FA-CH-11&12

In the statement Of financial position at 31 December 20X5, Yanlin had net receivables Of

S12mo. During 20X6 Yanlin made sales on credit of $125,000 and received cash from credit

customers amounting to $115,500. At 31 December 20X6, Yanlin decided to write off debts

of $7,100 and increase the specific allowance for receivables by $950 to $2,100.

What was the net receivables figure reported in Yanlin's statement of financial position at

31 December 20X6?

• $12,300

• $13,450

• $14,400

• $15,550

Newell CO's receivables ledger control account shows a balance at the end Of the year Of

$58,200 before making the following adjustments:

(i) Newell co decides to write Off debts amounting to $8,900 as it believes they are

irrecoverable.

(ii) Newell Co also decides to make specific allowance for Carroll's debt of $1,350, Jay's

debt of $750 and Mai's debt of $1,416.

Newell CO's allowance for receivables at the previous year end was $5,650.

What is the charge to the statement of profit or loss in respect of the above information?

• $6, 766

• $11,034

• $6,829

• $10,971

In the year ended 30 September 20X8, Gulzar had sales of The year-end

receivables amounted to 5% of annual sales. At the year end, Gulzar's specific allowance for

receivables equated to 4% of receivables. Gulzar also identified that this amount was 20%

higher than at the previous year end.

During the year irrecoverable debts amounting to were written off and debts

amounting to $450 and previously written off were recovered.

What was Gulzar's irrecoverable debt expense for the year?

• $5,083

• $5,550

• $5,583

• $16,750

The sales revenue of J Co was $2 million and its receivables were 5% Of sales. J Co wishes to

have a specific allowance for receivables of $4,000, which would make the allowance one-

third higher than the current allowance.

How will the profit for the period be affected by the change in allowance?

• Profit will be reduced by $1,000

• Profit will be increased by $1,000

• Profit will be reduced by $1,333

• Profit will be increased by $1,333

Abacus Co started the year with total receivables of $87,000 and an allowance for receivables

of $2,500.

During the year, two specific debts were written off, one for $800 and the other for $550.

A debt of $350 that had been written off as irrecoverable in the previous year was paid during

the year. At the year-end, total receivables were $90,000 and the allowance for receivables

was $2,300.

What is the charge to the statement of profit or loss for the year in respect of irrecoverable

debts and allowance for receivables?

• $800

• $1,000

• $1,150

• $1,550

An increase in the allowance for receivables results in which Of the following?

• An increase in net current assets

• A decrease in net current assets

• An increase in sales

• A decrease in drawings

At the end of 20X7, Charu's receivable's balance is $230,cm. Charu wishes to make specific

allowance for Emily's debt of $450 and Lulu's debt of $980. Irrecoverable debts of $11,429

should be written Off.

What amount should be charged or credited to Charu's statement of profit or loss in

respect of irrecoverable debts and the allowance for receivables if the allowance at the

start of the year was $11,700?

• $1,159 Dr

• $1,230 Dr

• $200 cr

• $12,930 Dr

Which of the following is not a benefit of providing credit to customers?

• It may result in increased sales

• It may encourage customer loyalty

• It may attract new customers

• It may improve the cash flow Of the business

Which of the following best explains the purpose of an aged receivables analysis?

• TO ensure that credit is not extended to unapproved customers

• To ensure that credit customers regularly purchase goods from the business

• To keep track of outstanding debts and identify overdue amounts to follow up

• To keep track of customer addresses

Which the following statements relating to the requirements of IAS 37 Provisions,

Contingent Liabilities and Contingent Assets is correct?

• A contingent asset must always be recognised and accounted for in the financial

  statements.

• A contingent asset must always be disclosed in the notes to the financial statements.

• A contingent liability must always be disclosed in the notes to the financial statements

  if it is regarded as possible.

• A contingent liability must always be disclosed in the notes to the financial statements

  if it is regarded as probable.