CFAB2

 

The carrying amount of machinery has reduced by £10,000 following the disposal of one item of machinery.

Which of the following statements relating to the disposal are correct?

• Disposal proceeds were £15,000 and the profit on disposal was £5,000

• Disposal proceeds were £15,000 and the carrying amount of the machinery disposed of was £5,000

• Disposal proceeds were £15,000 and the loss on disposal was £5,000

• Disposal proceeds were £5,000 and the carrying amount of the machinery disposed of was £5,000

Extracted initial trial balance of Summer plc at 31 March 20X8 is as follow

Equity share capital (£1 shares): 400,000

Share premium: £100,000

Retained earnings (opening): £61,000

Equity dividend paid: £15,000

Profit for the year: £55,440

Retained earnings to be presented in the SOFP is

• 61,000

• 101,440

• 131,440

• 116,440

Any under-provision from the previous reporting period increases the tax expense for subsequent reporting period

• True

• False

In the course of preparing a statement of cash flows, the following figures are to be included in the calculation of net cash flows from operating activities

Depreciation charges: 900,000

Impairment losses: 80,000

Profit on sale of non-current assets: 40,000

Increase in inventories: 130,000

Decrease in trade receivables: 100,000

Increase in trade payables: 80,000

What will the net effect of these items be in the statement of cash flows

• Addition to cash flows from operating activities 890,000

• Deduction from cash flows from operating activities 890,000

• Addition to cash flows from operating activities 1,070,000

• Addition to cash flows from operating activities 990,000

On 1 June 20X1 Quandry bought a non-current asset for £50,000 which had an estimated useful life of 10 years and a residual value of £2,000. Quandry's depreciates its non-current assets on a straight line basis. Quandry's reporting period is the 12 months ended 31 December.

On 1 January 20X4 the accountant determined that the asset's remaining useful life should be revised to eight years from that date with no residual value. An impairment review at that date shows that the recoverable amount of the asset is considered to be only £25,000.

What is the total depreciation and impairment loss charge for this asset in 20X4? 

• £3,125

• £12,400

• £15,725

• £18,000

The called-up share capital of the company is the par value of the shares that have actually been issued to shareholders

• True

• False

If there are changes in expected use of assets (estimated useful life or revaluation), the remaining carrying amount is depreciated under the new method and only current and future periods are affected

• True

• False

The following extracts are taken from the financial statements of Radio for the years ended 31 March 20X4 and 20X5: (unit:  £)

Statement of financial position extract:

                                                                20X5      20X4

Inventories:                                      310,600     363,700

Trade receivables                           312,000     299,500

Trade payables                              277,200      269,400

Statement of profit or loss extract: 

Profit from operations: 797,200

Finance charge:  (15,000)

Profit before tax: 782,200

Income tax:  (219,000)

Profit for the period: 563,200

What is the cash generated from operations to be included in the statement of cash flows for the year ended 31 March 20X5?

• £626,600

• £748,800

• £815,600

• £845,600

Yvette purchased some plant on 1 January 20X0 for £38,000. The payment for the plant was correctly entered in the cash at bank account but was incorrectly entered on the debit side of the plant repairs account.

Yvette charges depreciation monthly on the straight-line basis over five years and assumes no scrap value at the end of the life of the asset.

How will Yvette's profit for the year ended 31 March 20X0 be affected by the error?

• Understated by £30,400

• Understated by £36,100

• Understated by £38,000

• Overstated by £1,900

In the Statement of financial position under IFRS, bank overdrafts, which are technically repayable on demand, are called…

• Short-term borrowings

• Bank overdrafts