FA - Mock (1)

In accordance with IAS 37 provisions , contingent liabilities and contingent Assets are the following statements true or false ?

1. An entity should disclose a contingent liability , unless the possibility of an outflow of future economic benefits is remote

2. If a provision is for a single item it should equate to an amount that reflects The best estimate of the expenditure

• False, False

• True, False

• False, True

• True, True

The following extracts are from the statements of financial position of Charlton co. $

Property plant and equipment - 56,000

Inventory - 29,000

Trade receivable - 14,000

Cash and cash equivalents - 7,000

Long term borrowings - 20,000

Trade payable - 10,000

Taxation payable - 2,000

What is the current ratio of chartlon co (rounded to two decimal places)?

• 1.75

• 1.56

• 4.17

• 3.31

What is accounting concepts means that the financial statements must reflects the underlying commercial reality of a transaction ?

• Going

• Business entity

• Materiality

• Substance over from

Which TWO of the following should be included in a statement of profit or loss?

1. Bank overdraft

2. Capital introduced

3. Rent received for the year

4. Trade receivable

5. Employees salaries for the year

6. Drawings taken from the business

• 2 and 5

• 1 and 3

• 3 and 5

• 5 and 6

. Windham co has incurred the followings costs in relation to its new product the winder

$6,000 in January 20X5 evaluate two potential prototype for the winder

$12,000 in February 20X5 to test the technical feasibility of the two winder prototypes before the selection of final model

$25,000 in April 20X5 for the producing the first batch of winder for resale

$2,000 in April 20X5 for registering the patent for winder

What amount should be expensed as research costs?

• $10,000

• $17,000

• $18,000

• $19,000

Gorden has enterd goods sold toR Brown in the account of R BROWNE.

What type of error has Gorden made?

• Transposition

• Error of Principle

• Error of Omission

• Error of commission

What impact do the followings have on profit in the statement of profit or loss?

1. Recovery of debt previously written off

2. Decrease in allowances for receivables

• Increase in Profit , Decrease in Profit

• Decrease in Profit, Decrease in Profit

• Decrease in Profit, Increase in Profit

• Increase in Profit, Increase in Profit

Roger is preparing his financial statements for the year ended 31^st October 20X8 Roger has included within his expenses office rental of $36,000 paid on 1 February 20X8 for the year followings 20 months?

What is reflects of this error on Roger’s net profit ?

• $19,800 overstated

• $19,800 understated

• $16,200 understated

• $16,200 overstated

The debit and credit columns of XYZ ‘s trial balance did not agree A debit balance of $25,950 was entered in a suspense account and the following error were subsequently identified

(1) A cheque received for $1900 had been correctly posted to the cash account and posted to the receivables ledger as $9,100

(2) Rent paid of $6,500 had been posted correctly to the cash account posted to the rent expenses account as $650

(3) No entries had been made to reflect a cash sale of $1000

What is the remaining debit balance on the suspense account after making adjustments for the above error ?

• $11,900

• $15,600

• $12,900

• 14,600

Lan record his transactions in his daybooks.

Which TWO of the followings transactions should be recorded in the journal?

(a) An increase in the allowance for receivable

(b) The depreciation charge for the year

(c) A large purchase of goods for resale credit

(d) Goods sold that have been rejected and returned by credit customers

• a and b

• b and c

• c and d

• a and d