct in relation to the revaluation gain?

1. It will be reported in the statement of prof it or loss.

2. It will be reported in other comprehensive income f or the year.
3. It will be shown as a cash inf low in the cash f low statement.
4. It will be reported in the statement of changes in equity
5. It will increase the value of non-current assets in the statement of f inancial position.

A. 1,3 and 5
B. 1 and 4
C. 2,3 and 4
D. 2, 4 and 5

Question 46

Which one of the f ollowing would you expect to f ind in the statement of changes in equity in a limited
company f or the current year?

A Ordinary dividend proposed during the current year, but paid in t he f ollowing year
B Ordinary dividend declared during the current year, but paid in the f ollowing year
C Directors' f ees
D Auditors' f ees

Question 47

Using the drop down lists available show the correct accounting entries for the following share issue.

An entity has issued 10,000 new ordinary shares with a nominal value of $0.50 each, at an issue price of
$2. The market price immediately bef ore issue was $2.50 each. The ledger entries to record this are as
f ollows:

Debit Bank/Share Capital/Share Premium $5,000/$15,000/$20,000/$25,000

Credit Bank/Share Capital/Share Premium $5,000/$15,000/$20,000/$25,000

Credit Bank/Share Capital/Share Premium $5,000/$15,000/$20,000/$25,000

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Question 48

X Ltd has in issue $100,000 of ordinary shares at a par value of 20¢ each and 100,000 6% pref erence
shares at a par value of 50¢ each. The entity paid a dividend of 7% per ordinary share.

Required:

What was the total amount paid out in dividends?

$..........................

Question 49

A business has the f ollowing trading account f or the year ending 31 May 2018:

Its rate of inventory turnover f or the year is:

A 4.9 times
B 5.3 times
C 7.5 times
D 9 times

Question 50

BCD extracted the following information from its statement of financial position:

Calculate the current ratio : ………………: 1 State your answer to 1 decimal place.

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Question 51

The f ollowing are extracts f rom the f inancial statements f or the year ended 31 January 2003 of M plc:
$000
Issued Ordinary shares of $1 200
Share premium account 50
Prof it and loss account 25
Debenture 80
Prof it bef ore interest f or the
year ended 31 January 2003 60

What is the return on total capital employed?

A 17%
B 22%
C 24%
D 30%

Question 52

A business entity accounted f or an upward revaluation of its land and buildings during the year.

As a result, what would be the impact on the Gearing Ratio? (Increase / Decrease / No change)

Question 53

The annual sales of CQR were $400,000. Half of the sales were made on credit terms, with the remainder
on a cash basis. The trade receivables in the statement of f inancial position were $25,000. ($10,000 at
the beginning of the year)

Required:

What was the trade receivables collection perio d (to the nearest day)?

................... days

Question 54

Which of the f ollowing transactions would result in an increase in capital employed?

A Selling inventories at prof it

B Writing of f an irrecoverable debt

C Paying a payable in cash

D Increasing the bank overdraf t to purchase a non-current asset

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Question 55

The accounting concept to be considered when the owner of a business uses business f unds to pay
f or his private household expenses, is the:
A Separate entity concept
B Fair presentation concept
C Accruals concept
D Going concern concept

Question 56

According to the lASB's Conceptual Framework f or Financial Reporting, which TWO of the f ollowing are
part of f aithf ul representation?

1 It is neutral
2 It is relevant
3 It is presented f airly
4 It is f ree f rom material error
A 1 and 2
B 2 and 3
C 1 and 4
D 3 and 4

Question 57

Which one of the f ollowing statements is true in relation to integrated reports?

A. An integrated report should contain only historical f inancial inf ormation

B. An integrated report should contain a combination of financial and non-f inancial inf ormation which is
historical only

C. An integrated report should contain a combination of financial and non-f inancial inf ormation which is
f orward-looking only

D. An integrated report should contain a combination of financial and non-f inancial inf ormation, which is
both historical and f orward-looking

Question 58

What is the role of the IASB?

A. Oversee the standard setting and regulatory process

B. Formulate international financial reporting standards
C. Review defective accounts
D. Control the accountancy profession

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Question 59

Financial accounts differ f rom management accounts in that they:

A are prepared monthly f or internal control purposes

B contain details of costs incurred in manuf acturing
C are summarised and prepared mainly f or external users of accounting inf ormation

D provide inf ormation to enable the trial balance to be prepared

Question 60

Which THREE of the f ollowing are necessary elements of the stewardship f unction?

A To maximise prof its

B To saf eguard assets

C To ensure adequate controls exist to prevent or detect f raud

D To prepare the f inancial accounts

E To attend meetings with the bank

F To prepare management accounts

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