Kimi has recorded total net sales of $120,000 and total gross purchases of $96,000.

Kimi owed $3,300 to the tax authority at 1 October 20X8. Sales tax is charged at 20%.
1. What is the balance on Kimi's sales tax account at the quarter ended 31
December 20X8? $_______

Alan has recorded total net sales of $100,000 and total net purchases of $84,000. Alan was
owed $2,000 by the tax authority at 1 July 20X8. Sales tax is charged at 20%.
2. What is the balance on Alan's sales tax account at the quarter ended 30 September
20X8?
A.$1,200 Debit
B.$1,200 Credit
C.$5,200 Debit
D.$5,200 Credit

Wang is registered for sales tax. At 1 November 20X7 the amount owing to the local tax
authority was $4,800. During the year ended 31 October 20X8 he makes net sales of
$120,000 and gross purchases of $96,000. The sales tax rate applicable to Wang's business
is 20%.
3. What is the amount of sales tax due to the local tax authority at 31 October 20X8? $_____

Naima is registered for sales tax. She sells goods on credit of $80 net of sales tax. Sales tax
is charged at 22%.
4. Which of the following journals will record this sale?
A.DR Receivables $97.60, CR Sales $80, CR Sales tax control $17.60
B.DR Receivables $80, CR Sales $65.57 CR Sales tax control $14.43
C.CR Receivables $97.60, DR Sales $80, DR Sales tax control $17.60
D.CR Receivables $80, DR Sales $65.57, DR Sales tax control $14.43

Chen is registered for sales tax. At 1 March 20X7 the amount owed by the local tax authority
was $1,600. During the year ended 30 April 20X8 he makes gross sales of $150,000 and net
purchases of $78,000. The sales tax rate applicable to Chen's business is 20%.
5. What is the amount of sales tax due to the local tax authority at 30 April 20X8? $_____

6. Which TWO of the following would be included in the initial cost of property, plant and
equipment?
A.Installation and assembly costs
B.Staff training costs
C.Professional fees
D.Maintenance costs

Max acquired an item of machinery on 1 July 20X6 for $15,000. He incurred staff training
costs for the new machinery of $2,000 and believes that the residual value will be nil. Max
charges depreciation at 15% per annum on a straight-line basis with a full year's charge in
the year of acquisition.
7. What is the depreciation charge for machinery for the year ended 31 December 20X6?
A.$1,125
B.$1,275
C.$2,250
D.$2,550

Jessica purchased a building for use as her main office on 1 September 20X8 for $100,000.
In addition, she paid legal fees associated with the purchase of $5,000. Jessica charges
depreciation on buildings over a useful life of 25 years on a straight-line basis with
depreciation charged from the date of acquisition to the date of disposal.
8. What is the depreciation charge for the building for the year ended 31 December 20X8?
$_____

Zinan acquired a motor vehicle on 1 June 20X7 for $18,000. The motor vehicle had an
estimated residual value of $2,000. Zinan charges depreciation on a 25% reducing balance
basis with a full year's charge in the year of acquisition.
9. What is the net book value of the motor vehicle at 31 December 20X7?
A.$13,500
B.$14,000
C.$15,375
D.$15,667

Binta purchased an item of plant on 1 September 20X5 for $50,000 with a residual value of
$8,000. Binta charges depreciation on plant over an estimated useful life of five years on a
straight-line basis, with a full year's charge in the year of acquisition and none in the year of
disposal. The item of plant is sold on 31 August 20X8 for $35,000. Binta's accounting year
end is 31 December.
10. What is the profit on disposal of the plant recognised in the year ended 31 December
20X8? $_____

11. Which TWO of the following would be taken into account when considering the cost of
inventories?
A.Purchase price
B.Storage costs of inventories
C.Delivery costs to customers
D.Trade discounts

At 1 August 20X8 Shota had 30 units of inventory which cost $2 per unit. The following
sales and purchases took place during August 20X8.

5 August Purchase of 50 units at $2.40 each

10 August Sale of 40 units

18 August Purchase of 60 units at $2.50 each

23 August Sale of 25 units

Shota uses a continuous weighted average method for her inventory valuation.
12. What is the value of Shota's inventory at 31 August 20X8? $_____
At 1 February 20X6 Thomas had 50 units of inventory which cost $2.50 per unit. The
following sales and purchases took place during February 20X6.

2 February Purchase of 40 units at $2.60 each

10 February Sale of 30 units

17 February Purchase of 60 units at $2.70 each

22 February Sale of 20 units

Thomas uses the first in, first out method of valuing inventory.
13. What is the value of Thomas's inventory at 28 February 20X6?
A.$256
B.$260
C.$266
D.$270

14. Which TWO of the following statements about inventory valuation are correct?
A.The weighted average cost or FIFO method can be used to determine cost.
B.Closing inventory is valued at the lower of cost and net realisable value (NRV).
C.Closing inventory is always valued at historic cost.
D.Net realisable value is the selling price plus the costs to sell.

On 1 September, Joshua has 100 units of inventory that cost $12 each. During
September, he made the following purchases and sales:

Date Units $

3 September Sale 60

4 September Purchase 50 11.50

12 September Purchase 80 12.50

18 September Sale 80
15. What is the value of Joshua's inventory at 30 September using the first in, first out
method (FIFO)?
A.$1,115
B.$1,125
C.$1,180
D.$1,055

Tisha discovered that some items of closing inventory had been excluded, in error, from
inventory in her draft financial statements. The extra 50 units of inventory have an average
cost of $40 each. Each unit has a net realisable value of $30 each.
16. What adjustment should be made to her closing inventory value?
A.Decrease of $1,500
B.Increase of $1,500
C.Increase of $2,000
D.Decrease of $2,000

On 1 September, Miu has 100 units of inventory that cost $12 each.

Date Transaction Units $

3 September Sale 60

4 September Purchase 50 11.50

12 September Purchase 80 12.50

18 September Sale 80
17. What is the value of Miu's inventory at 30 September using the continuous weighted
average method?
A.$1,088
B.$1,080
C.$1,115
D.$1,125

18. Which TWO of the following are credit entries in the receivables ledger account?
A.Cash paid to credit suppliers
B.Discounts received
C.Irrecoverable debts
D.Sales returns from credit customers

Alan has produced a first draft of his receivables ledger account but is not confident that
he has all the entries on the correct side of the ledger account.

Trade Receivables ledger

$ $

Balance b/d 12,000 Credit sales 54,600

Receipts from customers 53,500 Sales returns 1,100

Cash sales 4,800 Contra with payables ledger 900

Irrecoverable debt 700

19. What should Alan’s closing balance for receivables be after making the necessary
corrections? $_____

Lin has the following information relating to her credit suppliers for the month of
November.

$000

Trade payables b/d 580

Cash paid to suppliers 1,360

Cash purchases 55

Credit purchases 1,480

Contra with receivables ledger 35

Discounts received from suppliers 20

20. What is Lin’s balance on the trade payables account at the end of November? $_____

Naima paid rent of $12,000 on 1 October 20X6 for the year to 30 September 20X7 and
$16,000 on 1 October 20X7 for the year to 30 September 20X8.
21. What is the figure for Naima's rent expense which should be recognised in the
statement of profit or loss the year ended 31 December 20X7?
A.$12,000
B.$13,000
C.$15,000
D.$16,000

In the year to 31 December 20X8, Tareq received $48,000 rental income. Extracts from
Tareq's statement of financial position showed the following balances for rental income:

31 Dec 20X8 31 Dec 20X7

$ $

Rent due in arrears 1,800 1,400

22. What is the figure for rental income which should be recorded in the statement of profit
or loss the year ended 31 December 20X8? $_____

Sophie has paid a total of $12,800 for business telephone bills during the year ended 30
September 20X8. She pays a monthly line rental of $100 which is payable in advance. Call
charges are in arrears with call charges outstanding at 30 September 20X7 and 20X8 or
$320 and $410 respectively.
23. What is the figure for Sophie's telephone expense which should be recognised in the
statement of profit or loss the year ended 30 September 20X8? $_____

On 1 May 20X7, Bailey leases a new building and pays rent of $1,800 for the period to
30 April 20X8.
24. Which of the following is correct for the year ended 30 November 20X7?
A. Rent expense is $1,050 and prepayment is $750
B. Rent expense is $1,800 and prepayment is $750
C. Rent expense is $1,050 and prepayment is $1,050
D. Rent expense is $1,800 and prepayment is $1,050

25. Which TWO of the following describe the impact of the adjustment for a prepaid
expense on the financial statements?

A.Profit for the year will decrease.

B.Profit for the year will increase.

C.Current assets will increase.

D.Current liabilities will increase.