Acca f3 Financial Accounting (int) Study Text

430

Exam question bank  

45 

At 31 December 20X5 the following require inclusion in a company’s financial statements:  

(1) 

On 1 January 20X5 the company made a loan of $12,000 to an employee, repayable on 1 

January 20X6, charging interest at 2 per cent per year. On the due date she repaid the loan 

and paid the whole of the interest due on the loan to that date.

(2) 

The company has paid insurance $9,000 in 20X5, covering the year ending 31 August 20X6.  

(3) 

In January 20X6 the company received rent from a tenant $4,000 covering the six months 

to 31 December 20X5.

For these items, what total figures should be included in the company’s statement of financial 

position at 31 December 20X5?

Current assets 

Current liabilities 

 $ 

$ 

A 10,000 

12,240 

B 22,240 

Nil 

C 10,240 

Nil 

D 16,240 

6,000 

(2 marks) 

46 

Should details of material adjusting or material non-adjusting events after the reporting period be 

disclosed in the notes to financial statements according to IAS 10 Events After the Reporting 

Period?

A Adjusting 

events 

B Non-Adjusting 

events 

(1 mark)

47 

Which of the following material events after the reporting period and before the financial 

statements are approved are adjusting events?

(1) 

A valuation of property providing evidence of impairment in value at the reporting date.  

(2) 

Sale of inventory held at the reporting date for less than cost.  

(3) 

Discovery of fraud or error affecting the financial statements.  

(4) 

The insolvency of a customer with a debt owing at the reporting date which is still 

outstanding.

A 

1, 2, 3 and 4 

B 

1, 2 and 4 only 

C 

3 and 4 only 

D 

1, 2 and 3 only. 

(2 marks) 

48 

Part of a company’s statement of cash flows is shown below:  

$'000

Operating profit 

8,640

Depreciation charges 

(2,160)

Increase in inventory 

(330)

Increase in accounts payable 

440

The following criticisms of the extract have been made:

(1) 

Depreciation charges should have been added, not deducted.  

(2) 

Increase in inventory should have been added, not deducted.  

(3) 

Increase in accounts payable should have been deducted, not added.  

Which of the criticisms are valid? 

A 

2 and 3 only 

B 1 

only 

C 

1 and 3 only 

D 2 

only 

(2 marks) 

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  Exam question bank

431

49 

Which of the following items could appear in a company’s statement of cash flows?  

(1) 

Surplus on revaluation of non-current assets  

(2) 

Proceeds of issue of shares  

(3) 

Proposed dividend  

(4) Dividends 

received 

A 

1 and 2 

B 

3 and 4  

C 

1 and 3 

D 

2 and 4  

(2 marks) 

50 

Which of the following statements are correct?  

(1) 

A statement of cash flows prepared using the direct method produces a different figure for 

operating cash flow from that produced if the indirect method is used.

(2) 

Rights issues of shares do not feature in statements of cash flows.  

(3) 

A surplus on revaluation of a non-current asset will not appear as an item in a statement of 

cash flows. 

(4) 

A profit on the sale of a non-current asset will appear as an item under Cash Flows from 

Investing Activities in a statement of cash flows.

A 

1 and 4  

B 

2 and 3  

C 

3 only  

D 

2 and 4  

(2 marks) 

51 

A computerised accounting system operates using the principle of double entry accounting.  

Is this statement true or false? 

A True 

B False 

(1 mark) 

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432

Exam question bank  

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  Exam answer bank

433

1  

C  

A sole trader also invests capital in his or her business. 

2  

B  

 

3 C 

 

4 A 

 

5  

A  

IAS 8 does not require prospective future information, so 3 is never correct. 

6  

D  

7  

B  

 

8  

B  

A remittance advice gives details of the invoices covered by the payment. 

9  

A  

 

10  

A  

Balance carried forward from previous period shows debits exceed credits and so it is a 

debit balance brought forward for the new period. 

11 

B 

False. Sales tax for a registered trader is removed from income and expenses. 

12  

D  

Carriage outwards is a selling expense. 

13 

A  

(300@230) + (500@220) + (50@190) = 188,500

14  

B  

1,000,000/40years = 25,000; 1,000,000 – (800,000 – (800,000 × 2%*10years)) = 360,000  

15  

D  

(240,000*20%) + (6/12*160,000*20%) – (9/12*60,000*20%) = 55,000

16  

D  

890 + 95 + 10 + 20 = 1,015 Maintenance is revenue expenditure and the sales tax is 

reclaimed.

17  

A  

 

18  

A  

Research expenditure must be charged to the income statement. 

19  

D  

(84,000 × 2/12) + (96,000 × 10/12) = 94,000; 96,000 × 2/12 = 16,000  

20  

D  

 

RENT RECEIVABLE 

$

$

O/Balance

21,200

O/Balance

28,700

Income statement

475,900

Cash received

481,200

C/Balance

  31,200

C/Balance

  18,400

528,300

528,300

21 

B  

37,000 + ((517,000 – 37,000) × 5%) – 39,000) = 22,000. New allowance required is 

$24,000, so the allowance is reduced by $15,000. 

22  

B  

 

23 

D 

RECEIVABLES LEDGER CONTROL ACCOUNT 

$

$

Opening balance

308,600

Contras

4,600

Credit sales

154,200

Cash received

147,200

Interest charged

2,400

Discounts allowed

1,400

Irrecoverable debts

4,900

Closing balance

307,100

465,200

465,200

24  

A  

(8,950 – 4,080) – (4,140 + 40) = 690  

25  

D 

$

List Price 

200,000

Trade discount

(20,000)

180,000

Sales tax (17.5% × 95% × 180,000)

  29,925

209,925

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