Mirchawala’s Hub of Accountancy:

FA2:Mock Exam:
Question#1:
Which of the following statements about a trial balance are correct?
(1) The trial balance includes all of the amounts needed to complete the final accounts
(2) The trial balance is part of the double entry system
(3) All bookkeeping errors will lead to an imbalance in the trial balance
A. 1 and 3 only
B. 2 and 3 only
C. None of the above
D. 1 and 2 only
Question#2:
Joe has prepared the following journal entry:
$
Dr Cash 850
Cr T Sudgen 850
Which of the following is the correct narrative for the journal entry?
A. Cash payments to T Sudgen
B. Cash purchases from T Sudgen
C. Cash sales to T Sudgen
D. Cash receipt from T Sudgen
Question#3:
A and B are in partnership sharing profits equally. On 1 December 20X0 C joined the partnership and the
partners agree to change the profit sharing ratio to 3:4:1 to A, B and C respectively.
At the date the goodwill of the partnership had been valued at $16,000 and the capital accounts are
A $24,000 Cr and B $32,000 Cr. C paid $4000 into the partnership. Goodwill will not be maintained in the
accounts.
What is A’s capital balance after C had joined the partnership?
A. $32000
B. $26000
C. $24000
D. $30000
Question#4:
If a partnership maintains both the capital and current accounts, a partner’s drawings and interest on
drawings should be recorded in which TWO of the following?
A. Interest on drawings: Capital Accounts
B. Drawings: Current Account
C. Interest on drawings: Current Account
D. Drawings: Capital Account

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Question#5:
In the year ended 30 November 20X9, Karl sold a machine for $5,800. The machine had been bought for
$15,000 in July 20X5. Karl depreciates machinery at 20% per annum on the reducing balance basis. He
charges a full year’s depreciation in the year an asset is purchased, and no depreciation in the year of
sale.
What was the profit or loss on disposal of the machine?
A. $344 loss
B. $344 profit
C. $2,800 loss
D. $2,800 profit
Question#6:
Anne has prepared the following reconciliation between the balance on her trade payables ledger
control account in her general ledger and the list of balances from her supplier’s ledger:
$
Balance on the trade payables ledger control account 68,566
Credit balance omitted from list of balances from suppliers ledger (127)
68,439
Under casting of Purchases day book 99
Total of list of balances 68,538
What balance should be reported on Anne’s statement of financial position for trade payables?
A. $68,538
B. $68,665
C. $68,439
D. $68,566
Question#7:
At 1 June 20X8, the value of Lindsay’s net assets was $144,804. At 31 May 20X9 the value was $191,779.
During the year to 31 May 20X9 Lindsay introduced $52,250 of capital and her drawings were $34,400.
What was Lindsay’s profit for the year to 31 May 20X9?
$
Question#8:
When completing the extended trial balance, In which column should the closing balance for
prepayments be entered?
A. Statement of Profit and loss debit
B. Statement of financial position credit
C. Statement of profit and loss credit
D. Statement of financial position debit

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Question#9:
Is each of the following statements about double entry book keeping true or false?
True False
In double entry book keeping we have a basic check on the accuracy of the
entries, as a total value of the debit entries and the total value of credit entries
should be equal
‘Double entry bookkeeping’ means that two sets of records are maintained

Question#10:
According to her sales return day book, Amy’s returns were $880, excluding sales tax 17.5%. Amy is
registered for sales tax.
How should this information be recorded in Amy’s general ledger?
A. Dr Receivables $1,034, Cr Sales return $1,034
B. Dr Sales return $880, Cr Receivables $880
C. Dr Sales return $880, Dr Sales tax $154, Cr Receivables $,1034
D. Dr Receivables $1,034,Cr Sales Return $880, Cr Sales tax $154
Question#11:
Cathy is extending the entries for depreciation on her extended trial balance (ETB).
Which TWO of the following show the ETB columns into which the entries for depreciation charge and
accumulated depreciation should be extended?
A. Accumulated depreciation: statement of financial position credit
B. Depreciation charge: statement of profit or loss debit
C. Depreciation charge: statement of profit or loss credit
D. Accumulated depreciation: statement of financial debit
Question#12:
Which of the following is the reason for preparing a receivables ledger reconciliation?
A. To check the calculation of gross profit
B. To confirm the accuracy of posting
C. To calculate the allowance for irrecoverable debts
D. To identify overdue accounts
Question 13:
At 30th November 20X9, Marek’s trial balance includes the following balances:
$ $
Inventory at 1 December 20X8 17,558
Trade receivables 31,749
Prepayments 3,629
Trade payables 24,928
Accruals 5,291
Bank account 1,827
Receivables allowance at 1 December 20X8 683
Inventory at 30 November 20X9 is valued at $18,736 and the receivables allowance is to be adjusted to
$744.

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What value should be reported on Marek’s statement of financial position at 30 November 20X9 for
current assets?
$
Question#14:
In Benni’s records for the year to 31 October 20X8, expenditure on a depreciable asset has been
incorrectly classified as revenue expenditure.
If the error is not corrected, what is the effect on Benni’s profit for each of the years to 31 October
20X8 and 31 October 20X9?
Understated overstated
Year to 31 October 20X8
Year to 31 October 20X9
Question#15:
When Paul’s extended trial balance was extended and totaled, the totals were as follows:
Statement of profit or loss statement of financial position

Dr ($) Cr ($) Dr ($) Cr ($)

97,945 120,634 84,752 62,063
What is Paul’s profit or loss?
A. $35,882 loss
B. 22,689 profit
C. 22,689 loss
D. 35,882 profit
Question#16:
$
Trade receivables 136,853 Dr
Receivables allowances 14,862 Cr
If Ethel calculates that her receivables allowance should be revised to $13,854 what should be
reported for the receivables expense in her statement of profit or loss?
A. A charge of $1,008
B. A credit of $13,854
C. A credit of $1,008
D. A charge of $13,854
Question#17:
At 1 May 20X8, the total balance on Trevor’s receivables ledger was $88,463. This includes a balance of
$563 which is irrecoverable.
Which TWO of the following from the journal entry that is needed to write of the irrecoverable
balance?
A. Credit: Receivables
B. Debit: Receivables expense
C. Credit: Receivables expense
D. Debit: Receivables

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Question#18:
Arnold claimed that some fish Burton sold him in October 20X3 was contaminated and made his family
ill. Arnold is seeking compensation of $4,000 Burton accepted responsibility and offered $1,500 as
compensation Arnold rejected this offer and has begun legal proceedings.
Burton’s legal advisor expects the court case to take place in March 20X4 and has estimated that Burton
will have to pay $2,500 in compensation.
What amount should be included as a liability in Burton’s statement of financial position at 30
November 20X3?
A. $4,000
B. Nil
C. 1,500
D. 2,500
Question#19:
The bank account in Trish’s general ledger has credit balance of $358.
The difference between this balance and the balance on her bank statement is due to:
(1) Trish incorrectly recorder the value of a cheque paid to a supplier for $245 as $254
(2) A lodgment of $283 has still to be credited by the bank
(3) The bank charged interest of $104 on her overdraft
What is the correct credit balance on the bank account in Trish’s general ledger?
$
Question#20:
Tony returned items of office stationery to his supplier and his supplier sent him a credit note.
What debit and credit entries and required in Tony’s general ledger?
Trade payables goods for resale – returns Office stationery
Credit
Debit
Question#21:
In the year to 30 April 20X8, Tanya paid a total of $127,569 to her suppliers.
Her opening and closing balances due to suppliers and her opening and closing inventory values were as
follows:

Opening value ($) closing value ($)

Supplier 11,564 12,826
Inventory 5,288 4,184
What was Tanya’s cost of sales for the year to 30 April 20X8?
A. $129,935
B. $127,727
C. $126,307
D. $125,203

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Question#22:
Maureen had an opening accrual of $533 for telephone expenses. During the year she paid invoices with
a total value of $2,974.Her closing accruals was $488.
What is the correct charge for telephone expenses in Maureen’s statement of profit or loss?
$
Question#23:
When Keith’s trial balance was extracted, a suspense account was opened as the total of the debit
column was $400 greater than the total of the column. Keith found that a cash purchase of stationary
for $200 was correctly entered in the cash account, but was entered on the wrong side of the stationary
account.
When the error is corrected, what is the balance on the suspense account?
A. $800
B. $200
C. Nil
D. $600
Question#24:
Would each of the following errors be highlighted by extracted a trial balance?
Yes No
 Cash sales have been omitted from the records entirely
 The sales returns have been credited to the purchase returns
Account and correctly posted to the receivables control account.
Question#25:
Bruce prepared the following payables ledger reconciliation statement:
$
Balance on general ledger control account 46,865 Cr
Payment entered twice in the general ledger control accounts 573 Cr
47,438 Cr
Purchase daybook overcast 900 Dr
Total of list of balances 46,538 Cr
How should the payables ledger balance be reported on the statement of financial position?
A. 46,538 as a current assets
B. 46,538 as a current liability
C. 46,865 as a current asset
D. 46,865 as a current liability
Question#26:
At 1 November 20X8, Borim had an accrual of $855 for fuel. During the year to 31 October 20X9 he paid
invoices with a total value of $11,874. His closing accruals at 31 October 20X9 was $962.
What is the charge for the fuel in his statement of profit or loss for the year to 31 October 20X9?
$

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Question#27:
When goods are sold on credit at a profit, what is the effect on the assets and liabilities of the seller?
Increase Reduce Do not change
Assets
Liabilities
Question#28:
Wu is preparing the reconciliation between the total of the list of balances from his payables ledger and
the balance on the payables ledger control account in the general ledger. The total of the list of balances
is $45,845.
He has discovered that a credit balance of $1,539 has been omitted from the list of balances, and that
no entry has been made to record a contra of $318 with receivables ledger.
What values should be reported on the statement of financial position for payables?
A. $47,702
B. $47,384
C. $43,988
D. $47,066
Question#29:
In the year to 31 May 20X8, Lesley’s sales totaled $600,000 and her cost of sales totaled $480,000.
What are the correct figures for the Lesley’s mark up and margin?
A. Markup: 20%, Margin: 25%
B. Markup: 25%, Margin: 20%
C. Markup: 20%, Margin: 20%
D. Markup: 25%, Margin: 25%
Question#30:
You are preparing the final accounts for a business. The cost of the items in the closing inventory is
$41,875. This includes some items which cost $1,960 and which were damaged in transit. You have
estimated that it will cost $360 to repair items, and they can then be sold for $1,200.
What is the correct inventory valuation for inclusion in the final accounts $_______?
Question#31:
Jo sold a non-current asset which had originally cost $87,600 for $43,000. At the date of disposal, the
accumulated depreciation on the asset was $45,800.
What is Jo’s profit or loss on disposal of the non-current asset?
A. $2,800 profit
B. $1,200 loss
C. $2,800 loss
D. $1,200 profit
Question#32:
Jodie is carrying out a reconciliation of the bank account in her ledger with the balance on her bank
statement. She has found the following reason for the difference between the two balances:
(1) Some cheques paid to suppliers have not been presented at the bank
(2) The bank has made charges on Jodie’s bank account

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(3) A customer has paid $980 directly into Jodie’s bank account
Which of the above items will require an entry in the general ledger?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1,2 and 3
Question#33:
At 31 October 20X8, Dong’s statement of financial position reported non-current assets with a carrying
amount of $237,950. In the year to 31 October 20X9. He scrapped assets with a carrying amount of
$12,890, and bought new assets for $19,500.
He has calculated that depreciation for the year to 31 October 20X9 is $46,900.
What value should be reported for non-current assets in Dong’s statement of financial position 31
October 20X9 $______?
Question#34:
Walter paid an invoice amounting to $6,300 for goods purchased from Pollux. Pollux accepted payment
of $6,174 in full settlement.
How should Walter record the discount of $126?
A. Dr Discounts received $126 Cr Pollux $126
B. Dr Pollux $126 Cr Purchases $126
C. Dr Pollux $126 Cr discounts received $126
D. Dr Purchases $126 Cr Pollux $126
Question#35:
Which of the following relates to the principals of going concern?
A. It requires that expenditure incurred in a particular accounting period should be accounted for in
that period
B. It separates the individual who owns the business from the business itself
C. It requires that caution should be applied when exercising judgment about uncertainties
D. It assumes that the business will continue in operation for the foreseeable future
Question#36:
Vivienne and Robert are in a Partnership sharing profits and losses in a ratio of 3:2. They maintain
current accounts and capital accounts. In the last year, their profits before appropriations was $27,800.
Robert is entitled to an annual salary of $3,800.
During the year Vivienne and Robert made cash drawings of $12,000 each.
What is Vivienne’s share of profit $______?
Question#37:
Which of the following statements about accounting records is/are true?
(1) Accounting records include documents received by a business such as supplier invoices
(2) Businesses are legally required to keep accounting records
A. Statement 2 only
B. Neither statement
C. Statement 1 only

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D. Both statements
Question#38:
Cameron makes capital repayments of $558 on a bank loan on the 10th of each month. At 31 May 20X0
the capital balance on the loan was $18,414.
How should the loan be reported in Cameron’s statement of financial position at 31 May 20X0?
A. Current liability: nil non-current liability: $18,414
B. Current liability: $11,718 non-current liability: $6,696
C. Current liability: $18.414 non-current liability: nil
D. Current liability: $6,696 non-current liability: $11,718
Question#39:
you are preparing a client’s final accounts. You know that the client’s bookkeeper has correctly
completed a reconciliation of the bank balance in the general ledger to the balance on the bank
statement.
The balances on the general ledger and the bank statement are:
General ledger balance $2,358(credit)
Bank statement balances $1,053(debit)
The difference between the two balances is explained by unpresented cheques and outstanding
lodgments.
How should the bank balance be reported in the final accounts?
A. As a current asset of $1,053
B. As a current liability of $1,053
C. As a current asset of $2,358
D. As a current liability of $2,358
Question#40:
Which of the following correctly calculates the difference between closing capital and opening
capital?
A. Profit - capital introduced - drawings
B. Profit + capital introduced – drawings
C. Profits + capital introduced + drawings
D. Profits – capital introduced + drawings
Question#41:
Which accounting principal is described by the following statement?
For accounting purposes, a business is separate from its owners.
A. Accruals
B. Business entity
C. Going concern
D. Materiality
Question#42:
When Imogen’s trial balance was extracted, the total of the debit balances was $95 greater than the
total of the credit balances. Imogen then discovered that the entry for a cash sale for $95 had been
made correctly in the sales account, but was recorded on the wrong side of the cash account.

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After the error is corrected, what should the balance on the suspense account be?
A. Nil
B. $95 debit
C. $285 credit
D. $95 credit
Question#43:
Ed and Hilary are in partnership. Their draft statement of the profit or loss reports a profit for the year of
$75,862. However, interest on drawings (Ed $2,754; Hilary $3,156) and interest on a loan from Hilary
($1,346) have not been included.
What is the correct profit for the year $______?
Question#44:
Tim has recently commenced trading. The materials he uses in his business are subject to regular price
rises. He is unsure how to value his inventory and is trying to decide whether to use FIFO, or continuous
weighted average.
Which of the following statements is correct?
A. Continuous weighted average will lead to the higher reported profit
B. FIFO will lead to the higher reported profit
C. The profit will be more accurate of FIFO is used
D. Tim’s profit will be unaffected by the method of inventory valuation
Question#45:
The cash payments book shows the following
Total cash ($) Discounts received ($) Payables ledger control account (PLCA) ($)
2,640 60 2,640
How should this be recorded in the ledgers?
A. Dr PLCA $2,700, Cr Discount received $60, Cr Cash $2,640
B. Dr Cash $2,640, Dr Discount received $60, Cr PLCA $2,700
C. Dr Cash $2,700, Cr Discount received $60, Cr PLCA $2,640
D. Dr PLCA $2,640, Dr Discount received $60, Cr Cash $2,700
Question#46:
According to IAS 2 invontories, which of the following methods is/are acceptable when valuing
inventory?
(1) Continuous weighted average
(2) Last in, first out
(3) Periodic weighted average
A. 1,2 and 3
B. 1 and 2 only
C. 1 and 3 only
D. 2 and 3 only

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Question#47:
A company has the following ledger accounts:
Payables control account
$ $
Cash 3,000 Purchases 4,500

Cash
$ $
Payables control account 3,000

Purchases
$ $
Payables control account 4,500
Which of the following accounting entries would result in the amounts shown in these accounts?
A. Dr purchases $4,500, Cr payables control account $4,500, Dr payables control account $3,000, Cr
cash $3,000
B. Dr purchases $4,500, Cr payables control account $4,500, Dr cash $3,000, Cr payables control
account $3,000
C. Dr payables control account $4,500, Cr purchases $4,500, Dr payables control account $3,000, Cr
cash $3,000
D. Dr payables control account $4,500, Cr purchases $4,500, Dr cash $3,000, Cr payables control
account $3,000
Question#48:
Milos obtains a 25% mark-up on all of the goods he sells in the year to 31 May 20X1, the goods which he
bought for resale cost him $25,652. His opening inventory was valued at $3,720 and his closing
inventory was valued at $3,640.
What was the value of his sales for the year to 31 May 20X1 $______?
Question#49:
During the period, Alisa has paid input sales tax of $450 on her purchases and charged output sales tax
of $300 on her sales
Alias is now completing her sales tax return.
What is the total amount of sales tax due to or from the tax authorities?
A. $150 due to tax authorities
B. $750 due to tax authorities
C. $750 due from the tax authorities
D. $150 due from the tax authorities
Question#50:
Ricardo pays to rent car parking spaces outside his office. On occasions, he is able to sublet these.
During the year to 30 April 20X0, the following entries were recorded in his rental ledger account:
(1) Rent paid $4,853
(2) An additional invoice for $150 for renting an additional space

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(3) Cash of $822 received from subletting the parking spaces

What is the net balance on the rental ledger account that should be included in Ricardo’s trial balance
at 30 April 20X0?
A. $4,181 credit
B. $4,181 debit
C. $3,881 credit
D. $3,881 debit

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