Brain of Accountants - Stage 3

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

• Closing net assets - drawings + capital introduced - opening net assets

• Closing net assets - drawings - capital introduced - opening net assets

• Closing net assets + drawings - capital introduced - openings net assets

• Closing net assets + drawings + capital introduced - opening net assets

Which of the following explains the imprest system of operating petty cash?

• Weekly expenditure cannot exceed a set amount

• The exact amount of expenditure is reimbursed at intervals to maintain a fixed float

• All expenditure out of the petty cash must be properly authorised

• Regular equal amounts of cash are transferred into petty cash at intervals

Which of the following statements are TRUE about limited liability companies?

(a) The company exposure to debt and liability is limited

(b) Financial statements must be produced

(c) A company continues to exist regardless of the identity of its owners

• 1,2 and 3

• 1 and 2 only

• 1 & 3 only

• 2 & 3 only

• $331,760

• $391,760

• $380,000

• $321,000

Which TWO of the following errors would cause the total debit column and the total credit column of a trial balance not to agree?

• A transposition error was made when entering a sales invoice into the sales day book

• A cheque received from a customer was credited to cash and correctly recognised in receivables

• A purchase of non-current assets was omitted from the accounting records

• Rent received was included in the trial balance as a debit balance

At 31 December 20X5 the following require inclusion in a company's financial statements.

(a) On 1 January 20X5 the company made a loan of $12,000 to an employee, repayable on 1 January 20X6, charging interest at 2% per year. On the due date she repaid the loan and paid the whole of the interest due on the loan to that date

(b) The company paid an annual insurance premium of $90,000 in 20X5, covering the year ending 31 August 20X6

(c) In January 20X6 the company received rent from a tenant of $4,000 covering the six months to 31 December 20X5

• Current assets: $16,240 , Current liabilities: $6,000

• Current assets: $10,240 , Current liabilities: $nil

• Current assets $22,240 , Current liabilities: $nil

• Current assets: $10,000 , Current liabilities: $12,240

A company's statement of profit or loss for the year ended 31 December 20X5 showed a net profit of $83,600. It was later found that $18,000 paid for the purchase of a motor van had been debited to the motor expenses account. It is the company's policy to depreciate motor vans at 25% per year on the straight-line basis, with a full year's charge in the year of acquisition.

• $97,100

• $97,500

• $98,200

• $99,000

• Xena is taking longer to pay suppliers in 20X9

• Xena is suffering from a worsening liquidity position in 20X9

• Xena is receiving cash from customers more quickly in 20X9 than in 20X8

• Xena's liquidity and working capital has improved in 20X9

• $486,500

• $475,900

• $460,900

• $501,500

Which TWO of the following are differences between sole traders are limited liability companies?

• A sole trader's financial statements are private; a company's financial statements are sent to shareholders and may be publicly filled

• Only companies have capital invested into the business

• A sole trader is fully personally liable for any losses that the business might make

• Revaluations can be carried out in the financial statements of a company, but not in the financial statements of a sole trader