WorksheetsFA - Ch-5 to Ch-12
Total questions: 25
Worksheet time: 1hrs 3mins
Which of the following statements relating to a partnership of twenty persons and a limited liability company with twenty shareholders, each with a five per cent shareholding, is true?
Both partnerships and limited liability companies are able to own assets in their own name.
The members of a limited liability company have the right to participate in the management of that company, whereas partners do not have the right to participate in the management of their partnership
The partners have the right to participate in the management of the partnership, whereas members of a limited liability company do not have the right to participate in the management of that company.
Partnerships are subject to the same regulations regarding introduction and withdrawal of capital from the business as a limited liability company
Laker, a customer, returned goods to Streamer that had a net value of $200. What entries are required by Streamer to record this transaction if transactions are subject to sales tax is payable at 17.5%?
Dr Returns inward $200, Dr Sales tax $35, Cr Laker $235
Dr Returns inward $235, Cr Sales tax $35, Cr Laker $200
Dr Purchases $200, Dr Sales tax $35, Cr Laker $235
Dr Laker $235, Cr Returns inward $200, Cr Sales tax $35
Which of the following statements is true?
Closing inventory is $19.50 higher when using the FIFO method instead of the periodic weighted average.
Closing inventory is $19.50 lower when using the FIFO method instead of the periodic weighted average.
Closing inventory is $17.50 higher when using the FIFO method instead of the periodic weighted average.
Closing inventory is $17.50 lower when using the FIFO method instead of the periodic weighted average.
Inventory movements for product X during the last quarter were as follows:
Opening inventory at 1 January was 6 items valued at $15 each.
What was gross profit for the quarter, if inventory is valued using the continuous weighted average cost method?
$483
$155
$490
$295
Your firm values inventory using the periodic weighted average cost method. At 1 October 20X8, there were 60 units in inventory valued at $12 each. On 8 October, 40 units were purchased for $15 each, and a further 50 units were purchased for $18 each on 14 October. On 21 October, 75 units were sold for $1,200.
What was the value of closing inventory at 31 October 20X8?
$11,000
$1,110
$111
$110
Laurie bought an asset on the 1st January 20X4 for $235,000. He has depreciated it at 30% using the reducing balance method. On 1st January 20X7, Laurie revalued the asset to $300,000.
What accounting entries should Laurie post to record the revaluation?
Dr Non‐current asset - 65,000
Dr Accumulated depreciation - 154,395
Cr Revaluation surplus 219,395
Dr Non‐current asset - 65,000
Dr Accumulated depreciation - 211,500
Cr Revaluation surplus 276,500
Dr Revaluation surplus - 219,395 Cr Non‐current asset - 65,000
Cr Accumulated depreciation - 154,395
Dr Revaluation surplus 276,500
Cr Non‐current asset - 65,000
Cr Accumulated depreciation - 211,500
C Co’s policy is to charge straight line depreciation at 20% per year on a pro rata basis.
What should be the charge for depreciation in C Co’s statement of profit or loss for the year ended 31 December 20X6?
$1,75,200
$192,600
$1,87,800
$1,80,000
A non‐current asset was purchased at the beginning of Year 1 for $2,400 and depreciated at 20% per annum using the reducing balance method. At the beginning of Year 4 it was sold for $1,200.
What was the profit or loss on disposal?
$240.00 loss
$28.80 loss
$28.80 profit
$240.00 profit
A business’ non‐current assets had a carrying amount of $125,000. An asset which had cost $12,000 was sold for $9,000, at a profit of $2,000.
What is the revised carrying amount of non‐current assets?
$113,000
$118,000
$125,000
$127,000
A non‐current asset was disposed of for $2,200 during the last accounting year. It had been purchased exactly three years earlier for $5,000, with a residual value of $500, and had been depreciated on the reducing balance basis, at 20% per annum.
What was the profit or loss on disposal?
$360 loss
$150 loss
$104 loss
$200 profit
Which of the following items should be accounted for as capital expenditure?
The cost of painting a building
The replacement of broken windows in a building
The purchase of a car by a car dealer for re‐sale
Legal fees incurred on the purchase of a building
Liza bought a guillotine for her framing business for $20,000 on 1 July 20X7. She expected the guillotine to have a useful life of ten years and a residual value of $500. On 1 July 20X8, Liza revised these estimates and now believes the guillotine to have a remaining useful life of 5 years and no residual value.
What was the depreciation charge for the year ended 30 June 20X9?
$0
$36,100
$3,610
$$18,050
The following information of Premium Co is available for the year ended 31 October 20X2:
On 1 November 20X1, P Co revalued the property to $120,000.
Premium Co’s accounting policy is to charge depreciation on a straight‐line basis over 50 years. On revaluation there was no change to the overall useful life. It has also chosen to make the annual transfer of excess depreciation on revaluation in equity.
What should be the balance on the revaluation surplus and the depreciation charge as shown in Premium Co’s financial statements for the year ended 31 October 20X2?
Depreciation charge - $3,000
Revaluation surplus - $ 37,440
Depreciation charge - $3,000
Revaluation surplus - $ 38,400
Depreciation charge - $2,400
Revaluation surplus - $ 39,360
Depreciation charge - $2,400
Revaluation surplus - $ 18,000
At the date of purchase, the item of plant and equipment had an estimated useful life to the business of five years and an estimated residual value of $2,000. Thisitem of plant wastraded in for a replacement item on 30 September 20X8 at an agreed valuation of $5,000.
It has been depreciated at 20% per annum on a straight‐line basis, with a pro‐rated charge in the year of acquisition and disposal.
Calculate the profit or loss on disposal of the item of plant.
$ (a) Profit / loss*. * Delete which does not apply
Identify which THREE of the following statements are true in relation to application of IAS 38 Intangible Assets.
(A) Research costs should be expensed to the statement of profit or loss.
(B) All types of goodwill can be capitalised.
(C) Capitalised development costs that no longer meet the criteria specified by IAS 38 must be written off to the statement of profit or loss.
(D) Capitalised development costs are amortised from the date the assets is available to use or sell.
(E) Research costs written off can be re‐capitalised when the developed asset is feasible.
(F) Only purchased intangibles can be capitalised.
(B), (C) & (F)
(A), (B) & (C)
(D), (C) & (F)
(B), (D) & (F)
Troy Co has a property rental business and received cash totalling $838,600 from tenants during the year ended 31 December 20X6.
What amount should appear in Troy Co’s statement of profit or loss for the year ended 31 December 20X6 for rental income?
$838,600
$88,700
$858,600
$85,860
Details of B Co’s insurance policy are as follows:
Premium for year ended 31 March 20X6 paid April 20X5 - $10,800
Premium for year ending 31 March 20X7 paid April 20X6 - $12,000
What figures should be included in the B Co’s financial statements for the year ended 30 June 20X6?
Statement of profit or loss - $11,100
Statement of financial position - $ 9,000 prepayment
Statement of profit or loss - $11,700
Statement of financial position - $ 9,000 prepayment
Statement of profit or loss - $11,100
Statement of financial position - $ 9,000 accrual
Statement of profit or loss - $11,700
Statement of financial position - $ 9,000 accrual
Which of the following statements is false?
Accruals decrease profit
Accrued income decreases
A prepayment is an asset
An accrual is a liability
Newell’sreceivablesledger control accountshows a balance at the end of the year of $58,200 before making the following adjustments:
(i) Newell decides to write off debts amounting to $8,900 as he believes they are irrecoverable. (ii) He also decides to make specific allowance for Carroll’s debt of $1,350, Jeff’s debt of $750 and Mary’s debt of $1,416.
Newell’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, Fauntleroy had sales of $7,000,000. The year‐end receivables amounted to 5% of annual sales. At the year end, Fauntleroy’s specific allowance for receivables equated to 4% of receivables. He also identified that this amount was 20% higher than at the previous year end.
During the year irrecoverable debts amounting to $3,200 were written off and debts amounting to $450 and previously written off were recovered.
What was the irrecoverable debt expense for the year?
$5,083
$5,550
$5,583
$16,750
For which of the following items is a provision required in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets?
(a) A retail outlet has a policy of providing refunds over and above the statutory requirement to do so. This policy is well publicised and customers have made use of this facility in the past.
(b) A customer has made a legal claim against an entity, claiming that faulty goods sold to them caused damage to their property. The entity’s lawyers have advised that the claim will possibly succeed and, if it does, compensation of $10,000 will be payable.
(a) - Provision required
(b) - Provision not required
(a) - Provision not required
(b) - Provision not required
(a) - Provision required
(b) - Provision required
(a) - Provision not required
(b) - Provision required
Which the following statements relating to the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets is correct?
A contingent asset must be recognized and accounted for in the financial statements if it is regarded as probable.
A contingent asset must never be recognized in the financial statements.
A contingent liability must either be recognized and accounted for in the financial statements, or disclosed in the notes to the financial statements.
A contingent liability may not be required to be accounted for or disclosed in the notes to the financial statements under certain circumstances
Which of the following statements are correct in relation to provisions and liabilities?
(1) A provision will always be classified as falling due for payment within twelve months of the reporting date, whereas a liability may be classified as either current or non‐ current.
(2) A provision requires judgement and estimation to quantify the amount and/or the date of payment, whereas a liability is normally capable of precise calculation and the date of payment can be determined.
(3) A provision meets the definition of a liability, but is subject to uncertainty regarding the exact amount or date of the future outflow of economic benefits.
(1) and (2)
(2) and (3)
(1) and (3)
(1), (2) and (3)
Which of the following statementsistrue in relation to a bonusissue ofshares by an entity?
The entity issues shares for cash at a price less than the market price of the shares
The entity issues shares for cash at market price of the shares
No cash is received by the entity as a result of making the bonus issue
A bonus issue will be presented in a statement of cash flows
An entity made an issue of 20,000 $1 equity shares at a price of $1.75.
What accounting entries are required to record the issue of shares?
Debit Bank $35,000, and Credit Share capital $35,000
Debit Share capital $20,000, Debit Share premium $15,000 and Credit Bank $35,000
Debit Bank $35,000, Credit Share premium $20,000 and Credit Share capital $15,000
Debit Bank $35,000, Credit Share capital $20,000 and Credit Share premium $15,000
