When preparing financial statements under IFRS, the statement of comprehensive income must show separately any material profit or loss from operations discontinuing during the year.

When preparing financial statements under IFRS, dividends paid and proposed should be included in the statement of comprehensive income.

John bought a car to use for his business. He made some enhancements to it by adding some extra equipment such as a new music system & LCD display. In this case, the costs should be treated as revenue expenditure

Which of the following statements is correct

The equity capital of a limited liability company comprises:

In the UK GAAP balance sheet, trade payables and other payables (including VAT, PAYE/NIC and sales commission owed, interest payable and accruals) are combined as…

In the Statement of financial position under UKGAAP, trade receivables and any other receivables (including VAT due) are combined as…

In the UK GAAP balance sheet, creditors falling due after more than one year are equivalent to current liabilities

In the UK GAAP profit and loss account, income is equivalent to revenue

A bank overdraft is treated as a current liability in the SOFP

In the UK GAAP balance sheet, tangible fixed assets are equivalent to non-current assets

In the Statement of financial position under IFRS, all tangible assets (including land and buildings) are combined under the heading…

If there are changes in expected use of assets (estimated useful life or revaluation), the remaining carrying amount is depreciated  under the new method and only  current and future  periods are affected

Any over-provision from the previous reporting period reduces the tax expense for subsequent reporting period

Any under-provision from the previous reporting period increases the tax expense for subsequent reporting period

In the Statement of financial position under IFRS, bank overdrafts, which are technically repayable on demand, are called…

Prepayments are expenses which have been paid in one reporting period, but are not charged against profit until a later period, because they relate to that later period

Journal entry to set up prepayment is: Dr. Expenses/ Cr. Prepayment

According to IAS 08 – Accounting policies, changes in accounting estimates, and errors, change from one depreciation method to another is considered a change in accounting policy.

A proceeds on the disposal of a non-current asset will appear as an item under Cash Flows from Investing Activities in a statement of cash flows.

Repairing cost of an item of manufacturing equipment has been recorded as capital expenditure. In this case, non-current asset will be understated.

The called-up share capital of the company is the par value of the shares that have actually been issued to shareholders

When a business chooses a depreciation method, it should be applied consistently from reporting period to reporting period. A change in the method of depreciations is prohibited.

In relation to accounting for partnerships which two of the following statements are true?

The useful life of an asset is an estimate of the number of years it will remain in profitable service.

Profit or loss on disposal is capital income or capital expense, not part of gross profit.

Any over-provision from the previous reporting period increases the tax expense for subsequent reporting period

The carrying amount of machinery has reduced by £10,000 following the disposal of one item of machinery. Which of the following statements relating to the disposal are correct?

In a partnership, the current account decreases when the partnership makes profits.

Irredeemable preference share is the shares in which the company is entitled to buy back from its shareholders

Which is not included in the cash flows from investing activities

A profit on the sale of a non-current asset will appear as an item under Cash Flows from Investing Activities in a statement of cash flows.

A bank overdraft is treated as a non-current liability in the SOFP.

In the calculation of net cash flows from operating activities when preparing a cash flow statement, any loss on sale of non-current assets should be deducted from profit before tax.

In the Statement of financial position under IFRS, trade receivables and any other receivables (including VAT due) are combined as…

A change from one depreciation method to another is considered a change in accounting estimate.

In a partnership, partners' drawings affects:

The issued share capital of the company is the par value of the shares that have actually been issued to shareholders

When an impairment loss is recognized, the asset’s remaining useful life and residual value should be reviewed and revised.

When preparing financial statements under IFRS, a material profit or loss on the sale of part of the entity must appear in the statement of comprehensive income as an extraordinary item.

The recoverable amount of an asset is the higher of its market value and its fair value less cost to disposal

The objective of IAS 36 Impairment of Assets is to ensure that an entity's assets are not carried at more than their recoverable amount.

Which of the following transactions are not recorded in a company's cash at bank account?

A statement of cash flows prepared using the direct method produces a different figure for net cash flows generated from operations compared to that produced when the indirect method is used.

In the Statement of financial position under IFRS, trade payables and other payables (including VAT, PAYE/NIC and sales comrmission owed, interest payable and accruals) are combined as…

In a partnership, interest on partners' drawings affects:

In relation to accounting for partnerships, drawings by a partner are credited in the current account.

In relation to accounting for partnerships, goods taken by a partner from the business are treated as drawings.

In a partnership, the journal entry for partner's drawings is: DEBIT Current accounts/ CREDIT Drawings accounts

In SFP, the balance on the accumulated depreciation account is set against the NCA cost accounts to derive the carrying amount

The costs of major improvements or a major overhaul may be added to the cost of the asset.

The journal entry to reverse accruals at the beginning of the subsequent period is: Dr Expenses/Cr Accruals

In the UK GAAP balance sheet, fixed assets are equivalent to non-current assets.

Journal entry to set up accrual is: Dr. Accrual/ Cr. Expenses

When recording depreciation charge for the period, we should Debit Depreciation expense and Credit Accumulated depreciation

Share premium is the account to record the excess of the issued price above the par value

A partner's private petrol bills have been treated as part of the partnership's motor vehicle expenses. Which of the following journals corrects the error?

In a public company’s financial statements, purchased goodwill should normally be amortised through the statement of profit or loss.

In a partnership, interest on partners' loans is usually credited to the partner's current account.

In a partnership, the journal entry for accrued interest on a partner's loan is: DEBIT Interest expense/ CREDIT Capital account

A business may appear profitable on its statement of profit or loss, however if its cash outflow exceeds its cash inflow over a prolonged period then it will not survive.

In UK, the only tangible asset that is deemed to have an unlimited useful life is freehold land

The cost of a non-current asset includes: purchase price; delivery costs; taxes and duties; VAT; installation and assembly costs; professional fees; testing costs

Residual value is the estimated amount that the entity would obtain from disposing of the asset, after deducting estimated disposal cost

Depreciation allocates the asset's cost less its residual value over its useful life.

NCAs are assets that have a useful life extends beyond one reporting period

In a partnership, interest on the loan by partners is a deduction from profit to arrive at net profit, not an appropriation of profit.

Repairing cost of an item of manufacturing equipment has been recorded as capital expenditure. In this case, profit will be overstated.

NCA cost accounts are unaffected by depreciation

Right issue: new shares are offered to existing owners in proportion to their existing shareholding, usually at a discount to the current market value

Bonus issue: new shares are offered to existing owners in proportion to their existing shareholding, usually at a discount to the current market value

Depreciation is the systematic allocation of the cost of an asset, less its residual value over its useful life

Which of the following equations represents the closing capital of a sole trader?

What journal is necessary to record interest payable on partners' drawings?

What is the reason behind charging depreciation in historical cost accounting?

Every non-current asset including land held on freehold or very long leasehold should be depreciated

Provisions are liability of uncertain timing or amount of a company.

Depreciation reflects the fall in value of an asset over its useful life

In relation to accounting for partnerships, interest on drawings by a partner is income in the partnership's profit and loss account.

Rights issue: new shares are offered to existing owners in proportion to their existing shareholding, usually at a discount to the current market value

Rights issue: new shares are offered to existing owners in proportion to their existing shareholding, usually at a discount to the current market value

Bonus issue could increase cash inflow for the company

Cost of sales includes: Purchase, wage of production staffs, wages of distribution staffs and depreciation of production NCA

Which of the following statements about intangible assets in public company financial statements are correct? (1) Internally generated goodwill should not be capitalised; (2) Purchased goodwill should normally be amortised through the statement of profit or loss; (3) Development expenditure must be capitalised if certain conditions are met

The directors of Ellen Ltd are considering whether any impairment has arisen in respect of its plant and machinery in the year ended 31 March 20X2. The indicators for an impairment of plant and machinery is: There have been technological advances which means the plant and machinery is not as efficient as that currently available.

A bonus issue of shares will not appear as an item in a statement of cash flows

In the reducing balance method, depreciation is charged yearly, not monthly.

In the reducing balance method, depreciation charge is fixed percentage of the brought foward carrying amount of NCA, not concerned with residual value.

The basic principle behind accrual accounting is to record revenues and expenses regardless of payment.

Directly attributable cost of a PPE includes: purchase price, delivery cost, professional fee, testing and installation cost and staff training costs

Part of the process of preparing a cash flow statement is the calculation of net cash flows from operating activities. Which of the following statements about that calculation using the indirect method are correct? (1) Loss on sale of non-current assets should be deducted from profit before tax. (2) Increase in inventories should be deducted from profit before tax. (3) Increase in trade payables should be added to profit before tax. (4) Impairment losses should be added to profit before tax.

In a public company’s financial statements, internally generated goodwill should not be capitalised.

In the calculation of net cash flows from operating activities when preparing a cash flow statement, impairment losses should be added to profit before tax.

In the UK GAAP balance sheet, trade receivables and any other receivables (including VAT due) are combined as

In the UK GAAP balance sheet, trade payables and other payables (including VAT, PAYE/NIC and sales comrmission owed, interest payable and accruals) are combined as…

Share premium may be reduced by a bonus of issue

If there are changes in expected use of assets (estimated useful life or revaluation), the remaining carrying amount is depreciated under the new method and only current and future periods are affected.

The statement of changes in equity is an optional financial statement

Which of the following journals records interest earned on partners' capital account balances?

How should interest charged on partners' drawings be dealt with in partnership financial statements?

Depreciation is charged on non-current assets to ensure that sufficient funds are available to replace the assets.

In the UK which of the following are responsible for the preparation of company annual financial statements?

In the calculation of net cash flows from operating activities when preparing a cash flow statement, increase in inventories should be deducted from profit before tax.

Journal entry to remove excess provision is: Dr. Expenses/ Cr. Current liabilities

Cost of advertising and irrecoverable debt expenses should be included in distribution costs

Cost of advertising and irrecoverable debt expenses should be included in distribution costs

4Bonus issue does not involve any cash inflow for the company

Any under-provision from the previous reporting period reduces the tax expense for subsequent reporting period

Any balance owed to HMRC in respect of VAT or PAYE is disclosed as other payables, not as tax payable

In the Statement of financial position under IFRS, income tax payable is shown as a separate item under current liabilities

In a partnership, each partner's total profit share is accounted for as follows: DEBIT Profit and loss account/CREDIT Current accounts

The ownership interest side of the partnership balance sheet will includes: capital accounts for each partner and current accounts for each partner.

Rights issues of shares do not feature in statements of cash flows.

A proceed on the disposal of a non-current asset will appear as an item under Cash Flows from Investing Activities in a statement of cash flows

In relation to accounting for partnerships, in the absence of a partnership agreement, no salaries are due to partners

Tangible non-current assets are held for use in the production or supply of goods or services for administrative purposes; and are expected to be used during more than one period.

All subsequent expenditure is incurred on an asset should be capitalized

When a share is issued at a premium to their par value, the excess over par value should be recorded at share premium item

When preparing financial statements under IFRS, the statement of changes in equity must not include unrealised gains or losses.

Once development costs have been capitalised, the asset should be amortised in accordance with the accruals concept over its finite life.

The issue price is the price at which the share was originally issued by the company to raise capital

In a partnership, interest on partners' drawings affects neither net profit available for appropriation nor the cash position.

Sanders plc issued 50,000 equity shares of 25p each at a premium of 50p per share. The cash received was correctly recorded but the full amount was credited to the share capital account. The journal entry to correct this error is: DEBIT Share premium £25,000/ CREDIT Share capital £25,000

Which of the following is excluded from the cost of a tangible non-current asset?

Why is depreciation charged on non-current assets?

Which three of the following would be included in current liabilities in a company's financial statements?

What does GAAP stand for?

Journal entry to set up prepayment is: Dr. Expenses/ Cr. Prepayment

According to IFRS 15, there are 6 steps in the recognition of revenue

Finance costs include: interest payable on bank loans and overdrafts; and interest on debt securities

The journal entry to reverse prepayments at the beginning of the subsequent period is: Dr Expenses/Cr Prepayments

All tangible non-current assets except freehold land have a finite useful life

Materials purchased and used by Pola & Co for repairs to office buildings have been included in the draft financial statements as purchases. The necessary amendment will: