ACCA

Paper F3
Financial Accounting
(International Stream)

Question day – Final Mock

Examination

Commentary and solutions

ACF3FM10(J) INT
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Solutions
1 A 16 C 31 C 46 B

2 B 17 B 32 A 47 A

3 D 18 D 33 A 48 C

4 C 19 B 34 A 49 B

5 B 20 A 35 D 50 A

6 A 21 A 36 D

7 C 22 B 37 B

8 A 23 D 38 C

9 C 24 C 39 B

10 C 25 C 40 B

11 A 26 C 41 B

12 A 27 B 42 B

13 A 28 C 43 D

14 C 29 B 44 B

15 A 30 B 45 D

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Workings
1 A
PPE (NBV)
$ $
B/f 155 Depreciation charge in year 25
Purchase of PPE 10 ∴NBV of sale 15
C/f 125
165 165
So, NBV 15
Proceeds (7)
Loss 8

2 B $200 debit which should have been credited.

3 D
Rent receivable
$ $
Bal b/d 21,200 Bal b/d 28,700
Income statement 475,900 Cash received 481,200
Bal c/d 31,200 Bal b/d 18,400
528,300 528,300

4 C

5 B Cost = $5,000 x 100/125 = $4,000

6 A

7 C
Billy Charlie
$ $
Opening balance 15,500 12,700
Profit share [$32,000 – (5% × $5,000)] ÷ 2 15,875 15,875
Loan interest 250 -
Closing balance 31,625 28,575

8 A 73,680 + 102,480 – 87,240 = $58,440 overdrawn but then adjust for items not in the cash book.
(58,440) + 14,500 + 1,670 = $45,610 overdrawn, ie credit balance in cash book

9 C

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10 C
B&DD Expense
$ $
Specific allowance 100 Cash received 500
Decrease in general 705
allowance
∴ Income statement 1,105
1,205 1,205

General allowance:
Receivables 6,000
Less: Specific allowance 100
5,900 × 5% 295
Opening allowance 1,000
705 ↓ Reduction
11 A
Curtis Sillett McAllister
$ $ $
To 31 December 2005 ($480,000 × 6
12
) 3:2 144,000 96,000
To 30 June 2006 ($480,000 × 6
12
) 240,000
Salaries 6
12 (16,000) 10,000 6,000

(50 : 25 : 25) 224,000 112,000 56,000 56,000

256,000 162,000 62,000
12 A
13 A
$ $
Sales revenue 1,587,500
Opening inventory 386,200
Purchases 989,000
Less: closing inventory (422,700)
Cost of sales (952,500)
Gross profit 635,000
Gross profit margin = 635,000/1,587,500 = 40%

14 C Each of the items are credit balances

15 A
$ $
Sales 240,000
Purchases 134,025
∴ Drawings (2,640)
Inventory adjustment (11,385)
Cost of sales (50% × 240,000) 120,000
120,000

16 C

17 B Comparability not consistency

18 D (5c × 10,000,000 + 8% × $500,000)

19 B

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20 A
Payables ledger control account
$ $
Cash paid to suppliers 494,200 Opening balance 192,300
Purchase returns 8,700 Purchases 481,600
Contras with RLCA 2,100
Discounts received 6,300
Balance c/d 162,600
673,900 673,900
21 A
22 B Equity dividends appear in the statement of changes in equity, not the income statement

23 D

24 C

25 C Any abnormal costs are not directly attributable to the asset and therefore should not be
capitalised.

26 C

27 B Neutrality is part of the characteristic of reliability not relevance.

28 C
$
List price 1,000.00
Less trade discount (200.00)
800.00
Sales tax (800 × 95% × 13%) 98.80
Invoice total 898.80

29 B
$
Lower of cost and NRV P 10,400
Q 15,600
R 11,200
37,200

30 B Rent and rates

Rent and rates
$ $
Reverse opening prepayment 4,800 Reverse opening accrual 2,200
Cash payment (15,200 + 4,600) 19,800 ∴I/S 19,200
Closing accrual 2,400 Closing prepayment 5,600
27,000 27,000

31 C
Closing balance of receivables = $18,400 + 58,700 – 61,200 – 400 = $15,500
Allowance required $5,500 × 4% = $620
Opening allowance $8,400 × 4% = $736
Decrease in allowance = $116
Charge to income statement = $400 – 116 = $284

32 A

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33 A

34 A

35 D
$
Profit before tax 156,800
Add back depreciation 27,600
Increase in inventory (14,600 – 12,300) (2,300)
Decrease in receivables (19,200 – 16,700) 2,500
Decrease in payables (15,400 – 13,800) (1,600)
Tax paid (W) (53,300)
Cash flow from operating activities 129,700

Income tax payable

$ $
Cash paid (bal fig) 53,300 Bal b/d 51,200
Bal c/d 46,800 Income statement 48,900
100,100 100,100

36 D

37 B
$
2007 estimated liability 196,700
Less over provision in previous year (235,600 – 220,300) (15,300)
181,400

38 C
FIFO Closing inventory 60 units × $30 = $1,800

Weighted average cost $

Opening inventory 100 @ $25 2,500
Purchases 200 @ $28 5,600
300 $27 8,100
Sales (180) @ $27 (4,860)
Purchases 120 @ $30 3,600
240 $28.50 6,840
Sales (180) @ $28.50 (5,130)
Closing inventory 60 @ $28.50 1,710

FIFO WAC
$ $
Cost of sales
(2,500 + 5,600 + 3,600 – 1,800) 9,900
(2,500 + 5,600 + 3,600 – 1,710) 9,990

39 B It must be probable not possible that an outflow of economic resources will be required.

40 B
$
Draft profit 115,600
Motor vehicle to be capitalised 18,000
Less: depreciation (18,000 x 20%) (3,600)
Corrected profit 130,000

41 B A change in accounting policy and the correction of an error are both made retrospectively and
will therefore affect both this years and the previous years financial statements.

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42 B
Share capital Share premium
account
$ $
Opening balance 800,000 350,000
Bonus issue 200,000 (200,000)
Rights issue (400,000 shares) 400,000 320,000
1,400,000 470,000

43 D Capital accounts
Capital accounts
E F G E F G
$000 $000 $000 $000 $000 $000
Goodwill 30 20 10 Bal b/d 100 80
Cash 50
Goodwill 40 20
Bal c/d 110 80 40
140 100 50 140 100 50

44 B

45 D

46 B Under historical cost accounting if prices are rising then assets will be understated and profits will
be overstated.

47 A As there are more shares in issue the price per share will tend to drop and the shares will become
more marketable.

48 C Statement 1 is a provision or liability and should be recorded in the financial statements.

49 B
$
Rights issue – cash inflow 600,000/3 x $2 400,000
Bonus issue – no cash flow
Redemption of loan stock – cash outflow (200,000)
Net cash inflow 200,000

50 A

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