Interim mock FA

Which two of the following could be considered a role of International Financial Reporting Standards?

1. To help provide comparability of accounting treatments internationally

2. To provide guidance for the preparation of the financial statements

3. To ensure all financial information is accurately recorded in the financial records of a business entity

4. To provide a legally binding framework to be adhered to internationally

• 1 and 2

• 2 and 3

• 1 and 3

• 2 and 4

Manu Co. opened a suspense account with a debit balance of $650 when the trial balance did not balance. On investigation, the following errors were discovered :

i. A page of sales from the sales day book totalling $200 was omitted from the total posted to the general ledger ii. Telephone expenses of $460 were correctly recorded in the statement of profit or loss but were recorded as $640 in the payable control account

iii. A purchase on credit of $190 had only been posted to the payable control account

What will be the remaining debit balance on the suspense account after the errors identified above have been corrected ?

• $1020

• $640

• $280

• $90

Which two of the following are reasons why companies must prepare disclosure notes ?

1. To comply with finance providers requirements

2. To explain items presented in the annual financial statements

3. To comply with accounting standards

4. To explain information required by taxation authority regulations

• 1 and 3

• 2 and 4

• 1 and 4

• 2 and 3

Egret Co made a profit before tax of $2,35,000 for the year ended 30 June 20X8. The tax charge for the year was $84,500 and the company transferred $10,000 from profit to a general reserve. It paid a final ordinary dividend of $38,000from the prior year on 18 May 20X8 which had been proposed on 1 July 20X7, and on 1 July 20X8, a final dividend of $39,500 for the current year was proposed. No interim dividends were paid or proposed.

By what amount is Egret Co’s retained earnings increased for the year ended 30 June 20X8?

• $1,04,500

• $1,00,000

• $1,02,000

• $1,02,500

A company bought a machine on november20X2

Purchase price $ 22,000

Expected useful life 7 years

Estimated residual value $ 1,000

On 1 may 20X6 the machine was disposed of for 9,000. The company charges deprecation of machinery

On the straight –line basis with a proportional charges in the year of acquisition and disposal.

The company has a year end of 31 December.

What would be the profit or loss on disposal of the machine?

• Profit of $1,000

• Loss of $ 1,000

• Loss of $ 2,500

• Profit of $2,500

Vinnie co commenced a development project on 1 January 20X5. During the year ended 31 December 20X5, material costing$ 20,000 were used on the development a member of staff was hired on a salary of $15,000per annum on January 20X5 to work exclusively on the development.

If the capitalization criteria in IAS 38 Intangible Assets are met, what amount for development cost should be capitalized by Vinnie co in 20X5?

• $32000

• $30,000

• $33,000

• $35,000

A trade payables control account contains the following entries in the year ended 31 December 20X1.

Bank payments 70,658

Credit purchase 79,084

Returns outwards 3,815

Discount received 450

Contra with sales ledger 1,200

Closing balance as at 31 December 20X1 12,011

There are no other entries in the account.

What was the opening balance on trade payable control account brought forward at 1January 20X1?

• $905

• $9000

• $9050

• $90500

Between the financial year end of 30 November 20X8 and 31 January 20X9, the date that the Financial statement were approved by the directors, the following information was received.

1) A customer had commenced legal action against the company for providing faulty products in December20X8

2) An ex –employee was suing them for unfair dismissal in november20X8

The company’s legal team have advised them that both claims are likely to succeed .both claims are Material in relation to the financial statements.

How will these two legal claims be reported in the financial statements for the year ended 30

November 20X8?

• Only claim 1 should be provided and claim 2 does not need to be provided for or disclosed

• Both claims should be provided for

• Claim 1 should be disclosed and claim 2 should be provided for

• Neither claim should be provided for or disclosed

Which TWO of the following are expenses?

(A) Increase in owner‘s drawings

(B) Irrecoverable debt written off

(C) Decrease in allowance for receivables

(D) Increase in warranty provision

• A and B

• C and D

• A and C

• B and D

The following information relates to the latest financial year for garden Co

1) The company made a loss of $ 87,445

2) Assets were revalued resulting in an increase in the revaluation surplus of $ 145,000

3) Interim dividends of $ 30,000 were paid during the year

4) The final dividend of $ 25,000 for the prior year was paid at the beginning of the year

What is the total comprehensive income for the year to be reported in the statement of profit or Loss and other comprehensive income?

• $2,555

• $57,555

• $27,555

• $145,000