2012 Paper F3 QandA Sample Download v1

Practice Questions and Answers

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ACCA Paper F3: Financial Accounting (International)

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ACCA Paper F3: FINANCIAL ACCOUNTING (INTERNATIONAL) Practice Questions and Answers Answers Published by Tony Surridge Online Limited in 2012 Copyright © Tony Surridge Online Limited Part of the Tony Tony Surridge Su rridge +Add Vance Vance study materials range

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Welcome to our download sample of the Tony Surridge +Add Vance E-book publication: ACCA Paper F3 – Financial Accounting (International) – Practice Questions and Answers

Thanks for taking time to review a download extract of this Study Text publication which we have developed specially for the ACCA Paper F3: Financial Accounting (International). We hope you like our electronic study material and recognise that at an extremely low price from just £3 (plus VAT where applicable) the complete purchased and downloaded version represents true value for money. This is only a small sample, taken directly from the full version, and as such not all hyperlinks will be active. For illustrative purposes, the selection shown here is Tutorial 3 in full, as highlighted in the table of contents. All hyperlinks are fully functional only in the full downloaded version when purchased. You may like to learn some details about the full version: (please note these details may vary slightly depending on which updated version you have purchased) Pages

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Diagnostic Questions and Answers: Syllabus: Questions and Answers 5 Diagnostic Tests : Questions and Answers

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No snowflake in an avalanche ever feels responsible. Voltaire



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Main Page Copyright statement For the ladies only 10 Golden Rules for a Computer-based Examination Computer Based Exams

ACCA Paper F3

Financial Accounting (International) +Add Vance Practice Questions and Answers

Syllabus

The structure of the syllabus and study guide Level of assessments - Intellectual demand Value of assessments (based on UK frameworks) - Guided learning hours Guide to exam structure Guide to examination assessment Qualification structure Syllabus structure Aim Rationale Main capabilities Relational diagram of main capabilities Detailed syllabus Approach to examining the syllabus

Study Guide A B C D E F G H

The content and purpose of financial reporting The qualitative characteristics of financial information The use of double-entry and accounting systems Recording transactions and events Preparing a trial balance Preparing basic financial statements Preparing simple consolidated financial statements Interpretation of financial statements

Your Study Material The syllabus outline and our Questions and Answers pathway through it Click here In ADDITION there are FOUR tests. Click below. This free sample shows Diagnostic Test 1 and the first 16 answers

Tests Diagnostic Test – 1

Questions

Answers

Diagnostic Test – 2

Questions

Answers


Questions

Answers


Questions

Answers

ACCA Pilot Paper

Questions

Answers

“Where shall I begin, please your majesty?” he asked. “Begin at the beginning,” the king said gravely, “and go on till you come to the end: then stop.” Lewis Carroll Through the Looking-Glass ©Tony Surridge Online Limited, 2012


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The syllabus outline and our pathway through it …. Syllabus section

Main topic

Pages Questions

Answers

A

The context and purpose of financial reporting

23

37

B

The qualitative characteristics of financial information

46

49

C

The use of double-entry and accounting systems

51

71

D

Recording transactions and events

85

120

E

Preparing a trial balance

144

169

F

Preparing basic financial statements

191

214

G

Preparing simple consolidated financial statements

230

236

H

Interpretation of financial statements

239

246

Diagnostic Test 1

250

268

Diagnostic Test 2

274

292

Diagnostic Test 3

302

314

Diagnostic Test 4

322

343

ACCA Pilot Paper

361

380

This free sample shows Diagnostic Test 1 and the first 16 answers



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+Add Vance

Financial Accounting (International)

DIAGNOSTIC TEST - 1 QUESTION PAPER Time allowed: 2 hours All FIFTY questions are compulsory and MUST be attempted Each question is worth 2 marks

Do NOT attempt this test until you are ready for the test.



3 F r e p a P 7


1


Should details of material adjusting or material non-adjusting events after the statement of financial position date be disclosed in the notes to fi nancial statements according to IAS 10 Events After the statement of financial position Date? A B

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Non-Adjusting events Adjusting events

A

( 2 marks)

At 30 June 2010 a company’s allowance for receivables was $39,000. At 30 June 2011 trade receivables totaled $517,000. It was decided to write off debts totaling $37,000 and to adjust the allowance for receivables to the equivalent of 5 per cent of the trade receivables based on past events.

A

What figure should appear in the income statement for the year ended 30 June 2011 for these items? A B C D 3

$24,000 $23,850 $22,000 $61,850

(2 marks)

At 1 January 2011 a company had an allowance for receivables of $66,000. At 31 December 2011 the company’s trade receivables were $1,123,500 and it was decided to write off balances totalling $43,500 as irrecoverable. In addition it was decided to adjust the allowance for receivables to 5% of the remaining receivables, based on past experience.

A

What total figure should appear in profit or loss for bad debts and allowance for receivables, for the year to 31 December 2010? A B C D

4

$31,500 $33,713 $55,500 $97,500

(2 marks)

The IASB’s Framework for the preparation and presentation of financial statements gives qualitative characteristics that make financial information reliable.

A

Which of the following are examples of those qualitative characteristics? A B C D 5

Neutrality, accruals and going concern. Prudence, comparability and accruals. Neutrality, comparability and true and fair view. Faithful Representation, neutrality and prudence.

(2 marks)

The following bank reconciliation statement has been prepared by a trainee accountant:

A

$ 3,860 9,160 5,300 16,690 21,990

Overdraft per bank statement less: Outstanding cheques add: Deposits credited after date Cash at bank as calculated above

(The question continues on the next screen) ©Tony Surridge Online Limited, 2012


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What should be the correct balance per the cash book? A B C D 6

$3,670 balance at bank $11,390 balance at bank $3,670 overdrawn $21,990 balance at bank as stated

(2 marks)

Which of the following calculates a trader’s net profit for a period?

A B C D 7

A

A

Closing net assets – drawings + capital introduced – opening net assets Closing net assets + drawings + capital introduced – opening net assets Closing net assets + drawings – capital introduced – opening net assets Closing net assets – drawings – capital introduced – opening net assets

(2 marks)

A sole trader took some goods costing $800 from inventory for his own use. The normal selling price of the goods is $1,600.

A

Which of the following journal entries would correctly record this?

A B C

8

Dr $ 1,600

Sales account Drawings account Drawings account Inventory account Drawings account Purchases account

Cr $ 1,600

800 800 800 800 (2 marks)

The debit side of a company’s trial balance totals $800 more than the credit side. Which one of the following errors would fully account for the difference? A B C D

A

Discount received $400 has been debited to discount allowed account. The petty cash balance of $800 has been omitted from the trial balance. $400 paid for plant maintenance has been correctly entered in the cash book and credited to the plant asset account. A receipt of $800 for commission receivable has been omitted from the records. (2 marks)

A musician must make music, an artist must paint, a poet must write, if he to be at peace with himself. What a man can be, he must be. Abraham Maslow Abraham Harold Maslow (1908 – 1970) was an American professor of psychology at Brandeis University, Brooklyn College, New School for Social Research and Columbia University who created Maslow's hierarchy of needs. He stressed the importance of focusing on the positive qualities in people, as opposed to treating them as a 'bag of symptoms.‘ Abraham Maslow ©Tony Surridge Online Limited, 2012


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A company’s income statement for the year ended 31 December 2011 showed a net profit of $83,600. It was later found that $18,000 paid for the purchase of a motor van had been debited to the motor expenses account. It is the company’s policy to depreciate motor vans at 25 per cent per year on the straight line basis, with a full year’s charge in the year of acquisition.

A

What would the net profit be after adjusting for this error? A B C D 10

(2 marks)

Should dividends paid appear on the face of a company’s income statement? A B

11

$70,100 $101,600 $106,100 $97,100

No Yes

A (2 marks)

The following control account has been prepared by a trainee accountant: Receivables ledger control account $ Opening balance 308,600 Cash received from credit customers Credit sales 154,200 Discounts allowed to credit customers Cash sales 88,100 Interest charged on overdue accounts Contras against credit Bad debts written off balances in payables ledger 4,600 Allowances for receivables . Closing balance 555,500

A $ 147,200 1,400 2,400 4,900 2,800 396,800 555,500

What should the closing balance be when all the errors made in preparing the receivables ledger control account have been corrected? A B C D

12

$309,500 $307,100 $395,200 $304,300

(2 marks)

A

At 31 December 2010 Q, a limited liability company, owned a building that cost $800,000 on 1 January 2001. It was being depreciated at two per cent per year. On 1 January 2011 a revaluation to $1,000,000 was recognised. At this date the building had a remaining useful life of 40 years. What is the depreciation charge for the year ended 31 December 2011 and the revaluati on reserve balance as at 1 January 2011?

A B C D

Depreciation charge for year ended 31 December 2011 $ 25,000 20,000 20,000 25,000


Revaluation reserve as at 1 January 2011 $ 360,000 200,000 360,000 200,000


(2 marks)

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A business had an opening inventory of $86,400 and a closing inventory of $96,000 in its financial statements for the year ended 30 September 2011.

A

Which of the following entries for the opening and closing inventory figures are made as yearend adjustments for inventory? Dr Cr $ $ Purchases account 96,000 A Inventory account 96,000 B

C

D

14

Income statement Inventory account

86,400

Inventory account Income statement

96,000

Inventory account Income statement

86,400

Income statement Inventory account

96,000

Inventory account Purchases account

86,400

96,000

86,400

96,000 96,000 96,000

(2 marks)

A company has made a material change to an accounting policy in preparing its current financial statements.

A

Which of the following disclosures are required by IAS 8 Accounting policies, changes in accounting estimates and errors in the financial statements? 1 2

15

3

The reasons for the change. The amount of the adjustment in the current period and in comparative information for prior periods. An estimate of the effect of the change on the next five accounting periods.

A B C D

1, 2 and 3 1 and 2 only 1 and 3 only 2 and 3 only

(2 marks)

According to IAS 2 Inventories, which of the following costs should be included in valuing the inventories of a manufacturing company? (1) (2) (3) (4)

Carriage inwards. Carriage outwards. Depreciation of factory plant. General administrative overheads.

A B C D

2 and 3 only 1 and 3 only All four items 1, 2 and 4 only


A

(2 marks) www.tonysurridge.co.uk

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Part of a company’s cash flow statement is shown below:

A

$’000 8,640 (2,160) (330) 440

Operating profit Depreciation charges Increase in inventory Increase in accounts payable The following criticisms of the extract have been made: (1) (2) (3)

Depreciation charges should have been added, not deducted. Increase in inventory should have been added, not deducted. Increase in accounts payable should have been deducted, not added.

Which of the criticisms are valid? A B C D

17

(2 marks)

The profit of a business may be calculated by using which of the following formula? A B C D

18

1 and 3 only 2 only 2 and 3 only 1 only

Opening capital + drawings - capital introduced - closing capital Closing capital - drawings + capital introduced - opening capital Closing capital + drawings - capital introduced - opening capital Opening capital - drawings + capital introduced - closing capital

A

(2 marks)

Which of the following are differences between sole traders and limited liability companies? (1)

A sole traders’ financial statements are private; a company’s financial statements are sent to shareholders and may be publicly filed.

(2)

Only companies have capital invested into the business.

(3)

A sole trader is fully and personally liable for any losses that the business might make; a company’s shareholders are not personally liable for any losses that the company might make.

A B C D

1 and 3 only 1 and 2 only 1, 2 and 3 2 and 3 only


A

(2 marks)


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19


Which of the following documents should accompany a payment made to a supplier? A B C

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Purchase invoice Supplier statement Remittance advice

A

(2 marks)

A company is in a legal dispute with a supplier. The supplier is making a claim for losses suffered as a result of an alleged breach of contract by the company. The supplier is claiming $1 million. The company has denied any liability but has offered $150,000 as an outof-court settlement. The company’s lawyers have advised that if the case goes to court, the most likely outcome is that the company will lose the case and will be required to pay $500,000 in compensation to the supplier.

A

What amount should be provided in respect of the claim by the supplier? A B C D 21

(2 marks)

Which of the following journal entries are correct, according to their narratives? Dr CR $ $ 1 Suspense account 18,000 Rent received account 18,000 Correction of error in posting $24,000 cash received for rent to the rent received account as $42,000 2

3

A B C D 22

Nothing, because there is only a contingent liability $150,000 $500,000 $1,000,000

Share premium account 400,000 Share capital account 1 for 3 bonus issue on share capital of 1,200,000 50¢ shares

400,000

Trade investment in X 750,000 Share capital account Share premium account 500,000 50¢ shares issued at $1.50 per share in exchange for shares in X

250,000 500,000

1 only 3 only 1 and 2 only 2 and 3 only

A

(2 marks)

The plant and machinery account (at cost) of a business for the year ended 31 December 2011 was as follows: Plant and machinery – cost 2011 2011 $ $ 1 Jan Balance 240,000 31 March Transfer disposal account 60,000 30 June Cash – purchase of plant 160,000 31 Dec Balance 340,000 400,000 400,000

A

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. (The question continues on the next screen) ©Tony Surridge Online Limited, 2012


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What should be the depreciation charge for the year ended 31 December 2011? A B C D

23

24

25

$61,000 $55,000 $68,000 $64,000

A

(2 marks)

Which of the following should appear in a company’s statement of changes in equity? 1 2 3

Profit for the financial year. Amortisation of capitalised development costs. Surplus on revaluation of non-current assets.

A B C D

1 and 3 only 1 and 2 only All three items 2 and 3 only

A

(2 marks)

Which of the following statements are correct?

A

(1)

Capitalised development expenditure must be amortised over a period not exceeding five years.

(2)

Capitalised development costs are shown in the statement of financial position under the heading of Non-current Assets.

(3)

If certain criteria are met, research expenditure must be recognised as an intangible asset.

A B C D

1 only 2 only 1 and 3 only 2 and 3 only

(2 marks)

A fire on 30 September destroyed some of a company’s inventory and its inventory records. The following information is available: $ Inventory 1 September 318,000 Sales for September 612,000 Purchases for September 412,000 Inventory in good condition at 30 September 214,000

A

Standard gross profit percentage on sales is 25%. Based on this information, what is the value of the inventory lost? A B C D

$271,000 $57,000 $96,000 $26,400


(2 marks)


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26


At 31 December 2010 a company’s capital structure was as follows: Ordinary share capital (500,000 shares of 25¢ each) Share premium account

A

$ 125,000 100,000

In the year ended 31 December 2011 the company made a rights issue of 1 share for every 2 held at $1 per share and this was taken up in full. Later in the year the company made a bonus issue of 1 share for every 5 held, using the share premium account for the purpose. What was the company’s capital structure at 31 December 2011? Ordinary share account $ 450,000 225,000 225,000 212,500

A B C D 27

Share premium account $ 125,000 262,500 250,000 262,500

(2 marks)

The inventory value for the financial statements of Q for the year ended 31 May 2011 was based on an inventory count on 4 June 2011, which gave a total inventory value of $836,200.

A

Between 31 May and 4 June 2011, the following transactions took place: Purchases of goods Sales of goods (profit margin 30% on sales) Goods returned by Q to supplier

$ 8,600 14,000 700

What adjusted figure should be included in the financial statements for inventori es at 31 May 2011? A B C D 28

$853,900 $834,300 $838,100 $818,500

(2 marks)

In preparing a company’s bank reconciliation statement at March 2012, the fol lowing items are causing the difference between the cash book balance and the bank statement balance: (1) (2) (3) (4) (5) (6)

A

Bank charges $380. Error by bank $1,000 (cheque incorrectly debited to the account). Lodgements not credited $4,580. Outstanding cheques $1,475. Direct debit $350. Cheque paid in by the company and dishonoured $400.

Which of these items will require an entry in the cash book? A B C D

3, 4 and 5 1, 2 and 3 1, 5 and 6 2, 4 and 6


(2 marks)


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At 31 December 2011 the following require inclusion in a company’s financial statements:

A

(1)

On 1 January 2011 the company made a loan of $12,000 to an employee, repayable on 1 January 2012, charging interest at 2 per cent per year. On the due date she repaid the loan and paid the whole of the interest due on the loan to that date.

(2)

The company has paid insurance $9,000 in 2010, covering the year ending 31 August 2012.

(3)

In January 2012 the company received rent from a tenant $4,000 covering the six months to 31 December 2011.

For these items, what total figures should be included in the company’s statement of financial position at 31 December 2011? Current assets Current liabilities $ $ 16,240 6,000 A B 10,000 12,240 C 22,240 NIL 10,240 NIL D (2 marks) 30

How should a contingent liability be included in a company’s financial statements if the likelihood of a transfer of economic benefits to settle it is remote? A B

31

No disclosure or provision is required. Disclosed by note with no provision being made.

A

(2 marks)

Which of the following material events after the statement of financial positi on date and before the financial statements are approved are adjusting events? (1) (2) (3) (4) A B C D

A

A valuation of property providing evidence of impairment in value at the statement of financial position date. Sale of inventory held at the statement of financial position date for less than cost. Discovery of fraud or error affecting the financial statements. The insolvency of a customer with a debt owing at the statement of financial position date which is still outstanding. 1, 2, and 3 only 3 and 4 only 1, 2 and 4 only 1, 2, 3 and 4

(2 marks)

The word "now" is like a bomb thrown through the window, and it ticks. Arthur Miller Arthur Asher Miller (1915 – 2005) was an American playwright and essayist. He was a prominent figure in American theatre, writing dramas. Miller was often in the public eye, particularly during the late 1940s, 1950s and early 1960s, a peri od during which he testified before the House Un-American Activities Committee, received the Pulitzer Prize for Drama and the Prince of Asturias Award, and was married to Marilyn Monroe.



Arthur Miller

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Alpha received a statement of account from a supplier Beta, showing a balance to be paid of $8,950. Alpha’s payables ledger account for Beta shows a balance due to Beta of $4,140.

A

Investigation reveals the following: (1) (2)

Cash paid to Beta $4,080 has not been allowed for by Beta. Alpha’s ledger account has not been adjusted for $40 of cash discount disallowed by Beta.

What discrepancy remains between Alpha’s and Beta’s records after allowing for these i tems? A B C D 33

$9,930 $690 $770 $9,850

(2 marks)

A

The business entity concept requires that a business is treated as being separate from its owners. Is this statement true or false? A B

34

False True

(2 marks)

Theta prepares its financial statements for the year to 30 April each year. The company pays rent for its premises quarterly in advance on 1 January, 1 April, 1 July and 1 October each year. The annual rent was $84,000 per year until 30 June 2011. It was increased from that date to $96,000 per year.

A

What rent expense and end of year prepayment should be included in the financial statements for the year ended 30 April 2012?

A B C D 35

Expense $94,000 $94,000 $93,000 $93,000

Prepayment $ 8,000 $16,000 $ 8,000 $16,000

(2 marks)

A

Which of the following items could appear in a company’s cash flow statement? (1) (2) (3) (4)

Surplus on revaluation of non-current assets. Proceeds of issue of shares. Proposed dividend. Dividends received.

A B C D

2 and 4 1 and 3 1 and 2 3 and 4


(2 marks)


17


36


What is the role of the International Financial Reporting Interpretations Committee? A B

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A

To issue guidance on the application of International Financial Reporting Standards. To create a set of global accounting standards. (2 marks)

A

Q’s 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 $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 $500 had been omitted from the trial balance.

(4)

A cheque 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 B C D

38

2 and 3 only 1, 2 and 4 only 1, 2, 3 and 4 1 and 4 only

(2 marks)

Mountain sells goods on credit to Hill. Hill receives a 10% trade disc ount from Mountain and a further 5% settlement discount if goods are paid for within 14 days. Hill bought goods with a list price of $200,000 from Mountain. Sales tax is at 17.5%.

A

What amount should be included in Mountain’s receivables ledger for this transaction?

A B C D

39

$209,925 $200,925 $235,000 $211,500

(2 marks)

A

A computerised accounting system operates using the principle of double entry accounting. Is this statement true or false? A B

True False


(2 marks)


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A company receives rent from a large number of properties. The total received in the year ended 30 April 2012 was $481,200.

A

The following were the amounts of rent in advance and in arrears at 30 April 2010 and 2011:

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

30 April 2011 $ 28,700 21,200

30 April 2012 $ 31,200 18,400

What amount of rental income should appear in the company’s income statement for the year ended 30 April 2012? A B C D

41

$475,900 $501,500 $460,900 $486,500

(2 marks)

A

Annie is a sole trader who does not keep full accounting records. The following details relate to her transactions with credit customers and suppliers for the year ended 30 June 2011: $ Trade receivables, 1 July 2010 130,000 Trade payables, 1 July 2010 60,000 Cash received from customers 686,400 Cash paid to suppliers 302,800 Discounts allowed 1,400 Discounts received 2,960 Contra between payables and receivables ledgers 2,000 Trade receivables, 30 June 2011 181,000 Trade payables, 30 June 2011 84,000 What figure should appear in Annie’s income statement for the year ended 30 June 2011 for purchases? A B C D

$283,760 $331,760 $330,200 $740,800


(2 marks)


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The bookkeeper of Field made the following mistakes:

A

Discounts allowed $3,840 was credited to the discounts received account. Discounts received $2,960 was debited to the discounts allowed account. Which journal entry will correct the errors? DR Discounts allowed Discounts received Suspense account

$880 $880

B

Discounts allowed Discounts received

$6,800 $6,800

C

Discounts allowed Discounts received Suspense account

$3,840

Discounts allowed Discounts received Suspense account

$7,680

A

D

43

44

CR

$1,760

$2,960 $880

$5,920 $1,760

(2 marks)

A

Which of the following statements are correct? (1)

Materiality means that only items having a physical existence may be recognised as assets.

(2)

The substance over form convention means that the legal form of a transaction must always be shown in financial statements even if this differs from the commercial effect.

(3)

The money measurement concept is that only items capable of being measured in monetary terms can be recognised in financial statements.

A B C D

1 only 3 only 2 only 1, 2 and 3

(2 marks)

The total of the list of balances in Valley’s payables ledger was $438,900 at 30 June 2011. This balance did not agree with Valley’s payables ledger control account balance. The following errors were discovered:

A

1

A contra entry of $980 was recorded in the payables ledger control account, but not in the payables ledger.

2

The total of the purchase returns daybook was undercast by $1,000.

3

An invoice for $4,344 was posted to the supplier’s account as $4,434. (The question continues on the next screen)



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What amount should Valley report in its statement of financial position as accounts payable at 30 June 2011? A B C D 45

46

$438,010 $436,830 $437,830 $439,790

A

(2 marks)

Which of the following statements are correct?

A

(1)

A cash flow statement prepared using the direct method produces a different figure for operating cash flow from that produced if the indirect method is used.

(2)

Rights issues of shares do not feature in cash flow statements.

(3)

A surplus on revaluation of a non-current asset will not appear as an item in a cash flow statement.

(4)

A profit on the sale of a non-current asset will appear as an item under Cash Flows from Investing Activities in a cash flow statement.

A B C D

3 only 2 and 4 1 and 4 2 and 3

(2 marks)

A

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 (1 year) 25 1,040 Sales tax (17.5%) 182 Total 1,222 How much should Gareth capitalise as a non-current asset in relation to the purchase? A B C D

$890 $1,015 $1,222 $1,040


(2 marks)


21


47

3 4

A B C D

49


Which of the following statements about inventory valuation are correct, for the purpose of financial reporting? 1 2

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A

It might be acceptable for inventory to be valued at selling price minus gross profit margin. A company’s financial statements must disclose the accounting policies that have been used for inventory valuation, including the cost formula used. Inventory should be valued at the lowest of cost, net realisable value and replacement cost. The valuation of work in progress must include some fixed and variable production overhead cost. 1, 2 and 4 only are correct 1, 3 and 4 only are correct 2 and 4 only are correct All four statements are correct

(2 marks)

What is the correct double entry to record the depreciation charge for a period? A

DR CR

Accumulated depreciation Depreciation expense

B

DR CR

Depreciation expense Accumulated depreciation

A

(2 marks)

A

James acquired 100% of the ordinary share capital of Bond on 1 January 2009 when Bond’s retained earnings stood at $1,440,000. Bond’s statement of financial position at 31 December 2011 is as follows: $’000 Non-current assets Property, plant and equipment Current assets

Equity and reserves Share capital Retained earnings Current liabilities

8,640 4,800 13,440

7,680 2,400 3,360 13,440

On 1 January 2009, the fair value of Bond’s non-current assets was $1,920,000 greater than the book value. James had non-current assets at 31 December 2011, at book value of $10,560,000. What is the total amount for non-current assets that will appear on the consolidated statement of financial position at 31 December 2011? A B C D

$19,200,000 $20,736,000 $21,024,000 $21,120,000


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A

A statement of financial position and other financial data for Ashford Company appear below. Ashford Company Statement of financial position at 31 December 2011

Non-current assets Current assets Total assets

`

$ 3,000,000 2,000,000 5,000,000

Equity and liabilities Equity Shareholders' capital: issued capital reserves Total equity

2,000,000 300,000 2,300,000

Non-current liabilities Long-term debt Current liabilities Net assets employed Total equity and liabilities

1,500,000 1,200,000 2,700,000 5,000,000

Statement of comprehensive income for the year ended 31 December 2011 Sales revenue Interest expense Net profit

7,500,000 80,000 450,000

Ignore taxation. The appropriate ratios are: Debt/equity A B C D

65.2% 75% 65.2% 75%


Net profit margin

Return on net assets

7.1% 6% 6% 7.1%

10.6% 10.6% 11.8% 15%


(2 marks)

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THE END OF DIAGNOSTIC TEST 1



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+Add Vance

Financial Accounting (International)

DIAGNOSTIC TEST - 1

ANSWER GUIDE (PILOT PAPER) Each question is worth 2 marks



3 F r e p a P 25


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OVERVIEW OF ANSWERS FOR DIAGNOSTIC TEST 1 (PILOT PAPER) Question number

Marks available

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Total marks available : Time allowed :

Answer

Answer

100 2 hours

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2

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Q Q

37,000 + ((517,000 – 37,000) x 5%) – 39,000) = 22,000

Q $

Irrecoverable debts written off Allowance at end of year 5% × $(1,123,500 – 43,500) Allowance at beginning of year Reduction in allowance for irrecoverable debts Total charge for the year

$ 43,500

54,000 (66,000) (12,000) 31,500

Q

4

D

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C

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C

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Q

-3,860 - 9,160 + 16,690 = 3,670

83,600 +18,000 – (18,000 x 25%) = 97,100

Q Q

Opening balance Credit sales Interest charged

Receivables ledger control account $ 308,600 Contras 154,200 Cash received 2,400 Discounts allowed Bad debts Closing balance 465,200

$ 4,600 147,200 1,400 4,900 307,100 465,200

1,000,000/40years = 25,000; 1,000,000 – (800,000 – (800,000 x 2% x 10years)) = 360,000

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12

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13

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The answers are continued in the full edition



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Q 27


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