HOPE Teacher : SirHaris FIA F-3 Total MCQ,s 36

Q1 When sales tax is not recoverable on the cost of a motor vehicle, it should be treated in which of the following? A B C D Deducted from the cost of the asset capitalised Included in the cost of the asset capitallised Deducted from outut tax for the period Written off to the income statemente as an expense

Q2 Erin is registered for sales tax .During May,sh sells goods with a tax exclusive price of $600 to Kyle on credit. As Kyle is buying a large quantity of goods, Erin reduces the price by 5%. She also offers a discout of another 3% If kyle pays within 19 days.Kyle does not pays winthin the 10 days. If sales tax is chared at 17.5%, what amount should Erin charges on the transaction? A B C D $96.76 $101.85 $99.75 $105.00

Q3 At 1 December 20x5, Laurel owes the authorities $23,778. During the mionth December , she recorded the following transactions: Sales of 800,000 exclusive of 17.5% sales tax. Purchases of $590,790 inclusve of sales tax. What is the balance on Laurels sales tax accounts at the end of December ? A B C D $54,937 $60,389 $75,788 $163,778

Q4 If Sales (including sales tax ) amounted to $27,612.50 and Purchases ( exclusive sales tax) Amounted to $18,000, the balance on the sales tax account, assuming all items are subjected to tax at 17.5%, would be: A B C D $962.50 Dr $962.50Cr $1,682.10Dr $1,682.10Cr

Q5 A business sold goods that had a net value of $6,000 to Lucid . What entries are required to record this tranasaction isf sales tax is payable at 17.5%? A B C D Dr Lucid $600, Dr Sales tax $105,Cr Sales$705 Dr Lucid $705,Cr Sales tax $105,Cr Sales $600 Dr Lucid $600, Cr sales tax $105, Cr Sales $600 Dr Sales $600, Dr Sales tax $105, Cr Lucid $705

Q6 The cost of a $6 pancil-holder is charged ff as an expense , for the year in which cost is incurred even through it would still be in use for more than one accounting period. This is an example of A B C D Consistency Matching Going concern Materiality

Q7 There is great uncertainty about the continuance of a business. This has caused the proprietor to make a large reduction in the valuation of the year end stock. Which accounting concept does this Illustrate? A B C D Going concren Matching Materiality Substance over form

Q8 Accounting prefer the commercial reality of a transaction to a strickly leagl approach. This is an example of A B C D Consistency Materiality Prudence Substance over form

Q9 A sole trader pays private expenses from the business bank acc0ount and records them as drawings.Which accunting principle is applied? A B C D Business entity Going concern Matching Prudence

Q10 Of which concept is the writing off of a bad debt an example? A Going concen

B C D

Matching Prudence Substance over form

Q11 which accounting policies illustrete the matching principle? 1. Charging depreciation on fixed assets 2. Revaluing fixed assets on a regular basis 3. Using the reducing balance method o f depreciation A B C D 1,2 & 3 1 & 2 only 1 & 3 only 2 & 3 only

Q12 The following information relates to acompanys fixed assets at december. Cost price ($) 25,000 48,000 12,000 Disposal Value ($) 18,000 36,000 5,000

Mootr vehicles Equipment Fixtures & fittings

The company has a serious shortage and will cease to trade within the next two months. What is the total value for fixed assets in the companys balance sheet at december? A B C D $26,000 $59,000 $85,000 $144,000

Q13. According to IAS2 Inventories, which TWO of the following should be accounted for in the cost of an item of inventory? A B C D Material wasted due to a machine breakdown Import duties on shipping of inventory inwards Storage costs of finished goods Trade discounts received on purchase of inventory

Q14. According to IAS2 Inventories, which TWO of the following costs should be included in inventory valuations? A B C D Transport costs for raw materials Abnormal material usage Storage costs relating to finished goods Fixed production overheads

Q15. How should import duties be dealt with when valuing inventories at the lower of cost and net realisable value (NRV) according to IAS2 Inventories?

(select one answer) A B C D Added to cost Ignored Deducted in arriving at NRV Deducted from cost

Q16. How should trade discounts be dealt with when valuing inventories at the lower of cost and net realisable value (NRV) according to IAS2 Inventories? (select one answer) A B C D Added to cost Ignored Deducted in arriving at NRV Deducted from cost

Q17. The Coronet Company has a cost card in relation to an item of goods manufactured as follows: CU Materials Storage costs of finished goods 18 Delivery to customers 4 Irrecoverable purchase taxes 70

According to IAS2 Inventories, at what figure should the item be valued in inventory? A B C D CU88 CU76 CU98 CU94

Q18. The Motmot Company has partially-completed inventory located in its factory, to which the following estimates relate: CU Production costs incurred to date Production costs to complete Transport costs to customer Future selling costs Selling price 2,900 2,000 300 400 2,800

According to IAS2 Inventories, what is the net realisable value of Motmot's inventory? A B C D CU2,100 CU2,800 CU400 CU100

Q19. The Whimbrel Company has two products in its inventory which have costs and selling prices per unit as follows: Product X CU 200 150 30 60 (40) Product Y CU 300 180 80 70 (30)

Selling price Materials and conversion costs General administration costs Selling costs Profit/(loss)

At the year end, the manufacture of items of inventory has been completed but no selling costs have yet been incurred. According to IAS2 Inventories, should these products be carried in Whimbrel's statement of financial position at cost or net realisable value (NRV) rule? Product X A B C D NRV NRV Cost Cost Product Y NRV Cost NRV Cost

Q20. Which ONE of the following statements best describes the carrying amount of an asset? A B C D The cost (or an amount substituted for cost) of the asset less its residual value The amount at which the asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses The higher of the asset's net selling price and its value in use The fair value of the asset at the date of a revaluation less any subsequent accumulated impairment losses

Q21. Which ONE of the following statements best describes the term 'depreciation'? A B C D The systematic allocation of an asset's cost less residual value over its useful life The removal of an asset from an entity's statement of financial position The amount by which the recoverable amount of an asset exceeds its carrying amount The amount by which the carrying amount of an asset exceeds its recoverable amount

Q22. Which of the following terms best describes the systematic allocation over its useful life of the cost of an asset, or other amount substituted for cost, less its residual value? A B C D Depreciation Derecognition Impairment Value in use

Q23. Which TWO of the following statements are correct per IAS16 Property, plant and equipment? A Assets are depreciated even if their fair value exceeds their carrying amount

B C D

Land and buildings are accounted for separately, even when acquired together A non-current asset acquired as the result of an exchange of assets is not recognised A gain on disposal of a non-current asset is classified as revenue

Q24 Closing inventory has been overvalued. What is the effect on the financial statements? net current assets profit from operations A B C D overstated overstated overstated understated understated overstated understated understated

Q25 At the year end a company discovers that some inventory is damaged. This inventory originally cost $2000 and to replace it would now cost $1900. It would normally sell for $2400 but can now only be sold for $2200 if repairs costing $400 are undertaken. At what value should the damaged inventory be shown in the financial statements? A B C D $1800 $1900 $2000 $2200

Q26 How should goodwill be treated by a limited company? A B C D Goodwill should always be written off immediately. Non-purchased goodwill is shown in the balance sheet. Purchased goodwill is shown in the balance sheet and written off over its useful life. Purchased goodwill remains on the balance sheet as a permanent item.

Q27 A company issues for cash 50 000 shares of $5 each at a premium of $15 each and $300 000 4 % debentures. By what amount will the net assets of the company increase? A B C D $250,000 $550,000 $1,000,000 $1,300,000

Q28 An extract from Bumble Ltd's balance sheet shows the following. $000 ordinary shares of $0.25 each 500 share premium 100 retained earnings 300 The company makes a rights issue of 1 share for each 4 held at a price of $0.30 per share. All shares are taken up. What will the new balance sheet show?

ordinary shares of $0.25 each rights issue share premium retained earnings

A $000 625 100 300

B $000 500 125 125 275

C $000 625 125 300

D $000 625 100 325

Q29 A business paid $10 000 for waste disposal in the year. The opening prepayment was $1500 and the closing accrual was $2000. What was the charge for waste disposal for the year? A $6500 B $9500 C $10,500 D $13,500

Q30 Which transaction would increase the current assets of a business? A B C D paying invoices $950, after receiving $50 cash discount purchasing a machine on credit for $1200 purchasing inventory for $1100 cash and selling it on credit for $1500 selling inventory with an original cost of $800 at below cost price

Q31 A new business was established with opening capital of $20 000. At the end of the first year, assets less liabilities were $26 000. The owner withdrew $7000 as drawings during the year and this resulted in a bank overdraft of $5000 at the end of the year. What was the profit during the first year? A $8000 B $12,000 C $13,000 D $18,000

Q32 The annual accounts of a business include the following. $ revenue 160,000 opening inventory 10,000 closing inventory 14,000 Inventory turnover is 10 times. What is the gross profit? A $20,000 B $40,000 C $60,000 D $120,000

Q33 A companys profit from operations was $128 000. Interest payable was $8000. The following amounts were included in the companys balance sheet. $ non-current assets 485,000 net current assets 27,000 non current liabilities 80,000 How much is the return on the total capital employed? A 20.3 % B 21.6 % C 23.4 % D 25.0 %

Q34 A business has $10 000 in the bank and buys inventory for $6000 paying by cheque. What is the effect of this on its current ratio and quick (acid test) ratio? current ratio quick (acid test) ratio A decreases increases B decreases no effect C no effect decreases D no effect no effect Q35 On 1 January 2009 a business had prepaid rent of $50. During 2009, three rent payments were made of $250 each. On 31 December 2009, the business still owes $200 rent on account for 2009. The business owner has charged the rent payments made during 2009 in his income (profit and loss) account. What is the effect on net profit? A B C D $200 too high $200 too low $250 too high $250 too low

Q36 What does the application of the accounting principle of consistency ensure? A B C D that all losses are provided for that assets are recorded at their actual cost that financial statements are produced annually that profits are calculated the same way each year

Composed By : Daniyal Saleem