FAPS Lesson 4 - Plenary

A sole trader has trade receivables of £38,900. During the period one of their customers goes into administration owing £2,700 which should be written off as an irrecoverable debt. The sole trader has an existing general allowance for doubtful receivables of £1,350. The sole trader provides for a general allowance of doubtful receivables each year which is 3% of receivables.

What would be the value posted to the allowance for doubtful receivables adjustment account?

• £1,167.00

• £183.00

• £264.00

• £1,086.00

• £223.50

On 1 April 20X4 the balance b/d on a sole trader's allowance for doubtful receivables account was £433. This included an amount of £56 in respect of a specific debt which was subsequently recovered. On 31 March 20X5 the trader required a general allowance for doubtful receivables of £605, but no further debts required a specific allowance. The allowance for doubtful receivables adjustment account will show a (a)   balance of ​ (b)   .

• debit
• £172
• credit
• £605
• £228
• £116

The accounts manager at the business where you work has asked you to write off an irrecoverable debt for a customer that they are no longer expecting money from. The customer S Timmins owes £2400 (ignore VAT).

The transaction for this will be ​ credit​ (a)   , ​ debit ​ (b)   .

• receivables ledger control account
• irrecoverable debt
• sales
• bank
• purchases
• payables ledger control account

If there is a decrease in the allowance for doubtful receivables, what will happen?

• Decrease profits for the year

• Be recorded in the trade receivables accounts in receivables ledgers

• Increase the bank balance

• Increase profit for the year

A business matches income & expenses so that they relate to the same goods & services & the same accounting period.

Of the below accounting principles which one best describes the rule of accounting?

• Money measurement

• Accruals

• Going concern

• Materiality

From the below what is the most accurate description for the fundamental qualitive accounting characteristic "Relevance".

• Users of financial information receive information in time to make decisions

• Financial information must correspond to the effect of transactions or events

• Financial information is useful to financial users of statements

• Financial statements can be compared with those from previous years

From the below what is the most accurate description for the fundamental qualitive accounting characteristic "Faithful representation".

• Users of financial information receive information in time to make decisions

• Financial information must correspond to the effect of transactions or events

• Financial information is useful to financial users of statements

• Financial statements can be compared with those from previous years

The International Financial Reporting Standards Framework for Financial Reporting identifies four enhancing qualitative characteristics that make financial information useful.

Under which one of the following are users presented with financial information clearly & concisely?

• Timeiness

• Comparability

• Verifiability

• Understandability