Section a – all 35 questions are compulsory and must be attempted

Which of the errors will require an entry to the suspense account to correct them?

1. 
   1, 2 and 4 only
   
2. 
   1, 2, 3 and 4
   
3. 
   1 and 4 only
   
4. 
   2 and 3 only
   
25. 
    Prior to the financial year end of 31 July 20X9, Cannon Co has received a claim of $100,000 from a supplier for providing poor quality goods which have damaged the supplier’s plant and equipment. Cannon Co’s lawyers have stated that there is a 20% chance that Cannon will successfully defend the claim.
    

Which of the following is the correct accounting treatment for the claim in the financial statements for the year ended 31 July 20X9?

1. 
   Cannon should neither provide for nor disclose the claim
   
2. 
   Cannon should disclose a contingent liability of $100,000
   
3. 
   Cannon should provide for the expected cost of the claim of $100,000 D Cannon should provide for an expected cost of $20,000
   
25. 
    Gareth, a sales tax registered trader purchased a computer for use in his business. The invoice for the computer showed the following costs related to the purchase:
    

$
Computer 890
Additional memory 95
Delivery 10
Installation 20
Maintenance (1 year) 25
––––––
1,040
Sales tax (17·5%) 182
––––––
Total 1,222
––––––
How much should Gareth capitalise as a non-current asset in relation to the purchase?

1. 
   $1,193
   
2. 
   $1,040
   
3. 
   $1,222
   
4. 
   $1,015
   

29. 
    The following bank reconciliation statement has been prepared by a trainee accountant:
    

$

Overdraft per bank statement	3,860
Less: Unpresented cheques	9,160 ––––––– 5,300
Add: Outstanding lodgements	16,690 –––––––
Cash at bank	21,990 –––––––