MOCK EXAM 1 (Specimen Exam) // QUESTIONS SECTION A — ALL 35 questions are compulsory and MUST be attempted 1 Which of the following calculates a sole trader's net profit for a period? ‘A Closing net assets + drawings ~ capital introduced ~ opening net assets B Closing net assets — drawings + capital Introduced ~ opening net assets © Closing net assets — drawings — capital introduced — opening net assets D Closing net assets + drawings + capital introduced — opening net assets, (2 marks) 2 Which of the following explains the imprest syste of operating petty cash? ‘A Weekly expenditure cannot exceed a set amount. B The exact amount of expenditure is reimbursed at intervals to maintain 2 fixed float. © All expenditure out of the petty cash must be properly authorised. D Regular equal amounts of cash are transferred into petty cash at intervals. (2 marks) 3 Which of the following statements are TRUE of limited liability companies? ‘The company's exposure to debts and liability is limited, Financial statements must be produced. A company continues to exist regardless of the identity of its owners, Land 2 only Land 3 only 2and 3 only 1, 2and3 (2 marks) Dome one 4 Annie is a sole trader who does not keep full accounting records. The following details relate to her transactions with credit customers and supoliers for the year ended 30 June 20X6: $ Trade receivables, 1 July 20x5 130,000 Trade payables, 1 July 20X5 60,000 ‘Cash received from customers 686,400 Cash paid to suppliers 302,800 Discounts received 2,960 Contra between payables and receivables ledgers 2,000 Trade receivables, 30 June 20X6 181,000 Trade payables, 30 June 20X6 84,000 ‘What figure should appear for purchases in AnnieS statement of profit or loss for the year ended ‘30 June 20x62 — (2 marks) 5 Which TWO of the following errors would cause the total of the debit column and the total of the credit column of a trial balance not to agree? 1 transposition error was made when entering a sales invoice into the sales day book. 2 Accheque received from a customer was credited to cash and correctly recognised in receivables, 3 Apurchase of non-current assets was omitted from the accounting records. 4 Rent received was included in the trial balance as a debit balance. (2 marks) ee BPP oO www.ACCAGlobalBox.com 25Download FREE ACCA STUDY MATERIALS from "www.ACCAGlobalBox.com” GR 6 —_At31 December 20X5 the following require inclusion in a companys financial statements: 1 On 1 January 20X5 the company made 2 loan of $12,000 to an employee, repayable on 1 January 20X6, charging interest at 2% per year. On the due date she repaid the loan and paid the whole ofthe interest due on the loan to that date 2 The company paid an annual insurance premium of $9,000 in 20X5, covering the year ending 31 August 20X6. 3 In January 20X6 the company received rent fram a tenant of $4,000 covering the six months to 31 December 20X85. For these items, what total figures should be included in the company's statement of financial position as at 31 December 20X5? A Current assets $10,000 Current liabilities $12,240 B Current assets $22,240 Current liabilities nil © Current assets $10,240 Current liabilities Sri D Current assets $16,240 Current liabilities $6,000 (2 marks) 7 Accompany’s statement of profit or loss for the year ended 31 December 20X5 showed a net profit of ‘$83,600. It was later found that $18,000 paid for the purchase of a motor ven had been debited to the ‘motor expenses account. It is the company’s policy to depreciate motor vans at 25% per year on the straight line basis, with a full year's charge in the year of acquisition, What would the net profit be after adjusting for this error? — (2 marks) 8 Xena has the following working capital ratios: 20x9 20X8 Current ratio 12:1 15:1 Receivables days 75 days 50 days Payables cays 30 days 45 days Inventory tumover 42 days 35 days Which of the following statements is CORRECT? A Xenals liquidity and working capital has improved in 20X89. B Xena is receiving cash from customers more quickly in 20X9 than in 2X8, © Xena is sufering from a worsening liquicity position in 20X9, D Xena is taking longer to pay suppliers in 20X9. (2 marks) 9 Are the following statements true or false? ‘A statement of cash flows prepared using the direct method produces True False diferent figure to net cash from operating activities from that produced it the indirect method is used Rights issues of shares do not feature in a statement of cash flows. True False ‘A surplus on revaluation of a non-current asset will nat appear as an item | True False ina statement of cash flows, A profit on the sale of a non-current asset will appear as an item under True False cash flows from investing activites in the statement of cash flows. (2 marks) 26 www.ACCAGIobalBox.com “@MOCK EXAM 1 (Specimen Exam) // QUESTIONS 10 Accompany 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 28,700 31,200 Rent in arrears (all subsequently received) 21,200 18,400 ‘What amount of rental income should appear in the company's statement of profit or loss for the year ended 30 April 20X6? ‘A $486,500 B $460,900 © $501,500 D $475,900 (2 marks) 11 Which TWO of the following are differences between sole traders and limited lability companies? 1 Asole trader's financial statements are private; a company’s financial statements are sent to shareholders and may be publicly filed 2 Only companies that have capital invested into the business. A sole trader is fully and personally liable for any losses that the business might make, 4 evaluations can be carried out in the financial statements of a company, but not inthe financial statements of a sole trader, (2 marks) 12 Which of the following statements is TRUE? ‘A The interpretation of an entity financial statements using ratios is only useful for potential Investors, Ratios based on historical data can predict the future performance of an entity. The analysis of financial statements using ratios provides useful information when compared with previous performance or industry averages, D_—Anentitys management will not assess an entity's performance using financial ratios. (2 marks) 13 Acompany’s motor vehicles (at cost) account at 30 June 20X6 is as follows: MOTOR VEHICLES (AT COST) s Balance bif 35,800 Disposal Additions 12,950 Balance off FB T5O What opening balance should be included in the following period's trial balance for Mator vehicles (at cost) at 1 July 20x6? ‘A $36,750 DEBIT B $48,750 DEBIT © $36,750 CREDIT D $48,750 CREDIT (2 marks) eo BPP oO www.ACCAGlobalBox.com zatDownload FREE ACCA STUDY MATERIALs from "www.ACCAGlobalBox.com’ MEE 14 Which TWO of the following iterss must be disclosed in the note to the financial statements for intangible assets? 1 The useful lives of intangible assets capitalised in the financial statements 2 Adescription of the development projects that have been undertaken during the periad 3 A\list ofall intangible assets purchased or developed in the period 4 Impairment losses written off intangible assets during the period (2 marks) 15. Which of the following statements are CORRECT? 1 Capitalised development expenditure must be amartised over 2 period not exceeding five years, 2 Capitalised development costs are shown in the statement of financial position under the heading cof non-current assets, 3. certain criteria are met, research expenditure must be recognised as an intangible asset. A 2only B 2and3 © Lonly D Land3 (2 marks) 16 The following transactions relate to Rashid’s electricity expense ledger account for the year ended 30 June 20x9: s Prepayment brought forward 550 Cash paid 5,400 Acerual cartied forward 650 What amount should be charged to the statement of profit or loss in the year ended 30 June 20XS for electricity? A $6,600 B $5,400 © $8,500 D $5,300 (2 marks) 17 At30 June 20X5 a company’s allowance for receivables was $39,000. At 30 June 20X6 trade recelvables totalled $517,000. It was decided to write off debts totalling $37,000. The receivables allowance was to be adjusted to an amount equivalent to 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 these items? — (2 marks) 18 The total ofthe list of balances in Valley's payables ledger was $438,900 at 30 June 20X6. This balance did not agree with Valley's payables ledger control account balance. The following errors were discovered: 1 Acontra entry of $980 was recorded in the payables ledger control account, but notin the payables ledger. 2 The total of the purchase returns daybook was undercast by $1,000. 3 Am invoice for $4,344 was posted to the supplier's account as $4,434. ‘What amount should Valley report in ils statement of financial position as accounts payable at 30 June 20x6? A $436,830 B $438,010 © $439,790 D $437,830 (2 marks) 248 www.ACCAGlobalBox.com BPPMOCK EXAM 1 (Specimen Exam) // QUESTIONS 19 According to IAS 2 Inventories, which TWO of the following costs should be included in valuing the Inventories of a manufacturing company? 1 Carriage inwards 2 Carriage outwards 3 Depreciation of factory plant 4 General administrative overneads (2 marks) 20 Prisha has not kept accurate accounting records during the financial year. She had opening Inventory of ‘$6,700 and purchased goods costing $84,000 during the year. At the year end she had $5,400 left in inventory. All sales are made at a mark up on cost of 20%. What is Prisha's gross profit for the year? 8, (2 marks) 21 At31 December 20X4 a companys capital structure was as follows: $ Ordinary share capital (500,000 shares of 25¢ each) 125,000 ‘Share premium account 100,000 In the year ended 31 December 20XS the company made a rights issue of one share for every two held at $1 per share and this was taken up in full. Later in the year the company made a bonus issue of tne share for every five held, using the share premium account for the purpose. What was the company’s capital structure at 31 December 20X5? Ordinary share capital Share premium account ‘A $450,000 $25,000 B $225,000 $250,000 © $225,000 $325,000 D $212,500 $262,500 (2 marks) 22 Which of the following should appear in a company’s statement of changes in equity? 1 Total comprehensive income forthe year 2 Amortisation of capitalised development costs 3 Surplus on revaluation of non-current assets A 1,2and3 8 2'and 3 only © Land 3 only D — Land2 only (2 marks) 23 The plant and machinery account (at cost of a business for the year ended 31 December 20XS was as fllows PLANT AND MACHINERY (AT COST) 20X5 $ 20X5, $s 1 Jan Balance bit 240,000 31 Mar Transfer to disposal account _60,000 30 Jun Cash purchase of plant 160,000 31 Dec Balance of 340,000 400,000 00,000 The company's 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 deprecation charge forthe year ended 31. December 20x57 ‘A $68,000 B $64,000, c $61,000 dD $55,000, (2 marks) eo BPP oO www.ACCAGlobalBox.com 249Download FREE ACCA STUDY MATERIALs from "www.ACCAGlobalBox.com’ MEE 24 — The following extracts are from Hassan's financial statements: $ Profit before interest and tax 10,200 Interest (1,600) Tax (3,300) Profit after tax 00 Share capital Reserves, Loan liability What is Hassan’s return on capital employed? % (2 marks) 25 Is each of the following statements about sales tax true or false? Sales tax is an expense to the ultimate consumer of the goods purchased. True False ‘Sales tax is recorded as income In the accounts of the entity selling the goods. True False (2 marks) 26 Qs trial balance failed to agree and a suspense account was opened for the difference. Q does not keep receivables and payables control accounts. The following errors were found in Q's accounting records: 1 In recording an issue of shares at par, cash received of $333,000 was credited to the ordinary share capital account as $330,000. 2 Cash of $2,800 paid for plant repairs was correctly accounted for in the cash book but was credited to the plant asset account, 3 The petty cash book balance of $500 had been omitted from the trial balance. 4 Accheque for $78,400 paid for the purchase of a motor car was debited to the motor vehicles account as $87,400. Which of the errors will require an entry to the suspense account to correct them? A 1,2and 4 only 1, 2,3 and 4 B © Land 4 only D and 3 only (2 marks) 27 Prior to the financial year end of 31 July 20X9, Cannon Co has received a claim of $100,000 from a customer for providing poor quality goods which have damaged the customer'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? A Cannon should neither provide for nor disclose the claim. B Cannon should disclose 2 contingent ability of $100,000, © Gannon should provide for the expected cost ofthe claim of $100,000. D_Cannon should provide for an expected cost of $20,000. (2 marks) 250 www.ACCAGlobalBox.com BPPMOCK EXAM 1 (Specimen Exam) // QUESTION s 28 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 (one year) 25 1,040 Sales tax (17.5%) 182 Total 222 How much should Gareth capitalise as a non-current asset in relation to the purchase? $___ (2 marks) 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 ‘What should be the correct balance per the cash book? A $21,990 balance at bank as stated B $3,670 balance at bank © $11,390 balance at bank D $3,670 overdrawn (2 marks) 30 The IASB's Conceptual Framework for Financial Reporting identifies characteristics which make financial information faithfully represent what it purports to represent. Which TWO of the following are examples of thase qualitative characteristics? 1 Accruals 2 Completeness 3. Going concern 4 Neutrality (2 marks) 31 The following control account has been prepared by a trainee accountant: RECEIVABLES LEDGER CONTROL ACCOUNT s s ‘Opening balance 308,600 Cash 148,600 Credit sales 154,200 Interest charged on overdue ‘accounts 2,400 ash sales 88,100 recaverable debts 4,900 Contras against credit balances 4,600 Allowance for receivables 2,800 in payables ledger Closing balance 396,800 BEE 5OO "555,500 What should the closing balance be when all the errors made in preparing the receivables ledger control account have been corrected? A $395,200 8B $304,300 © $309,500, D $307,100 (2 marks) www.ACCAGlobalBox.com 251 i ®Download FREE ACCA STUDY MATERIALS from "www.ACCAGlobalBox.com” GR 32 Are the following material events, which occurred atter the reporting date and before the financial statements are approved, adjusting events? ‘A valuation of property providing evidence of impairment in value at the Yes No reporting date Sale of inventory held at the reporting date for less than cost, Yes Ne Discovery of fraud or error affecting the financial statements Yes No The insolvency of a customer with a debt owing at the reporting date which is still outstanding Yes No (2 marks) 33 Acompany values its inventory using the FIFO method. At 1 May 20XS the company had 700 engines in inventory, valued at $190 each. During the year ended 30 April 20X6 the following transactions took place: 20x5 Luly Purchased 500 engines at $220 each 1 Novernber Sold 400 engines for $160,000 20X6 1 February Purchased 300 engines at $230 each 15 Apri Sold 250 engines for $125,000 What is the value of the company closing inventory of engines at 30 April 20X67 ‘A $188,500 B $195,500 © $166,000 D $106,000 (2 marks) 34 Amy is a sole trader and had assets of $569,400 and liabilities of $412,840 on 1 January 20X8. During the year ended 31 December 20X8 she paid $65,000 capital into the business and she paid herself wages of $800 per month ‘At 31 December 20X8, Amy had assets of $614,130 and liabilities of $369,770. What is Amy's profit for the year ended 31 December 20X8? a (2 marks) 35. Bumbly Co extracted the trial balance for the year ended 31 December 20X7. The total of the debits exceeded the credits by $300, Which of the following could explain the imbalance? Sales of $300 were omitted from the sales day book Returns inward of $150 were extracted to the debit colurnn of the trial balance. B © Discounts received of $150 were extracted to the debit column of the trial balance. D The bank ledger account did not agree with the bank statement by a debit of $300. (2 marks) 252 www.ACCAGIobalBox.com “@MOCK EXAM 1 (Specimen Exam) // QUESTIONS SECTION B - BOTH questions are compulsory and MUST be attempted Background 36 Keswick Co acquired 80% of the share capital of Derwer statements of profit or loss for Keswick Co and Derwent Co for the year ended 31 May 20X6 are shown below: Keswick Co $1000 Revenue 8,400 Cost of sales (4,600) Gross profit 3,800 Distribution costs (1,500) ‘Administrative costs (700) Profit before tax 1,600 Tax (600) Profit of the year =r.000 During tne year Keswick Co sola goods costing $1,000,000 to Derwent Co 31 May 20X6, 30% of these goods remained in Derwent Co's inventory Task 1 Use the information above to complete the following financial statement: 1000 Revenue ss: Cost of sales Gross profit ess: Distribution costs Administrative costs Profit before tax Less: Tax Profit for the year Attributable to: Equity owners of Keswick Co Non-controlling interest Task 2 Derwent Co $1000 3,200 (2,700) T,500 for $1,500,000. at “0 on 1 June 20XS. The summarised drat (21 marks) Does each af the following factors illustrate the existence of a parent — subsidiary relationship? 150% of all shares and debt being held by an investor Yes No 2, Greater than 50% of the preference shares being held by an investor Yes No 3. Control Yes No 4. Greater than 50% of the equity shares being held by an investor Yes No 5. 100% of the equity shares being held by an investor Yes No 6. Significant influence Yes No 7. Non-controlling interest Yes No 8, Greater than 50% of preference shares and debt being held by an investor Yes No (4 marks) (Total = 15 marks) v.ACCAGlobalBox.cor ie ® 253Download FREE ACCA STUDY MATERIALs from "www.ACCAGlobalBox.com’ GR 37 Malrignt, a limited liability company, has an accounting year end of 31 October, The accountant is preparing the financial statements as at 31 October 20X7. A trial balance has been prepared. Task 1 Do each of the following items belong on the statement of financial position (SOFP) as at 31 October 20X77 Belongs on SOFP as DEBIT CREDIT at 31 October 20X7 s7000 $1000 Buildings at cost 740 YesyNo Buildings accumulated depreciation at 60 YesiNo 1 Novernber 20X6 Plant at cost| 220 YesINo Plant accumulated depreciation at lio YesiNo 1 November 20X6 Bank balance 70 YesiNo Revenue 1,800 YesNo Net purchases 1,140 YesiNo Inventory at 1 November 20X6 160 YesiNo Cash 20 YesiNo Trade payables 250 YesiNo Trade receivables 320 YesiNo Administrative expenses 325 YesiNo Allowance for receivables at 10 YesiNo 1 November 20X6 Retained earings at 1 November 20X6 YesNo Equity shares, $1 YevNo Share premium account YesNo (4 marks) Task 2 The allowance for receivables is to be increased to 5% of trade receivables. The allowance for receivables is treated as an administrative expense. The year end journal for allowance for receivables is given below. Prepare the double entry by selecting. the correct option for each row. Trade receivable DEBIT / CREDIT / No debit or credit Administrative expenses DEBIT / CREDIT / No cebit or credit Allowance for receivables DEBIT / CREDIT No cebit or credit Revenue DEBIT / CREDIT / No cebit or credit Complete the following: ‘The amount included in the statement of profit or loss after the allowance is increased to 5% of trade receivables is $ ‘000. (3 marks) Task 3 Plant is depreciated at 20% per annum using the reducing balance method and buildings are depreciated at 5% per annum on their original cost, Depreciation Is treated as a cost of sales expense. ‘The year end journal for buildings and plant depreciation is given below. Using the information above, prepare the double entry by selecting the correct option for each row. Administrative expenses DEBIT / CREDIT / No debit or credit Cost of sales DEBIT / CREDIT / No debit or credit Buildings cost DEBIT / CREDIT / No debit or credit, Plant cost DEBIT / CREDIT / No debit or credit, Buildings accumulated depreciation DEBIT / CREDIT J No debit or credit Plant accumulated depreciation DEBIT / CREDIT / No debit or credit 254 www.ACCAGIobalBox.com “@MOCK EXAM 1 (Specimen Exam) // QUESTIONS Calculate the depreciation charge for the below for the year ended 31 October 20X7. Use the information above to help you. Buildings §, Plant 8 (5 marks) Task 4 Closing inventory has been counted and is valued at $75,000, Ignoring the depreciation charge calculated earlier, what is the cost of sales for the year? 8, ‘000 (1.5 marks) Task 5 An invaice of $15,000 for energy costs relating to the quarter ended 30 November 20X7 was received on 2 Decemiser 20X7. Energy costs are included in administrative expenses. Complete the following statements: ‘The double entry to post the year end adjustment for energy costs is or cr ‘The amount to be posted within the year end adjustment double entry above is $ ‘000, (1.5 marks) (Total = 15 marks) ee BPP oO www.ACCAGlobalBox.com 255Download FREE ACCA STUDY MATERIALs from "www.ACCAGlobalBox.com" GR 256 www.ACCAGlobalBox.com BP QAnswers to Mock Exam 1 (Specimen Exam) www.ACCAGlobalBox.com 257Download FREE ACCA STUDY MATERIALs from "www.ACCAGlobalBox.com" 258 www.ACCAGlobalBox.com BP QMOCK EXAM 1 (Specimen Exar) j/ ANSWERS Note. The ACCA examining team's answers follow these BPP Learning Media answers. SECTION A 1 oA 2 8 3 6 4 8 8 6 8 7 aoc 9 10D cht Remember that: closing net assets = opening net assets + capital introduced + profit— drawings. Under the imprest system, a reimbursement which equals the total of expense vouchers paid out, is made at intervals to maintain the petty cash balance at a certain amount, The shareholder's exposure to debts is limited, not the company’s. PAYABLES CONTROL ACCOUNT $ $ Cash paid to suppliers 302,800 Balance byt 60,000 Discounts received 2,960 Purchases (bal fig) 331,760 Contra 2,000 Balance cif 84/000 91,760 39T,760 Errors (1) and (3) will not cause @ trial balance imbalance. In error (1), the incorrect amount will be posted to both sales and receivables (Or receivables, Cr sales). In error (3), the complete omission of the transaction will have no effect on the trial balance. Current assets Loan asset Interest (12,000 x 1234) Prepayment (8/12 x 9,000) ‘Accrued rent Profit Purchase of van Depreciation 18,000 x 25% The ratios given relate to working capital and liquidity. The ratios have all worsened from 20X8 to 20XS, suggesting a worsening liquidity position. Receivables days have gone up, meaning that customers are taking longer to pay. Payables days have gone down, meaning that Xena is paying suppliers more quickly. Inventory turnover days have gone up, meaning inventories are being held for longer. Only the thitd statement is true. The direct and indirect method both produce the same figure for cash from operating activities. A rights issue of shares does feature in a statement of cash flows 2a cash Is received for the issue, a bonus issue, however, would nat feature as no cash is received. A profit on the sale of 2 non-current asset would not appear as an investing cash flow, rather the cash received from the sale would appear as an investing cash flow and the profit on the sale would be added back to profit before tax under the indirect method of calculating cash from operating activities 8 Balance bif (advance) 28,700 Balance byt (arrears) (21,200) Cash received 481,200 Balance off (advance) (31,200) Balance off (arrears) 18,400 775,300 v.ACCAGlobalBox.cor 259Download FREE ACCA STUDY MATERIALs from "www.ACCAGlobalBox.com’ MSE 11 1,3. Asole trader's financial statements are not publicly available, but they might be made available to some third parties, for example, the tax authorities. 12 © Ratio analysis is useful for different users of financial statements, including management, potential investors, the government, employees and so on. Historical performance can give an Indication of what might occur in the future, especially if a trend is shown, but it cannot be used to accurately predict the future, 13 A Motor vehicles ~ cost account is an asset and so the balance brought forward must be a debit. It is $36,750 as this is the figure that balances the account. 14 1,4 Anentity is not required to disclose a description of the development projects undertaken in the period, ora list of all intangible assets purchased or developed in the period. It is however, required to: disclose a description, the carying amount and remaining amortisation period of any individual intangible asset that is material to the entitys financial statements, and distinguish between internally generated intangible assets capitalised in the period and those acquired in the period. 15 A Statement (2) isthe only correct statement, Statement (1) is incorrect because capitalised development expenditure is amortsed over its useful fe. Statement (3) is incorrect because research expenditure is never capitalised, 16 A 8 Balance byt 550 Expense incurred (cash) 5,400 Accrual cif 7 8 $ Debts written off 37,000 Movement in allowance: (517 ~37) x 5% 24,000 Less opening allowance 39,000 (15,000) Receivables expense 22,000, 18D $ Balance per ledger 438,900 Less contra (980) Posting error (90) Corrected balance 737,830 The individual returns from the purchase returns day book are posted to the individual accounts in the memorandum payables ledger, so thelist of balances does not need to be adjusted for error (2), 19 1,3 Carriage outwards is a distribution expense. General administrative overheads should not be included per IAS 2. 20 (6,700 + 84,000 - 5,400) x 20% = $17,060 21 8 Share capital = 125,000 + 62,500 rights issue of 250,000 25c shares (500,000/2) + 37,500 bonus issue of 150,000 25c shares (750,000/5) = 225,000 100,000 + 187,500 rights issue (250,000 x 75c) - 37,500 bonus issue 50,000 Share premium (150,000 x 25¢) 260 www.ACCAGlobalBox.com BPPMOCK EXAM 1 (Specimen Exar) j/ ANSWERS 22 © _Amotisation of development costs wil appear in the statement of profit loss, notte talerent of changes in equity 230 $ Depreciation Jan-Mar 240,000 » 20% x 312 12,000 Apelun (240,000 ~ 60,000)» 20% «32 9,000 JubBee (180,000 + 160,000) x 20% x 6/2 26 10,200/42,500 = 24% 25 Only the fst staternent is tue, Sales taxis merely collected bythe business, the utimate consumer bers the expense, 26 8 Aol the eors would requieaneniy lo the suspense acounl lo comet them 27 Cis probable that Caron wil have to pay $100,000 forte claim, therefor a provision is required 28 $1,015 1,040 - 25 = $1,015. The maintenance costs should not be capitalised. The sales tax is Iccoverabe 35 Gare is rested for sales tax, therefor is should tbe captalsed. 28 $ Cverrat per bank statement 3.860) Loss: Unpresented cheques (8,160) fds Outstanding lodgements 1e.e00 Cash at bank 3.670 3024 Completeness and neutrality are two characteristics given inthe Conceptual framework Going concem i he underyng assumption and acruas snot sated characteris. ao RECEIVABLES LEDGER CONTROL ACCOUNT $ $ Opening balance 308,600 cash 148,600 Creat sales 154200 Contras 600 Interest charged on overdue acoounts "2,400. recoverable debts 4300 eee Closing balance 307,100 TEE ZO 86.200 32 The answeris Yes far all ofthe statement. Al ofthe events ae adjusting events 33. A Chsing inventory $ 50 x $190 9,500 500 » $220 120,000 300 » $230 188.500 34 $32,400 Closing net assets = opening net assets + capt introduced + pra - drawings $ Opening assets 569,100 Opening abilities (ai2.840) Captal introduced 65.000 Drawings (800 12) 18,500) 211,260 Prot (ba 2321400 Closing net assets (614,130 - 369,770) 244,360 35 C Discounts receved are recorded a a cel balance and appear as cher income inthe statement cht of profit or loss: DEBIT payables, CREDIT discounts received v.ACCAGlobalBox.cor 261Download FREE ACCA STUDY MATERIALs from "www.ACCAGlobalBox.com’ MSE SECTION B 36 Task KESWICK GROUP CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MAY 20X6 $000 Revenue (8,400 + 3,200 - 1,500) 10,100 Less: Cost of sales (4,600 +' 1,700 ~ 1,500 + 150) (4.950) Gross profit 5,150 Less Distribution casts (2,010) ‘Administration costs (1,150) Profit betore tax 11990 Less: Tax (600 + 140) (740) Proft of the year =20 Attributable to Equity owners of Keswick Co 1,170 Non-contoling interest ($400,000 x 20%) 80 Task2 1 Significant influence No 2 Contrl Yes 3 Non-contrlling interest Yes 4 Greater than 50% of the equity shares being held by an investor Yes 5 100% of the equity shares being held by an investor Yes © Greater than 50% of the preference shares being held by an investor No 7 50% of al shares and debt being held by an investor No 8 Greater than 50% of preference shares and debt being held by an investor No 37 MALRIGHT CO Task 1 Bolongs on SOFP as, at 31 October 20x7? Builaings at cost Yes Buildings accumulated depreciation at 1 November 20X6 No Plant at cost Yes Plant accumulated depreciation at | November 20X6 No Bank balance Yes Revenue No Net purchases No Inventory at 1 Novernber 20X6 No Cash Yes Trade payables Yes Trade receivables Yes Administrative expenses No Allowance for receivables at 1 November 20X6 No Retained earnings at 1 Novernber 20X6 No Equity shares, $1 Yes Share premium account Yes Task2 The year end journal forthe receivables allowance is Trade receivable No debit or erect Administrative expenses DeeIT Allowance for receivables CREDIT Revenue No debit or crecit 262 www.ACCAGlobalBox.com BPPMOCK EXAM 1 (Specimen Exar) j/ ANSWERS The armount included in the statement of profit or loss after the allowance is increased to 5% of trade receivables is $6,000,000. Workings (in $1000): Required end allowance is 320,000 « 5% = $16,000 As the allowance for doubtful debts has an existing balance of $10,000, the allowance must be increased by $6,000 Task 3 ‘The year end journal for buildings and plant depreciation is: Administrative expenses No debit or credit Cost of sales DEBIT Buildings cost No debit or credit Plant cost No debit or credit Buildings accumulated depreciation CREDIT Plant accumulated depreciation CREDIT The depreciation charge for the year ended 31 October 20X7 is: Buildings. $37,000 (Working: 740 x 5%) Plant $22,000 (Working: (220 -110) x 20%) Task 4 The cost of sales for the year is $1,225,000. Working 000 Opening inventory 160 Purchases. 1,140 Closing inventory (75) 1225 Task 5 ‘The year end adjustment for energy costs is DEBIT —_—_ administrative expenses CREDIT accrual Energy cost accrual 15,000 x 2/3 = $10,000 BPP Qo www.ACCAGlobalBox.com 263