Name:___________________________________________________Roll

No._____________________________
1. A business sold goods with a list price of $24,000 to a credit customer. The customer is
entitled to a trade discount of 5% and also to a further 2.5% discount if payment is made
within ten days of the invoice date.
What amount should be credited to the revenue in the statement of profit or loss?
a. $22,800
b. $22,230
c. $23,400
d. $24,000
2. Smith receives a bank statement which shows an overdrawn balance of $3,500. Whilst
carrying out a reconciliation of the cash book to the bank statement balance, the following
points came to light:
1) Cheques sent to suppliers for $4,019 have not been presented to the bank at the
date of the bank statement
2) A payment of $75 has been paid out of the bank account due to a bank error
After correction of the above points, what amount should be shown in the statement of
financial position for the bank overdraft?
3. On 1 August 20X8 Xin had an opening accrual of $600 on her rent account which was owed
from the previous year. On 1 October 20X8 Xin paid $4,500 rent for the period from 1 June
20X8 to 31 August 20X9.
What amounts should be included in the financial statements in relation to the rent for the
year ended 31 July 20X9?
a. Rent Expense $4,500
Prepayment $300
b. Rent expense $4,500
Accrual $600
c. Rent expense $3,600
Accrual $600
d. Rent expense $3,600
Prepayment $300
4. Which of
a.
b.
c.
d.

the following is capital expenditure for a hotel?

Repairing a leaking roof
Refurbishing the rooms on a cyclical basis
Redecorating a function room which had become damaged after a wedding
Adding an internet connection to operate in all guest rooms

5. A business has 1,000 identical units of inventory. Each one originally cost of $50 and they will
be ready for resale after modification work costing $ 10 per unit. They are expected to be sold
for $60 each but the business will incur selling costs of $3per unit.
What should be the total value of the inventory in the statement of financial position?
6. What type of liabilities are the following items?
CURRENT
a. A bank overdraft using a facility arranged two years ago
b. Amount owed for the supply of a non-current asset one month
ago on 12 months interest free credit

NON-CURRENT

7. When performing his yearend inventory count Mahmood accidentally counted goods that
were in the despatch area waiting to be delivered to customers. The goods had a cost of
$50,000 and were despatched prior to the year end.
What impact does this uncorrected error have on profit and assets at the year end?
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Overstated
Understated
a. Profits
b. Assets
8. Lime Co. owns a brand name which was purchased in the prior year for $40,000 .it has an
estimated useful life of four years and is being amortised on a straight line basis.
Which FOUR of the following items of the information must be disclosed in
respect of the brand name in accordance with IAS 38 intangible Assets?
o
o
o
o
o
o

A reconciliation of the carrying amount at the beginning and end of the period
The useful life of the brand
The amortization expense for the period
The accumulated amortization at the beginning and end of the period
How the brand will be used in the business
The name of the brand

9. Craig has incorrectly prepared his bank reconciliation statement at 31 December 20X2 as
follows
$
Balance at the bank per statement

110

Add: unpresented cheques

30

Add: Uncleared lodgments

50

Less: Interest credited in errors by bank

40

Balance per cash book

150

What should be the cash book balance be, after the above items have been
correctly accounted for?
a.
b.
c.
d.

$230
$90
$130
$150

10.
What is the effect on the statement of the financial position of an increase in
the allowance for receivables?
o Decrease in the current assets
o Increase in current liabilities
o Decrease in current liabilities
o Increase in current assets
11.
The following figures are from Lucys statement of the financial position for the
year ended 31 December 20X8?
$
Land and Building
Loan stock

735000
75000
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Trade payables

225000

Trade receivables

200000

Overdraft

35000

Prepayments

54000

Accruals

23000

Inventory

25000

Loan repayable 30 June 20X9

450000

What are Lucys CURRENT liabilities?

12.
A company receives rent from a large number of properties. The total received in
the year ended 30 April 20X6 was $481,200. The following were the amounts of rent
in advance and in arrears at 30 April 20X5 and 20X6:
30 April 20X5

30 April 20X6

$
Rent received in advance
Rent in arrears (all subsequently received)

$
28,700
21,200

31,200
18,400

What amount of rental income should appear in the companys statement of profit or
loss for the year ended 30 April 20X6?
A $486,500
B $460,900
C $501,500
D $475,900
13.

A companys motor vehicles cost account at 30 June 20X6 is as follows:

What
opening balance should be included in the following periods trial balance for Motor
vehicles cost at 1 July 20X6?
A $36,750 Dr
B $48,750 Dr
C $36,750 Cr
D $48,750 Cr
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14.

Which of the following statements are correct?

(1) Capitalised development expenditure must be amortised over a period not
exceeding five years.
(2) Capitalised development costs are shown in the statement of financial position
under the heading of non-current assets
(3) If certain criteria are met, research expenditure must be recognised as an
intangible asset.

A 2 only
B 2 and 3
C 1 only
D 1 and 3
15.
The following transactions relate to Rashids electricity expense ledger account for
the year ended 30 June 20X9:
$
Prepayment brought forward
550
Cash paid
5,400
Accrual carried forward
650
What amount should be charged to the statement of profit or loss in the year ended 30
June 20X9 for electricity?
A $6,600
B $5,400
C $5,500
D $5,300
16. At 30 June 20X5 a companys allowance for receivables was $39,000. At 30 June
20X6 trade receivables totaled $517,000. It was decided to write off debts totalling
$37,000 and to adjust the allowance for receivables to the equivalent of 5% of the
trade receivables based on past events.
What figure should appear in the statement of profit or loss for the year ended 30 June
20X6 for receivables expense?
A $61,000
B $52,000
C $22,000
D $37,000
17. According to IAS 2 Inventories, which TWO of the following costs should be
included in valuing the inventories of a manufacturing company?
(1)
(2)
(3)
(4)

Carriage inwards
Carriage outwards
Depreciation of factory plant
General administrative overheads
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A 1 and 4
B 1 and 3
C 3 and 4
D 2 and 3
18. The plant and machinery account (at cost) of a business for the year ended 31
December 20X5 was as follows:

The companys policy is to charge depreciation at 20% per year on the straight line
basis, with proportionate depreciation in the years of purchase and disposal.
What should be the depreciation charge for the year ended 31 December 20X5?
A $68,000
B $64,000
C $61,000
D $55,000
19.

Which of the following statements about sales tax is/are true?

(1) Sales tax is an expense to the ultimate consumer of the goods purchased
(2) Sales tax is recorded as income in the accounts of the entity selling the goods
A 1 only
B 2 only
C Both 1 and 2
D Neither 1 nor 2
20. Sunnys financial year ended on 30 November 2012. The last invoice paid for
telephone calls was for $1,800. This invoice covered the three months to 31 October
2012.
What adjustment is required when preparing the accounts for the year to 30 November
2012?
A
B
C
D

A prepayment of $600
A prepayment of $1,200
An accrual of $600
An accrual of $1,200

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20.
If sales (including VAT) amounted to $27,612.50, and purchases (excluding VAT)
amounted $18,000, the balance on the VAT account assuming all items are subject to
VAT at 17.5% would be:
A. $962.50 debit
B. $962.50 credit
C. $1,682.10 debit
D. $1,682.10 credit
21.
You are preparing final accounts for a business. The cost of the items in 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 the items, and
they can then be sold for $1,200.
What is the correct inventory valuation in the final accounts?
A $39,915
B $40,755
C $41,515
D $42,995
22.

At 30 September 2000, the following balances existed in the records of Lambda:

$

Plant and equipment: Cost

860,000

Accumulated depreciation

397,000

During the year ended 30 September 2001, plant with a written down value of $37,000
was sold for $49,000. The plant had originally cost $80,000. Plant purchased during the
year cost $180,000. It is the companys policy to charge a full years depreciation in the
year of acquisition of an asset and none in the year of sale, using a rate of 10% on the
straight line basis.
What net amount should appear in Lambdas balance sheet at 30 September 2001 for
plant and equipment?
A $563,000
B $467,000
C $510,000
D $606,000
23.
When Michelle purchased a new car, she used her old car in part exchange. She
has made the correct entry for the part exchange value of $3,500 in the non current
asset disposal account.
What other entry is needed to complete the double entry for the part exchange value of
$3,500?
A A debit entry in the motor vehicles cost account
B A credit entry in the motor vehicles cost account
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C A debit entry in the bank account

D A credit entry in the bank account

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
Additional memory
Delivery
Installation
Maintenance (1 year)

$
890
95
10
20
25

1,040

Sales tax (175%)

182

1,222

How much should Gareth capitalise as a non-current asset in relation to the purchase?
Total

A $1,193
B $1,040
C $1,222
D $1,015

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