CFAB Tutorial Chapter 5

Anchor Ltd is preparing its financial statements. After transferring the balances on all the income and expenses ledger accounts to the profit and loss ledger account, the total credits in the profit and loss ledger account exceed the total debits by £4,000.

Which two of the following statements about Anchor Ltd are correct?

• Anchor Ltd has made a loss for the year of £4,000

• Anchor Ltd has made a profit for the year of £4,000

• To begin to calculate the closing capital account balance, Anchor Ltd should credit the capital account and debit the profit and loss ledger account with £4,000

• The opening balance on the profit and loss ledger account for the next reporting period is £4,000 credit

• The closing balance on the profit and loss ledger account of £4,000 should be deducted from the capital account to give the profit for the year.

Which of the following would be classified as a non-current asset

• Cash

• Prepayments

• Land

• Receivables

Gerrard Ltd is registered for VAT. In the month of April, it sells goods to customers for a total of £89,436 excluding VAT and purchases goods from suppliers for a total of £86,790 including VAT.

What is the net amount shown in Gerrard ltd's VAT account at the end of April?

• £3,422 debit

• £2,452 debit

• £3,422 credit

• £2,452 credit

Which of the following statements concerning preparation of financial statements is true?

• The balances on income and expenses accounts are brought down at the end of the accounting period to be carried forward to the next accounting period.

• The balances on asset and liability accounts are summarised in an additional ledger account knwon as the statement of financial position ledger account.

• The statement of profit or loss ledger account is a list of all the balances extracted from the business's accounts.

• Loss for the year is a credit entry in the statement of profit or loss ledger account.

A sole trader had trade receivables of £2,700 at 1 May and during May made cash sales of £7,200, credit sales of £16,500 and received £15,300 from his credit customers.

The balance on his trade receivables account at the end of May was:

• £1,500

• £3,900

• £8,700

• £11,100

Which two of the following types of account would normally appear on the debit side of the initial trial balance?

• Asset

• Liability

• Income

• Expense

• Capital

Which of the following would be a credit balance in the trial balance?

• Bank overdraft

• Drawings

• Purchases

• Delivery outwards

Rose Ltd was set up on 1 May 20X8 with opening capital of £1,000. During the month of May, it entered into the following transactions:

Purchases of goods for resale, on credit £12,100

Payments to credit suppliers £ 8,400

Sales on credit £16,200

Sales in cash £ 1,300

Receipts from credit customers £ 3,200

Non-current assets purchased for cash £ 1,500

Depreciation £ 100

Other expenses, all paid in cash £ 800

What is the net profit earned by Rose Ltd in the month of May 20X8?

• £3,200

• £5,400

• £4,500

• £3,000

Plym plc is a retailer which is registered for value added tax. All sales, and all purchases of goods for resale, attract value added tax at the rate of 20%. For the year to 30 June 2018, Plym plc paid £69,600 to suppliers in respect of goods for resale and showed revenue in SOPL of £89,400. There is no change in the figures for inventory and trade payables in the SOFP at 30 June 2017 and 30 June 2018.

WHat was Plym plc gross profit for the year ended 30 June 2018.

• £19,800

• £4,900

• £31,400

• £16,500

Violet had an opening trade payables balance of £3,450 on 1 December. During the month of December, she sold good totalling £6,780 to customers on credit, purchased goods totalling £5,100 from suppliers on credit and made cash purchases of £400. She also received £3,900 from credit customers and made payments to credit suppliers of £4,200.

The balance on Violet's trade payables account at the end of December was:

• £4,350

• £6,330

• £4,750

• £2,550