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BA3 Sample Questions Answers

Questions 4

After calculating your company's profit for the year, you discover that:

(a) A non-current asset costing £2,000 has been included in the purchases account; the asset has not been included in the closing inventory figure; nor has it been depreciated by the normal 25% per annum

(b) Closing inventory of raw materials, costing £500, have been treated as closing inventory of stationery.

These two errors have had the effect of.

Options:

A.

Understating gross profit by £2,500 and understating net profit by £1,500

B.

Understating both gross profit and net profit by £2,500

C.

Understating gross profit by £2,000 and understating net profit by £2,500

D.

Understating both gross profit and net profit by £1,500

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Questions 5

STU has an accounting period end of 31 December 20X8 During the year STU paid $4,800 for business insurance to cover the year to 30 June 20X9 The amount paid for business insurance for 30 June 20X8 was $4,500.

What is the insurance expense to be recognized in the statement of profit or loss of STU for the year ended 31 December 20X8? Give your answer to the nearest $

Options:

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Questions 6

Refer to the Exhibit.

John Taylor commenced business on 1 March 2006, paying $1,000 cash into a business bank account. During the next month the following transactions took place.

The balance on the bank account at the end of the month is:

Options:

A.

$700 debit

B.

$700 credit

C.

$1,200 debit

D.

$1,200 credit

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Questions 7

One of the main responsibilities of internal auditors is to check the operational systems within their organization to establish whether the system's internal controls are sufficient and in full operation.

Which THREE of the following are examples of internal controls?

Options:

A.

Segregation of duties

B.

Physical

C.

Accounting codes

D.

Authorization and approval

E.

Filing

F.

Documentation

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Questions 8

The prime cost of goods manufactured is the total of:

Options:

A.

All factory costs of goods completed

B.

All factory costs before adjusting for work in progress

C.

Direct materials, labor and overheads

D.

All materials and labor

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Questions 9

GH operates an imprest system for petty cash, maintaining a float of $250 The following petty cash book extract is available for a week in March 20X6:

How much does GH need to transfer from the bank account at the end of this week In order to maintain the imprest system?

Options:

A.

The total spend of $185

B.

The float total of $250.

C.

The total of the float and total spend of $435

D.

The difference between the float and total spend of $65

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Questions 10

Refer to the Exhibit.

On 1 May year 1 a company pays insurance of $1,800 for the period to 30 April year 2

What is the charge to the income statement and the entry in the statement of financial position for year 1 ended 30 November?

Options:

A.

A

B.

B

C.

C

D.

D

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Questions 11

Which ONE of the following statement is true?

Options:

A.

Fraud arises due to deliberate misrepresentation

B.

Internal auditors are appointed by the external auditors

C.

Audit trails are meant to trace fraud

D.

External auditors are responsible to detect fraud

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Questions 12

Refer to the Exhibit.

A company has the following information available for the month of June:

The opening receivables balance was $124,600.

The closing receivables balance at the end of June was

Options:

A.

$117,200

B.

$110,800

C.

$122,400

D.

$116,000

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Questions 13

Refer to the exhibit.

A company's gross profit margin has fallen from 40% to 38% in the last period.

Which three of the following would be possible explanations for this?

Options:

A.

A, B and C

B.

D, E and F

C.

B, C and F

D.

A, D and E

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Questions 14

Which of the following would be a role of the management accountant?

Options:

A.

Reporting historic transactions

B.

Monitoring actual results to expected results

C.

Meeting external reporting requirements

D.

Producing financial statements

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Questions 15

Who is responsible for ensuring that internal control systems operate efficiently?

Options:

A.

External auditors

B.

Directors

C.

Shareholders of the company

D.

Creditors

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Questions 16

Which of the following statements is NOT correct?

Options:

A.

A receipts and payments account is the equivalent of an income statement.

B.

A receipts and payments account is the equivalent of a cash book summary.

C.

A receipts and payments account does not include depreciation of non-current assets.

D.

An income and expenditure account is the equivalent of an income statement.

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Questions 17

Accounting records should be kept by all businesses for many reasons.

Which THREE of the following are reasons for keeping accounting records?

Options:

A.

Aids the efficient running of a business

B.

Indicates how successfully managers are performing

C.

To aid the application of bank loans

D.

To reassure employees

E.

Provides information about the resources and activities of a business

F.

In case of potential takeovers

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Questions 18

A trial balance should be extracted from the ledger accounts prior to preparing the final accounts because:

Options:

A.

It confirms the arithmetical accuracy of the entries made in the ledger accounts

B.

It proves that the entries made in the ledger accounts are all correct

C.

It provides a summary of assets and liabilities

D.

It shows where errors have been made

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Questions 19

Non-current assets can be divided between intangible and tangible assets.

Which THREE of the following are intangible assets?

Options:

A.

Research and development

B.

Buildings

C.

Plant

D.

Goodwill

E.

Patent

F.

Land

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Questions 20

Which ONE of the following does the Statement of Cash Flows show:

Options:

A.

The assets, equity and liabilities of a business

B.

The revenue and expenses of a business over a period of time

C.

The cash usage of a business over a period of time

D.

Notes to go with the statements that explain the practices used

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Questions 21

There are many types of fraud that can happen within a business. On example could be the theft of cash, concealing the theft by delaying banking or by making up the shortage from other sources.

What is this type of fraud called?

Options:

A.

Ghost employee

B.

Theft

C.

Collusion

D.

Teeming and Lading

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Questions 22

The external auditor seeks to provide an opinion on whether the accounts show a true and fair view

What is the international term for 'true and fair view'?

Options:

A.

Going concern

B.

Prudence

C.

Fair presentation

D.

Completeness

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Questions 23

In relation to accounting coding systems in the computerized records of an entity, which of the following is true?

Options:

A.

Codes are used to cross-reference transactions

B.

Codes in coding systems are not unique

C.

Coding systems are not expandable

D.

Codes are used in the nominal ledger but not in payroll

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Questions 24

Refer to the Exhibit.

Your organization bought a machine for £50,000 at the beginning of year 1, which had an expected useful life of four years and an expected residual value of £10,000; the machine was depreciated on the straight-line basis.

At the beginning of year 4, the machine was sold for £13,000

The total amount of depreciation charged to the income statement over the life of the machine, and the amount of profit or loss on disposal was:

The answer is:

Options:

A.

Option A

B.

Option B

C.

Option C

D.

Option D

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Questions 25

Life membership fees payable to a club or society are usually dealt with by:

Options:

A.

Crediting the total received to the income and expenditure account in the year in which they are received

B.

Debiting the total received to the income and expenditure account in the year in which they are received

C.

Debiting the total received to a Life Memberships account and transferring a proportion each year to the income and expenditure account

D.

Crediting the total received to a Life Memberships account and transferring a proportion each year to the income and expenditure account

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Questions 26

Your organization owed VAT of $22,700 at the beginning of the month.

During the month, it sold standard-rated goods with a net value of $600,000. Its purchases and expenses during the same month amounted to $188,000 including VAT. It paid VAT to the Revenue and Customs, of $33,400. The VAT rate is 17.5%

At the end of the month, the balance on the VAT account was:

Options:

A.

$66,300 debit

B.

$128,200 debit

C.

$66,300 credit

D.

$128,200 credit

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Questions 27

Store Y believe customer XF will not be able to pay his £300 debt. Which ONE of the following day books should this 'bad debt' be recorded in?

Options:

A.

Returns inwards daybook

B.

Sales daybook

C.

journal

D.

Cash book

E.

Petty cash book

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Questions 28

Published accounts must include the following statements:

Options:

A.

Income statement, statement of financial position and statement of cash flows

B.

Manufacturing account, income statement, statement of financial position and statement of cash flows

C.

Income statement and statement of financial position

D.

Trading account, income statement and statement of financial position

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Questions 29

In a manufacturing company, prime costs is the total of

Options:

A.

Purchases of raw materials + opening inventories of raw materials - closing inventories of raw materials + direct wages + direct expenses + production overheads

B.

Purchases of raw materials + direct wages + direct expenses + production overheads

C.

Purchases of raw materials - opening inventories of raw materials + closing inventories of raw materials + direct wages + direct expenses

D.

Purchases of raw materials + opening inventories of raw materials - closing inventories of raw materials + direct wages + direct expenses

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Questions 30

LMN's totals for its sales day book and its cash receipts book for the month ended 31 January 20X6 are as follows

What is the total value for sales that LMN will post to the sales account in the nominal ledger for January 20X6?

Options:

A.

$51,000

B.

$45,000

C.

$36,000

D.

$30,000

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Questions 31

Which of the following would meet the definition of a liability in accordance with the Conceptual Framework's definition?

Options:

A.

An amount due from a customer for goods dispatched two weeks ago

B.

An amount due to a supplier for goods to be purchased in one month's time

C.

An amount which was paid to a supplier in relation to a dispute

D.

An amount due to a supplier for goods purchased one month ago

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Questions 32

The profit earned by Subramanian in 2006 was £ 50,000. He injected new capital of £12,000 during the year and withdrew goods for his private use that cost £4,000.

If net assets at the beginning of 2006 were £10,000, what were the closing net assets?

Options:

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Questions 33

ABC produces accounts to the year ended 31 December annually Extracts from the most recent financial statements are.

Which of the following ratios is a liquidity ratio?

Options:

A.

Debt/Equity x 100%

B.

Operating profit/Capital employed x 100%

C.

Revenue/Capital employed

D.

Current assets/Current liabilities

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Questions 34

Which of the following statements about revenue is CORRECT?

Options:

A.

Revenue is claimed when received, not earned

B.

Revenue cannot be claimed until the end of the period

C.

Revenue is claimed when earned, not received

D.

Revenue is never earned

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Questions 35

Refer to the Exhibit.

The Financial Accountant for a company is preparing the monthly bank reconciliation and has extracted the following information:

The correct cash book balance at the month end will be:

Options:

A.

$42,870

B.

$41,960

C.

$44,610

D.

$29,140

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Questions 36

JW's debits total £10,502 for this period. JW's credits total £8,940.

What amount does JW's accountant need to include in the company's suspense account to make the transactions balance?

Options:

A.

£1,562 CR

B.

£1,562 DR

C.

£10,502 CR

D.

£8,940 DR

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Questions 37

Which one of the following is not an example of an intangible asset?

Options:

A.

Patents

B.

Trademarks

C.

Royalties

D.

Research and Development costs

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Questions 38

Which of the following is an error of principle?

Options:

A.

Using the wrong amount when recording a transaction

B.

Recording a transaction in the wrong type of account

C.

A transaction recorded twice in the ledger accounts

D.

Recording a transaction in the wrong ledger account

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Questions 39

At the beginning of the year, an organization’s non-current asset register showed a total net book value for fixed assets of £86,000. The nominal ledger showed non-current assets at cost of £120,000 and provision for depreciation of £39,000.

The disposal of a non-current asset for £10,000, at a profit of £2,000, had not been accounted for in the non-current asset register.

After correcting for this, the net book value shown in the ledger accounts would be

Options:

A.

£13,000 lower than that in the non-current asset register

B.

£3,000 higher than that in the non-current asset register

C.

£5,000 higher than that in the non-current asset register

D.

£7,000 higher than that in the non-current asset register

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Questions 40

On 31 December 20X6 GHI makes a bonus issue of 50,000 shares On this dale the nominal value of the shares is $1 and the market value is $3 GHI has a share premium account with a substantial credit balance. The share capital account is credited correctly in the nominal ledger. Which of the following statements is TRUE?

Options:

A.

The bonus issue is valued at $3 per share and the debit entry is to the cash account

B.

The bonus issue is valued at $1 per share and the debit entry is to the share premium account

C.

The bonus issue is valued at $1 per share and the debit entry is to the cash account

D.

The bonus issue is valued at $3 per share and the debit entry is to the share premium account

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Questions 41

A sole trader made a net profit of $8000 for the year.

During the year, inventory increased by $500, receivables decreased by $800 and payables increased by $2400.

This would result in:

Options:

A.

An increase in cash flow of $10100

B.

A decrease in cash flow of $10100

C.

An increase in cash flow of $10700

D.

A decrease in cash flow of $10700

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Questions 42

The formula for calculating payables days is

Options:

A.

cost of goods sold divided by payables x 365

B.

payables divided by purchases x 365

C.

purchases divided by payables x 365

D.

payables divided by cost of goods sold x 365

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Questions 43

Which TWO of the following are treated as statutory deductions from an employee's gross salary?

Options:

A.

Employer pension contributions D Income tax

B.

Employee social club contributions

C.

Employee pension contributions

D.

Employer social security contributions

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Questions 44

The Accounting Standards Board is responsible for:

Options:

A.

Producing the Companies Act

B.

Governing the activities of the external auditors

C.

Producing International Accounting Standards

D.

Producing Financial Reporting Standards

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Questions 45

Comany D recently purchased an intangible asset from CompanyJFY, which was priced at £150,500, which Company D paid, along a goodwill amount that totalled 25% of the asking price.

Company D has estimated that the purchased entity will have a useful life of 35 years. Company D has decided to amortise the cost of the new asset using the straight line method.

What will the amortisation figure per annum be for Company D's new entity?

Options:

A.

£5,375

B.

£4,300

C.

£1,075

D.

£5,500

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Questions 46

Before lending to an entity, which TWO of the following pieces of information would a potential lender want to consider?

Options:

A.

Past tax payments made by the entity

B.

Social policies of the entity

C.

Dividend policy of the entity

D.

Ability of the entity to meet interest payments

E.

Long term business plans of the entity

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Questions 47

If an auditor expresses an opinion of `fair presentation' on a set of financial statements, this means:

Options:

A.

The financial statements do not contain any errors

B.

There is fraud taking place in the company

C.

The financial statements comply with the requirements of the Companies Act and accounting statements

D.

The financial statements have been audited by the internal auditors

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Questions 48

A company is preparing its accounts to 30 November. The latest gas bill received by the company was dated 30 September and included usage charges for the quarter 1 June to 31 August of $5,700 and a service charge of $1,200 for the quarter 1 October to 31 December. It is estimated that the gas bill for the following quarter will be a similar amount.

What will be the amount of the accrual shown in the accounts at 30 November 2006?

Options:

A.

$5,300

B.

$3,400

C.

$3,800

D.

$4,900

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Questions 49

A payment to a supplier has been credited to the supplier's account and debited to the bank account.

This would result in

Options:

A.

an understatement of profit and an overstatement of liabilities

B.

an understatement of profit and an overstatement of assets

C.

an overstatement of profit and an overstatement of liabilities

D.

an overstatement of profit and an overstatement of assets

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Questions 50

Which of the following would require an adjustment to be made to the cash book?

(a) Unpresented cheques

(b) Receipts not yet credited by the bank

(c) A dishonoured cheque

(d) Bank charges

Options:

A.

(a) and (b) only

B.

(b) and (c) only

C.

(c) and (d) only

D.

(d) only

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Questions 51

Refer to the Exhibit.

A business banks its takings for the week. The bank account at the start of the week shows an overdraft

Which of the following is the dual effect?

Options:

A.

A

B.

B

C.

C

D.

D

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Questions 52

An asset may best be defined as:

Options:

A.

An obligation to transfer economic benefits as a result of past transactions or events

B.

A resource which may be used to derive income in the future

C.

A person or entity to whom money is owed by the business

D.

The amount of money invested in the business by the shareholders

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Questions 53

MHJ purchased an asset for £53,500, which incurred a delivery charge of £20,000. MHJ decided to set a depreciation rate of 15% per annum for the asset.

In its second year, the asset is re-valued at 180% of the net carrying value of the previous year.

What will be the asset's net carrying amount by the end of its second year?

Options:

A.

£7 72,455.00

B.

£95,586.75

C.

£53,101.20

D.

£81,248.74

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Questions 54

A basic principle of accounting is that resources are normally stated in accounts at historical cost.

Which THREE of the following are alternative ways of measuring resources?

Options:

A.

Purchase price

B.

Replacement cost

C.

Value in use

D.

Net book value

E.

Fair value

F.

Invoice value

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Questions 55

Below is some information about Company TYY:

TYY offers a wholesale price for Product P of £650 per 100 quantity.

TYY offers regular customers a 35% trade discount.

On every 15th of the month, TYY offers a 15% cash discount on sales.

MPU wants to make a purchase from TTY for the first time, of900 Product Ps on the 15th of June. How much will MPU pay for this purchase?

Options:

A.

£3,232.13

B.

£4,972.50

C.

£3802.50

D.

£5,850.00

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Questions 56

Which of the following would be a role of the financial accountant?

Options:

A.

Meeting management reporting requirements

B.

Monitoring actual results to expected results

C.

Meeting external reporting requirements

D.

Producing budgets for the future

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Questions 57

A company has profit before tax and dividends of £500000. The share capital consists of 1000000 ordinary shares of £1 each and 100000 10% preference shares of 50p each.

A 10p dividend was declared on ordinary shares.

Assuming there was no tax liability for the period, profit retained for the period was

Options:

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Questions 58

Which one of the following internal controls is designed to prevent errors and fraud?

Options:

A.

Confirmation of payables balances with suppliers.

B.

Requiring cheques over a certain amount to be signed by two signatories.

C.

Bank reconciliations.

D.

External audit.

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Questions 59

The issue of a company's shares for more than their normal value results in the creation of a

Options:

A.

General reserve.

B.

Suspense account.

C.

Goodwill account.

D.

Share premium account.

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Questions 60

The petty cash imprest is restored to £500 at the end of each week. The following amounts are paid out of petty cash during week 23:

(a) Stationery - £70.50 (including VAT at 17.5%)

(b) Travelling costs - £127.50

(c) Office refreshments - £64.50

(d) Sundry payables - £120.00 plus VAT at 17.5%

The amount required to restore the imprest to £500.00 is:

Give your answer to 2 decimal places.

Options:

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Questions 61

An organization’s cash book has an opening balance in the bank column of $4,850 credit.

The following transactions then took place:

(a) Cash sales of $14,500, including VAT of $1,500.

(b) Receipts from customers of debts of $24,000.

(c) Payments to creditors of debts of $18,000, less 5% cash discount.

(d) Dishonored cheques from customers amounting to $2,500.

The resulting balance in the bank column of the cash book should be:

Options:

A.

$12,550 debit

B.

$14,050 debit

C.

$19,050 credit

D.

$23,750 credit

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Questions 62

In a cash flow statement, which one of the following would not be found under the section "cash flows from operating activities"?

Options:

A.

Taxation paid

B.

Interest received

C.

Interest paid

D.

Profit on disposal of non-current assets

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Questions 63

Which of the following entries would result in the trial balance not agreeing?

(a) An invoice for £200 for electricity has been omitted from the ledgers

(b) A payment received from a customer has been posted to the accounts twice

(c) An invoice for repairs and maintenance has been charged to the non-current asset account

(d) A payment made to suppliers had been recorded in the cash book but not recorded in the supplier's account

Options:

A.

(a) and (b) only

B.

(c) and (d) only

C.

(d) only

D.

All of the above - (a), (b), (c) and (d)

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Questions 64

The suspense account of a company was opened with a credit balance of $360 when the trial balance failed to agree.

This could have arisen because

Options:

A.

an electricity bill of $840 was entered in the electricity account as $480.

B.

an electricity bill of $480 was entered in the electricity account as $840.

C.

an electricity bill of $360 was duplicated.

D.

an electricity bill of $180 was duplicated.

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Questions 65

Refer to the Exhibit.

The sales day book for the last month, appeared as follows:

The entries which should be made in the ledger accounts are:

The answer is:

Options:

A.

Option A

B.

Option B

C.

Option C

D.

Option D

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Questions 66

An invoice for electricity has been debited to the supplier's account and credited to the electricity account. This would result in:

Options:

A.

An overstatement of profit and an overstatement of current liabilities

B.

An overstatement of profit and an understatement of current liabilities

C.

An understatement of profit and an overstatement of current liabilities

D.

An understatement of profit and an understatement of current liabilities

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Questions 67

An increase in work-in-progress will:

Options:

A.

Decrease the factory cost of goods completed

B.

Increase the prime cost

C.

Decrease the prime cost

D.

Increase the cost of goods sold

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Questions 68

Which THREE of the following would be recorded as a debit balance in the trial balance?

Options:

A.

Income tax liability

B.

Opening inventory

C.

Share capital

D.

Income tax expense

E.

Dividends paid

F.

Dividends received

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Questions 69

In times of rising prices, the historical cost convention results in:

Options:

A.

Assets and profits being overstated

B.

Assets and profits being understated

C.

Assets being overstated and profits being understated

D.

Assets being understated and profits being overstated

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Questions 70

HJK has maintained minimal accounting records during the year but has the following information available:

HJK charges a mark-up on all goods sold of 25%. What is HJK's gross profit for the year?

Options:

A.

$77,500

B.

$62,000

C.

$57,500

D.

$46,000

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Questions 71

Different users have different needs from financial information. One of which is to know about the company's ability pay its debts

Which of the following users will have this need for information?

Options:

A.

Managers

B.

Suppliers

C.

Customers

D.

Shareholders

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Questions 72

Refer to the Exhibit.

A club receives the following fees in its first two years of operations:

Entrance fees are to be recognized over a period of 5 years while life membership fees are to be credited over a period of 10 years.

The total amount of fees which will be recognized in the income and expenditure account for each of the two years is:

Options:

A.

Year 1 - £27000 Year 2 - £38500

B.

Year 1 - £27000 Year 2 - £44500

C.

Year 1 - £27000 Year 2 - £45500

D.

Year 1 - £36000 Year 2 - £49000

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Questions 73

Accounting standards and company law both influence how assets and liabilities ate classified and presented in financial statements

An amount owing at the year end, due for repayment more from one year from the date that the statement of financial position is being prepared, will be

classified under which of the following headings?

Options:

A.

Non-current liability

B.

Current liability

C.

Capital

D.

Non-current asset

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Questions 74

A company's financial statements show a gross profit of $15 million. A major error in the inventory value system has been discovered resulting in an overstatement on opening inventory of $1.2 million and an understatement in closing inventory of $1.5 million.

What is the correct gross profit figure for the period?

Options:

A.

$17.7 million

B.

$15.3 million

C.

$14.7 million

D.

$12.3 million

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Questions 75

The Finance Director of EFG company has made the following statements regarding the recording of expenditure relating to the entity's property, plant and equipment (PPE) in the nominal ledger.

Which THREE of the following statements are true?

Options:

A.

The annual depreciation charge reduces EFG's profit for the year.

B.

The cost of insurance for the factory is debited to the PPE asset account.

C.

The loss on the disposal of PPE reduces EFG's profit for the year

D.

The cost of repainting the office is credited to the repairs expense account

E.

The loss on the disposal of PPE is recorded in a liability account

F.

The annual depreciation charge reduces the carrying value of PPE

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Questions 76

At the end of the year, the non-current asset register showed assets with a net book value of £170,300. The non-current asset accounts in the nominal ledger showed a net book value of £150,300.

The difference could be due to a disposed asset not having been removed from the non-current asset register, which had.

Options:

A.

Disposal proceeds of £25,000 and a profit on disposal of £5,000

B.

Disposal proceeds of £25,000 and a net book value of £5,000

C.

Disposal proceeds of £25,000 and a loss on disposal of £5,000

D.

Disposal proceeds of £10,000 and a net book value of £10,000

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Questions 77

The accounting concept which states that non-current assets should be valued at cost (or valuation) less accumulated depreciation, rather than their saleable value in the event of closure, is the.

Options:

A.

Net realisable value concept

B.

Realisation concept

C.

Prudence concept

D.

Going concern concept

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Questions 78

The balance on LMN's cash account at 31 December 20X6 is $108,000 (debit) On performing the monthly bank reconciliation the following is discovered.

• a payment of $2,000 made to a supplier has not yet appeared on the bank statement,

• an automated receipt from a customer for $5,000 has not yet been recorded in the cash book, and

• a pigment to a supplier of $1,500 was incorrectly recorded in the cash book as $1,050

The balance showing on the bank statement at 31 December 20X6 is

Options:

A.

$111,450

B.

$101,450

C.

$114,550

D.

$104,550

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Questions 79

Which of the following methods of inventory valuation is not acceptable in the UK for financial reporting purposes?

Options:

A.

Periodic weighted average

B.

Weighted average

C.

First In First Out (FIFO)

D.

Last in First Out (LIFO)

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Questions 80

The main aim of financial accounting is to:

Options:

A.

Maintain ledger accounts for every asset and liability

B.

Provide financial information to satisfy the needs of users of accounts

C.

Ensure that double-entry records are maintained

D.

Record every financial transaction in the books of account

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Questions 81

Refer to the exhibit.

The bookkeeper of Joshua Ltd has absconded with the petty cash. The following was available:

How much has the bookkeeper stolen during the year?

Options:

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Questions 82

A public limited company declares a 10% final dividend.

The nominal value of the shares is 50p and the shares are currently trading, in the stock market, at a price of £2.

A shareholder who purchased 1000 shares at a price of £1.00 per share, will receive a dividend of:

Give your answer to 2 decimal places.

Options:

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Questions 83

Your organization paid $120250 in net wages to its employees during the year.

Employees' tax and national insurance amounted to $32000 and employers national insurance was $11000. Employees had contributed $6250 to a superannuation scheme.

The amount to be charged against profits for the year, in respect of wages is

Options:

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Questions 84

In a cash flow statement, which one of the following would not be found under the section "cash flows from financing activities"?

Options:

A.

Loan repayments

B.

Dividend payments

C.

Dividend received

D.

Proceeds from issuing shares

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Questions 85

Which of the following are relevant to the total working capital days ratio calculation?

Options:

A.

Inventories days

B.

Receivables days

C.

Payables days

D.

Current assets

E.

Current liabilities

F.

Operating profit

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Questions 86

M Ltd owns property costing $80,000 ($50,000 for the land and $30,000 for the building).

The company's accounting policy is to depreciate buildings at the rate of 5% per annum on the straight-line basis.

After five years, what is the net book value of freehold land and building in the financial accounts of M Ltd?

Options:

A.

$87,500

B.

$72,500

C.

$60,000

D.

$78,500

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Questions 87

Which of the following would be a good method of segregating the duties of staff?

Options:

A.

Employing separate persons to maintain the sales and purchase ledgers

B.

Employing a wages specialist to calculate and deal with the payment of wages

C.

Employing an experienced cashier to deal with all bank transactions

D.

Employing a separate person to maintain and reconcile control accounts

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Questions 88

Refer to the exhibit.

Which three of the following would be classified as a revenue reserve?

Options:

A.

A, B and C

B.

D, E and F

C.

A, C and F

D.

B, D and E

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Questions 89

Jasper has an opening capital balance at 1 January of $84,650 credit. During the period there was an increase in assets of $16,890 and an increase in liabilities of $22,480.

The balance on the capital account at the end of the period is:

Options:

A.

$79,060 credit

B.

$5,590 credit

C.

$5,590 debit

D.

$90,240 credit

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Questions 90

Refer to the Exhibit.

The following information is available for the period for AC Limited, a manufacturing company:

The factory cost of goods completed for the period was

Options:

A.

$228,000

B.

$229,000

C.

$232,000

D.

$230,000

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Questions 91

The concept of stewardship refers to which ONE of the following?

Options:

A.

An accountant's responsibility to remain optimistic in the presenting financial information

B.

An accountant's responsibility to properly look after and present financial information

C.

An accountant's responsibility to properly advise management on financial information

D.

An accountant's responsibility to make sure all financial information is correct

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Questions 92

Which one of the following would not be considered a purpose of segregation of duty?

Options:

A.

Ensuring staff get experience of a variety of different tasks.

B.

Ensuring no one person should have complete control over any section of the bookkeeping system.

C.

Preventing fraudulent manipulation of the bookkeeping system.

D.

Avoiding opportunities for diverting money from the company.

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Questions 93

Refer to the Exhibit.

The following information relates to a business at its year end:

The prime cost of goods manufactured during the year is:

Options:

A.

£5,550,000

B.

£8,150,000

C.

£8,350,000

D.

£8,800,000

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Questions 94

Which of the following are examples of indirect costs for a chocolate manufacturing business?

Options:

A.

Factory rent

B.

Factory insurance

C.

Factory supervisor wages

D.

Purchase of milk

E.

Purchase of cocoa

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Questions 95

The total of the debit column of a trial balance is $800 bigger than the credit column.

Which of the following is the entry recorded in the suspense account?

Options:

A.

$800 Debit

B.

$1,600 Debit

C.

$1,600 Credit

D.

$800 Credit

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Questions 96

Entity HJ is a small business. In the period. Entity Hj earned revenue of £24,300, had opening inventories of £1,500 and closing inventories of £8,000. Purchases came to £13,200.

What was Entity Hj's gross profit or loss for this period?

Options:

A.

£17,600 profit

B.

£6,700 loss

C.

£17,600 loss

D.

£6,700 profit

E.

£31,000 profit

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Questions 97

A contra entry is best described as:

Options:

A.

An entry made between two customers in the sales ledger

B.

An entry made between two customers in the purchase ledger

C.

An entry made to set off the balances of the same account within the sales ledger and the purchase ledger

D.

An entry made to balance the control account

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Questions 98

What is the balance of the trading account?

Options:

A.

The gross profit

B.

The revenue value

C.

The closing inventories total

D.

The total income

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Questions 99

The method of accounting that attempts to recognize changing price levels by applying an industry or asset specific price index to the cost of goods sold and assets consumed is known as:

Options:

A.

Current cost accounting

B.

Current purchasing power accounting

C.

Historic cost accounting

D.

Replacement cost accounting

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Questions 100

A company that is VAT-registered has sales for the period of $245,000 (excluding VAT) and purchases for the period of $123,375 (including VAT). The opening balance on the VAT account was $18,000 credit. The VAT rate is 17.5%.

What will be the closing balance on the VAT account at the end of the period?

Options:

A.

$6,500 debit

B.

$42,500 credit

C.

$375 debit

D.

$36,375 credit

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Questions 101

AB sold a machine for $15,000 The machine had originally cost $160,000 and al the dale of disposal had a carrying value of $26,000.

The journal entry lo record this disposal is:

A)

B)

C)

D)

Options:

A.

Option A

B.

Option B

C.

Option C

D.

Option D

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Questions 102

A business buys a new production line at a cost of £100,000. After using the line for one year a more advanced version of the line is marketed by the manufacturer. As a result the production line in operation has a market value of £ 50,000. The line is being depreciated straight line over five years.

The charge to the income statement for impairment of the production line will be

Options:

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Questions 103

The accumulated fund is equal to:

Options:

A.

The book value of net assets in a not-for-profit organization

B.

The bank balances of an organization

C.

The excess of receipts over payments in a not-for-profit organization

D.

Retained profits in a limited company

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Questions 104

Fraud can be conducted by employees or management. Management fraud can be hard to detect and may not seem like fraud at all as often company performance improves.

Which ONE of the following would be an example of management fraud?

Options:

A.

Theft by management

B.

Improved performance and position for the company

C.

Charging personal expenses to a company credit card

D.

Trading with friends and family

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Questions 105

Refer to the Exhibit.

From the following information, calculate the value of sales for the period:

Value of sales is

Options:

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Questions 106

Which of the following are likely examples of accrued expenses:

Options:

A.

Water bill

B.

Purchase order

C.

Electricity bill

D.

Interest on loans

E.

Sales tax

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Questions 107

Which TWO of the following are features of a private limited company?

Options:

A.

Listed on the stock exchange

B.

Usually a small number of owners

C.

Usually a large number of owners

D.

Recognised as a 'person' in the eyes of the law

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Questions 108

Refer to the exhibit.

The following information is available about the ordinary shares of a public limited company:

A shareholder who purchased 20,000 shares at a price of $1.90 will receive a dividend of

Options:

A.

$1,900

B.

$500

C.

$2,500

D.

$2,400

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Questions 109

An external audit is an independent examination of, and expression of opinion on the financial statements of an entity.

Who of the following appoints the external auditor?

Options:

A.

The Board

B.

Finance director

C.

Shareholders

D.

Chief operating officer

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Questions 110

Which TWO of the following statements are correct?

Options:

A.

Ordinary shares carry compulsory dividends

B.

Ordinary shares carry voting rights

C.

Preference shares carry voting rights

D.

Preference shares are the lowest priority when winding up

E.

Preference shares usually carry a fixed dividend

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Questions 111

FGH has extracted its trial balance from its nominal ledger for the year ended 31 March 20X6 The items below have a value greater than SNil Which are debit and which are credit balances?

Options:

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Questions 112

Refer to the Exhibit.

A company operates a FIFO system of inventory valuation. Opening inventory at the beginning of the period was 200 units @ £2.80 each. During the period the following movements of inventory were recorded.

The value of the closing inventory at the end of the period and amount charged to the income statement were:

Options:

A.

Closing inventory £360.00 Income statement £2255.00

B.

Closing inventory £360.00 Income statement £1895.00

C.

Closing inventory £357.50 Income statement £1897.50

D.

Closing inventory £360.00 Income statement £1695.00

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Questions 113

AB commenced trading on 1 January 20XS. introducing $50,000 cash and $15,000 of assets to the business. The profit earned and retained in the business for the year ended 31 December 20X6 was $160,000. AB's closing capital at 31 December 20X5 was $190,000.

What is the value of AB's drawings for the year ending 31 December 20X5?

Options:

A.

$35,000

B.

$20,000

C.

$95,000

D.

$135,000

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Questions 114

The statement of cash flow is a primary statement.

Which of the following gives the best description of the information provided to users by a statement of cash flow?

Options:

A.

Financial position

B.

Financial performance

C.

Liquidity, viability and adaptability

D.

Going concern status

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Questions 115

MM does not maintain complete accounting records. The following information is available for the year ended 31 December 20X3:

The mark up on items sold by MM is 20%.

Which THREE of the following statements are true?

Options:

A.

Opening receivables is a debit balance

B.

Using mark-up means the profit is based on selling price

C.

Opening receivables is a credit balance.

D.

Opening inventory is a credit balance

E.

Using mark-up means the profit is based on cost

F.

Opening inventory is a debit balance.

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Questions 116

Refer to the exhibit.

Jordan has the following assets and liabilities at 1 January:

What is the capital balance at 1 January?

Options:

A.

$38,000

B.

$14,000

C.

$22,000

D.

$18,000

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Questions 117

A business may have thousands of transactions in any one accounting year. To trace the details of one of those transactions could be very difficult

Which of the following would be a way to make this easier?

Options:

A.

Efficient filing

B.

Effective coding

C.

Audit trail

D.

Complete record keeping

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Exam Code: BA3
Exam Name: Fundamentals of financial accounting
Last Update: Jun 18, 2024
Questions: 393
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