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Final Test - EY - A - 3.19.2018
Final Test - EY - A - 3.19.2018
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MOCK EXAMINATION – EY
Total questions: 30 MCQs (1.5 points each) and 1 Essay (5 points)
Total marks: 50 points
Time: 2 hours
SECTION A - ACCOUNTING
2. D. $1,800 credit
SPL CHARGE
$ $
Receivables allowance at 31.12.X1 (15% of $20,000) 1,000
Receivables allowance at 1.1.X1 3,000
Decrease in allowance 2,000
Irrecoverable debts written off (1,000)
Debt recovered 800
Total credit to statement of profit or loss 1,800
4. C. 1 and 3
An aged receivables analysis shows the outstanding balances owed by each customer analysed by how
long they have been outstanding, usually 30, 60 and 90+ days. The receivables allowance is deducted
from the receivables balance in the statement of financial position.
5. B. 35% of the profit after tax of Deciduous should be added to Evergreen’s consolidated profit before
tax.
Deciduous is an associate of Evergreen. Under equity accounting, the Evergreen group’s share of the
profit after tax of Deciduous is added to the group profit before tax.
6. A. $560,000
Weighted average capitalisation rate =(9% × 15 / 39) + (11% × 24 / 39) = 3.5% + 7% = 10.5%
Borrowing costs = $6m × 10.5% × 9/12 + $2m × 10.5% × 5/12 = 472,500+ 87,500 = 560,000
7. A. $130,000
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8. D. A gain or loss arising from a change in the fair value of an investment property should be recognized
in other comprehensive income.
A gain or loss arising from a change in the fair value of an investment property is recognised in profit or
loss. The other options are all correct.
9. B. $314,000
Building transferred to investment property
$'000
Original cost 600
Depreciation 1.1.X0 to 1.7.X9 ((600 / 50) × 9.5) (114)
Carrying amount at 1.7.X9 486
Revaluation surplus 314
Fair value 800
12. B. $70,000
The impairment loss is not allocated to current assets.
13. D. $825,000
The impairment loss is allocated first against goodwill and then pro-rata against the tangible non-
current assets.
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This means writing $75,000 off the carrying amount of the building and $25,000 off plant and
equipment.
14. D. It has not been possible to reliably allocate costs to development of the product.
In order for capitalisation to be allowed it is not necessary for development to be completed,patents to
be registered or sales contracts signed. However, an intangible asset can only be recognised if its cost
can be reliably measured.
SECTION B - AUDITING
16. C. For a sample of goods received notes check that there is an authorised purchase order
The direction of the test is important here. The sample is taken from goods received notes as these
represent deliveries. The auditor can then check that each delivery is supported by a valid order. If the
sample is chosen from purchase orders (Option A) the test would confirm whether orders have been
fulfilled. Options B and D are tests of controls regarding completeness of accounting information.
17. A. Undertake 'mystery shopper' reviews, where they enter the store as a customer, purchase goods
and rate the overall shopping experience
18. D. The relationship between goods and services produced and the resources used to produce them
A Value for Money focuses on three Es: Economy, Efficiency and Effectiveness. Option A describes
economy. Option C describes effectiveness. Option B only describes one aspect of efficiency.
The selection and application of accounting policies is one of the areas in which the auditor is required
to gain an understanding, as part of the auditor's risk assessment procedures. It is not a component of
internal control. The other components of internal control are the risk assessment process and
monitoring of controls.
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3Ard Floor, No. 374 – 374B, Vo Van Tan Str, Ward 05, Dist 03, HCM
SECTION C – TAXATION
21. A. £48,500
£50,000 minus the balance of the 2015–16 AE of £1,000 (3,000 – 2,000 PET) minus the balance of the
2014–15 AE of £500 (3,000 – 2,500) = £48,500
23. C. £65,000
£40,000 (2015–16) + 2012–13 £0 (contribution exceeds £50,000) + 2013–14 £13,000 (50,000 – 37,000)
+ 2014–15 £12,000 (40,000 – 28,000) = £65,000.
SECTION E – IQ TEST
28. B.
So that each connected straight line of three circles contains one each of the three different types of
star.
30. 72.5
the amount deducted increases by 2.75 each time, ie 2.75, 5.5, 8.25, 11
SECTION F – WRITING
Social media is becoming increasingly popular amongst all age groups. However, sharing personal information
on social media websites does have risks.
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Do you think that the advantages of social media outweigh the disadvantages?
Answer:
There is no doubt that many people rely more on the Internet for the latest news or trends. Although
its utilization has disadvantages such as the threat to privacy, I believe they are outweighed by its advantages
and I will support this argument with valid examples.
To begin with, some opine that posting private information on the Internet websites may bring
security problems. This is because once the individual shares their current location online, their enemies /
opponents can plan strategies to hurt/harm them. To illustrate, in recent times the number of attacks on
women have increased because their movements can be easily monitored through social media. If an individual
is not posting any secure information online, such attacks can be lowered. Thus, many people oppose the
extensive use of social networks to protect their privacy and security.
On the other hand, I agree with the argument that many people nowadays are utilizing social media
as a common platform to connect with each other. The reason for this is that with the help of renowned
websites like Facebook, Twitter and Linked-in, people can connect to friends and family living in different parts
of the world and also make new connections. For example, multiple job requirements are posted online;
people who are subscribed to such information can utilize this information. There are also many newspapers
that post the same information but print media takes more time than online media to reach the public. Hence,
new generation is making an advantage of fast and reliable media.
To conclude, there are both advantages and disadvantages associated with Internet usage. In my view
the benefits such as faster connectivity and access to information outweigh the demerits.
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