ACCA Paper F3 Financial Accounting June 2012
Revision Mock – Answers To gain maximum benefit, do not refer to these answers until you have completed the revision mock questions and submitted them for marking.
ACCA F3: FINANCIAL ACCOUNTING
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REVISION MOCK ANSWERS
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C Dividends received and proceeds of sale of a non-current asset are cash inflows. The rest of the items are non cash items.
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B $ Overdraft per bank statement Add:
Unpresented cheques
Less:
Lodgements/deposits credited
(7,700) (18,300) 30,600 ––––––
Bank balance per cash book (positive)
4,600 ––––––
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B $ Total rent received during the year
902,400
Add:
1/8/20X8 rent received in advance
27,600
Less:
31/7/20X9 rent received in advance
(61,300)
Less:
1/8/20X8 rent in arrears
(41,700)
Add:
31/7/20X9 rent in arrears
33,500 –––––––
Total rent receivable for the year ended 31/7/20X9
860,500 –––––––
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C $ Opening receivables Credit sales Payments from credit customers
26,000 300,000 (295,000)
Irrecoverable debts written off during the year
(6,800)
Further irrecoverable debts written off
(2,600) ––––––
Closing receivables
21,600 ––––––
Closing allowance 10% × $21,600 Opening allowance
2,160 (1,860) ––––––
Increase in allowance
300
Irrecoverable debts
− written off during the year − discovered at the year end
6,800 2,600 ––––––
Total irrecoverable debt expense
9,700 ––––––
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ACCA F3: FINANCIAL ACCOUNTING
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C (($2,170,000 – $682,000) / $2,170,000) * 100 = 68.6%
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D Receivables Bal b/d
45,300
Dishonoured cheques Credit sales
4,800 523,720
Discounts allowed
3,500
Sales returns
2,800
Bank (balance)
518,800
Bal c/d
Bal b/d
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48,720
–––––––
–––––––
573,820
573,820
–––––––
–––––––
48,720
A $ Assets held all year (280,000 − 48,000 – 18,000) × 20%)
=
42,800
1/11/20X6 Disposals (48,000 × 2/12 × 20%)
=
1,600
1/3/20X7 Disposal (18,000 × 6/12 × 20%)
=
1,800
1/1/20X7 (60,000 × 20% × 8/12)
=
8,000
1/3/20X7 (*30,000 × 20% × 6/12)
=
3,000
Assets acquired
–––––– 57,200 –––––– *Part exchange allowance plus cash paid ($18,000 + $12,000)
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B ($600,000 – $475,000) / $475,000) * 100
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A $ Value of inventory at 8 August
17,800
Less:
Purchases at cost
(5,400)
Add:
Sales at cost $8,160 × 100/120
6,800 ––––––
Value of inventory at cost
19,200 ––––––
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REVISION MOCK ANSWERS
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B Sales tax account Bank (part payment on account to the tax authority)
20,800
Purchases (input tax)
564,000
Bal b/d (amount owing to the tax authority) Sales (output tax) Purchases returns (sales tax)
Bal c/d
587,500 19,975
68,475 –––––––
–––––––
653,275
653,275
–––––––
––––––– Bal b/d
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45,800
68,475
C $ Current year's income tax estimate Less:
76,000
Overprovision of previous year’s income tax (80,000 – 77,000)
(3,000) –––––––
Total income tax charge
$73,000 –––––––
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$15,000 Fair Value of consideration
$120,000
Fair value of NCI
$45,000 ––––––– $165,000
Fair value of NA at acquisition
($150,000) –––––––
Goodwill
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$15,000
B (Trade payables / Credit purchases) * 365 ($35,000 / $210,000 – $20,000) * 365 = 67.2 days Sales
$200,000
COS Opening inventory
$20,000
Purchases (Bal fig)
$210,000
Closing Inventory
($35,000) ––––––– ($195,000) –––––––
Profit
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$5,000
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ACCA F3: FINANCIAL ACCOUNTING
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$4,300 $3,150 + $1,250 – $ 100 = $4,300 ($1,000 / 125 *25) * 50% = $100
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D The bank statements and the general ledger are not books of prime entry.
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C IAS 16 gives guidance on property, plant and equipment. IAS 38 gives guidance on intangible assets. IAS 2 gives guidance on inventory valuation. Inventory is a current asset. IAS 10 gives guidance on events after the reporting/balance sheet date.
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B Payables ledger control account
Balances b/f
$18,000
$18,200
(i)
Invoice omitted
$100
$100
(ii)
Undercast PDB
$200
−
(iii)
Debit balances omitted
−
Corrected balances c/f
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Total individual payables balances
($100)
–––––––
–––––––
$18,300
$18,200
C Proposed dividends after the year-end are not included in the financial statements according to IAS 10. The rest of the items are all included in the statement of changes in equity.
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$5,991 (debit) Suspense a/c $ Bal b/d (derived) (iii) Payables ($98 – $89)
$
5,991
6,000
(i) Rent ($3,000 × 2)
9 –––––
–––––
6,000
6,000
–––––
–––––
(ii) The omission of credit sales would not have affected the suspense account.
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REVISION MOCK ANSWERS
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D $ Disposal proceeds
13,000
Cost of machine sold (year ended 31/12/20X5)
20,000
Depreciation charge 20% × 20,000 (y/e 31/12/20X5)
(4,000) –––––– 16,000
Depreciation charge 20% × 16,000 (y/e 31/12/20X6)
(3,200) ––––––
Net book value as at 31/12/20X6
(12,800) ––––––
Profit on disposal
200 ––––––
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A $4,000 / 100* 25 = $1,000 25% still in inventory, $250 unrealised profit. NB:
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As it is margin sales = 100%, cost of sales 75% and profit 25%
A The revaluation reserve of $900,000 will be the difference between the revalued amount ($1,800,000) and net book value ($900,000). The revaluation reserve account will be credited with $900,000. The accumulated depreciation account will be debited by $300,000. The cost account will be debited by $600,000. $
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Dr
Cost
600,000
Dr
Accumulated depreciation
300,000
Cr
Revaluation reserve
900,000
Assets − Liabilities = Capital $ Cash
2,000
Buildings
80,000
Receivables
15,000
Inventory
21,000
Payables
(20,000)
Bank overdraft
(5,000) ––––––
Capital
93,000 ––––––
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A This is incorrect: IAS 8 permits a company to change its policies and estimates if it makes the accounts more relevant to their circumstances. This could be caused due to changes in accounting standards, the business environment or the internal company environment.
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C $ Profit for the year + Depreciation charges
250,000 28,000
− Loan repaid − Payments for non-current assets
(50,000) (90,000)
+ Issue of shares
100,000
− Increase in inventories
(18,000) –––––––
Increase in cash and bank
220,000 –––––––
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C $ Retained profit for the year ($105,000 – $55,000)
50,000
Dividends
4,000
Taxation
16,000
Debenture interest payable(10% × $70,000)
7,000 –––––––
Profit before interest and tax
77,000 –––––––
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D Acid Test Ratio (Quick Ratio) is a liquidity ratio.
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0.99 26.4 / 26.7 Asset turnover * Operating profit margin = ROCE Rearrange ROCE / Operating profit margin = Asset turnover
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D (A) is incorrect since development expenditure may have to be capitalised if IAS 38 conditions are satisfied. IAS 10 states that only dividends proposed before the year end should be accrued in the financial statements. IAS 37 states that contingent liabilities should be provided if the likelihood is probable/possible.
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REVISION MOCK ANSWERS
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A $ Sales Opening inventory Purchases Returns outwards Carriage inwards Goods withdrawn by the owner Closing inventory
60,000 780,000 (12,000) 4,500 (1,600) (62,000) ––––––– 768,900 –––––––
Cost of sales Gross profit
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$ 800,000
(768,900) ––––––– 31,100 –––––––
D Max Ruby
$50,000 post acquisition reserves ($20,000-$15,000)
=
$5,000 –––––––
Consolidated
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$55,000
A Closing inventory 100 + 550 – 400 + 720 – 530 = 440 units @$2.70 = $1,188
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C Opening development costs
720,000
Development costs incurred during the year
120,000
Total development costs
840,000
Development costs amortised to the statement of comprehensive income $840,000/4years × 3/12 (1/4/20X7 to 30/6/20X7)
(52,500) –––––––
Closing development cost taken to the statement of financial position
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785,500
A Bank account $ Receipt from customer
400
$ Bal b/d Bank charges
Bal c/d
80
230 –––
––––
630
630
––––
–––– Bal b/d
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550
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ACCA F3: FINANCIAL ACCOUNTING
$ Bank statement balance (positive balance on statement = credit) Add:
Bank error
Less:
Unpresented cheques
Add:
Lodgements/deposits credited
210 60 (800) 300 –––––
Bank overdraft per cash book
(230) –––––
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B
Preference dividend (20% × $10,000)
SOCIE
SOFP
$
$
2,000
Ordinary dividend declared before the year end (5c × 100,000)
5,000
5,000
–––––
–––––
7,000
5,000
–––––
–––––
Ordinary dividends declared after the year end will not be in the financial statements but will be disclosed as per IAS 10 Events After the Reporting Date .
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D (ii) A rights issue of $120,000. Plus (iv) A receipt of $130,000 8% loan notes. Less (iii) A repayment of $80,000 10% loan notes. Resulting in a total net cash inflow of $170,000. The bonus issue is not a cash flow.
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C $ Receivables at 1/9/20X6 Credit sales Payment from credit customers
540,000 2,500,000 (2,485,000) –––––––– 555,000
Less:
Irrecoverable debts written off
(55,000)
Less:
Specific allowance
(10,000) –––––––– 490,000
Less:
Closing allowance for receivables (10% × $490,000)
(49,000) ––––––––
Receivables at 31/8/20X7
441,000 ––––––––
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REVISION MOCK ANSWERS
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C
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A Fair value of consideration
$900,000
Fair value of NVI at acquisition
$325,000 –––––––– $1,225,000
Less Fair value of net assets at acquisition
($880,000) ––––––––
Goodwill
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B
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C
$345,000
Payables Ledger Control Account Cash paid to suppliers
348,000
Discounts received
28,000
Sales ledger contra
14,000
Returns outwards
5,800
Bal c/d
Bal b/d Credit purchases
400,000
40,000 –––––––
–––––––
435,800
435,800
–––––––
––––––– Bal b/d
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35,800
40,000
D Last year’s proposed dividends
$60,000
This year’s interim dividends (100,000 − 65,000)
$35,000 –––––––
Total dividends paid
$95,000 –––––––
Alternatively: Opening proposed dividends
$60,000
Add:
Dividends for the year
$100,000
Less:
Closing proposed dividends
($65,000) –––––––
Total dividends paid
$95,000 –––––––
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ACCA F3: FINANCIAL ACCOUNTING
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C Product A
$530
Product B
$1,400
Product C
$296 ––––––
Total value
$2,226 ––––––
NB:
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Storage should not be included. It doesn’t affect product C since NRV is still lower.
B The opening suspense account will be $14,644 credit ($42,333 − $27,689). The correcting entry in B will be: Dr Cash
$1,000
Cr Suspense
$1,000
The suspense account would therefore increase. A and C have no effect on the suspense account. D would reduce the difference on the suspense account.
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A The sales returns has been overstated thus needs to be reduced in both the sales returns and the sales ledger control account.
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C $ Opening inventory Purchases Purchase returns Carriage inwards Goods withdrawn by the owner Closing inventory
20,000 170,000 (3,500) 600 (700) (18,000) –––––––
Cost of sales
168,400 –––––––
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D The following is incorrect in: A − A credit entry decreases profit. B − A credit entry decreases liabilities. C − A debit entry increases profit.
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REVISION MOCK ANSWERS
48
A
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B Statement of comprehensive income: Old rent cost
$24,000 per annum
New rent cost $24,000 × 110% = $26,400 per annum 1.1.X6 – 30.6.X6
24,000 × 6/12
$12,000
1.7.X6 – 31.12.X6
26,400 × 6/12
$13,200 ––––––– $25,200 –––––––
Statement of financial position: Rent Bal b/d Bank
750 25,700 I&E a/c
−
Bal b/d
50
Bal c/d (β)
25,200 1,250
––––––
––––––
26,450
26,450
––––––
––––––
1,250
D Since it is highly likely that the claim will be successful a full provision must be made.
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