The statement of financial position of a company as at 31 December 20X6 shows the following.

Buildings $

Cost 90,000

Less: Accumulated depreciation 36,000

Carrying amount 54000

On 1 January 20X7 the building were revalued to $ 150,000 but their remaining useful life was not charged it was decided to incorporate this revaluation into the financial statements. The company has been depreciating buildings over 50 year on a straight –line basis.

What is the deprecation charge for the year ended 31 December 20X7?

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?

Which of the followings lists includes only items that would appear on the debit side of the accounts payables ledger control account?

Glow Co, a manufacturer started trading on 1 January 20X5 and has following information in relation to the cost of inventories for the ended 31 December. $

Raw materials purchased 150,000

Direct labor 75,000

Production overheads 50,000

General administration costs 50,000

Units produced 13,000 units

At 31 December 20X5, there was no work –in –progress 10% of the raw materials are still in inventory at the year end there are 2,000 completed unit in inventory at the end these units will be sold at a profit.

At what value will finished goods inventory be reported at 31 December 20X5?

Jeff’s receivables control account at the year end is shown below:

Jeff has not yet recorded irrecoverable debts of $ 4,500 of which $ 2,000 had a specific allowance made for it at the start of the year. His allowance for receivables at the year end is $8,300

What balance should be extracted from the receivables control account into Jeffs’ trial balance at the year end?

A business preparing its accounts for the year to 31 January pays rent quarterly in advance on 1 January, 1 April, 1 July and 1 October each year.

After remaining unchanged for some years, the rent was increased from $ 24,000 per year to $ 30,000 per year as from 1 July 20X6.

What would be the figure for rent expense which should appear in the statement of profit or loss for the year ended 31 January20X7?

Annie does not keep detailed accounting records. Her opening inventory was $17,200 and her closing

Inventory was $14,800 during the year purchases were $122,00 and purchase returns were $2,800.

Annie’s mark up on cost is 20%

What are Annie‘s sales for the year?

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?

Which of the following are ADVANTANGES to the owner of an entity operating as an unincorporated business as opposed to an incorporated business?

1) Legal separation of the entity from the owners

2) Unlimited liability

Burton is reviewing his receivables at the end of the financial year. A receivable of $300 will need to Be written to their inability to pay. He has also concluded that an allowance for receivables of $ 3,800 will be required the allowance for receivables last year was $4,000.

What should be the total charge to the statement of profit or loss for irrecoverable.

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?

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

When a machine is purchased it is capitalized as non –current assets deprecated over its useful life. After, rather than writing the cost in full in the statement of profit or loss.

Which accounting concept is Bering applied here?

Lin Co made the following share issues on 31 December 20X1

(A) An issue of 10,000 ordinary shares at full market value

(B) A bonus issue of 5,000 ordinary shares

(C) A right issue of 4,000 ordinary shares .The exercise price was 10% less than full market value

At 31 December 20X1 the market value of Lin Co’s share was estimated at $ 4.50 for ordinary shares

How much cash did Lin Co raise as a result on these share issues?

In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets which Two of the following statements are correct?

1. A probable liability of uncertain timing and amount should be provided for

2. A contingent asset should be disclosed where an inflow of economic benefit is probable

3. A contingent asset should be recognized if it is possible an inflow of economic benefit will be received

4. No disclosure is required for a contingent liability where an outflow of economic benefit is possible

The following figures are from Luck’s statement of financial position for the year ended 31 December 20X5 :

$

Land and buildings 7,35,000

Loan stock 20X9 75,000

Trade payables 2,25,000

Trade receivables 2,00,000

Overdraft 35,000

Prepayments 54000

Accruals 23,000

Inventory 25,000

Loan repayable 30 June 20X6 45,000

What are Lucy’s Current liabilities ?

Which TWO of the following types of error should be identified by performing the Trade receivable control account reconciliation ?

a) Incorrect calculation of the sales invoice total posting to the sales day book and customer account

b) Omission of a balance from the list of credit customer balances

c) Addition of sales invoices to the wrong customer

d) Addition errors in the sales day book

Jian is preparing her annual accounts for the year ending 31may 20X7. She has been reviewing her accounts receivable and has decided to increase her allowance for receivable from $550 to $1,050 Jian has a accounted for this by debiting the receivable expense account with $1,050 and crediting the allowance for receivable with $1,050

Which is the effect of this error on Jian 's profit And net assets ?

Overstated Understated

Profit - -

Net assets - -

ABC Co’s equity 1 January 20X7 was as follows :

$000

Ordinary share capital ($1 shares) 500

Share premium 150

Retained earnings 800

1450

On 30 June 20X7 there was a one for five bonus issue and on 30 September there was a one for three bonus issue. Bonus issues are made from the Share premium account wherever possible.

What is the balance of Retained earnings after the bonus issue?

What is the purpose of a credit note?

Should the following items be included in cash and cash equivalents in a statement of cash flows?

Yes No

Long term investment - -

Bank overdraft - -

Liquid investment - -

Cash in hand - -

Semple uses FIFO for inventory valuation. Transactions during July 20X6 were s follows :

Semple had no inventory at the beginning of July.

What value should be recorded for the inventory at 31 July 20X6?

Which TWO of the following are true ?

(A) Sales tax can be repaid to a business by the tax authorities

(B) Sales are included in the statement of profit or loss gross of the sales tax charged

(C) Sales tax is collected on behalf of the tax authorities

(D) Sales are included in receivable net of sales tax charged

Which of the following statements about contingent assets and contingent liabilities are correct?

1 A contingent asset should be disclosed by note if an inflow of economic benefits is probable.

2 A contingent liability should be disclosed by note if it is probable that a transfer of economic

benefits to settle it will be required, with no provision being made.

3 No disclosure is required for a contingent liability if it is not probable that a transfer of economic

benefits to settle it will be required.

4 No disclosure is required for either a contingent liability or a contingent asset if the likelihood of a

payment or receipt is remote.

The following items have to be considered in finalising the financial statements of Q, a limited liability

company:

1 The company gives warranties on its products. The company’s statistics show that about 5% of

sales give rise to a warranty claim.

2 The company has guaranteed the overdraft of another company. The likelihood of a liability

arising under the guarantee is assessed as possible.

According to IAS 37 Provisions, contingent liabilities and continent assets, what is the correct action to

be taken in the financial statements for these items?

Doggard Co is a business that sells second hand cars. If a car develops a fault within 30 days of the

sale, Doggard Co will repair it free of charge.

At 30 April 20X4 Doggard Co had made a provision for repairs of $2,500. At 30 April 20X5 Doggard Co

calculated that the provision should be $2,000.

What entry should be made for the provision in Doggard Co’s statement of profit or loss for the year to

30 April 20X5?

Which of the following items does the statement below describe?

“A possible obligation that arises from past events and whose existence will be confirmed only by the

occurrence or non-occurrence of one or more uncertain future events not wholly within the entity’s

control”

When a provision is needed that involves a number of outcomes, the provision is calculated using the

expected value of expenditure. The expected value of expenditure is the total expenditure of:

At 30 September 20X9 Sandown’s trial balance showed a brand at cost of $30 million, less accumulated amortisation brought forward at 1 October 20X8 of $9 million. Amortisation is based on a ten-year useful life. An impairment review on 1 April 20X9 concluded that the brand had a value in use of $12 million and a remaining useful life of three years. However, on the same date Sandown received an offer to purchase the brand for $15 million.

What should be the carrying amount of the brand in the statement of financial position of Sandown as at 30 September 20X9?

During the current year an entity had in place $1 million of 6% loan finance and $2 million of 8% loan finance. It constructed a new factory which cost $600,000 and this was funded out of the existing loan finance. The factory took 8 months to complete. To the nearest thousand, what borrowing costs should be capitalised?

A machine has a carrying amount of $85,000 at the year end of 31 March 20X9. Its market value is $78,000 and costs of disposal are estimated at $2,500. A new machine would cost $150,000. The company which owns the machine expects it to produce net cash flows of $30,000 per annum for the next three years. The company has a cost of capital of 8%.

What is the impairment loss on the machine to be recognised in the financial statements at 31 March 20X9?

The following information relates to an item of plant.

(i) Its carrying amount in the statement of the financial position is $3 million.

(ii) The company has received an offer of $2.7 million from a company in Japan interested in buying the plant.

(iii) The present value of the estimated cash flows from continued use of the plant is $2.6 million.

(iv) The estimated cost of shipping the plant to Japan is $50,000.

What is the amount of the impairment loss that should be recognised on the plant?

Y purchased some plant on 1 January 20X0 for $38,000. The payment for the plant was correctly

entered in the cash book but was entered on the debit side of the plant repairs account.

Y charges depreciation on the straight line basis at 20% per year, with a proportionate charge in the years of acquisition and disposal, and assuming no scrap value at the end of the life of the asset.

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

Banjo Co purchased a building on 30 June 20X8 for $1,250,000. At acquisition, the useful life of the

building was 50 years. Depreciation is calculated on the straight-line basis. 10 years later, on 30 June

20Y8 when the carrying amount of the building was $1,000,000, the building was revalued to

$1,600,000. Banjo Co has a policy of transferring the excess depreciation on revaluation from the

revaluation surplus to retained earnings.

Assuming no further revaluations take place, what is the balance on the revaluation surplus at 30 June

20Y9?

Banter Co purchased an office building on 1 January 20X1. The building cost was $1,600,000 and this was depreciated by the straight line method at 2% per year, assuming a 50-year life and nil residual

value. The building was re-valued to $2,250,000 on 1 January 20X6. The useful life was not revised.

The company’s financial year ends on 31 December.

What is the balance on the revaluation surplus at 31 December 20X6?

The carrying amount of a company's non-current assets was $200,000 at 1 August 20X0. During the year ended 31 July 20X1, the company sold non-current assets for $25,000 on which it made a loss of $5,000. The depreciation charge for the year was $20,000. What was the carrying amount of noncurrent assets at 31 July 20X1?

In accordance with IAS 37 provisions , contingent liabilities and contingent Assets are the following statements true or false ?

1. An entity should disclose a contingent liability , unless the possibility of an outflow of future economic benefits is remote

2. If a provision is for a single item it should equate to an amount that reflects The best estimate of the expenditure

According to the definition of an asset in the IASB’s Conceptual Framework for Financial

Reporting, which TWO of the following transactions would results in an asset being

recognised in Joe’s accounts?

(1) Joe has ordered some items of inventory which will not be delivered until next month

(2) Joe has purchased an item of machinery which has been delivered and he agrees to pay for it

in three months time.

(3) Joe’s father has given him a $5,000 cash contribution to his business with no obligation for

Joe to repay in the future

(4) Joe has promised to pay $50 to Andrew for delivering goods to customers

Which two of the following material events after the reporting period are adjusting events according to IAS 10 Events after the Reporting Period?

a) A 15% shareholding was acquired in STU for Rs.10m

b) Inventories, which were included in the statement of the financial position at cost of Rs.10,000 were sold for Rs.7,000

c) An accident occurred in the company’s factory, injuring five employees

d) A legal claim, against which a provision of Rs.50,000 had been made, was settled for Rs.40,000