F3 Mid-Term Exam - Sok Chea

1.       Which of the following statement is true?

• A The directors of a company are liable for any losses of the company.

• B A sole trader business is owned by shareholders and operated by the proprietor.

• C Partners are liable for losses in a partnership in proportion to their profit share ratio.

• D A company is run by directors on behalf of its members.

2.       Which of the following statements best defines a statement of financial position?

• A It is a summary of income and expenditure for an accounting period.

• B It is a summary of cash receipts and payments made during an accounting period.

• C It is a summary of assets, liabilities and equity at a specified date

• D It is a summary of income and expenditure for an accounting period

3.       Which of the following statements does NOT explain the distinction between financial statements and management accounts?

• A Financial statements are primarily for external users and management accounts are primarily for internal users.

• B Financial statement are normally produced annually and management accounts are normally produced monthly.

• C Financial statements are more accurate than management accounts.

• D Financial statements are audited by an external auditor and management accounts do not normally have an external audit.

4.       Which of the following can the accounting equation can be rewritten as?

• A Assets + Profit – Drawings – Liabilities = Closing Capital

• B Assets – Liabilities – Drawings = Opening Capital + Profit

• C Assets – Liabilitites – Opening Capital + Drawings = Profit

• D Assets – Profit – Drawings = Closing Capital – Liabilities

5.       A business sells $ 100 worth of goods to a customer who pays $50 in cash and pay the remaining in 30 days. What is the double entry to record?

• A. Debit cash $50, Credit Payable $50, Credit Purchase $50

• B. Debit Receivable $50, Debit Cash $50, Credit Sales $100

• C. Debit Purchase $100, Debit Payable $100

• D. Debit Purchase $100, Credit Cash $100

6. Closing inventory may be valued using first-in, first-out (FIFO), or average cost (AVCO).

Which of the following statements is true assuming that prices have fallen throughout the year?

• A Closing inventory and profit are higher using FIFO rather than AVCO

• B Closing inventory and profit are lower using FIFO rather than AVCO

• C Closing inventory is higher and profit lower using FIFO rather than AVCO

• D Closing inventory is lower and profit higher using FIFO rather than AVCO

 

7.       An item of inventory was purchased for $500. It is expected to be sold for $1200 although $250 will need to be spent on it in order to achieve the sale. To replace the same item of inventory would cost $650. At what value should this item of inventory be included in the financial statements?

(a)  

8. Dudu Purchased a patent on 30 Nov 20x3 for $25000, expect to use for next 10 years, after which it will be valueless. What is the value of the patent in SoFP at 30 Nov 20x5 according to IAS 38?

• A $25000

• B $20000

• C $5000

• D $15000

9.       Complete the following statement by selecting the appropriate wording from the choice available. When accounting for intangible assets using the revaluation model, movements in the carrying amount are…………………………

• A Accounted for in other comprehensive income and other components of equity

• B Accounted for in the statement of profit or loss only

• C Accounted for in other comprehensive income only

• D Accounted for on other components of equity only

10. Company M bought a machine for $5000 on 1 Jan 20x1, which had an expected useful life of four years and an expected residual value of $1000; the asset was to be depreciated on the straight-line basis. The firm's policy is to charge depreciation in the year of disposal. On 31 Dec 20x3, the machine was sold for $1600.

What amount should be entered in the 20x3 Statement of Profit or Loss and Other Comprehensive Income for Profit or Loss on Disposal?

 

• A. Profit of $600

• B. Loss of $600

• C. Profit of $350

• D. Loss of $400