Chapter 16: Additional question

practice
1 Information about an entity's financial performance is primarily provided in:
A the statement of profit or loss
B the statement of financial position
C the statement of changes in equity
D the statement of cash flows LO 3a

2 According to the IASB's Conceptual Framework, information about the nature and amounts of
an entity's economic resources and claims can help users to assess which three of the
following?
A The entity's need for additional financing
B The entity's liquidity and solvency
C How profitable the entity is likely to be in the future
D How successful the entity is likely to be in obtaining any necessary financing
E The market value of the entity LO 3d

3 According to the IASB's Conceptual Framework, information about an entity's financial

performance helps users to:
A understand the return that the entity has generated on its economic resources
B assess the entity's ability to meet its financial commitments as they fall due
C predict how future profits and cash flows will be distributed among those with an interest
in the entity
D asses the entity's adaptability to changes in its operating environment LO 3d

4 Which two of the following are source documents from which transactions are recorded in the
nominal ledger?
A Delivery note from a supplier
B Credit note to a customer
C Purchase order from a customer
D Debit note to a supplier
E Invoice from a supplier LO 1c

ICAEW 2019 Chapter 16: Additional question practice 111

 5 Which of the following transactions would normally be automatically matched by the
accounting system from the electronic banking report?
A Bonus issue of shares
B Payment of an invoice to a credit supplier
C Redemption of preference shares
D Sale proceeds of non-current assets Lo 1c, d

6 Eiris plc has the following information in its financial statements relating to machinery as at 31
July:
20X4 20X3
£ £
Cost 320,000 260,000
Accumulated depreciation 97,500 90,000
Carrying amount 222,500 170,000
During the year to 31 July 20X4, the following transactions occurred in relation to machinery:
Additions £142,000
Sales proceeds from disposals £94,000
Depreciation charge £31,400
What is Eiris plc's profit or loss on disposals of machinery in the year ended 31 July 20X4?
A £35,900 loss
B £35,900 profit
C £4,500 profit
D £4,500 loss LO 1d; 3c

7 Arabella has a debit balance of £123 in Fab plc's payables ledger. Which of the following
would, alone, explain this balance?
A Fab plc bought and paid for some goods for £123 which it then returned, but Arabella has
not yet issued a credit note for Fab plc to record.
B Fab plc paid £37 to Arabella in respect of an invoice for £160.
C Fab plc received a credit note for £23 from Arabella but posted it to the account of
Mirabelle.
D Fab plc paid an invoice for £123 even though Arabella had issued a credit note in respect
of it.
LO 1d

112 Accounting: Electronic Question Bank ICAEW 2019

 8 Truro plc is a retailer which is registered for VAT. All sales, and all purchases of goods for
resale, attract VAT at the rate of 20%. For the year to 30 November 20X1 Truro plc paid
£60,480 to suppliers in respect of goods for resale, and showed revenue in the statement of
profit or loss of £81,600. There was no change in the figures for trade payables and inventory
in Truro plc's statements of financial position as at 30 November 20X0 and 20X1.
What was Truro plc's gross profit for the year ended 30 November 20X1?
A £7,520
B £17,600
C £21,120
D £31,200 LO 3a, c

9 For many years Meadows plc has experienced falling prices for raw material M, and has kept
constant inventory levels. It uses the AVCO inventory valuation method. If Meadows plc had
used the FIFO valuation method, in each successive year's financial statements this would
result in:
A lower cost of sales and higher closing inventory value
B lower cost of sales and lower closing inventory value
C higher cost of sales and lower closing inventory value
D higher cost of sales and higher closing inventory value LO 3a

10 Charles plc has the following note to its statement of financial position relating to fixtures and
fittings as at 31 August
20X3 20X2
£ £
Cost 166,000 125,000
Accumulated depreciation 81,000 72,000
Carrying amount 85,000 53,000
During the year to 31 August 20X3, the following transactions occurred in relation to fixtures
and fittings:
Additions £74,000
Loss on disposals £3,000
Depreciation charge £28,000
What were the proceeds from disposals of fixtures and fittings received by Charles plc in the
year to 31 August 20X3?
A £11,000
B £19,000
C £33,000
D £75,000 LO 1d; 3a

ICAEW 2019 Chapter 16: Additional question practice 113

 11 Mahmood runs a small bakery and is preparing his financial statements for the year ended
31 March 20X4. There are three outstanding matters that he has not yet accounted for.
(1) Advance payments (deposits) of £110 recorded as revenue from customers in respect of
cakes ordered from Mahmood but not yet delivered by him at the year end.
(2) An unpaid rent demand for the six months to 31 July 20X4 for £3,600.
(3) Insurance of £960 recorded as paid by Mahmood and accounted for on 1 February 20X4
for the year ending 30 November 20X4.
Which three of the following balances will appear in Mahmood's statement of financial position
as at 31 March 20X4?
A Prepayment £640
B Accrual £640
C Accrual £1,200
D Deferred income £110
E Prepayment £1,200
F Accrued income £110 LO 1d; 3a, b

12 Hill plc has the following ledger account balances as at 1 January 20X5:
Share capital (400,000 25p equity shares) £100,000
Share premium £50,000
Retained earnings £1,423,126
On 1 March 20X5 Hill plc made a 1 for 5 rights issue at £1.20 per share. On
31 August 20X5 it made a three for one bonus issue. Profit for the year to
31 December 20X5 was £80,000.
What are the balances on the three ledger accounts as at 31 December 20X5?
A Share capital £480,000, Share premium £126,000, Retained earnings £1,143,126
B Share capital £480,000, Share premium £Nil, Retained earnings £1,269,126
C Share capital £1,920,000, Share premium £Nil, Retained earnings £129,126
D Share capital £1,920,000, Share premium £66,000, Retained earnings £63,126
LO 1e; 3a, c

13 David, Paul and Daniel are in partnership sharing profits 4:3:1. Each partner has a combined
capital and current account, which at 1 September 20X1 were as follows:
David £9,870
Paul £8,140
Daniel £15,580
During the year to 31 August 20X2 the partnership made profits of £120,000, and each partner
took drawings of £10,000. On 31 August 20X2 Paul retires. The partners value goodwill at
£96,000 at that date, but do not wish this valuation to remain in the accounts. David and
Daniel will continue in partnership, sharing profits 3:1. What is the balance on Daniel's capital
and current account on 1 July 20X7?
A £8,580
B £18,580

114 Accounting: Electronic Question Bank ICAEW 2019

 C £35,870
D £79,140 LO 3a, c

14 Zylon Ltd has prepared a draft statement of profit or loss at 31 January 20X6 which shows a
gross profit of £54,200. Zylon Ltd has now discovered that at both the beginning and the end
of the accounting period one line of inventories, the Merit, has been included at a selling price
of £800 at 31 January 20X6 and £1,200 at 1 February 20X5. The Merit is always sold at a
mark-up of 20% by Zylon Ltd.
After correcting this error, Zylon Ltd's gross profit for the year to 31 January 20X6 is:
A £54,120
B £54,133
C £54,267
D £54,280 LO 2a, b; 3a

15 Taylor plc has prepared a draft statement of profit or loss that shows a profit for the year of
£60,000 for the reporting period ended 30 November 20X4. Subsequently, the following
matters have been discovered.
(1) An insurance renewal for £2,500 was received in November 20X4 for the year to
30 November 20X5. As the premium had increased significantly Taylor plc decided to pay
the amount in two equal instalments. The first instalment was paid on
28 November 20X4 and recorded in administrative expenses.
(2) Goods that cost £300 and sold at a gross margin of 40% were returned by Prism Ltd on
30 November 20X4, after the inventory count had taken place. No credit note was issued.
Once these matters have been dealt with Taylor plc's profit for the year ended
30 November 20X4 will be:
A £58,950
B £60,950
C £61,050
D £61,130 LO 1d; 2a, b; 3a, b

16 Riley plc has drawn up draft financial statements as at 31 December 20X8, which show a draft
profit for the year of £150,000 and a suspense account with a £600 debit balance. The
following issues have now been discovered.
(1) An early settlement discount of £600 received from a supplier was credited to trade
payables and debited to a suspense account as the bookkeeper wasn't sure how to
record the transaction. Riley plc had not expected to take advantage of the discount on
the date the invoice was recorded.
(2) Maintenance costs of £1,200 incurred on 1 January 20X8 were debited to plant and
machinery. Riley plc depreciates plant and machinery at 20% per annum.
After adjusting for these issues Riley plc's profit for the year will be:
A £148,800
B £149,640
C £150,960

ICAEW 2019 Chapter 16: Additional question practice 115

 D £152,160 LO 1d; 2a, b; 3a, b

17 Picasso plc has prepared draft financial statements for the year ending 30 November 20X4,
following a physical inventory count. However, on further investigation it has been realised
that, in a burglary at the company's warehouse in September 20X4, inventory at a cost of
£10,000 was stolen. Picasso Ltd has insurance which covers 60% of the cost of inventory
stolen. The insurance company has agreed to pay in this instance but as yet, no money has
been received. No accounting entries have been made in respect of the stolen inventory.
Correcting this matter will:
A increase profit for the year by £4,000
B decrease profit for the year by £4,000
C increase profit for the year by £6,000
D decrease profit for the year by £6,000 LO 1d; 2a, b; 3a, b

18 Faringdon plc records £5,274 overdrawn as the bank balance in its statement of financial
position at 31 December 20X0 before reconciling to the year end bank statement. The bank
statement showed interest charged of £78 which had not previously been recorded in the cash
at bank account. The company noted that payments of £564 and receipts of £1,875 have not
yet appeared on the bank statement.
The bank statement at the year end showed an overdrawn balance of:
A £3,963
B £6,507
C £6,585
D £6,663 LO 1d; 2b

19 Mortimer plc correctly records £7,480 as the figure for short-term borrowings (overdraft) in its
statement of financial position at 30 June 20X3 after performing a bank reconciliation at that
date. The bank statement showed interest income of £75 and a bank transfer to a supplier of
£5,650 which had not previously been recorded in the cash at bank account. On the bank
reconciliation the bookkeeper includes unpresented cheques of £1,785 and uncleared
lodgements of £650.
Before the reconciliation was performed:
A the cash at bank account balance was £1,905 credit and the bank statement balance was
£3,040 overdrawn
B the cash at bank account balance was £1,755 credit and the bank statement balance was
£620 overdrawn
C the cash at bank account balance was £1,905 credit and the bank statement balance was
£770 overdrawn
D the cash at bank account balance was £1,755 credit and the bank statement balance was
£2,890 overdrawn LO 1d; 2b

116 Accounting: Electronic Question Bank ICAEW 2019

 20 During the year ended 31 January 20X2 Pelham plc suffered a major flood at its warehouse, in
which inventory that had cost £10,000 was destroyed. An insurance payment of 60% of the
cost has been agreed but not received at the end of the reporting period.
To take account of these matters Pelham plc should debit Trade and other receivables with
£6,000 and:
A Dr Administrative expenses £10,000, Cr Purchases £10,000, Cr Other income £6,000
B Dr Administrative expenses £4,000, Cr Inventory £10,000,
C Dr Administrative expenses £4,000, Cr Purchases £10,000
D Dr Administrative expenses £10,000, Cr Purchases £6,000, Cr Revenue £10,000
LO 1d; 3a, c

21 School plc is a large company with a share capital of 4 million 25p equity shares. To raise
funds it has made a 1 for 5 rights issue of its equity shares at £2 per share. The rights issue
was fully taken up but only £1,500,000 had been paid up at the end of the reporting period, 30
June 20X4. The only entries in the accounting records have been to debit cash at bank with
£1,500,000 and credit the suspense account with the same amount.
As well as debiting the suspense account with £1,500,000, which of the following entries
should School plc now make to correctly record the share issue?
A Dr Other receivables £100,000, Cr Share capital £200,000,
Cr Share premium £1,400,000
B Dr Other receivables £100,000, Cr Share capital £200,000,
Cr Share premium £1,400,000
C Dr Other receivables £100,000, Cr Share capital £800,000,
Cr Share premium £800,000
D Cr Share capital £200,000, Cr Share premium £1,300,000 LO 1d; 2a, b, c

22 Sneaky plc acquired a truck on 31 December 20X1, the end of its reporting period, for
£60,000. It transferred £15,000 to the seller and handed over an old truck with a carrying
amount at that date of £18,200. This truck had cost £55,000. A further sum of £25,000 was
then due to the supplier of the truck as the final payment.
The only entries made before the initial trial balance was drawn up were to debit suspense
with £40,000, credit cash at bank £15,000 and credit other payables £25,000.
As well as crediting suspense with £40,000, which of the following sets of adjustments should
Sneaky plc record when preparing its final trial balance?
A Dr Truck – cost £5,000, Dr Truck – accumulated depreciation £18,200,
Dr Disposal £16,800
B Dr Truck – cost £60,000, Dr Truck – accumulated depreciation £36,800,
Cr Disposal £56,800
C Dr Truck – cost £5,000, Dr Truck – accumulated depreciation £36,800,
Cr Disposal £1,800
D Dr Truck – cost £60,000, Dr Truck – accumulated depreciation £18,200,
Cr Disposal £38,200 LO 1d; 2b, c

23 A summarised version of Leah plc's initial trial balance for the year ended
30 September 20X3 is as follows:

ICAEW 2019 Chapter 16: Additional question practice 117

 Initial trial balance Trial balance (summary)
£ £
Profit after tax 68,574
Total non-current and current assets 998,230
Current and non-current liabilities 150,344
Share capital 50,000
Retained earnings 734,656
Suspense 5,344
1,003,574 1,003,574
It has now been discovered that the bookkeeper was unsure where to record insurance costs
for the current year of £5,344, so he credited cash at bank and posted the other side of the
entry to the suspense account.
When this error is corrected, the balance of retained earnings for inclusion in the statement of
financial position will be:
A £729,312
B £740,000
C £797,886
D £808,574 LO 1f; 2b; 3a, c

118 Accounting: Electronic Question Bank ICAEW 2019

 24 Rickard and Grab are in partnership sharing profits and losses 3:1 after allowing for partner
salaries of £20,000 and £15,000 respectively. On 1 January 20X6 Rickard lent the business
£30,000 at 6% interest pa. The profit for the year ended 30 June 20X6, before loan interest, is
£79,000.
How much profit will be credited to Rickard's current account?
A £25,775
B £51,650
C £52,325
D £53,000 LO 3a, c

25 Tanga plc is preparing its financial statements as at 31 December 20X9. Its ledger account
balance for subscription income includes £15,730 subscriptions received in 20X9 in respect of
20X8.
Tanga plc should enter a journal with two entries of £15,730 as:
A a credit entry to the deferred income (liability) account
B a credit entry to the subscription income account
C a debit entry to the subscription income account
D a credit entry to the accrued income (asset) account
E a debit entry to the deferred income (liability) account
F a debit entry to the accrued income (asset) account LO 1d

26 Brassie plc has an allowance for receivables of £1,200 on 1 October 20X4. During the
reporting period ending 30 September 20X5 the following events take place:
(1) A cheque for £106 previously received and included in the cash at bank account was
returned unpaid on 29 September 20X5. The amount was correctly credited to the cash at
bank account but the other side of the transaction was debited to the suspense account.
The directors wish to write the debt off as irrecoverable.
(2) An allowance of £1,500 is required at the year end.
(3) A cheque received for £36 in respect of an amount written off in August 20X4 was
debited to the cash at bank account and credited to the suspense account.
What journal entries are required as at 30 September 20X5?
A Dr Trade Receivables £106, Dr Irrecoverable debts expense £264, Cr Suspense account
£70, Cr Allowance for receivables £300
B Dr Irrecoverable debts expense £370, Cr Allowance for receivables £300,
Cr Suspense account £70
C Dr Suspense account £70, Dr Irrecoverable debts expense £200,
Cr Allowance for receivables £300
D Dr Irrecoverable debts expense £406, Cr Allowance for receivables £300,
Cr Suspense account £70, Cr Trade receivables £36 LO 1d; 3a

27 As at 30 November 20X8 Briggs plc had accrued administrative expenses of £1,589 and
prepaid administrative expenses of £746. On 1 December 20X8 the bookkeeper processed

ICAEW 2019 Chapter 16: Additional question practice 119

 the following opening journal: Credit Accruals £1,589, Debit Prepayments £746, Debit
Administrative expenses £843.
During the reporting period to 30 November 20X9 cash was paid in respect of administrative
expenses of £54,123 and was correctly posted to the administrative expenses account. At the
end of the reporting period, Briggs plc's bookkeeper correctly processed closing journals to set
up an accrual of £2,745 and a prepayment of £1,669 in respect of administrative expenses.
Which of the following journals should Briggs plc process as at 30 November 20X9 to correct
the three accounts?
A Dr Accruals £1,589, Cr Prepayments £746, Cr Administrative expenses £843
B Dr Administrative expenses £1,686, Dr Prepayments £1,492, Cr Accruals £3,178
C Dr Administrative expenses £843, Dr Prepayments £746, Cr Accruals £1,589
D Dr Accruals £3,178, Cr Prepayments £1,492, Cr Administrative expenses £1,686
LO 1d; 2b, c; 3a

28 In relation to accounting for partnerships, which two of the following statements are true?
A Goods taken by a partner from the business are treated as appropriations of profit
B Interest on drawings by a partner is an expense in the partnership's profit and loss
account
C Interest on a partner's loan capital is an expense in the partnership's profit and loss
account
D Drawings by a partner are debited in the current account
E In the absence of a partnership agreement, under the Partnership Act 1890 salaries of
£5,000 are due to partners LO 3c

29 The following statements have been made by a colleague about accounting for partnerships:
Statement 1: Partners' salaries affect neither the amount of profit for the year available for
appropriation, nor the partnership's cash position.
Statement 2: Interest on partners' drawings affects the amount of profit for the year available
for appropriation but not the partnership's cash position.
Identify whether these statements are true.
A Statement 1 is true but Statement 2 is false.
B Statement 1 is false but Statement 2 is true.
C Both Statement 1 and 2 are true.
D Neither Statement 1 nor Statement 2 are true. LO 3c

30 Lemon plc draws up financial statements to 31 December in each year. It pays telephone line
rental charges for each year ending 30 April in two equal instalments, on 1 May and
1 November, in advance. It also pays telephone call charges quarterly in arrears at the end of
February, April, July and November. The total telephone line rental for the year to
30 April 20X4 was £6,300. Telephone call charges for the year commencing 1 July 20X3 were
£5,820.

120 Accounting: Electronic Question Bank ICAEW 2019

 What were Lemon plc's prepayment for line rental and accrual for call charges in its statement
of financial position at 31 December 20X3?
A Prepayment for line rental £2,100, Accrual for call charges £485
B Prepayment for line rental £1,575, Accrual for call charges £485
C Prepayment for line rental £1,575, Accrual for call charges £970
D Prepayment for line rental £2,100, Accrual for call charges £970
LO 1d; 3b

31 In relation to distribution costs Levi plc has paid £11,794 in the period ended 31 October 20X9.
The company's distribution costs accruals need to be £107 more than at 31 October 20X8,
and prepayments need to be £78 more.
What is the figure for distribution costs in Levi plc's statement of profit or loss for the year
ended 31 October 20X3?
A £11,269
B £11,327
C £11,765
D £11,823 Lo 1d; 3c

32 Wombat plc is a retailer that rents its premises; its only non-current assets are fixtures and
fittings. The company has been experiencing trading problems for some time. The directors
have concluded that the company is no longer a going concern and have changed the basis of
preparing the financial statements to the break-up basis.
Which of the following will be the immediate effect of changing to the break-up basis?
A All fixtures and fittings are transferred from non-current to current assets
B Fixtures and fittings are valued at their purchase cost
C The company ceases to trade
D A liquidator is appointed LO 1e; 3c

33 George plc acquired a new truck on 1 February 20X7 for £79,680 including VAT. The
company depreciates all vehicles straight line at 25% per annum on a monthly basis.
What is the carrying amount of George plc's truck at 31 July 20X7?
A £49,800
B £58,100
C £66,400
D £69,720 LO 1d

34 Winston started a trading business on 1 July 20X6 with capital of £50,000. In his first year of
trading he made a profit for the year of £28,000, selling goods at a margin on sales of 60%. He
injected additional capital of £10,000 in the year and withdrew a monthly amount of £500 for

ICAEW 2019 Chapter 16: Additional question practice 121

 his living expenses. He also took drawings from inventories of goods with a resale value of
£6,400. The business had no inventories at the year end.
What were Winston's net assets at 30 June 20X7?
A £23,440
B £78,160
C £79,440
D £84,940 LO 1d; 3a, c

35 Hedges plc, a clothing retailer, depreciates all vehicles monthly over four years. On
31 December 20X4 Hedges plc bought a car at a cost of £21,000 plus VAT, trading in an old
car that had cost £17,760 including VAT on 1 December 20X2. A cheque for £11,900 was also
handed over.
In respect of this disposal in its statement of profit or loss for the reporting period ended
31 October 20X5 Hedges plc will show a profit of:
A £4,790
B £4,415
C £2,008
D £590 LO 1d; 3a, c

122 Accounting: Electronic Question Bank ICAEW 2019

 36 Quizzle plc has share capital of 500,000 £1 shares at 1 January 20X0. These were issued at
£1.30 per share. On 31 December 20X0 Quizzle plc made a three for five bonus issue. Before
accounting for this the balance on retained earnings at 31 December 20X0 was £484,000.
In its statement of financial position at 31 December 20X0 the balance on Quizzle plc's
retained earnings will be:
A £184,000
B £334,000
C £434,000
D £484,000 LO 1d, e; 3c

37 At the end of its first year of trading on 30 September 20X4 Sage plc's net assets are
£185,621. There are no non-current assets. It has share capital of £30,000 made up of 50p
equity shares issued at £1 each, and retained earnings of £105,621. There have been no
other entries in share premium other than those in relation to the original share issue.
In relation to Sage plc's statement of financial position at 30 September 20X4 which of the
following statements is true?
A It has other reserves of £50,000.
B It has share premium of £20,000.
C It has other reserves of £20,000.
D It has share premium of £50,000. LO 3a, c

38 Tennant plc is preparing its statement of profit or loss for the year ended 30 June 20X7. On
the initial trial balance at that date distribution costs have a debit balance of £125,000 before
accounting for depreciation and profits/losses on disposal in respect of the company's vehicle
fleet. At 30 June 20X6 Tennant plc had vehicles that cost £564,810, all of which had been
purchased on 1 July 20X5, and it had accumulated depreciation of £188,270. A vehicle costing
£15,000 was sold on 1 July 20X6 for £8,500. Vehicles are depreciated monthly over three
years.
The amount to be disclosed as distribution costs in Tennant plc's statement of profit or loss for
the year ended 30 June 20X7 is:
A £183,270
B £306,770
C £309,770
D £314,770 LO 1d; 3a, c

39 Vargo plc is finalising its financial statements as at 30 June 20X4. In its initial trial balance at
that date Vargo plc has a figure for tax payable as at 1 July 20X3 of £32,810. The total tax
charge in the statement of profit or loss for the year to 30 June 20X4 is £35,450, and tax paid
in the year was £31,960.
The tax payable balance that will appear in Vargo plc's statement of financial position as at 30
June 20X4 is:
A £29,320
B £34,600

ICAEW 2019 Chapter 16: Additional question practice 123

 C £35,450
D £36,300 LO 1d; 3c

40 Redman plc is finalising its financial statements as at 30 April 20X2. On 1 January 20X1 the
company paid an annual membership fee of £15,000 for the 12 months ended
31 December 20X1. A 10% increase in this subscription is expected, but has not been
finalised at 30 April 20X2.
In its statement of financial position at 30 April 20X2 Redman plc will include:
A a prepayment of £11,000
B a prepayment of £5,500
C an accrual of £11,000
D an accrual of £5,500 LO 3a, b, c

41 Crane plc is finalising its financial statements as at 31 December 20X5. Relevant initial trial
balance figures are as follows:
£
Trade and other payables (excluding interest paid or payable) 149,630
8% debentures as at 1 January 20X5 500,000
Crane plc issued further 8% debentures of £200,000 at par on 1 October 20X5, repayable at
par in ten years' time. No interest was outstanding at 1 January 20X5, and the company paid
interest in respect of debentures of £40,000 in 20X5.
The trade and other payables figure that will appear in Crane plc's statement of financial
position as at 31 December 20X5 is:
A £153,630
B £165,630
C £193,630
D £205,630 LO 1d; 3a, c

124 Accounting: Electronic Question Bank ICAEW 2019

 42 As at 1 June 20X8 Fara plc had 200,000 25p equity shares, which it issued in 20X2 at 80p
each fully paid. It also had 100,000 £1 5% irredeemable preference shares issued at par in
20X3. On 31 January 20X9 Fara plc made a further issue of 50,000 £1 irredeemable 5%
preference shares at £1.20 fully paid. On the same date Fara plc made a 1 for 5 bonus issue
of equity shares. Fara plc wishes to use the share premium in respect of the bonus issue.
In its statement of financial position as at 31 May 20X9 Fara plc will have share premium of:
A £100,000
B £110,000
C £120,000
D £150,000 LO 1e; 3a, c

43 Palin plc had fixtures with a carrying amount at 1 July 20X5 of £48,000. On that date it traded
in fixtures which had cost £12,000 on 1 July 20X3 for new fixtures which cost £18,000,
handing over a cheque in full settlement for £3,000. Palin plc depreciates fixtures at 30% per
annum on the reducing balance.
How much depreciation will be charged in Palin plc's statement of profit or loss for the year
ended 30 June 20X6 in respect of fixtures held at that date?
A £18,036
B £19,800
C £46,200
D £60,120 LO 1d; 3a, c

44 On 1 April 20X6 Newman plc purchased a machine at a price of £50,000. It cost £2,000 to
transport the machine to Newman plc's premises and set it up, plus £500 incurred in training
staff to operate the machine. The machine had a useful life of five years and a residual value
of £5,000. On 1 April 20X8 Newman plc's directors decided to change the depreciation
method to reducing balance, at 50%.
What is the carrying amount of Newman plc's machine in its statement of financial position at
31 March 20X9?
A £16,600
B £18,800
C £26,000
D £52,000 LO 1d; 3c

ICAEW 2019 Chapter 16: Additional question practice 125

 45 Nazrim, a sole trader preparing his financial statements under UK GAAP, has the following
information at the start and end of his second year of trading:
At 31 March 20X3 At 1 April 20X2
£ £
Fixed assets (net book value) 35,200 21,000
Stock 10,400 7,200
Trade debtors 11,980 8,450
Trade creditors 8,210 5,640
Cash in hand 1,100 300
During the reporting period Nazrim introduced £1,000 capital. He took stock for his own use
that cost £200, and paid himself £800 per month.
What is Nazrim's profit or loss for the reporting period ended 31 March 20X3?
A £10,360 loss
B £27,960 profit
C £33,100 profit
D £36,760 profit LO 3a, c

46 Walt plc's statement of profit or loss for the year to 31 August 20X4 shows an income tax
expense of £67,920. In its statement of financial position at that date tax payable is £54,740.
During the reporting period Walt plc paid HMRC £50,000 in respect of income tax for the year
ended 31 August 20X3, but subsequently received a refund from HMRC for £3,000.
At 31 August 20X3 Walt plc's income tax payable balance in its statement of financial position
was:
A £33,820
B £36,820
C £47,000
D £60,180 LO 1d; 3a, c

126 Accounting: Electronic Question Bank ICAEW 2019

 47 Joshua plc had the following amounts in its statement of financial position at 30 June 20X8
and 30 June 20X9:
20X9 20X8
£ £
Inventory 15,310 18,200
Trade receivables 23,900 22,400
Cash at bank 3,700 3,200
Trade payables 16,700 19,600
Profit before tax was £18,600 for the year ended 30 June 20X9 and the depreciation charge
was £4,320. What was the cash generated from operations for the year ended
30 June 20X9?
A £24,430
B £12,770
C £21,410
D £15,790 LO 3c

48 A business has a profit before tax of £50,000 after charging depreciation of £5,000. A non-
current asset had been sold for £20,000. Its carrying amount was £17,000 and the profit or
loss on disposal is included in operating profit.
Inventory increased by £8,000, trade receivables increased by £3,000 and trade payables
decreased by £4,000. What was the cash generated from operations?
A £37,000
B £63,000
C £33,000
D £45,000 LO 3c

ICAEW 2019 Chapter 16: Additional question practice 127

Answer Bank