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Who issues International Financial Reporting Standards?
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The IFRS Advisory Committee
The government and the stock exchange together
The government
The International Accounting Standards Board
The stock exchange
Equity is
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the non-current assets of a company
a present obligation of the entity arising from past events
a resource controlled by an entity as a result of past events
the residual interest in the assets of the entity after deducting all its liabilities.
None of the mentioned
Which of the following is responsible for developing and issuing International Financial
Reporting Standards (IFRSs)?
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None of the mentioned
IFRS Foundation
IFRS Interpretations Committee
International Accounting Standards Board (IASB)
IFRS Advisory Council
What is the role of the IFRS Interpretations Committee?
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To take account of the financial reporting needs of small and medium-sized entities
None of the mentioned
To provide a forum for the IASB to consult with the national accounting standard setters,
academics and other interested parties
To clarify issues in the application of IFRSs where unsatisfactory or conflicting
interpretations have developed
To develop and issue a set of globally accepted International Financial Reporting
Standards
Advantages of trading as a limited liability company
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Limited liability companies have to publish annual financial statements.
None of the mentioned
Share issues are regulated by law.
Limited liability makes investment less risky than being a sole trader or investing in a
partnership.
The financial statements of larger limited liability companies have to be audited.
Disadvantages of partnerships
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Sharing of risk and losses between more people
Partners are jointly personally liable for all debts (unlimited liability) unless they have formed an
LLP
Division of roles and responsibilities and an increased skill set
Additional capital can be raised because more people are investing in the business
None of the mentioned
Advantages of partnerships
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There are costs associated with setting up partnership agreements
All of the mentioned
Slower decision making due to the need for consensus between partners
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Additional capital can be raised because more people are investing in the business
There may be issues of continuity of business in the event of death or illness of the partners
Advantages of being a sole trader
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Owner is personally liable for all debts (unlimited liability)
None of the above
Owner does not have complete control over the business
Owner is entitled to profits and the ownership of assets
Personal property may be vulnerable for debts and other business liabilities
A business entity is owned and run by Alpha, Beta and Gamma.What type of business is this an example of?
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All of the mentioned
None of the mentioned
Partnership
Limited liability company
Sole trader
What should be the main aim for a director of a company?
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To manage the affairs of the company in order to earn a good bonus
To manage the affairs of the company in order to create wealth for the shareholders
To manage the affairs of the company in order to contribute to the general wellbeing of society
To manage the affairs of the company in order to expand a business
To manage the affairs of the company in order to generate the largest profits in the shortest time
Which of the following are true of sole traders?
1 A sole trader's financial statements are private; a company's financial statements are sent
to shareholders and may be publicly filed
2 Only companies, and not sole traders, have capital invested into the business
3 A sole trader is fully and personally liable for any losses that the business might make; a
company's shareholders are not personally liable for any losses that the company might make
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1 and 2 only
1 and 3 only
1, 2 and 3
3 only
2 and 3 only
Which ONE of the following statements correctly describes how International Financial Reporting Standards (IFRSs) should be used?
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To ensure high ethical standards are maintained by financial reporting professionals internationally
To provide examples of best financial reporting practice for national bodies who develop their own requirements
To prevent national bodies from developing their own financial reporting standards
To prevent companies from preparing their own financial reporting standards
To facilitate the enforcement of a single set of global financial reporting standards
Which ONE of the following is NOT an objective of the IFRS Foundation?
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Through the IASB, develop a single set of globally accepted International Financial Reporting
Standards (IFRSs)
Ensure International Financial Reporting Standards (IFRSs) focus primarily on the needs of
global, multi-national organisations
Bring about the convergence of national accounting standards and IFRSs
Take account of the financial reporting needs of emerging economies and small and mediumsized entities (SMEs)
Promote the use and rigorous application of International Financial Reporting Standards (IFRSs)
What is the role of the IASB?
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Oversee the standard setting and regulatory process
Formulate international financial reporting standards
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Control the accountancy profession
Consult companies on their financial affairs
Review defective accounts
Which of the following statements is/are true?
1 The IFRS Interpretations Committee is a forum for the IASB to consult with the outside world.
2 The IFRS Foundation produces IFRSs. The IFRS Foundation is overseen by the IASB.
3 One of the objectives of the IFRS Foundation is to bring about convergence of national accounting standards and IFRSs.
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1 and 3 only
3 only
2 and 3 only
1 and 2 only
2 only
Which of the following are TRUE of partnerships?
1 The partners’ individual exposure to debt is limited.
2 Financial statements for the partnership by law must be produced and made public.
3 A partnership is not a separate legal entity from the partners themselves.
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1 and 2 only
3 only
1 and 3 only
2 and 3 only
2 only
Which ONE of the following statements correctly describes the contents of the Statement of Profit or Loss?
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A list of ledger balances shown in debit and credit columns
A record of income generated and expenditure incurred over a given period
A record of the amount of cash generated and used by a company in a given period
A record of the capital structure
A list of all the assets owned and all the liabilities owed by a business
Which ONE of the following statements correctly describes the contents of the Statement of Financial Position?
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A list of ledger balances shown in debit and credit columns
A list of all the assets owned and all the liabilities owed by a business
A record of the amount of cash generated and used by a company in a given period
A record of capital introduced by the owners over a given period
A record of income generated and expenditure incurred over a given period
Which of the following statements is/are true?
1 The directors of a company are ultimately responsible for the preparation of financial statements,
even if the majority of the work on them is performed by the finance department.
2 If financial statements are audited, then the responsibility for those financial statements falls on the auditors instead of the directors.
3 There are generally no laws surrounding the duties of directors in managing the affairs of a
company.
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1 and 2 only
1 only
1 and 3 only
2 and 3 only
3 only
Which of the following best describes corporate governance?
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Corporate governance is the system of rules and regulations surrounding financial reporting.
Corporate governance is the system by which companies and other entities are directed and controlled.
Corporate governance is the system by which an entity monitors its impact on the natural
environment.
Corporate governance is the system of rules and regulations of the company’s internal audit department.
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Which of the following are advantages of trading as a limited liability company?
1 Operating as a limited liability company makes raising finance easier because additional shares can be issued to raise additional cash.
2 Operating as a limited liability company is more risky than operating as a sole trader because the shareholders of a business are liable
for all the debts of the business whereas the sole trader is only liable for the debts up to the amount he has invested.
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2 only
1 only
Neither 1 or 2
Partly 1 and 2
Both 1 and 2
Which of the following statements is/are true?
1 A supplier of goods on credit is interested only in the statement of financial position, ie an
indication of the current state of affairs.
2 The objective of financial statements is to provide information about the financial position,
performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions.
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1 only
2 only
Neither 1 or 2
Partly 1 and 2
Both 1 and 2
Which groups of people are most likely to be interested in the financial statements of a sole trader?
1 Shareholders of the company
2 The business’s bank manager
3 The tax authorities
4 Financial analysts
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1 and 2 only
2 and 3 only
1, 2 and 3 only
2 and 4 only
2, 3 and 4 only
Which ONE of the following statements describes faithful representation, a qualitative characteristic of
faithful representation?
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Revenue earned must be matched against the expenditure incurred in earning it.
Financial information should be complete, neutral and free from error
The presentation and classification of items in the financial statements should stay the same from
one period to the next.
None of the mentioned
Having information available to decision-makers in time to be capable of influencing their
decisions.
Listed below are some characteristics of financial information.
1 Relevance
2 Consistency
3 Faithful representation
4 Accuracy
Which of these are qualitative characteristics of financial information according to the IASB's Conceptual
Framework for Financial Reporting?
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Corporate governance is carried out by the finance department in preparing the financial
statements.
1 and 2 only
All of the them
3 and 4 only
1 and 3 only
2 and 4 only
Which of the following accounting concepts means that similar items should receive a similar accounting
treatment?
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Matching
Accruals
Going concern
All of the mentioned
Consistency
According to the IASB's Conceptual Framework for Financial Reporting, which TWO of the following are
part of faithful representation?
1 It is neutral
2 It is relevant
3 It is presented fairly
4 It is free from material error
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None of the mentioned
3 and 4
1 and 4
2 and 3
1 and 2
Which accounting concept states that omitting or misstating this information could influence users of the
financial statements?
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The consistency concept
None of the mentioned
The going concern concept
The materiality concept
The accruals concept
Sales revenue should be recognised when goods and services have been supplied; costs are incurred
when goods and services have been received.
Which accounting concept governs the above?
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The duality concept
The business entity concept
The materiality concept
The accruals concept
None of the mentioned
Which accounting concept should be considered if the owner of a business takes goods from inventory
for his own personal use?
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None of the mentioned
The fair presentation concept
The accruals concept
The business entity concept
The going concern concept
The information must be capable of being tested (i.e. falsified, or provable by observation).
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Understandability
Timeliness
Relevance
Verifiability
Reliability
Information must be timely if it is to be relevant. Financial statements should be published as soon as possible after year-end.
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Understandability
Relevance
Verifiability
Timeliness
Reliability
Information must be reliable to be useful. The information should be of a standard that can be relied on by external users.
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Timeliness
Relevance
Reliability
Verifiability
Understandability
This information must be relevant in that it influences the decisions of users. This influence occurs when information helps the reader
to: predict future income and cashflows and confirm or correct previous predictions by feeding back actual results.
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Timeliness
Understandability
Reliability
Relevance
Verifiability
Information must be understandable to users who are mature and willing to study the information diligently.
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Verifiability
Timeliness
Relevance
Understandability
Reliability
The accountant of Scrub and Shine Ltd identified an aggregate charge of $500 000 (comprising 126 various supplier invoices) of
advertising expense for a new microfibre cloth within the entity’s financial records. Should the accountant present this item separately in
the financial statements?
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The item always needs to be presented separately
Yes, the aggregate value of this advertising expenditure is material
Yes, details of all transactions should be disclosed to assist users make fully informed decisions.
Possibly. This would depend on the size and nature of the advertising expenditure relative to other
items disclosed in the financial report.
No, the individual values of the invoices comprising this amount are immaterial. The disclosure
requirements do not apply to immaterial items.
Which of the following statements about a departure from IFRS is correct?
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Departure is never permitted
Departure is always permitted.
Departure is permitted when the disclosure of the adopted accounting policy is detailed in the notes.
Departure is permitted when the financial statement would be unfairly presented because of
compliance with IFRS.
Departure is permitted when management and the external auditor agree on the departure.
Which of the following statements about the application of IFRS in accordance with The Conceptual Framework is the most correct?
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Entities within the scope of the Corporations Act can choose to apply Australian or International
accounting standards when preparing their financial reports.
Entities that are not expected to continue in the foreseeable future are to prepare their accounts on the net realisable value assumption.
Entities may prepare financial statements on a cash flow basis provided that they meet the
characteristics of comparability, understandability, timeliness and verifiability.
Entities may change the valuation and measurement of assets provided they disclose the change and its effects in the financial report.
none of the above
What effect does a framework have on an accountant's need to exercise professional judgement?
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Increases the scope for professional judgement
Eliminates the scope for professional judgement.
None of the above
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Has no impact on the scope for professional judgement.
Reduces the scope for professional judgement
Which of the following statements about enhancing qualitative characteristics of financial statements is not correct?
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The financial statements of similar entities adopting different asset measurement bases can be adequately compared.
All of the above
Financial statements should be presented with the assumption that a reasonable and informed third person will know how to analyse
financial information.
Fair values of assets that cannot be verified in an active market should not be disclosed in the financial statements.
The value of invoices not yet received from suppliers for services should be estimated at financial year end for reporting purposes
Which of the following are not enhancing qualitative characteristics of useful financial information as identified in The Conceptual
Framework? Item I Predictive.
Item II Influencing.
Item III Comparable.
Item IV Relevance.
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All of the above
I, III and IV only
I, II and III only
I, II and IV only
II, III and IV only
Which of the following is not an objective of The Conceptual Framework?
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All of the above
Provides guidance for transactions not addressed in existing accounting standards.
Enables implementation of one universal set of accounting standards
Enables consistency of qualitative characteristics in financial reports
Addresses the common needs of users of financial reports.
Which of the following is not a role of The Conceptual Framework (The Framework)?
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It is the foundation that standard-setters use when developing accounting standards.
All of the above
It enables consistency when the existing accounting standards do not provide guidance on a particular issue.
It is an alternative to the detailed accounting standards as it is much easier to understand by users of financial statements.
It enables the external auditors to evaluate compliance with IFRS and then form an opinion.
Which of the following would not be an example of a user who may rely on general purpose financial reports?
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None of the above
Van who owns a fishing and camping store is keen to expand his product range by approaching his suppliers to ask about increasing his
credit limit.
Singh who manufactures sugar free muesli bars hopes to secure long term sales contracts with school canteens all over the county.
Milly who runs a successful organic food café is keen to expand into the food truck industry by obtaining finance via crowd-funding.
Henry who is given $5 000 on his 18th birthday by his grandfather to invest in the share market.
Which of the following statements about the primary purpose of financial reporting is the most correct?
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Identifies a range of existing and potential users dependant on financial statements to make decisions.
None of the above
The individual needs of users can be satisfied by tailoring of financial reports.
Enables accountability since managers would have to account for resources used.
Provides information that can help with decision making
The net assets of Altese, a trader, at 1 January 20X2 amounted to $128,000. During the year to 31 December 20X2 Altese introduced a
further $50,000 of capital and made drawings of $48,000. At 31 December 20X2 Altese's net assets totalled $184,000.
What is Altese's total profit or loss for the year ended 31 December 20X2?
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$60,000 profit
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$58,000 profit
$54,000 profit
$42,000 loss
$54,000 loss
The profit made by a business in 20X7 was $35,400. The proprietor injected new capital of $10,200 during the year and withdrew a
monthly salary of $500. If net assets at the end of 20X7 were $95,100, what was the proprietor's capital at the beginning of the year?
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$100,700
$134,700
$55,500
$63,900
$50,000
The profit earned by a business in 20X7 was $72,500. The proprietor injected new capital of $8,000
during the year and withdrew goods for his private use which had cost $2,200.
If net assets at the beginning of 20X7 were $101,700, what were the closing net assets?
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$35,000
$168,400
$39,400
$180,000
$70,000
Which of the following documents should accompany a return of goods to a supplier?
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Debit note
Goods despatched note
Credit note
Remittance advice
Purchase invoice
Jones Co has the following transactions:
1 Payment of $400 to J Bloggs for a cash purchase
2 Payment of $250 to J Doe in respect of an invoice for goods purchased last month
What are the correct ledger entries to record these transactions?
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Dr Cash $650
Cr Trade Receivables $250
Cr Purchases $400
Dr Purchases $650
Cr Cash $650
Dr Purchases $400
Dr Trade Payables $250
Cr Cash $650
Dr Cash $650
Cr Purchases $650
Dr Cash $650
Cr Trade Payables $250
Cr Purchases $400
T Tallon had the following transactions:
1 Sale of goods on credit for $150 to F Rogit
2 Return of goods from B Blendigg originally sold for $300 in cash to B Blendigg
What are the correct ledger entries to record these transactions?
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Dr Sales $150
Dr Cash $300
Cr Receivables $150
Cr Sales Returns $300
Dr Sales Returns $450
Cr Sales $150
Cr Cash $300
Dr Receivables $150
Dr Sales Returns $300
Cr Sales $150
Cr Cash $300
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Dr Receivables $450
Cr Sales $150
Cr Sales Returns $300
Dr Sales Returns $300
Dr Sales $150
Cr Cash $450
Which of the following statements is true?
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A debit records an increase in capital
A debit records an increase in liabilities.
A credit records an increase in liabilities
A debit records a decrease in assets
A credit records an decrease in capital
How is the total of the purchases day book posted to the nominal ledger?
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Debit cash, Credit receivables
Debit purchases, Credit cash
Debit payables control, Credit purchases
Debit purchases, Credit payables control
Debit cash, Credit purchases
Smit Co has the following transactions:
1 Purchase of goods on credit from T Rader: $450
2 Return of goods purchased on credit last month to T Rouble: $700
What are the correct ledger entries to record these transactions?
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Dr Purchases $450
Dr Trade Payables $700
Cr Purchase Returns $1,150
Dr Purchases $450
Dr Trade Payables $250
Cr Purchase Returns $700
Dr Purchase Returns $1,150
Cr Purchases $450
Cr Trade Payables $700
Dr Purchase Returns $700
Dr Purchases $450
Cr Trade Payables $1,150
Dr Purchases $450
Dr Purchase Returns $700
Cr Cash $450
Cr Trade Payables $700
Smith Co has the following transactions:
1 Purchase of goods on credit from T Rader: $450
2 Return of goods purchased on credit last month to T Rouble: $700
What are the correct ledger entries to record these transactions?
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Dr Purchases $450
Dr Purchase Returns $700
Cr Cash $450
Cr Trade Payables $700
Dr Purchase Returns $700
Dr Purchases $450
Cr Trade Payables $1,150
Dr Purchase Returns $1,150
Cr Purchases $450
Cr Trade Payables $700
Dr Purchases $450
Dr Trade Payables $250
Cr Purchase Returns $700
Dr Purchases $450
Dr Trade Payables $700
Cr Purchase Returns $1,150
Which of the following statements is/are TRUE or FALSE?
1 Cash purchases are recorded in the purchases day book.
2 The sales day books is used to keep a list of invoices received from suppliers.
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At 30 November 20X5 Jenny had a bank loan of $8,500 and a balance of $678 in hand in her bank account. How should these amounts
be recorded on Jenny's opening trial balance at 1 December 20X5?
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Credit $8,500 and Debit $678
Debit $7,822
Credit $7,822
Debit $8,500
Debit $8,500 and Credit $678
Tin Co purchases $250 worth of metal from Steel Co. Tin Co agrees to pay Steel Co in 60 days time. What is the double entry to record
the purchase in Steel Co’s books?
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Debit sales $250, credit receivables $250
Debit payables $250, credit cash $250
Debit payables $250, credit purchases $250
Debit receivables $250, credit sales $250
Debit purchases $250, credit payables $250
A business sells $100 worth of goods to a customer, the customer pays $50 in cash immediately and will pay the remaining $50 in 30
days' time.
What is the double entry to record the purchase in the customer’s accounting records?
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Debit cash $100, credit Purchases $100
Debit cash $50, credit payables $50, credit purchases $50
Debit payables $50, debit cash $50, credit purchases $100
Debit purchases $100, credit payables $50, credit cash $50
Debit purchases $100, credit cash $100
Jesse's trial balance includes the following items: non-current assets $50,000, inventory $10,000,
payables $10,000, receivables $5,000, bank $90,000, allowance for receivables $1,000.
What is the figure for total assets?
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$1
$129,000
$4,000
$180,000
$154,000
$134,000
Jesse's trial balance includes the following items: non-current assets $50,000, inventory $10,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for total assets?
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62.
Books of prime entry is wrong
Both statements are TRUE
Statement 1 is TRUE and statement 2 is FALSE
Both statements are FALSE
Statement 1 is FALSE and statement 2 is TRUE
$129,000
$4,000
$1
$134,000
$174,000
$180,000
Mario's trial balance includes the following items: non-current assets $50,000, inventory $15,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for bad debts
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$1
$4,000
$170,000
$180,000
Not determinable
$134,000
A business starts trading on 1 September 20X0. During the year, it has sales of $400,000, purchases of
$250,000 and closing inventory of $0. What is the dividend deducted for the year?
63.
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$4,000
$180,000
$170,000
Not determinable
$134,000
$1
Mario's trial balance includes the following items: non-current assets $50,000, inventory $5,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for current liabilities?
64.
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$170,000
$4,000
$1
$134,000
Not determinable
$180,000
Mario's trial balance includes the following items: non-current assets $50,000, inventory $5,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for current assets?
65.
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$180,000
$170,000
$4,000
$1
$134,000
$119,000
A business starts trading on 1 September 20X0. During the year, it has sales of $400,000, purchases of
$250,000 and closing inventory of $0. What is the gross profit for the year?
66.
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$180,000
$134,000
$250,000
$179,000
$150,000
$129,000
A business starts trading on 1 September 20X0. During the year, it has sales of $500,000, purchases of
$250,000 and closing inventory of $0. What is the gross profit for the year?
67.
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$134,000
$179,000
$129,000
$250,000
$180,000
$134,000
Mario's trial balance includes the following items: non-current assets $50,000, inventory $15,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for total assets?
68.
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$4,000
$1
$134,000
$179,000
$180,000
$129,000
Mario's trial balance includes the following items: non-current assets $50,000, inventory $15,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for current assets?
69.
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$170,000
$180,000
$129,000
$134,000
$1
$4,000
A business starts trading on 1 September 20X0. During the year, it has sales of $500,000, purchases of
$250,000 and closing inventory of $75,000. What is the gross profit for the year?
70.
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$600,000
$325,000
$175,000
$250,000
$675,000
$375,000
Which one of the following statements about an imprest system of petty cash is correct?
71.
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An imprest system for petty cash can operate without the need for petty cash vouchers or receipts for spending.
None of them
An imprest system for petty cash helps with management of small cash expenditures and reduces the risk of fraud.
An imprest system for petty cash controls small cash expenditures because a fixed amount is paid into petty cash at the beginning of
each period.
The imprest system provides a control over petty cash spending because the amount of cash held in petty cash at any time must be equal
to the value of the petty cash vouchers for the period.
A trader's net profit for the year may be computed by using which of the following formulae?
72.
•
•
•
•
•
Closing capital + drawings – capital introduced – opening capital
Opening capital – drawings – capital introduced – closing capital
Opening capital – drawings + capital introduced – closing capital
Opening capital + drawings – capital introduced + closing capital
Opening capital + drawings – capital introduced – closing capital
The net assets of Altese, a trader, at 1 January 2020 amounted to $128,000. During the year to 31 December 2020 Altese introduced a
further $50,000 of capital and made drawings of $48,000. At 31 December 2020 Altese's net assets totalled $184,000.
What is Altese's total profit or loss for the year ended 31 December 2020?
73.
•
•
•
•
•
$60,000 profit
$54,000 profit
$42,000 loss
$54,000 loss
$58,000 profit
A firm has the following transactions with its product R.
Year 1
Opening inventory: nil
Buys 10 units at $300 per unit
Buys 12 units at $250 per unit
Sells 8 units at $400 per unit
Buys 6 units at $200 per unit
Sells 12 units at $400 per unit
Year 2
Buys 10 units at $200 per unit
Sells 5 units at $400 per unit
Buys 12 units at $150 per unit
Sells 25 units at $400 per unit
Required
Using FIFO, calculate Cost of Sales on an item by item basis for year 2
74.
•
•
•
•
•
•
6500
4000
4500
5500
12500
2000
A firm has the following transactions with its product R.
Year 1
Opening inventory: nil
Buys 10 units at $300 per unit
Buys 12 units at $250 per unit
Sells 8 units at $400 per unit
Buys 6 units at $200 per unit
Sells 12 units at $400 per unit
Year 2
Buys 10 units at $200 per unit
Sells 5 units at $400 per unit
Buys 12 units at $150 per unit
Sells 25 units at $400 per unit
Required
Using FIFO, calculate Sales on an item by item basis for year 2
75.
•
•
•
•
•
•
13000
12000
11000
10000
6000
2000
A firm has the following transactions with its product R.
Year 1
Opening inventory: nil
Buys 10 units at $300 per unit
Buys 12 units at $250 per unit
Sells 8 units at $400 per unit
Buys 6 units at $200 per unit
Sells 12 units at $400 per unit
Year 2
Buys 10 units at $200 per unit
Sells 5 units at $400 per unit
Buys 12 units at $150 per unit
Sells 25 units at $400 per unit
Required
Using FIFO, calculate the Gross Profit on an item by item basis for year 2
76.
•
•
•
•
•
•
2000
1500
65000
6500
2500
6000
A firm has the following transactions with its product R.
Year 1
Opening inventory: nil
Buys 10 units at $300 per unit
Buys 12 units at $250 per unit
Sells 8 units at $400 per unit
Buys 6 units at $200 per unit
Sells 12 units at $400 per unit
Year 2
Buys 10 units at $200 per unit
Sells 5 units at $400 per unit
Buys 12 units at $150 per unit
Sells 25 units at $400 per unit
Required
Using FIFO, calculate the Gross Profit on an item by item basis for year 1
77.
•
•
•
•
•
•
2000
1500
15000
2500
4000
6000
A firm has the following transactions with its product R.
Year 1
Opening inventory: nil
Buys 10 units at $300 per unit
Buys 12 units at $250 per unit
Sells 8 units at $400 per unit
Buys 6 units at $200 per unit
Sells 12 units at $400 per unit
Year 2
Buys 10 units at $200 per unit
Sells 5 units at $400 per unit
Buys 12 units at $150 per unit
Sells 25 units at $400 per unit
Required
Using FIFO, calculate the The cost of sales on an item by item basis for year 1
78.
•
•
•
•
•
•
6000
7500
8000
5500
4000
2000
A firm has the following transactions with its product R.
Year 1
Opening inventory: nil
Buys 10 units at $300 per unit
Buys 12 units at $250 per unit
Sells 8 units at $400 per unit
Buys 6 units at $200 per unit
Sells 12 units at $400 per unit
Year 2
Buys 10 units at $200 per unit
Sells 5 units at $400 per unit
Buys 12 units at $150 per unit
Sells 25 units at $400 per unit
Required
Using FIFO, calculate the The sales on an item by item basis for year 1
79.
•
•
•
•
•
•
7000
2000
5000
5500
8000
8500
A firm has the following transactions with its product R.
Year 1
Opening inventory: nil
Buys 10 units at $300 per unit
Buys 12 units at $250 per unit
Sells 8 units at $400 per unit
Buys 6 units at $200 per unit
Sells 12 units at $400 per unit
Year 2
Buys 10 units at $200 per unit
Sells 5 units at $400 per unit
Buys 12 units at $150 per unit
Sells 25 units at $400 per unit
Required
Using FIFO, calculate the The closing inventory on an item by item basis for year 1
80.
•
•
•
•
•
•
The following relates to inventory: Cost = 9, Selling Price = 12, Modification cost to enable sale = 2, Marketing Cost = 2, Unites held =
1500. Calculate the value of inventory held
81.
•
•
•
•
•
•
1200
14000
2005
1000
1400
12000
The following relates to inventory: Cost = 12, Selling Price = 22, Modification cost to enable sale = 8, Marketing Cost = 2, Unites held
= 300. Calculate the value of inventory held
82.
•
•
•
•
•
•
1400
2005
1200
1000
1700
3600
The following relates to inventory: Cost = 9, Selling Price = 12, Modification cost to enable sale = 2, Marketing Cost = 2, Unites held =
150. Calculate the value of inventory held
83.
•
•
•
•
•
•
1000
1300
2000
2005
1400
1200
A business starts trading on 1 September 20X0. During the year, it has sales of $400,000, purchases of
$250,000 and closing inventory of $0. Is cost of sales considered to be a product cost?
84.
•
•
•
•
•
•
85.
1600
17000
2000
5000
16000
1700
Yes, because it is a periodic cost
It depends
No, because it is a periodic cost
No
No, because it is calculated for gross profit
Yes, because it is calculated for gross profit
The following relates to inventory: Cost = 20, Selling Price = 30, Modification cost to enable sale = 0, Marketing Cost = 7, Unites held
= 200. Calculate the value of inventory held
•
•
•
•
•
•
2005
1000
3000
5000
4000
2000
If an owner takes goods out of inventory for their own use, how is this dealt with?
86.
•
•
•
•
•
•
Debited to drawings at cost
Credited to drawings at selling price
Debited to drawings at selling price
Credited to drawings at a price
Credited to drawings
Credited to drawings at cost
Which of the following is the correct formula for cost of sales?
87.
•
•
•
•
•
•
Opening inventory – purchases + closing inventory
Purchases – closing inventory + sales
Opening inventory – closing inventory
Opening inventory – closing inventory + purchases
Opening inventory + closing inventory – purchases
Opening inventory – closing inventory + purchases
A company values its inventory using the first in, first out (FIFO) method. At 1 May 20X2 the company had 700 engines in inventory,
valued at $190 each.
During the year ended 30 April 20X3 the following transactions took place:
20X2
1 July
Purchased 500 engines at $220 each
1 November
Sold 400 engines for $160,000
20X3
1 February
Purchased 300 engines at $230 each
15 April
Sold 250 engines for $125,000
What is the value of the company's closing inventory of engines at 30 April 20X3?
88.
•
•
•
•
•
None of these figures
$ 195,500
$ 166,000
$ 188,500
$ 196,000
Which of the following statements about IAS 2 Inventories is correct?
89.
•
•
•
•
•
It is permitted to value finished goods inventories at materials plus labour cost only, without adding production overheads.
In arriving at the net realisable value of inventories, trade discounts and settlement discounts must be deducted.
In arriving at the cost of inventories, FIFO, LIFO and weighted average cost formulas are acceptable.
Production overheads should be included in cost on the basis of a company's normal level of activity in the period.
Historical cost method is only method in valuation of invetories
At 1 July 2019 a limited liability company had an allowance for receivables of $83,000. During the year ended 30 June 2020 debts
totalling $146,000 were written off. At 30 June 2020 a receivables allowance of $218,000 was required. What figure should appear in
the company's statement of profit or loss for the year ended 30 June 2020 for receivables expense?
90.
•
•
•
•
•
$ 155,000
$ 164,000
$ 11,000
$ 281,000
$ 364,000
At 1 July 20X3 a limited liability company had an allowance for receivables of $83,000. During the year ended 30 June 20X4 debts
totalling $146,000 were written off. At 30 June 20X4 a receivables allowance of $218,000 was required.
What figure should appear in the company's statement of profit or loss for the year ended 30 June 20X4 for receivables expense?
91.
•
•
•
•
•
$ 164,000
$ 11,000
$ 281,000
$ 364,000
$ 155,000
At the beginning of the year, the allowance for receivables was $850. At the year-end, the allowance required was $1,000. During the
year $500 of debts were written off, which includes $100 previously included in the allowance for receivables.
What is the charge to statement of profit or loss for receivables expense for the year?
92.
•
•
•
•
•
$ 550
$ 450
$ 1,500
$ 1,000
$ 650
At 31 December 20X2 a company's receivables totalled $400,000 and an allowance for receivables of $50,000 had been brought
forward from the year ended 31 December 20X1.
It was decided to write off debts totalling $38,000. The allowance for receivables was to be adjusted to the equivalent of 10% of the
receivables.
What charge for receivables expense should appear in the company's statement of profit or loss for the year ended 31 December 20X2?
93.
•
•
•
•
•
$ 30,000
$ 74,200
$ 51,800
$ 24,200
$ 28,000
At 1 January 20X1, there was an allowance for receivables of $3,000. During the year, $1,000 of debts were written off as irrecoverable,
and $800 of debts previously written off were recovered. At 31 December 20X1, it was decided to adjust the allowance for receivables
to 5% of receivables which are $20,000.
What is the total receivables expense for the year?
94.
•
•
•
•
•
$ 200 debit
$2,200 debit
$2,200 credit
$1,800 credit
$1,800 debit
An increase in an allowance for receivables of $8,000 has been treated as a reduction in the allowance in the financial statements. Which
of the following explains the resulting effects?
95.
•
•
•
•
•
Net profit is understated by $8,000, receivables understated by $8,000
Net profit understated by $16,000, receivables understated by $16,000
Net profit is overstated by $16,000, receivables overstated by $8,000
Net profit overstated by $16,000, receivables overstated by $16,000
Gross profit overstated by $16,000, receivables overstated by $16,000
A company has been notified that a customer has been declared bankrupt. The company had previously made an allowance for this debt.
Which of the following is the correct double entry to account for this new information?
96.
•
•
•
•
•
Debit
Irrecoverable debts
Credit
Receivables
No accounting entries should be made
Debit
Allowance for receivables
Credit
Receivables
Debit
Receivables
Credit
Irrecoverable debts
Debit
Receivables
Credit
Allowance for receivables
At 31 December 20X4 a company's trade receivables totalled $864,000 and the allowance for receivables was $48,000. It was decided
that debts totalling $13,000 were to be written off. The allowance for receivables was to be adjusted to the equivalent of five per cent of
the receivables. What figures should appear in the statement of financial position for trade receivables (after deducting the allowance)
and in the statement of profit or loss for receivables expense?
97.
•
•
•
•
•
Statement of profit or loss - $ 17,450
Statement of financial position $ 808,450
Statement of profit or loss - $ 18,450
Statement of financial position $ 808,450
Statement of profit or loss - $ 8,200
Statement of financial position $ 807,800
Statement of profit or loss - $ 7,550
Statement of financial position $ 808,450
Statement of profit or loss - $ 55,550
Statement of financial position $ 807,800
The information below relates to inventory item Z.
Day of March
Transaction
1
50 units in stock at a cost of $40 per unit
17
50 units purchased at a cost of $50 per unit
31
60 units sold at a selling price of $100 per unit
Under AVCO, what is the value of inventory held for item Z at the end of March 31?
98.
•
•
•
•
•
$ 2,500
$ 4,000
$ 2,000
$ 1,800
$ 2,250
S sells three products – Basic, Super and Luxury. The following information was available at the year end.
Basic
Super
Luxury
$ per unit
$ per unit
$ per unit
Original cost
6
9
18
Estimated selling price
9
12
15
Selling and distribution costs
1
4
5
units
units
units
Units of inventory
200
250
150
What is the value of inventory at the year end?
99.
•
•
•
•
•
$ 3,000
$ 4,200
$ 6,150
$ 5,700
$ 4,700
An inventory record card shows the following details.
Day of February
Transaction
1
50 units in stock at a cost of $40 per unit
7
100 units purchased at a cost of $45 per unit
14
80 units sold
21
50 units purchased at a cost of $50 per unit
28
60 units sold
What is the value of inventory at 28 February using the FIFO method?
100.
•
•
•
•
•
$ 2,950
$ 3,000
$ 2,450
$ 2,700
$ 3,200
You are preparing the financial statements for a business. The cost of the items in closing inventory is $41,875. This includes some
items which cost $1,960 and which were damaged in transit. You have estimated that it will cost $360 to repair the items, and they can
then be sold for $1,200. What is the correct inventory valuation for inclusion in the financial statements?
101.
•
•
•
•
$ 42,995
$ 38,995
$ 39,915
$ 41,515
•
$ 40,755
The financial year of Mitex Co ended on 31 December 20X1. An inventory count on January 4 20X2 gave a total inventory value of
$527,300.
The following transactions occurred between January 1 and January 4.
$
Purchases of goods
7,900
Sales of goods (gross profit margin 40% on sales) 15,000
Goods returned to a supplier
800
What inventory value should be included in Mitex Co’s financial statements at 31 December 20X1?
102.
•
•
•
•
•
$ 525,400
$ 527,600
$ 529,200
$ 537,600
$ 535,200
In preparing its financial statements for the current year, a company's closing inventory was understated
by $300,000.
What will be the effect of this error if it remains uncorrected?
103.
•
•
•
•
•
The current year's profit will be overstated and next year's profit will be understated.
No effect will be on profit figures
The current year's profit will be overstated but there will be no effect on next year's profit.
The current year's profit will be understated and next year's profit will be overstated.
The current year's profit will be understated but there will be no effect on next year's profit.
For reducing balance method depreciation which answer choice is the most relevant
104.
•
•
•
•
•
•
2 of the answer choices are correct
None
All
You cannot depreciate any asset with residual value up to zero
Only 1 and 2
Only 2 and 4
For reducing balance method depreciation which answer choice is the most relevant
105.
•
•
•
•
•
You can depreciate any asset with residual value up to zero
All
None
You cannot deduct residual value from the cost
You can deduct residual value from the cost
Using straight line method calculate annual depreciation: Cost = 10000 Residual = 1000, economic life = 10
106.
•
•
•
•
•
•
10000
10
9000
90
900
1000
Using straight line method calculate annual depreciation: Cost = 50000 Residual = 10000, economic life = 4
107.
•
•
•
•
•
•
100000
1000
5000
155000
15000
10000
Why might the asset register not reconcile with the non-current assets?
A Asset stolen or damaged
B New asset, not yet recorded in the register
C Errors in the register
108.
•
•
•
•
•
C
A
B
A,B,C
A,B
Which of the below are classified as revenue expenditure
A. Customs duty charged on the plant when imported into the country
B. The 'carriage' costs of transporting the new plant from the supplier's factory to the premises of the business purchasing the plant
C.The cost of installing the new plant in the premises of the business
D.The wages of the machine operators
109.
•
•
•
•
•
A,B,C
A,D
all of them
B,D
D
XY Co has development expenditure of $500,000. Its policy is to amortise development expenditure at 2% per annum. Accumulated
amortisation brought forward is $20,000. What is the amount shown in the statement of financial position for development expenditure?
110.
•
•
•
•
•
B. 500000
D. 490000
E. 450000
A. 470,000
C. 480000
XY Co has development expenditure of $500,000. Its policy is to amortise development expenditure at 2% per annum. Accumulated
amortisation brought forward is $20,000. What is the charge in the statement of profit or loss for the year's amortisation?
111.
•
•
•
•
•
B. 400
C. 20,000
A. 10,000
D. 9,600
E. 15,000
Which of the following items is an intangible asset?
A Land
B Patents
C Buildings
D Van
E Plant
F Factory
112.
•
•
•
•
•
D
C
E
A
B
A non-current asset (cost $10,000, depreciation $7,500) is given in part exchange for a new asset costing $20,500. The agreed trade-in
value was $3,500. Which of the following will the statement of
profit or loss include?
A loss on disposal $1,000
B profit on disposal $1,000
C loss on purchase of a new asset $3,500
D profit on disposal $3,500
E loss of $20,500
F loss of $7,500
113.
•
D
•
•
•
•
E
A
B
C
What is an asset's carrying amount?
A Its cost less annual depreciation
B Its cost less accumulated depreciation
C Its net realisable value
D Its replacement value
E Zero
F Initial cost
114.
•
•
•
•
•
A
F
D
B
C
Which of the following statements regarding depreciation is correct?
A All non-current assets must be depreciated.
B Straight line depreciation is usually the most appropriate method of depreciation.
C A change in the chosen depreciation method is accounted for retrospectively, with all previous
depreciation charges reversed and recalculated.
D Depreciation charges must be based on the carrying amount of an asset (less residual value if
appropriate).
115.
•
•
•
•
•
A,D
B
C
A,B
D
Which of the following statements regarding non-current asset accounting is correct?
A All non-current assets should be revalued each year.
B Non-current assets may be revalued at the discretion of management. Once revaluation has
occurred it must be repeated regularly for all non-current assets in a class.
C Management can choose which non-current assets in a class of non-current assets should be revalued.
D Non-current assets should only be revalued to reflect rising prices.
116.
•
•
•
•
•
A
A,C
D
B
C
A business which has an accounting year that runs from 1 January to 31 December purchases a new non-current asset on 1 July 20X1, at
a cost of $50,000. The expected life of the asset is 10 years, and its residual value is nil. Calculate the carrying amount on 31 December
20X3
117.
•
•
•
•
•
50000
5000
37500
10000
40000
A business purchases a non-current asset at a cost of $10,000. The business wishes to use the reducing balance method to depreciate the
asset. If the rate of depreciation is 40%, calculate carrying amount at the end of 2nd year.
118.
•
•
•
•
•
4000
3600
5000
5600
4600
A business which has an accounting year that runs from 1 January to 31 December purchases a new non-current asset on 1 April 20X1,
at a cost of $48,000. The expected life of the asset is 6 years, and its residual value is nil. What should the depreciation charge for 20X1
be?
119.
•
•
•
•
•
6000
7000
10000
12000
8000
A non-current asset costing $100,000 has an estimated life of 10 years and a residual value of $35,000. Find the annual depreciation
charge using the straight line method
120.
•
•
•
•
4500
7000
5000
5500
Using straight line method, find annual depreciation of a non-current asset costing $30,000 with an estimated life of 6 years and no
residual value
121.
•
•
•
•
3000
6000
5500
4000
Which of the below are classified as capital expenditure
A The purchase of a property (eg an office building)
B The annual depreciation of such a property
C Solicitors' fees in connection with the purchase of such a property
D The costs of adding extra storage capacity to a computer used by the business
E Computer repairs and maintenance costs
F Profit on the sale of an office building
G Revenue from sales by credit card
H The cost of new plant
122.
•
•
•
•
•
C,D,F
B,C,D
A,B,G,H
A,D,F,G
A,C,D,H
The following items need to be considered in finalising the financial statements of Q Co:
(1) Q Co gives warranties on its products. Q Co’s statistics show that about 5% of sales give rise to a warranty claim.
(2) Q Co has guaranteed the overdraft of another entity. The likelihood of a liability arising under the guarantee is assessed as possible.
What is the correct action to be taken in the financial statements of Q Co for these items?
123.
•
•
•
•
•
1 and 2 - no action
1 - disclose by note only, 2 - no action
1 and 2 - create a provision
1 - create a provision, 2 - disclose by note only
1 and 2 - disclose by note only
Driller Co undertakes oil and gas exploration activities. One of the conditions of the operating licence is that Driller must make good
any damage caused to the local environment as a result of its exploration activities. As at the year-end date of 31 August 20X4, Driller
Co estimated that the cost of rectifying damage already caused at current exploration sites at $5 million. At that date Driller Co
estimated that that the cost of rectifying expected future damage at current exploration sites at an additional $20 million. Driller Co also
estimated that all current exploration sites will operate until 20X7 or beyond that date.
124.
•
•
•
•
•
There should be a provision classified as a non-current liability for $25 million
There should be a provision classified as a current liability for $25 million
There should be a provision classified as a current liability for $5 million
There should be a provision classified as a non-current liability for $5 million
There should be a provision classified as a non-current liability for $20 million
Which of the following statements about the requirements relating to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
are correct?
(1) A contingent asset should be disclosed by note if an inflow of economic benefits is probable.
(2) No disclosure of a contingent liability is required if the possibility of a transfer of economic benefits arising is remote.
(3) Contingent assets must not be recognised in financial statements unless an inflow of economic benefits is virtually certain to arise.
125.
•
•
•
•
•
(1) and (2) only
All three statements are incorrect
(2) and (3) only
All three statements are correct
(1) and (3) only
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 noncurrent.
(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.
126.
•
•
•
•
•
(3) and (1)
(1) and (2)
all of the above
(2) and (3)
none of the above
Recently, users of a new perfume have suffered blistering of the skin along with considerable pain and discomfort. Following
investigation by the manufacturer, Fleur Co, it appears that product contamination occurred during the bottling process which was
performed by Bottler. Fleur Co’s legal representatives have advised it that it is probable that customers will make valid compensation
claims totalling $3 million and that it is probable Fleur Co will be able to successfully counter-claim against Bottler for the same
amount. How should this information be reported in the financial statements of Fleur Co for the year ended 31 August 20X4?
127.
•
•
•
•
•
There should be a provision and an asset, each for $3 million, recognised in the statement of financial position.
There should be a provision for $3 million only recognised in the statement of financial position.
There should be a provision for $6 million only recognised in the statement of financial position.
No provision or asset should be recognised in the statement of financial position as the two amounts cancel each other.
There should be a provision for $3 million in the statement of financial position and a disclosure note only to deal with the contingent
asset of the amount which may be recovered from Bottler.
During the year ended 30 April 20X7 Doolittle experienced a number of difficulties with employees. On 1 April 20X7 Doolittle
dismissed an employee and subsequently received
notice of a claim for unfair dismissal amounting to $50,000. Another employee suffered personal injury on 30 March 20X7 whilst
operating machinery at work. On 30 May Doolittle
received notice of a claim from that employee for compensation of $100,000. Doolittle’s legal representatives have advised that the
claim for unfair dismissal will probably be successful and result in a compensation award of $50,000 to the employee. They also advised
that the compensation claim for injury suffered is regarded as possible, but not probable, that compensation will be payable. In the event
that compensation was payable for personal injury suffered, an amount of $100,000 is a reliable estimate. How should this information
be accounted for in the financial statements of Doolittle for the year ended 30 April 20X7?
128.
•
•
•
•
•
A provision should be recognised in the financial statements for $150,000 only.
A provision should be recognised in the financial statements for $50,000 plus a disclosure note included of the possible compensation
payment relating to the personal injury claim.
A provision should be recognised in the financial statement for $50,000 only.
A provision should be recognised in the financial statements for $100,000 plus a disclosure note included of the possible compensation
payment relating to unfair dismissal claim.
A provision should be recognised in the financial statements for $150,000 and a disclosure note included of the possible compensation
payment relating to the personal injury claim.
Electrode manufactures vacuum cleaners and allows customers three months from the date of purchase to return cleaners if they are
dissatisfied with the product for any reason. At 31 May 20X8, Electrode included a provision of $10,000 in the financial statements
relating to the expected return of cleaners which had been sold before the year-end date. At 31 May 20X9, Electrode estimated that the
amount of the provision should be changed to $13,000. How should this information be accounted for in the financial statements for the
year ended 31 May 20X9?
129.
•
•
•
•
Debit: Provision $3,000; Credit: PnL $3,000
Debit: PnL $3,000; Credit: Provision $3,000
Debit: Other comprehensive income $3,000; Credit: Provision $3,000
Debit: Balanse Statement $3,000; Credit: Provision $3,000
•
Debit: Provision $3,000; Credit: Other comprehensive income $3,000
On 1 January 20X3, a business had prepaid insurance of $10,000. On 1 August 20X3, it paid, in full, the annual insurance invoice of
$36,000, to cover the twelve months to 31 July 20X4. What was the amount charged in the statement of profit or loss and the amount
shown in the statement of financial position for the year ended 31 December 20X3?
130.
•
•
•
•
•
PnL: $5,000
PnL: $25,000
PnL: $36,000
PnL: $36,000
PnL: $22,000
BS: $24,000
BS: $21,000
BS: $15,000
BS: $10,000
BS: $23,000
Andrew's year-end is 30 September. On 1 January 20X6 Andrew took out a loan of $100,000 with annual interest of 12%. The interest
is payable in equal instalments on the first day of April, July, October and January in arrears. How much should be charged to the
statement of profit or loss account for the year ended 30 September 20X6, and how much should be accrued on the statement of
financial position?
131.
•
•
•
•
•
PnL: $12,000
PnL: $9,000
PnL: $6,000
PnL: $12,000
PnL: $9,000
BS: $3,000
BS: $3,000
BS: $3,000
BS: $9,000
BS: Nil
The annual insurance premium for S for the period 1 July 20X3 to 30 June 20X4 was $13,200, which is 10% more than the previous
year. Insurance premiums are paid on 1 July. What is the statement of profit or loss charge for insurance for the year ended 31
December 20X3?
132.
•
•
•
•
•
12000
12600
14000
11500
13200
On 1 May 2020, A commenced business and paid an annual rent charge of $1,800 for the period to 30 April 2021. What is the charge to
the statement of profit or loss and the entry in the statement of financial position for the accounting period ended 30 November 2020?
133.
•
•
•
•
•
$1,050 charge to statement of profit or loss and accrual of $750 in the statement of financial position.
$1,050 charge to statement of profit or loss and prepayment of $750 in the statement of financial position.
$750 charge to statement of profit or loss and prepayment of $1,050 in the statement of financial position.
$1,800 charge to statement of profit or loss and prepayment of $1,050 in the statement of financial position.
$1,800 charge to statement of profit or loss and no entry in the statement of financial position.
On 1 May 20X0, A commenced business and paid an annual rent charge of $1,800 for the period to 30 April 20X1. What is the charge
to the statement of profit or loss and the entry in the statement of financial position for the accounting period ended 30 November 20X0?
134.
•
•
•
•
•
$1,050 charge to statement of profit or loss and accrual of $750 in the statement of financial position.
$1,050 charge to statement of profit or loss and prepayment of $750 in the statement of financial position.
$750 charge to statement of profit or loss and prepayment of $1,050 in the statement of financial position.
$1,800 charge to statement of profit or loss and prepayment of $1,050 in the statement of financial position.
$1,800 charge to statement of profit or loss and no entry in the statement of financial position.
At 1October, the motor expenses account showed 4 months’ insurance prepaid of $80 and fuel costs accrued of $95. During October,
the outstanding fuel bill was paid, plus further bills of $245. At 30 October there was a further outstanding fuel bill of $120. What was
the expense included in the statement of profit or loss for motor expenses for October?
135.
•
•
•
•
•
540
385
360
265
480
At 1 September, the motor expenses account showed 4 months’ insurance prepaid of $80 and fuel costs accrued of $95. During
September, the outstanding fuel bill was paid, plus further bills of $245. At 30 September there was a further outstanding fuel bill of
$120. What was the expense included in the statement of profit or loss for motor expenses for September?
136.
•
•
•
•
•
540
385
360
265
480
Summer Co sublets part of its office accommodation to earn rental income. The rent is received quarterly in advance on 1 January, 1
April, 1 July and 1 October. The annual rent has been $24,000 for some years, but it was increased to $30,000 from 1 July 2019. What
amounts for rent should appear in Vine Co’s financial statements (PnL and BS) for the year
ended 31 January 2020?
137.
•
•
•
•
•
PnL: $27,500
PnL: $27,500
PnL: $20,000
PnL: $20,000
PnL: $27,000
BS: $5,000 in accrued income
BS: $5,000 in prepaid income
BS: $2,500 in accrued income
BS: $2,500 in prepaid income
BS: $5,000 in prepaid income
Vine Co sublets part of its office accommodation to earn rental income. The rent is received quarterly in advance on 1 January, 1 April,
1 July and 1 October. The annual rent has been $24,000 for some years, but it was increased to $30,000 from 1 July 20X5. What
amounts for rent should appear in Vine Co’s financial statements (PnL and BS) for the year
ended 31 January 20X6?
138.
•
•
•
•
•
PnL: $27,500
PnL: $27,500
PnL: $20,000
PnL: $20,000
PnL: $27,000
BS: $5,000 in accrued income
BS: $5,000 in prepaid income
BS: $2,500 in accrued income
BS: $2,500 in prepaid income
BS: $5,000 in prepaid income
Details of Beta Co’s insurance policy are shown below: Premium for year ended 31 March 2019 paid April 2018 $10,800; Premium for
year ending 31 March 2020 paid April 2019 $12,000. What figures should be included in the Beta Co’s financial statements (PnL and
BS) for the year ended 30 June 2019?
139.
•
•
•
•
•
PnL: $11,700, BS: $9,000 prepayment
PnL: $11,100, BS: $9,000 prepayment
PnL: $11,100, BS: $9,000 accrual
PnL: $10,700, BS: $9,000 accrual
PnL: $11,700, BS: $9,000 accrual
Details of B Co’s insurance policy are shown below: 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 (PnL and BS)
for the year ended 30 June 20X6?
140.
•
•
•
•
•
PnL: $11,700, BS: $9,000 prepayment
PnL: $11,100, BS: $9,000 prepayment
PnL: $11,100, BS: $9,000 accrual
PnL: $10,700, BS: $9,000 accrual
PnL: $11,700, BS: $9,000 accrual
HONDA Co has a property rental business and received cash totalling $838,600 from tenants during the year ended 31 December 2016.
Figures for rent in advance and in arrears at the beginning and end of the year were: 31 December 2015 31 December 20X6
Rent received in advance 102,600
88,700
Rent in arrears (all subsequently received) 42,300 48,400
141.
•
•
•
•
•
846400
858600
852500
925500
977500
Troy Co has a property rental business and received cash totalling $838,600 from tenants during the year ended 31 December 20X6.
Figures for rent in advance and in arrears at the beginning and end of the year were: 31 December 20X5 31 December 20X6
Rent received in advance 102,600
88,700
Rent in arrears (all subsequently received) 42,300 48,400
142.
•
•
•
•
•
977500
846400
925500
852500
858600
Betas created a suspense account with a debit balance of $1,250 in order to balance his trial balance. He subsequently investigated and
found the following errors:
(1) The closing balance of the purchase ledger control account at the year-end had been undercast by $160.
(2) Cash received of $450 from customers has only been entered into the cash account.
(3) The purchase returns day book has been overcast by $300.
What is the remaining debit balance on the suspense account after the errors have been corrected?
143.
•
•
•
•
•
$1,860 debit
$960 debit
$1,560 debit
$2,160 debit
$1,540 debit
Marlon created a suspense account with a debit balance of $1,250 in order to balance his trial balance. He subsequently investigated and
found the following errors:
(1) The closing balance of the purchase ledger control account at the year-end had been undercast by $160.
(2) Cash received of $450 from customers has only been entered into the cash account.
(3) The purchase returns day book has been overcast by $300.
What is the remaining debit balance on the suspense account after the errors have been corrected?
144.
•
•
•
•
•
$2,160 debit
$1,540 debit
$960 debit
$1,860 debit
$1,560 debit
The debit side of a trial balance totals $800 more than the credit side.
Which one of the following errors would fully account for the difference?
145.
•
•
•
•
•
The petty cash balance of $800 has been omitted from the trial balance
Discount received $800 has been debited to discount allowed account.
A receipt of $800 for commission receivable has been omitted from the records.
$400 paid for plant maintenance has been correctly entered in the cash book and credited to the
plant asset account.
Discount received $400 has been debited to discount allowed account.
The debit side of a trial balance totals $50 more than the credit side. Which one of the following could this be due to?
146.
•
•
•
•
•
A purchase of goods for $25 being omitted from the payables control account
A receipt for $50 from a customer being omitted from the cash book
A purchase of goods for $50 being omitted from the payables control account
An invoice of $25 for electricity being credited to the electricity account
A sale of goods for $50 being omitted from the receivables control account
ARAZ business statement of profit or loss and other comprehensive income for the year ended 31 December 2019 showed a net profit
of $83,600. It was later found that $18,000 paid for the purchase of a motor van had been debited to motor expenses account. It is the
company's policy to depreciate motor vans at 25 per cent per year, with a full year's charge in the year of acquisition.What would the net
profit be after adjusting for this error?
147.
•
•
•
$101,600
$88,100
$106,100
•
•
$97,100
$70,100
A business statement of profit or loss and other comprehensive income for the year ended 31 December 20X9 showed a net profit of
$83,600. It was later found that $18,000 paid for the purchase of a motor van had been debited to motor expenses account. It is the
company's policy to depreciate motor vans at 25 per cent per year, with a full year's charge in the year of acquisition.What would the net
profit be after adjusting for this error?
148.
•
•
•
•
•
$106,100
$88,100
$97,100
$70,100
$101,600
Net profit was calculated as being $10,000. It was later discovered that capital expenditure of $3,000
had been treated as revenue expenditure, and revenue receipts of $1,400 had been treated as capital receipts. What is the net profit after
correcting this error?
149.
•
•
•
•
•
$11,600
$8,400
$16000
$14,400
$5,600
After checking a business cash book against the bank statement, which of the following items could
require an entry in the cash book?
1. Bank charges
2. A cheque from a customer which was dishonoured
3. Cheque not presented
4. Deposits not credited
5. Credit transfer entered in bank statement
6. Standing order entered in bank statement.
150.
•
•
•
•
•
3, 4, 5 and 6
2, 3, 5 and 6
3 and 4
1, 3, 4 and 6
1, 2, 5 and 6
Which of the following statements about bank reconciliations are correct?
1. A difference
between the cash book and the bank statement must be corrected by means of a journal entry. 2. In preparing a bank reconciliation,
lodgements recorded before date in the cash book but credited by the bank after date should reduce an overdrawn balance in the bank
statement.
3. Bank charges not yet entered in the cash book should be dealt with by an adjustment in the bank
reconciliation statement. 4.If a cheque received from a customer is dishonoured after date, a credit entry in the cash book is required.
151.
•
•
•
•
•
1 and 3
1 and 4
2 and 3
2 and 4
1 and 2
The bank statement on 31 October 20X9 showed an overdraft of $800. On reconciling the bank statement, it was discovered that a
cheque drawn by your company for $60 had not been presented for payment, and that a cheque for $180 from a customer had been
dishonoured on 30 October 20X9, but
that this had not yet been notified to you by the bank.
What is the correct bank balance to be shown in the statement of financial position at 31 October 20X9?
152.
•
•
•
$620 overdrawn
$680 overdrawn
$560 overdrawn
•
•
$860 overdrawn
$920 overdrawn
A business had a balance at the bank of $2,500 at the start of the month. During the following month, it paid for materials invoiced at
$1,000 less trade discount of 20% and cash discount of 10%. It received a cheque from a customer in respect of an invoice for $200,
subject to cash discount of 5%.
What was the balance at the bank at the end of the month?
153.
•
•
•
•
•
$1,980
$1,990
$1,970
$2,010
$2,000
The cash book shows a bank balance of $3,675 overdrawn at 31 August 20X5. It is subsequently discovered that a standing order for
$125 has been entered twice, and that a dishonoured cheque for $450 has been debited in the cash book instead of credited. What is the
correct bank balance?
154.
•
•
•
•
•
$3,100 overdrawn
$3,350 overdrawn
$4,250 overdrawn
$4,450 overdrawn
B $4,000 overdrawn
A supplier sends you a statement showing a balance outstanding of $12,350. Your own records show a
balance outstanding of $12,500.
Which one of the following could be the reason for this difference?
155.
•
•
•
•
•
The supplier's invoice for $300 has recorded in your accounts as $150
You have paid the supplier $150 which he has not yet accounted for.
The supplier sent an invoice for $150 which you have not yet received.
The supplier has allowed you $150 cash discount which you had omitted to enter in your ledgers.
You have returned goods worth $150 which the supplier has not yet accounted for.
Your payables control account has a balance at 1 October 2018 of $34,500 credit. During October,
credit purchases were $78,400, cash purchases were $2,400 and payments made to suppliers, excluding cash purchases, and after
deducting settlement discounts of $1,200, were $68,900.
Purchase returns were $4,700. What was the closing balance?
156.
•
•
•
•
•
$42,900
$40,500
$47,500
$38,100
$49,900
Your payables control account has a balance at 1 October 20X8 of $34,500 credit. During October,
credit purchases were $78,400, cash purchases were $2,400 and payments made to suppliers, excluding cash purchases, and after
deducting settlement discounts of $1,200, were $68,900.
Purchase returns were $4,700.
What was the closing balance?
157.
•
•
•
•
•
$42,900
$49,900
$38,100
$47,500
$40,500
Which one of the following is not a purpose of a receivables ledger control account?
158.
•
•
A receivables ledger control account provides a check on the overall accuracy of the personal ledger accounts
ledger accounts.
A receivables ledger control account ensures that personal accounts are accurately summarised in control accounts
•
•
•
Control accounts help deter fraud.
A receivables ledger control account ensures the trial balance balances.
A receivables ledger control account aims to ensure there are no errors in the personal ledger.
Which of the following items could appear on the credit side of a receivables ledger control account?
received from customers
2. Irrecoverable debts written off
allowance for receivables
4. Discounts allowed
6. Credits for goods returned by customers
7. Cash refunds to customers
159.
•
•
•
•
•
1. Cash
3. Increase in
5. Sales
1, 2, 4 and 7
3, 4 and 6
5 and 7
1, 2, 4 and 6
3, 4, 5 and 6
A receivables ledger control account had a closing balance of $7,500. It contained a contra to the payables ledger of $400, but this had
been entered on the wrong side of the control account.
What should be the correct balance on the control account?
160.
•
•
•
•
•
$7100 Debit
$6900 Debit
$6700 Debit
$8300 Debit
$7900 Debit
A suspense account was opened when a trial balance failed to agree. The following errors were subsequently discovered:
Error
(1) A gas bill of $420 had been recorded in the Gas account as $240.
(2) A payment of $50 for stationery of $50 had been credited to Discounts received.
(3) Interest received of $70 had been entered in the bank account only.
If the errors when corrected clear the suspense account, what was the original balance on the suspense account?
161.
•
•
•
•
•
debit $160
credit $210
debit $350
credit $160
debit $210
Drive incurred bank charges of $40, which was then credited to the bank interest receivable account.
What was the effect upon profit for the year of recording the bank charges in this way?
162.
•
•
•
•
•
Profit will be understated by $80
Profit will be unchanged
Profit will be overstated by $40
Profit will be overstated by $80
Profit will be understated by $40
Which of the following statements about bank reconciliations are correct?
(1) In preparing a bank reconciliation, unpresented cheques must be deducted from a
balance of cash at bank shown in the bank statement.
(2) A cheque from a customer paid into the bank but dishonoured must be corrected by
making a debit entry in the cash book.
(3) An error by the bank must be corrected by an entry in the cash book.
(4) An overdraft is a debit balance in the bank statement.
163.
•
•
•
•
•
(2) and (3)
(2) and (4)
(1) and (2)
(1) and (3)
(1) and (4)
An organisation’s cash book had an opening balance of $485 credit. During the following week, the following transactions took place:
Cash sales $1,450 including sales tax of $150.
Receipts from credit customers of $2,400.
Payments to suppliers of debts of $1,800 less 5% cash discount.
Dishonoured cheques from customers amounting to $250.
What was the resulting balance in the cash book after the transactions had been recorded?
164.
•
•
•
•
•
$2,375 credit
$1,255 debit
C $1,905 credit
$1,405 debit
$1,655 debit
Your firm’s cash book at 30 April 20X8 showed a balance at the bank of $2,490. Comparison with the bank statement at the same date
revealed the following differences:
$
Unpresented cheques
840
Bank charges not in cash book
50
Receipts not yet credited by the bank
470
Dishonoured cheque not in cash book
140
The correct bank balance at 30 April 20X8 was:
165.
•
•
•
•
•
$2,580
$3,140
$2,770
$2,300
$1,460
ASK’s bank statement shows a balance of $715 overdrawn. The statement includes bank charges of $74 which have not been entered in
the cash book. There are also unpresented cheques totalling $824 and lodgements not yet credited of $337. In addition the bank
statement erroneously includes a dividend receipt of $25 belonging to another customer.
The bank overdraft in the statement of financial position should be:
166.
•
•
•
•
•
$1,301
$1,177
$1,227
$253
$1,202
Listed below are some possible causes of difference between the cash book balance and the bank
statement balance when preparing a bank reconciliation:
1 Cheque paid in, subsequently dishonoured
2 Error by bank
3 Bank charges
4 Lodgements credited after date
5 Unpresented cheques not yet presented
Which of these items require an entry in the cash book?
167.
•
•
•
•
•
1 and 5 only
4 and 5 only
2, 4, and 5 only
1 and 3 only
1, 2, 3, 4 and 5
Ordan received a statement from one of its suppliers, Alta, showing a balance due of $3,980. The amount due according to the payables
ledger account of Ordan was only $230.
Comparison of the statement and the ledger account revealed the following differences:
(1) A cheque sent by Ordan for $270 has not been recorded in Alta’s statement.
(2) Alta has not recorded goods returned by Ordan $180.
(3) Ordan made a contra entry, reducing the amount due to Alta by $3,200, for a balance due from Alta in Ordan’s receivables ledger.
No such entry has been made in Alta’s
records.
What difference remains between the two entities’ accounting records after adjusting for these items?
168.
•
•
•
$640
$460
$370
•
•
$6,500
$100
A receivables ledger control account showed a debit balance of $35,642. The individual customers’ accounts in the receivables ledger
showed a total of $33,840.
The difference could be due to:
169.
•
•
•
•
•
Entering a contra with the payables ledger control account of $901 on the credit side
of the receivables ledger control account
Entering cash receipts of $1,802 on the debit side of a customer’s account
Overcasting the sales returns day book by $1,802
Entering a contra with the payables ledger control account of $901 on the debit side
of the receivables ledger control account
Undercasting the sales day book by $1,802
A business’ receivables ledger control account did not agree with the total of the balances on the receivables ledger. An investigation
revealed that the sales day book had been
overcast by $10. What effect will this have on the control account?
170.
•
•
•
•
•
The control account should not change
The control account should be debited with $10
The control account should be credited with $20
The control account should be credited with $10
The control account should be debited with $20
In reconciling the receivables ledger control account with the list of receivables ledger balances of SK, the following errors were found:
(1) The sales day book had been overcast by $370.
(2) A total of $940 from the cash receipts book had been recorded in the receivables ledger control account as $490.
What adjustments must be made to correct the errors?
171.
•
•
•
•
•
Credit sales control account $820. No change in total of receivables ledger balances.
Credit sales control account $820. Decrease total of receivables ledger balances by
$820
Debit sales control account $80. No change in total of receivables ledger balances
Debit sales control account $80. Increase total of receivables ledger balances by $80
Debit sales control account $80. Decrease total of receivables ledger balances by $80
How should the balance on the payables ledger control account be reported in the final financial statements?
172.
•
•
•
•
•
As a current asset
As a non-current asset
As an expense account
As a current liability
As a non-current liability
The draft financial statements of Galahad’s business for the year ended 31 July 20X0 show a
profit of $54,250 prior to the correction of the following errors:
(1) Cash drawings of $250 have not been accounted for.
(2) Debts amounting to $420, which were provided against in full during the year, should
have been written off as irrecoverable.
(3) Rental income of $300 has been classified as interest receivable.
(4) On the last day of the accounting period, $200 in cash was received from a customer, but no bookkeeping entries have been made.
173.
What is the correct profit of Galahad for the year ended 31 July 20X2?
•
•
•
•
•
$53,830
$55,830
$54,030
$54,250
$53,580
Weagan’s trial balance at 31 October 20X9 is out of agreement, with the debit side totalling
$500 less than the credit side. During November, the following errors are discovered:
The credit side of the sales account for October had been undercast by $150.
Rent received of $240 had been credited to the rent payable account.
The allowance for receivables, which decreased by $420, had been recorded in the allowance for receivables account as an increase.
174.
Following the correction of these errors, the balance on the suspense account would be:
•
•
•
•
•
$190 Cr
$170 Cr
$670 Cr
$1,190 Cr
$1,490 Dr
Which ONE of the following is an error of principle?
175.
•
•
•
•
•
The payment of wages debited and credited to the correct accounts, but using the
wrong amount.
The payment of rents debited and credited to the correct accounts, but using the
wrong amount.
A gas bill credited to the gas account and debited to the bank account.
The purchase of a non-current asset credited to the asset at cost account and debited
to the supplier’s account.
The purchase of a non-current asset debited to the purchases account and credited
to the supplier’s account.
Asel business has net assets of $70,000 at the beginning of the year and $80,000 at the end of the year. Drawings were $25,000 and a
lottery win of $5,000 was paid into the business during the year. What was the profit for the year?
176.
•
•
•
•
•
$30,000 loss
$30,000 profit
$10,000 profit
$10,000 loss
$20,000 profit
A business has net assets of $70,000 at the beginning of the year and $80,000 at the end of the year. Drawings were $25,000 and a
lottery win of $5,000 was paid into the business during the year. What was the profit for the year?
177.
•
•
•
•
•
$10,000 profit
$10,000 loss
$30,000 profit
$20,000 profit
$30,000 loss
Harry has budgeted sales for the coming year of $175,000. He achieves a constant mark-up of 40% on cost. He plans to reduce his
inventory level by $13,000 over the year.
What will Harry's purchases be for the year?
178.
•
•
•
•
•
190000
111000
100000
120000
112000
ATM fire on 30 September 2020 destroyed some of a company's inventory and its inventory records. The following information is
available:
Inventory 1 September 2020 318,000
Sales for September 2020 612,000
Purchases for September 2020 412,000
Inventory in good condition at 30 September 2020 214,000
Standard gross profit percentage on sales is 25%
Based on this information, what is the value of the inventory lost?
179.
•
•
96000
30000
•
•
•
26400
57000
271000
A fire on 30 September 20X2 destroyed some of a company's inventory and its inventory records. The following information is
available:
Inventory 1 September 20X2 318,000
Sales for September 20X2 612,000
Purchases for September 20X2 412,000
Inventory in good condition at 30 September 20X2 214,000
Standard gross profit percentage on sales is 25%
Based on this information, what is the value of the inventory lost?
180.
•
•
•
•
•
30000
57000
96000
271000
26400
Atem business's bank balance increased by $750,000 during its last financial year. During the same period it issued shares of $1 million
and repaid a loan note of $750,000. It purchased non-current assets for $200,000 and charged depreciation of $100,000. Working capital
(other than the bank balance) increased by $575,000. What was its profit for the year?
181.
•
•
•
•
•
1375000
1400000
1275000
1325000
1175000
A business's bank balance increased by $750,000 during its last financial year. During the same period it issued shares of $1 million and
repaid a loan note of $750,000. It purchased non-current assets for $200,000 and charged depreciation of $100,000. Working capital
(other than the bank balance) increased by $575,000.
What was its profit for the year?
182.
•
•
•
•
•
1375000
1400000
1275000
1325000
1175000
A sole trader's business made a profit of $32,500 during the year ended 31 March 20X8. This figure was after deducting $100 per week
wages for himself. In addition, he put his home telephone bill through the business books, amounting to $400 plus sales tax at 17.5%.
He is registered for sales tax and therefore has charged only the net amount to his statement of profit or loss and other comprehensive
income.
His capital at 1 April 20X7 was $6,500. What was his capital at 31 March 20X8?
183.
•
•
•
•
•
33730
39100
39000
38930
33800
Senji does not keep proper accounting records, and it is necessary to calculate her total purchases for the year ended 31 January 20X3
from the following information:
Trade payables: 31 January 20X2 130,400
Trade payables: 31 January 20X3 171,250
Payment to suppliers: 888,400
Cost of goods taken from inventory by Senji for her personal use: 1,000
Refunds received from suppliers: 2,400
Discounts received: 11,200
What is the figure for purchases that should be included in Senji’s financial statements?
184.
•
•
•
914650
941850
940050
•
•
937050
939050
Aluki fixes prices to make a standard gross profit percentage on sales of 20%.
The following information for the year ended 31 January 20X3 is available to compute her sales total for the year.
$
Inventory: 1 February 20X2 $243,000
Inventory: 31 January 20X3 $261,700
Purchases $595,400
Purchases returns $41,200
What is the sales figure for the year ended 31 January 20X3?
185.
•
•
•
•
•
741480
669375
772375
702600
740500
Alfa is a sole trader who does not keep proper accounting records.
Alfa’s first year of trading was 2020. From reviewing Alpha’s bank statements and the incomplete records relating to cash maintained,
the following summary has been compiled.
Bank and cash summary, Alfa, 2020
Cash received from credit customers and paid into the bank 381,600
Expenses paid out of cash received from credit customers before banking 6,800
Cash sales 112,900
Other information, Alfa, 2020
Irrecoverable debts written off 7,200
Discounts allowed to credit customers 9,400
Closing balance of Trade receivables 0
Which of the following correctly represents Alfa's sales figure for 2020?
186.
•
•
•
•
•
381600
112900
517900
500000
510900
Alpha is a sole trader who does not keep proper accounting records.
Alpha’s first year of trading was 20X4. From reviewing Alpha’s bank statements and the incomplete records relating to cash
maintained, the following summary has been compiled.
Bank and cash summary, Alpha, 20X4
Cash received from credit customers and paid into the bank 381,600
Expenses paid out of cash received from credit customers before banking 6,800
Cash sales 112,900
Other information, Alpha, 20X4
Irrecoverable debts written off 7,200
Discounts allowed to credit customers 9,400
Closing balance of Trade receivables 0
Which of the following correctly represents Alpha's sales figure for 20X4?
187.
•
•
•
•
•
500000
112900
381600
517900
510900
Atom sole trader who does not keep full accounting records wishes to calculate her sales revenue for the year. The information available
is:
1 Opening inventory $17,000
2 Closing inventory $24,000
3 Purchases $91,000
4 Standard gross profit percentage on sales revenue 40%
Which of the following is the sales figure for the year calculated from these figures?
188.
•
•
•
•
•
117600
200000
210000
140000
108000
A sole trader who does not keep full accounting records wishes to calculate her sales revenue for the year. The information available is:
1 Opening inventory $17,000
2 Closing inventory $24,000
3 Purchases $91,000
4 Standard gross profit percentage on sales revenue 40%
Which of the following is the sales figure for the year calculated from these figures?
189.
•
•
•
•
•
210000
117600
108000
140000
200000
On 31 December 2020 the inventory of Vita was completely destroyed by fire. The following information is available:
1 Inventory at 1 December 2020 at cost $28,400
2 Purchases for December 2020 $49,600
3 Sales for December 2020 $64,800
4 Standard gross profit percentage on sales revenue 30%
Based on this information, which of the following is the amount of inventory destroyed?
190.
•
•
•
•
•
45360
20440
19440
32640
40971
On 31 December 20X0 the inventory of V was completely destroyed by fire. The following information is available:
1 Inventory at 1 December 20X0 at cost $28,400
2 Purchases for December 20X0 $49,600
3 Sales for December 20X0 $64,800
4 Standard gross profit percentage on sales revenue 30%
Based on this information, which of the following is the amount of inventory destroyed?
191.
•
•
•
•
•
20440
19440
32640
40971
45360
The following information is available for the year ended 31 December 20X4 for a trader who does not keep proper accounting records:
Inventories at 1 January 2019 $38,000
Inventories at 31 December 2019 $45,000
Purchases $637,000
Gross profit percentage on sales = 30%
Based on this information, what was the trader's sales figure for the year?
192.
•
•
•
•
•
837200
835000
819000
920000
900000
The following information is available for the year ended 31 December 20X4 for a trader who does not keep proper accounting records:
Inventories at 1 January 20X4 $38,000
Inventories at 31 December 20X4 $45,000
Purchases $637,000
Gross profit percentage on sales = 30%
Based on this information, what was the trader's sales figure for the year?
193.
•
•
•
•
•
837200
835000
819000
920000
900000
Wanda keeps no accounting records. The following information is available about her position and transactions for the year ended 31
December 20X4:
Net assets at 1 January 20X4 $210,000
Drawings during 20X4 $48,000
Capital introduced during 20X4 $100,000
Net assets at 31 December 20X4 $400,000
Based on this information, what was Wanda's profit for 20X4?
194.
•
•
•
•
•
338000
222000
42000
242000
138000
A sole trader fixes his prices to achieve a gross profit percentage on sales revenue of 40%. All his sales are for cash. He suspects that
one of his sales assistants is stealing cash from sales revenue. His trading account for the month of June 20X3 is as follows:
Recorded sales revenue $181,600
Cost of sales $114,000
Gross profit $67,600
Assuming that the cost of sales figure is correct, how much cash could the sales assistant have taken?
195.
•
•
•
•
•
It is not possible to calculate a figure from this information
13000
5040
22000
8400
Which of the following calculations could produce an acceptable figure for a trader's net profit for a period if no accounting records had
been kept?
196.
•
•
•
•
•
There is not correct answer
Closing net assets plus drawings plus capital introduced minus opening net assets
Closing net assets plus drawings minus capital introduced minus opening net assets
Closing net assets minus drawings minus capital introduced minus opening net assets
Closing net assets plus drawings minus capital introduced plus opening net assets
ALFA business has compiled the following information for the year ended 31 October 20X2:
Opening inventory 386,200$
Purchases 989,000$
Closing inventory 422,700$
The gross profit as a percentage of sales is always 40%
Based on these figures, what is the sales revenue for the year?
197.
•
•
•
•
•
1333500
The sales revenue figure cannot be calculated from this information
2382250
1587500
2381250
A business has compiled the following information for the year ended 31 October 20X2:
Opening inventory 386,200$
Purchases 989,000$
Closing inventory 422,700$
The gross profit as a percentage of sales is always 40%
Based on these figures, what is the sales revenue for the year?
198.
•
•
•
•
•
1333500
The sales revenue figure cannot be calculated from this information
2382250
1587500
2381250
MB's trial balance includes the following items: non-current assets $50,000, inventory $15,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for bad debts
199.
•
•
•
•
•
$170,000
Not determinable
$134,000
$1
$180,000
Mario's trial balance includes the following items: non-current assets $50,000, inventory $15,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for bad debts
200.
•
•
•
•
•
$170,000
Not determinable
$134,000
$1
$180,000
Karabakh business starts trading on 1 September 20X0. During the year, it has sales of $400,000, purchases of $250,000 and closing
inventory of $0. What is the dividend deducted for the year?
201.
•
•
•
•
•
$170,000
Not determinable
$134,000
$1
$180,000
A business starts trading on 1 September 20X0. During the year, it has sales of $400,000, purchases of
$250,000 and closing inventory of $0. What is the dividend deducted for the year?
202.
•
•
•
•
•
$170,000
Not determinable
$134,000
$1
$180,000
Mario's trial balance includes the following items: non-current assets $50,000, inventory $5,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for current liabilities?
203.
•
•
•
•
•
$170,000
Not determinable
$134,000
$1
$180,000
Mario's trial balance includes the following items: non-current assets $50,000, inventory $5,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for current assets?
204.
•
•
•
•
•
$170,000
$119,000
$134,000
$1
$180,000
EDA business starts trading on 1 September 2020. During the year, it has sales of $400,000, purchases of $250,000 and closing
inventory of $0. What is the gross profit for the year?
205.
•
•
$250,000
$150,000
•
•
•
$129,000
$180,000
$179,000
A business starts trading on 1 September 20X0. During the year, it has sales of $400,000, purchases of $250,000 and closing inventory
of $0. What is the gross profit for the year?
206.
•
•
•
•
•
$250,000
$150,000
$129,000
$180,000
$179,000
A business starts trading on 1 September 20X0. During the year, it has sales of $500,000, purchases of
$250,000 and closing inventory of $0. What is the gross profit for the year?
207.
•
•
•
•
•
$179,000
$250,000
$180,000
$134,000
$129,000
Mario's trial balance includes the following items: non-current assets $50,000, inventory $15,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for total assets?
208.
•
•
•
•
•
$129,000
$179,000
$134,000
$1
$180,000
Joe's trial balance includes the following items: non-current assets $50,000, inventory $15,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for current assets?
209.
•
•
•
•
•
$170,000
$129,000
$134,000
$1
$180,000
Mario's trial balance includes the following items: non-current assets $50,000, inventory $15,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for current assets?
210.
•
•
•
•
•
$170,000
$129,000
$134,000
$1
$180,000
SHUSHA business starts trading on 1 September 2020. During the year, it has sales of $500,000, purchases of $250,000 and closing
inventory of $75,000. What is the gross profit for the year?
211.
•
•
•
•
•
$250,000
$325,000
$675,000
$375,000
$175,000
A business starts trading on 1 September 20X0. During the year, it has sales of $500,000, purchases of
$250,000 and closing inventory of $75,000. What is the gross profit for the year?
212.
•
•
•
•
•
$375,000
$675,000
$325,000
$175,000
$250,000
If an owner takes goods out of inventory for their own use, how is this dealt with?
213.
•
•
•
•
•
Credited to drawings at cost
Credited to drawings
Debited to drawings at selling price
Credited to drawings at selling price
Debited to drawings at cost
Which of the following is the correct formula for cost of sales?
214.
•
•
•
•
•
Opening inventory + closing inventory – purchases
None one
Opening inventory – purchases + closing inventory
Purchases – closing inventory + sales
Opening inventory – closing inventory + purchases
A business starts trading on 1 September 20X0. During the year, it has sales of $400,000, purchases of
$250,000 and closing inventory of $0. Is cost of sales considered to be a product cost?
215.
•
•
•
•
•
No, because it is calculated for gross profit
Yes, because it is a periodic cost
No, because it is a periodic cost
Yes, because it is calculated for gross profit
No
Jese's trial balance includes the following items: non-current assets $50,000, inventory $10,000,
payables $10,000, receivables $5,000, bank $90,000, allowance for receivables $2,000.
What is the figure for total assets?
216.
•
•
•
•
•
$1
$129,000
$180,000
$155,000
$134,000
Jesse's trial balance includes the following items: non-current assets $50,000, inventory $10,000,
payables $10,000, receivables $5,000, bank $90,000, allowance for receivables $2,000.
What is the figure for total assets?
217.
•
•
•
•
•
$129,000
$1
$134,000
$155,000
$180,000
Jesse's trial balance includes the following items: non-current assets $50,000, inventory $10,000,
payables $10,000, receivables $5,000, bank $90,000, allowance for receivables $1,000.
What is the figure for total assets?
218.
•
•
•
•
$1
$180,000
$129,000
$154,000
•
$134,000
Joe's trial balance includes the following items: non-current assets $50,000, inventory $10,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for total assets?
219.
•
•
•
•
•
$129,000
$1
$134,000
$174,000
$180,000
Jesse's trial balance includes the following items: non-current assets $50,000, inventory $10,000,
payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.
What is the figure for total assets?
220.
•
•
•
•
•
$134,000
$1
$129,000
$180,000
$174,000
Which of the following events between the reporting date and the date the financial statements are authorised for issue must be adjusted
in the financial statements?
1 Declaration of equity dividends
2 Decline in market value of investments
3 The announcement of changes in tax rates
4 The announcement of a major restructuring
221.
•
•
•
•
•
1 only
3 only
2 and 4
None of them
1 and 2 only
Which of the following is the correct definition of an adjusting event after the reporting period?
222.
•
•
•
•
•
An event that occurs between the reporting date and the date on which the financial statements are authorised for issue that provides
evidence of conditions that arose subsequent to the reporting date
Sale of inventory which gives evidence about its value at the end of the reporting period, issue of shares or loan notes, destruction of a
major non-current asset by fire
An event that occurs after the date the financial statements are authorised for issue that provides evidence of conditions that arose
subsequent to the reporting date
An event that occurs between the reporting date and the date on which the financial statements are authorised for issue that provides
further evidence of conditions that existed at the reporting date
An event that occurs after the date the financial statements are authorised for issue that provides further evidence of conditions that
existed at the reporting date
The draft financial statements of a limited liability company are under consideration. The accounting treatment of the following material
events which occurred after the end of the reporting period needs to be determined. According to IAS 10 Events After the Reporting
Period, which TWO of the events require an adjustment to the figures in the draft financial statements?
A The bankruptcy of a major customer, with a substantial debt outstanding at the end of the
reporting period
B A fire destroying some of the company's inventory (the company's going concern status is not affected)
C An issue of shares to finance expansion
D Sale for less than cost of some inventory held at the end of the reporting period
223.
•
•
•
•
•
B, D
A, C
B, A
A, D
D, C
In finalising the financial statements of a company for the year ended 30 June 20X4, which of the following material matters should be
adjusted for?
1 A customer who owed $180,000 at the end of the reporting period went bankrupt in July 20X4. 2 The sale in August 20X4 for
$400,000 of some inventory items valued in the statement of financial position at $500,000.
3 A factory with a value of $3,000,000 was seriously damaged by a fire in July 20X4. The factory was back in production by August
20X4 but its value was reduced to $2,000,000.
4 The company issued 1,000,000 ordinary shares in August 20X4.
224.
•
•
•
•
•
All four items
1 and 2 only
2 and 3 only
None of the above
1 and 4 only
IAS 10 Events After the Reporting Period regulates the extent to which events after the reporting period should be reflected in financial
statements.
225.
Which one of the following lists of such events consists only of items that, according to IAS 10, should normally be classified as nonadjusting?
•
•
•
•
•
An event that occurs between the reporting date and the date on which the financial statements are authorised for issue that provides
further evidence of conditions that existed at the reporting date
Insolvency of an account receivable which was outstanding at the end of the reporting period, issue of shares or loan notes, an
acquisition of another company
An acquisition of another company, destruction of a major non-current asset by fire, discovery of fraud or error which shows that the
financial statements were incorrect
Sale of inventory which gives evidence about its value at the end of the reporting period, issue of shares or loan notes, destruction of a
major non-current asset by fire
Issue of shares or loan notes, changes in foreign exchange rates, major purchases of non-current assets
Viola has an accounting year-end of 31 January 20X4. Which of the following events, if they occurred before the financial statements
were approved, would be classified as adjusting events in accordance with IAS 10 Events after the Reporting Period?
(1) Viola paid an equity dividend of $10,000 on 28 February 20X4. The dividend had been proposed by the directors on 20 January
20X4. (2) Notification of a compensation claim from a customer was received on 15 February 20X4 which related to a faulty product
sold by Viola in January 20X4.
(3) Viola received notification on 5 February 20X4 that a major credit customer was insolvent.
226.
•
•
•
•
•
(1), (2) and (3) are adjusting events
(2) only is an adjusting event
(2) and (3) are adjusting events
(1) only is an adjusting event
(1) and (3) are adjusting events
Where there are material non-adjusting events, a note to the financial statements should disclose:
227.
•
•
•
•
•
A letter from shareholder
Where the event took place
A letter from the solicitor
Nothing
The nature of the event and the estimated financial effect
Brakes Co had a reporting date of 30 September 20X8. The financial statements for that year were approved by the directors on 14
December 20X8 and issued to the shareholders on 17 January 20X9. Details of several events which occurred after the reporting date of
30 September 20X8 are as follows:
(1) On 3 October 20X8 a fire destroyed all inventory on the premises with the consequence that it was unlikely Brakes would be able to
continue as a going concern.
(2) A credit customer with an outstanding balance at 30 September 20X8 was declared bankrupt on 12 December 20X8.
(3) An ordinary dividend of 6c per share was declared on 1 December 20X8.
(4) Inventory valued at a cost of $800 at the year-end was sold for $650 on 11 November 20X8.
228.
Which of the above are non-adjusting events?
•
•
•
•
•
All are adjusting events
All are non-adjusting events
(3) and (4) only are non-adjusting events
(1) and (3) only are non-adjusting events
(3) only is a non-adjusting event
Which of the following statements are correct based upon the requirements of IAS 10 Events after the Reporting Period?
(1) Details of all adjusting events must be disclosed by note to the financial statements.
(2) A material loss arising from the sale, after the reporting date of inventory valued at cost at the statement of financial position date
must be reflected in the financial statements.
(3) If the market value of property, plant and equipment falls materially after the reporting date, the details must be disclosed by note.
(4) Events after the reporting period are those that occur between the statement of financial position date and the date on which the
financial statements are approved.
229.
•
•
•
•
•
(2) and (3) only
(1) and (4) only
(1) and (2) only
(2), (3) and (4) only
(1), (3) and (4) only
Ribblesdale Co has prepared financial statements for the year ended 30 September 20X8. The financial statements were approved by the
directors on 12 January 20X9 and issued to the shareholders on 20 February 20X9. Which of the following are adjusting events after the
reporting period?
230.
(1) A flood on 3 October 20X8 that destroyed a relatively small quantity of inventory which had cost $1,700.
(2) A credit customer with a balance outstanding at 30 September 20X8 was declared insolvent on 20 December 20X8.
(3) Inventory valued at a cost of $800 at 30 September 20X8 was sold for $650 on 11 November 20X8.
(4) A dividend on ordinary shares of 4c per share was declared on 1 December 20X8.
•
•
•
•
•
(1) and (2) only
(1) and (3) only
(2), (3) and (4) only
(2) and (3) only
(1), (3) and (4) only
In the published accounts of XYZ Co, the profit for the period is $3,500,000. The balance of retained earnings at the beginning of the
year is $500,000. If dividends of $2,500,000 were paid, what is the closing balance of retained earnings?
231.
•
•
•
•
•
1000000
None of the above
4000000
500000
1500000
How is a bank overdraft classified in the statement of financial position?
232.
•
•
•
•
•
Current asset
Non-current asset
None of the above
Non-current liability
Current liability
Which of the following items are non-current assets? 1 Land 2 Machinery
233.
•
•
•
•
•
3 Bank loan
4 Inventory
2, 3 and 4 only
1 only
1, 2 and 3 only
1 and 2 only
All of the above
According to IAS 1, which of the following items make up a complete set of financial statements? 1 Statement of changes in equity 2
Statement of cash flows 3 Notes to the accounts 4 Statement of financial position 5 Statement of profit or loss and other
comprehensive income 6 Chairman's report
234.
•
•
•
•
•
None of the above
1, 2, 4 and 5 only
3, 4 and 5 only
1, 2, 3, 4 and 5 only
All of the items
According to IAS 1, which of the following items must appear on the face of the statement of profit or loss and other comprehensive
income? 1 Tax expense 2 Revenue 3 Cost of sales 4 Profit or loss
235.
•
•
•
•
•
2 and 3 only
4 only
2 and 4 only
1, 2 and 4 only
All of the above
Fruit Co has a tax liability relating to 2019 brought forward in 2020 of $16,000. This liability is finally agreed at $18,500, which is paid
in 20X2. Fruit’s accountant estimates their tax liability for profits earned in 2020 will be $20,000. What should the charge for taxation
be in Fruitz's statement of profit or loss (SPL) for the year ended 31 December 2020?
236.
•
•
•
•
•
15000
None of the above
20000
22500
17500
Fruitz Co has a tax liability relating to 20X1 brought forward in 20X2 of $16,000. This liability is finally agreed at $18,500, which is
paid in 20X2. Fruitz’s accountant estimates their tax liability for profits earned in 20X2 will be $20,000. What should the charge for
taxation be in Fruitz's statement of profit or loss (SPL) for the year ended 31 December 20X2?
237.
•
•
•
•
•
17500
None of the above
20000
22500
15000
Which of the following statements about limited liability companies' accounting is/are correct? 1 A revaluation surplus arises when a
non-current asset is sold at a profit. 2 The authorised share capital of a company is the maximum nominal value of shares and loan
notes the company may issue. 3. IAS 10 Events after the reporting period requires all non-adjusting events to be disclosed in the notes
to the financial statements.
238.
•
•
•
•
•
2 only
None of the statements are correct
All of the above
3 only
1 and 2 only
The correct ledger entries needed to record the issue of 200,000 $1 shares at a premium of 30c, and paid for in full, would be
239.
•
•
•
•
•
None of the above
Dr Ordinary share capital $200,000 Cr Share premium account $60,000 Cr Cash $140,000
Dr Cash $260,000 Cr Ordinary share capital $200,000 Cr Share premium account $60,000
Dr Ordinary share capital $200,000 Cr Share premium account $60,000 Cr Cash $260,000
Dr Cash $200,000 Dr Share premium account $60,000 Cr Ordinary share capital $260,000
Which one of the following items does not appear under the heading 'equity and reserves' on a company statement of financial position?
240.
•
•
•
•
•
None of the above
Share premium account
Retained earnings
Loan stock
Revaluation surplus
Which of the following could appear as separate items in the statement of changes in equity required by IAS 1 Presentation of Financial
Statements as part of a company's financial statements? 1 Dividends on equity shares paid during the period 2 Loss on sale of
investments 3 Proceeds of an issue of ordinary shares 4 Dividends proposed after the year end
241.
•
•
All four items
None of the above
•
•
•
Which of the following statements about the financial statements of limited liability companies are correct according to International
Financial Reporting Standards? 1 In preparing a statement of cash flows, either the direct or the indirect method may be used. Both lead
to the same figure for net cash from operating activities. 2.Loan notes can be classified as current or non-current liabilities. 3
Financial statements must disclose a company's total expense for depreciation, if material. 4 A company must disclose by note details
of all adjusting events allowed for in the financial statements.
242.
•
•
•
•
•
3 and 4 only
2 and 4 only
None of the above
All four items
1, 2 and 3 only
Which of the following items are required to be disclosed by a limited liability company, either on the face of their main financial
statements or in the notes, according to International Financial Reporting Standards? 1.Share capital 2.Finance costs 3 Dividends
proposed 4 Depreciation and amortisation
243.
•
•
•
•
•
All four items
None of the above
1, 2 and 3 only
2, 3 and 4 only
1, 2 and 4 only
At 31 December 20X2 the following matters require inclusion in a company's financial statements: 1 On 1 January 20X2 the company
made a loan of $12,000 to an employee, repayable on 30 April 20X3, charging interest at 2 per cent per year. On the due date she repaid
the loan and paid the whole of the interest due on the loan to that date. 2 The company has paid insurance $9,000 in 20X2, covering the
year ending 31 August 20X3. 3 In January 20X3 the company received rent from a tenant $4,000 covering the six months to 31
December 20X2. For these items, what total figures should be included in the company's statement of financial position at 31 December
20X2?
244.
•
•
•
•
•
Receivables and prepayments 10,240 Payables and accruals NIL
None of the above
Receivables and prepayments 16,240 Payables and accruals 6,000
Receivables and prepayments 22,240
Payables and accruals NIL
Receivables and prepayments 22,000
Payables and accruals 240
Which of the following might appear as an item in a company's statement of changes in equity? 1 Profit on disposal of properties
Surplus on revaluation of properties 3 Equity dividends proposed after the reporting date 4 Issue of share capital
245.
•
•
•
•
•
2
1 and 2 only
3 and 4 only
All of the above
2 and 4 only
1, 3 and 4 only
Which of the following items may appear as current liabilities in a company's statement of financial position? 1.Revaluation surplus 2
Loan due for repayment within one year 3 Taxation 4 Preference dividend payable on redeemable preference shares
246.
•
•
•
•
•
247.
1, 3 and 4 only
1, 2 and 4 only
1 and 3 only
1, 2 and 4
1, 2 and 3
1, 3 and 4
All of the above
2, 3 and 4
Carter Co has non-current assets with a carrying amount of $2,500,000 on 1 December 20X7. During the year ended 30 November
20X8, the following occurred:
(1) Depreciation of $75,000 was charged to the statement of profit or loss.
(2) Land and buildings with a carrying amount of $1,200,000 were revalued to $1,700,000.
(3) An asset with a carrying amount of $120,000 was disposed of for $150,000.
The carrying amount of non-current assets at 30 November 20X8 was $4,200,000.
What amount should be shown for the purchase of non-current assets in the statement of cash flows of Carter Co for the year ended 30
November 20X8?
•
•
•
•
•
1400000
1500000
1600000
1395000
1450000
Which THREE of the following items would you expect to see included within the operating activities section of a statement of cash
flows prepared using the direct method?
(1) Payments made to suppliers
(2) Increase or decrease in receivables
(3) Receipts from customers
(4) Increase or decrease in inventories
(5) Increase or decrease in payables
(6) Finance costs paid
248.
•
•
•
•
•
1, 2, 3
2, 3, 5
2, 4, 6
1, 3, 6
4, 5, 6
In relation to statements of cash flows, which, if any, of the following statements are correct?
(1) The direct method of calculating net cash from operating activities leads to a different figure from that produced by the indirect
method, but this is balanced elsewhere in the statement of cash flows. (2) An entity making high profits must necessarily have a net cash
inflow from operating activities.
(3) Profits and losses on disposals of non-current assets appear as items under investing activities in the statement of cash flows.
249.
•
•
•
•
•
None of the statements
All of them
Statement (2) only
Statement (3) only
Statement (1) only
Which one of the following is not an advantage of the statement of cash flows?
250.
•
•
•
•
•
It helps users to estimate future cash flows
The numbers within it cannot be manipulated through the adoption of beneficial accounting policies
It highlights the effect of non-cash transactions
It helps an assessment of the liquidity off a business
None of them
In the year ended 31 May 20X2, Galleon purchased non-current assets at a cost of $140,000, financing them partly with a new loan of
$120,000. Galleon also disposed of noncurrent assets with a carrying amount of $50,000, making a loss of $3,000. Cash of $18,000 was
received from the disposal of investments during the year.
251.
What is Galleons net cash inflow or outflow from investing activities to include in the statement of cash flows?
•
•
•
•
•
93000 outflow
47000 inflow
75000 outflow
85000 outflow
75000 inflow
A statement of cash flows prepared in accordance with the indirect method reconciles profit before tax to cash generated from
operations. Which of the following lists of items consists only of items that would be ADDED to profit before tax?
252.
•
•
•
•
•
Increase in payables, depreciation charge, profit on sale of non-current assets
Loss on sale of non-current assets, depreciation charge, increase in receivables
Increase in payables, decrease in receivables, profit on sale of non-current assets
Decrease in receivables, increase in payables, loss on sale of non-current assets
Decrease in inventory, depreciation charge, profit on sale of non-current assets
A Co made a profit for the year of $18,750, after accounting for depreciation of $1,250. During the year, non-current assets were
purchased for $8,000, receivables increased by $1,000, inventories decreased by $1,800 and payables increased by $350.
253.
What was A Co’s increase in cash and bank balances during the year?
•
•
•
•
•
13150
10650
10700
12450
10850
Buta business has made a profit of $8,000 but its bank balance has fallen by $5,000.
254.
Which one of the following statements could be a possible explanation for this situation?
•
•
•
•
•
The disposal of a non-current asset for $13,000 less than its carrying amount
Depreciation charge of $2,000 and an increase in inventories of $10,000
Depreciation charge of $3,000 and an increase in inventories of $10,000
Depreciation charge of $12,000 and the purchase of new non-current assets for $25,000
Depreciation charge of $6,000 and the repayment of a loan of $7,000
A business has made a profit of $8,000 but its bank balance has fallen by $5,000.
255.
Which one of the following statements could be a possible explanation for this situation?
•
•
•
•
•
The disposal of a non-current asset for $13,000 less than its carrying amount
Depreciation charge of $2,000 and an increase in inventories of $10,000
Depreciation charge of $3,000 and an increase in inventories of $10,000
Depreciation charge of $12,000 and the purchase of new non-current assets for $25,000
Depreciation charge of $6,000 and the repayment of a loan of $7,000
A business had non-current assets with a carrying amount of $50,000 at the start of the financial year. During the year the business sold
assets that had cost $4,000 and had been depreciated by $1,500. Depreciation for the year was $9,000. The carrying amount of assets at
the end of the financial year was $46,000.
256.
How much cash has been invested in non-current assets during the year?
•
•
•
•
•
4000
9000
10000
7500
2000
Where, in an entity’s financial statements, complying with International accounting standards, should you find the proceeds of noncurrent assets sold during the period?
A Statement of cash flows and statement of financial position
B Statement of changes in equity and statement of financial position
C Statement of profit or loss and other comprehensive income and cash flow statement
D Statement of cash flows only
257.
•
•
•
•
•
None of them
B
C
D
A
Which of the following items could appear as items in an entity’s statement of cash flows?
(1) A bonus issue of shares.
(2) A rights issue of shares.
(3) The revaluation of non-current assets.
(4) Dividends paid.
258.
•
•
•
None of them
(3) only
(1), (3) and (4) only
•
•
(2) and (4) only
All four items
Nobus Co is producing its statement of cash flows for the year ended 31 December 20X5. The accountant has identified the following
balances in the financial statements: $
Interest accrual b/f
4,900
Interest accrual c/f
1,200
Interest payable
20,000
Interest receivable
13,000
Preference dividend payable b/f 120,000 Preference dividends payable c/f 140,000 Dividends (statement of changes in equity)
600,000
259.
What is the net cash flow from investing activities?
•
•
•
•
•
-10700
-600700
-590700
13000
-603700
Extracts from the financial statements of Deuce Co showed balances as follows: 20X9
20X8
$1 Share capital
300,000 120,000
Share premium
260,000 100,000 A bonus issue of 1 share for every 12 held at the 20X8 year-end occurred during the
year and loan notes of $300,000 were issued at par. Interest of $12,000 was paid during the year. What is the net cash inflow from
financing activities?
260.
•
•
•
•
•
480000
580000
617000
605000
640000
Which of the below are advantage(s) of cash flow statement?
A. Cash flow forecasts are easier to prepare, as well as more useful, than profit forecasts.
B. They can in some respects be audited more easily than accounts based on the accruals concept.
C. The accruals concept is confusing, and cash flows are more easily understood.
D. Cash flow information can be retrospective and can also include a forecast for the future. This is of
great information value to all users of accounting information.
D. Forecasts can subsequently be monitored by the publication of variance statements which
compare actual cash flows against the forecast.
261.
•
•
•
•
•
D
B.D
A,B
A,B
all of them
Which of the below are advantage(s) of cash flow statement?
(a) Survival in business depends on the ability to generate cash. Cash flow accounting directs
attention towards this critical issue.
(b) Cash flow is more comprehensive than 'profit' which is dependent on accounting conventions and
concepts.
(c) Creditors of the business (both long and short term) are more interested in an enterprise's ability
to repay them than in its profitability. While 'profits' might indicate that cash is likely to be
available, cash flow accounting gives clearer information.
(d) Cash flow reporting provides a better means of comparing the results of different companies than
traditional profit reporting.
262.
•
•
•
•
•
B
A,B
B.C
all of them
A
Snapshot from Statement of financial position
20X2
20X1
$'000
$'000
Current assets
Inventory
24
20
Trade receivables
76
58
Bank
48
56
Looking at the figure, please calculate total cash flows from trade receivables
263.
•
•
•
•
•
58000
18000
76000
-58000
-18000
Snapshot from Statement of financial position
20X2
20X1
$'000
$'000
Current Liabilities
Trade payables
12
6
Taxation
102
86
264.
Looking at the figure, please calculate total cash flows from trade payables
•
•
•
•
•
18000
6000
-6000
12000
-12000
Snap from Statement of financial position
2019
$'000
Current assets
Inventory
24
Trade receivables
76
Bank
48
265.
2020
$'000
20
58
56
Looking at the figure, please calculate total cash flows from inventories
•
•
•
•
•
4000
-20000
24000
-4000
-24000
Snapshot from Statement of financial position
20X2
20X1
$'000
$'000
Current assets
Inventory
24
20
Trade receivables
76
58
Bank
48
56
266.
Looking at the figure, please calculate total cash flows from inventories
•
•
•
•
•
4000
-20000
24000
-4000
-24000
Boggis Co had the following transactions during the year.
(a) Purchases from suppliers were $19,500, of which $2,550 was unpaid at the year end. Brought
forward payables were $1,000.
(b) Wages and salaries amounted to $10,500, of which $750 was unpaid at the year end. The
accounts for the previous year showed an accrual for wages and salaries of $1,500.
(c) Interest of $2,100 on a long-term loan was paid in the year.
(d) Sales revenue was $33,400, including $900 receivables at the year end. Brought forward
receivables were $400.
(e) Interest on cash deposits at the bank amounted to $75.
Calculate total cash outflow
267.
•
•
•
•
Boris Co had the following transactions during the year.
(a) Purchases from suppliers were $19,500, of which $2,550 was unpaid at the year end. Brought
forward payables were $1,000.
(b) Wages and salaries amounted to $10,500, of which $750 was unpaid at the year end. The
accounts for the previous year showed an accrual for wages and salaries of $1,500.
(c) Interest of $2,100 on a long-term loan was paid in the year.
(d) Sales revenue was $33,400, including $900 receivables at the year end. Brought forward
receivables were $400.
(e) Interest on cash deposits at the bank amounted to $75.
Calculate total cash inflow
268.
•
•
•
•
•
32900
33400
31300
32975
32075
Boggis Co had the following transactions during the year.
(a) Purchases from suppliers were $19,500, of which $2,550 was unpaid at the year end. Brought
forward payables were $1,000.
(b) Wages and salaries amounted to $10,500, of which $750 was unpaid at the year end. The
accounts for the previous year showed an accrual for wages and salaries of $1,500.
(c) Interest of $2,100 on a long-term loan was paid in the year.
(d) Sales revenue was $33,400, including $900 receivables at the year end. Brought forward
receivables were $400.
(e) Interest on cash deposits at the bank amounted to $75.
Calculate total cash inflow
269.
•
•
•
•
•
32075
33400
31300
32975
32900
Using indirect method of cash flow statement, which of the below changes are considered as cash outflow
A. Decrease in inventory
B. Increase in inventory
C. Decrease in trade receivables
D. Increase in trade receivables
E. Decrease in trade payables
F. Increase in trade payables
270.
•
•
•
•
•
271.
32975
29000
31300
19500
B, C, F
A, D, F
B, C, E
B, D, E
B, D, F
Using indirect method of cash flow statement, which of the below changes are considered as cash inflow
A. Decrease in inventory
B. Increase in inventory
C. Decrease in trade receivables
D. Increase in trade receivables
E. Decrease in trade payables
F. Increase in trade payables
•
•
•
•
•
B, D, F
A, D, F
B, C, E
A, C, F
B, C, F
Which of the items below are related to financing activities of cash flows
A. Cash payments to owners to acquire or redeem the enterprise's shares
B. Cash receipts from sales of property, plant and equipment, intangibles and other non-current assets
C. Cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other short- or longterm borrowings
D. Cash payments to acquire shares or debentures of other enterprises
E. Cash repayments of amounts borrowed
F. Cash payments to suppliers for goods and services
G. Cash payments to and on behalf of employees
272.
•
•
•
•
•
C,E,F
A,D,G
D,F,G
A,C,E
A,B,C
Which of the items below are related to investing activities of cash flows
A. Cash payments to and on behalf of employees
B. Cash receipts from the repayment of advances and loans made to other parties
C. Cash proceeds from issuing shares
D. Cash payments to owners to acquire or redeem the enterprise's shares
E. Cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other short- or longterm borrowings
F. Cash advances and loans made to other parties
273.
•
•
•
•
•
A, B
C,D
B, F
F,E
B,D
Which of the items below are related to operating activities of cash flows
A. Cash receipts from the sale of goods and the rendering of services
B. Cash receipts from sales of property, plant and equipment, intangibles and other non-current
assets
C. Cash payments to acquire shares or debentures of other enterprises
D. Cash receipts from sales of shares or debentures of other enterprises
E. Cash advances and loans made to other parties
F. Cash payments to suppliers for goods and services
G. Cash receipts from the repayment of advances and loans made to other parties
H. Cash receipts from royalties, fees, commissions and other revenue
274.
•
•
•
•
•
A,F,G
C,B,F
C,D,B
A, F, H
G,F,B
A company has the following extract from a statement of financial position.
20X7 20X6
$'000 $'000
Share capital
2,000 1,000
Share premium
500
–
Loan stock
750 1,000
If there had been a bonus issue of 500,000 shares of $1 each during the year, what is the cash flow from financing activities for the year?
275.
•
•
•
•
•
$1,100 inflow
$1,250 outflow
$750 inflow
$1,100 outflow
$1,250 inflow
A company has the following extract from a statement of financial position.
20X7 20X6
$'000 $'000
Share capital
2,000 1,000
Share premium
500
–
Loan stock
750 1,000
If there had been a bonus issue of 500,000 shares of $1 each during the year, what is the cash flow from financing activities for the year?
A $1,250 inflow
B $750 inflow
C $750 outflow
D $1,250 outflow
E $1,100 inflow
F $1,100 outflow
276.
•
•
•
•
•
F
A
C
B
D
A company has the following information about property, plant and equipment.
20X7 20X6
$'000 $'000
Cost
750 600
Accumulated depreciation
250 150
Carrying amount
500 450
Plant with a carrying amount of $75,000 (original cost $90,000) was sold for $30,000 during the year.
What is the cash flow from investing activities for the year?
277.
•
•
•
•
•
$95,000 outflow
$95,000 inflow
$90,000 outflow
$210,000 outflow
$210,000 inflow
A company has the following information about property, plant and equipment.
20X7 20X6
$'000 $'000
Cost
750 600
Accumulated depreciation
250 150
Carrying amount
500 450
Plant with a carrying amount of $75,000 (original cost $90,000) was sold for $30,000 during the year.
What is the cash flow from investing activities for the year?
A $95,000 inflow
B $210,000 inflow
C $210,000 outflow
D $95,000 outflow
E $90,000 inflow
F $90,000 outflow
278.
•
•
•
•
•
B
F
A
C
D
Which of the following headings is not a classification of cash flows in IAS 7?
A Operating
B Investing
C Administration
D Financing
279.
•
•
•
•
•
B
C,D
D
C
A
Date Co owns 100% of the ordinary share capital of Prune Co. The following balances relate to Prune Co.
Dates
At acquisition At 31.12.X8
Tangible NCAs
Freehold land
500
500 Plant and equipment
350
450 Total
850
950
280.
At acquisition, the fair value of Prune Co's land was $50,000 more than shown in the financial
statements of Prune Co. At 31 December 20X8, Date Co's financial statements show a total tangible
non-current asset balance of $1,250,000.
What amount should be included in the consolidated financial statements of the Date group at
31 December 20X8 for tangible non-current assets?
•
•
•
•
•
1700000
1000000
2250000
1850000
2200000
Breakspear Co purchased 600,000 of the voting equity shares of Fleet Co when the value of the non-controlling interest in Fleet Co is
$150,000. The following information relates to Fleet at the acquisition date.
At acquisition Share capital $0.5 ordinary shares
500 Retained earnings
150 Revaluation surplus
50
Total
700
281.
The goodwill arising on acquisition is $70,000. What was the consideration paid by Breakspear Co for the investment in Fleet Co?
•
•
•
•
•
500000
570000
770000
620000
420000
On 1 January 20X0 Alpha Co purchased 90,000 ordinary $1 shares in Beta Co for $270,000. At that date Beta Co's retained earnings
amounted to $90,000 and the fair values of Beta Co's assets at acquisition were equal to their book values.
Three years later, on 31 December 20X2, the statements of financial position of the two companies were:
Sundry net assets
Shares in Beta
282.
Share capital
Ordinary shares of $1 each
Alpha Co
230,000
180,000
410,000
Beta Co
260,000
–
260,000
200,000
410,000
100,000 Retained earnings
260,000
210,000
160,000
The share capital of Beta Co has remained unchanged
since 1 January 20X0. The fair value of the noncontrolling interest at acquisition was $42,000.
What should the figure for retained earnings be in the group's consolidated statement of financial
position at 31 December 20X2?
•
•
•
•
•
183000
300000
250000
273000
200000
On 1 January 20X0 Alpha Co purchased 90,000 ordinary $1 shares in Beta Co for $270,000. At that date Beta Co's retained earnings
amounted to $90,000 and the fair values of Beta Co's assets at acquisition were equal to their book values.
Three years later, on 31 December 20X2, the statements of financial position of the two companies were:
Sundry net assets
Shares in Beta
283.
Share capital
Ordinary shares of $1 each
Alpha Co
230,000
180,000
410,000
Beta Co
260,000
–
260,000
200,000
410,000
100,000 Retained earnings
260,000
210,000
160,000
The share capital of Beta Co has remained unchanged
since 1 January 20X0. The fair value of the noncontrolling interest at acquisition was $42,000.
What amount should appear in the group's consolidated statement of financial position at
31 December 20X2 for non-controlling interest?
•
•
•
•
•
30000
42000
58000
51000
49000
On 1 January 20X0 Alpha Co purchased 90,000 ordinary $1 shares in Beta Co for $270,000. At that date Beta Co's retained earnings
amounted to $90,000 and the fair values of Beta Co's assets at acquisition were equal to their book values.
Three years later, on 31 December 20X2, the statements of financial position of the two companies were:
Sundry net assets
Shares in Beta
284.
Share capital
Ordinary shares of $1 each
Alpha Co
230,000
180,000
410,000
Beta Co
260,000
–
260,000
200,000
410,000
100,000 Retained earnings
260,000
210,000
160,000
The share capital of Beta Co has remained unchanged
since 1 January 20X0. The fair value of the noncontrolling interest at acquisition was $42,000.
What amount should appear in the group's consolidated statement of financial position at
31 December 20X2 for goodwill?
•
•
•
•
•
52000
80000
122000
212000
200000
Which of the following statements, if any, are correct in relation to accounting for associates?
(1) Equity accounting will always be used when an investing entity holds between 20% – 50% of the equity shares in another entity.
285.
(2) Dividends received from an investment in associate will be presented as investment income in the consolidated financial statements.
•
•
•
•
•
Correct Incorrect
Correct Correct
Incorrect Correct
None of them
Incorrect Incorrect
On 1 October 20X5, Luton acquired seventy-five per cent of the issued equity capital of Bedford. In exchange for gaining control of
Bedford, Luton made immediate cash payment of $4.50 per share acquired and also issued one new share for each share acquired. At the
date of acquisition, Bedford had issued share capital of fifteen million shares of $1 nominal value and a share premium account balance
of $5 million. On 1 October 20X5, Bedford had retained earnings of $76.875 million and the fair value of the non-controlling interest in
Bedford was $27 million. Bedford had a freehold factory that had a fair value of $2 million in excess of its carrying amount at the date
of acquisition. The fair value of a $1 equity share of Luton at the date of acquisition was $5.00 per share.
286.
What was goodwill on acquisition of Bedford for inclusion in the consolidated financial statements of Luton for the year ended 30
September 20X6?
•
$39 million
•
•
•
•
$42 million
$40 million
$35 million
$37 million
Pluton acquired sixty per cent of the issued equity share capital of Splinter on 1 January 2020. On that date, Pluton paid $3 cash per
share acquired and also issued two shares (nominal value $1 per share) in exchange for each Splinter share acquired. At the date of
acquisition, Splinter had ten million equity shares of $1 nominal value in issue, plus a share premium account balance of $10 million
and had retained earnings of $50 million. The fair value of the non-controlling interest in Splinter at the date of acquisition was $14
million. The fair value of an equity share in Plank and Splinter were $4.50 and $1.50 respectively at 1 January 2020. What was goodwill
on acquisition of Splinter for inclusion in the consolidated financial statements of Pluton for the year ended 31 December 2020?
287.
•
•
•
•
•
$2 million
$4 million
$26 million
$16 million
$19 million
Plank acquired sixty per cent of the issued equity share capital of Splinter on 1 January 20X2. On that date, Plank paid $3 cash per share
acquired and also issued two shares (nominal value $1 per share) in exchange for each Splinter share acquired. At the date of
acquisition, Splinter had ten million equity shares of $1 nominal value in issue, plus a share premium account balance of $10 million
and had retained earnings of $50 million. The fair value of the non-controlling interest in Splinter at the date of acquisition was $14
million. The fair value of an equity share in Plank and Splinter were $4.50 and $1.50 respectively at 1 January 20X2.
288.
What was goodwill on acquisition of Splinter for inclusion in the consolidated financial statements of Plank for the year ended 31
December 20X2?
•
•
•
•
•
$26 million
$4 million
$19 million
$2 million
$16 million
On 1 July 20X4 Lion paid $20 million to acquire seventy per cent of the issued equity capital of Tiger. For the year ended 31 December
20X4, Tiger had earned profit after tax of $2 million. Tiger had retained earnings of $10 million at 1 January 20X4. At the date of
acquisition, Tiger had issued equity capital of $8 million and the fair value of the noncontrolling interest at that date was $6 million.
Based upon the available information,
289.
What was goodwill on acquisition of Tiger for inclusion in the Lion consolidated financial statements for the year ended 31 December
20X4?
•
•
•
•
•
10000
11000
8000
9000
7000
Entity C acquired eighty per cent of the issued equity shares of entity D by paying cash of $3.00 per share plus exchanging three shares
in entity C for every five shares acquired in entity D. At that date, entity D had issued equity capital of two hundred and fifty thousand
shares. At the date of acquisition, the fair value of an equity share in entity C was $3.50 and the fair value of an equity share in entity D
was $2.00. The nominal value per share of both entities was $1.00 per share.
290.
What was the fair value of consideration paid by entity C to gain control of entity D?
•
•
•
•
•
1200000
1300000
1200000
1020000
1250000
Entity Alfa acquired sixty per cent of the issued equity shares of entity Beta by exchanging three shares in entity A for every two shares
acquired in entity Beta. At that date, entity B had issued equity capital of one hundred thousand shares. At the date of acquisition, the
fair value of an equity share in entity Alfa was $3.50 and the fair value of an equity share in entity Beta was $2.00. The nominal value
per share of both entities was $1.00 per share. What was the fair value of consideration paid by entity Alfa to gain control of entity
Beta?
291.
•
70000
•
•
•
•
90000
180000
315000
80000
Entity A acquired sixty per cent of the issued equity shares of entity B by exchanging three shares in entity A for every two shares
acquired in entity B. At that date, entity B had issued equity capital of one hundred thousand shares. At the date of acquisition, the fair
value of an equity share in entity A was $3.50 and the fair value of an equity share in entity B was $2.00. The nominal value per share of
both entities was $1.00 per share.
292.
What was the fair value of consideration paid by entity A to gain control of entity B?
•
•
•
•
•
70000
80000
315000
180000
90000
IFRS 10 Consolidated Financial Statements specify three necessary elements to determine whether or not one company controls
another.
293.
Which one of the following is not one of the three necessary elements to determine whether one entity has control of another?
•
•
•
•
•
The ability to use power over the other entity to affect the amount of investor returns
None of them
Exposure or rights to variable returns from involvement in the other entity
Power over the other entity
The ability to exercise significant influence over another entity
Which of the following companies are subsidiaries of Gamma Co?
Zeta Co: Gamma Co owns 51% of the non-voting preference shares of Zeta Co
Iota Co: Gamma Co has three representatives on the board of directors of Iota Co. Each director can cast 10 votes each out of the total of
40 votes at board meetings.
Kappa Co: Gamma Co owns 75% of the ordinary share capital of Kappa Co, however Kappa Co is located overseas and is subject to tax
in that country.
294.
A Zeta Co, Iota Co and Kappa Co
B Zeta Co and Kappa Co
C Iota Co and Kappa Co
D Zeta Co and Iota Co
•
•
•
•
•
B
None of them
D
A
C
Fanta Co acquired 100% of the ordinary share capital of Tizer Co on 1 October 20X7.On 31 December 20X7 the share capital and
retained earnings of Tizer Co were as follows:
$'000
Ordinary shares of $1 each
400
Retained earnings at 1 January 20X7
100
Retained profit for the year ended 31 December 20X7 80
580
The profits of Tizer Co have accrued evenly throughout 20X7. Goodwill arising on the acquisition of Tizer Co was $30,000.What was
the cost of the investment in Tizer Co?
295.
•
•
•
•
•
$580,000
$400,000
$610,000
$590,000
$530,000
Venus acquired 80 % of the issued equity shares of Rod for $43 million on 1 March 20X8. Rod had retained earnings of $15 million at 1
July 20X7 and made a profit after tax of $6 million for the year ended 30 June 20X8. At the date of acquisition, Rod had issued share
capital of $25 million and the fair value of the non-controlling interest was $10 million. On 1 March 20X8 the fair value of freehold land
and buildings owned by Rod was $1 million in excess of their carrying amount. Based upon the available information, what was
goodwill an acquisition of Rod for inclusion in the Venus consolidated financial statements for the year ended 30 June 20X8?
296.
•
•
•
•
•
$16.0 million
20.0 million
4.0 million
$8.0 million
$6.0 million
Which of the following investments of Coffee should be equity accounted in the consolidated financial statements?
(1) 40% of the non-voting preference share capital in Tea Co
(2) 18% of the ordinary share capital in Café Co with two of the five directors of Coffee Co on the board of Café Co
(3) 50% of the ordinary share capital of Choc Co, with five of the seven directors of Coffee Co on the board of Choc Co
297.
•
•
•
•
•
(1) and (2)
(3) only
(2) only
(2) and (3) only
(1) and (3) only
At 1 January 20X8 Orion acquired 65% of the share capital of Barlow for $300,000. At that date the share capital of Barlow consisted of
400,000 ordinary shares of 50c each and
its reserves were $60,000. At 31 December 20X9 the reserves of Orions and Barlow were as follows:
Orion
$200,000
Barlow
$75,000
The fair value of the non-controlling interest was valued at $50,000 at the date of acquisition.
In the consolidated statement of financial position of Orions and its subsidiary Barlow at 31 December 20X9, what amount should
appear for non-controlling interest?
298.
•
•
•
•
•
$76,250
$55,250
$50,000
$5,250
$26,250
Which of the following would normally indicate that one entity has significant influence over the activities of another entity?
299.
•
•
•
•
•
Ownership of over fifty per cent of the equity shares of another entity
Ownership of between twenty per cent and fifty per cent of the equity shares of
another entity
Ownership of some equity shares in another entity
Ownership of the majority of the equity share capital of that another entity
Ownership of up to twenty per cent of the equity shares of another entity
Which of the following would normally indicate that one entity has control over the activities of another?
300.
•
•
•
•
•
Ownership of between twenty per cent and fifty per cent of the equity shares of
another entity
Ownership of over fifty per cent of the equity shares of another entity
Ownership of up to twenty per cent of the equity shares of another entity
Ability to appoint at least one person to the board of directors of another entity
Ownership of some equity shares in another entity
Salt owns 70% of Pepper and sells goods to Pepper valued at $1,044 at a mark-up of 20%.40% of these goods were sold on by Pepper to
external parties at the year end.
What is the provision for unrealised profit (PURP) adjustment in the group financial statements?
301.
•
•
•
$125.28
$104.40
$69.60
•
•
$83.52
$31.32
At 1 January 20X6 Gary acquired 60% of the share capital of Barlow for $35,000. At that date the share capital of Barlow consisted of
20,000 ordinary shares of $1 each and its reserves were $10,000. At 31 December 20X9 the reserves of Gary and Barlow were as
follows:
Gary
$40,000
Barlow
$15,000
At the date of acquisition the fair value of the non-controlling interest was valued at $25,000.
In the consolidated statement of financial position of Gary and its subsidiary Barlow at 31 December 20X9, what amount should appear
for non-controlling interest?
302.
•
•
•
•
•
$28,000
$27,000
$25,000
$31,000
$29,000
At 1 January 20X8 Tom acquired 80% of the share capital of Jerry for $100,000. At that date the share capital of Jerry consisted of
50,000 ordinary shares of $1 each and its reserves were $30,000. At 31 December 20X9 the reserves of Tom and Jerry were as follows:
Tom
$400,000
Jerry
$50,000
In the consolidated statement of financial position of Tom and its subsidiary Jerry at 31 December 20X9, what amount should appear for
group reserves?
303.
•
•
•
•
•
$438,000
$416,000
$404,000
$440,000
$400,000
Which of the following statements is/are incorrect?
1 A Co owns 25% of the ordinary share capital of B Co, which means that B Co is an associate of A Co.
2 C Co can appoint 4 out of 6 directors to the board of D Co, which means that C Co has control over D Co.
3 E Co has the power to govern the financial and operating policies of F Co, which means that F Co is an associate of E Co.
4 G Co owns 19% of the share capital of H Co, but by agreement with the majority shareholder, has control over the financial and
operating policies of H Co, so H Co is an associate of G Co.
304.
•
•
•
•
•
1 and 2 only
3 and 4 only
4 only
2 and 3 only
1, 2 and 3 only
Volcano Co acquired 75% of the equity share capital of Lava Co on 1 September 20X3. The retained
profits of the two individual companies at the beginning and end of their financial year were as follows.
Volcano Co
Lava Co
$’000
$’000
Retained earnings at 1 January 20X3
596
264
Retained earnings at 31 December 20X3 650
336
What is the parent company’s share of consolidated retained earnings that should be reported in the consolidated statement of financial
position of the Volcano Group at 31 December 20X3?
305.
•
•
•
•
•
$674,000
$668,000
$704,000
$614,000
$722,000
On 1 August 2019 P purchased 18 million of the 24 million $1 equity shares of S. The acquisition was through a share exchange of two
shares in P for every three shares in Sardonic.The market price of a share in P at 1 August 2019 was $5.75. What is the fair value of the
consideration transferred for the acquisition of Sardonic?
306.
•
•
•
$103.5 million
$69 million
$92 million
•
•
$207 million
$155.25 million
On 1 August 20X7 Patronic purchased 18 million of the 24 million $1 equity shares of Sardonic. The acquisition was through a share
exchange of two shares in Patronic for every three shares in Sardonic.The market price of a share in Patronic at 1 August 20X7 was
$5.75.
What is the fair value of the consideration transferred for the acquisition of Sardonic?
307.
•
•
•
•
•
$103.5 million
$69 million
$92 million
$207 million
$155.25 million
Mico Co acquired 90% of the $100,000 ordinary share capital of Minnie Co for $330,000 on 1 January 2019 when the retained earnings
of Minnie Co were $156,000. At the date of acquisition the fair value of plant held by Minnie Co was $20,000 higher than its carrying
amount. The fair value of the non-controlling interest at the date of acquisition was $75,000.
What is the goodwill arising on the acquisition of Minnie Co?
308.
•
•
•
•
•
$149,000
$129,000
$54,000
$74,000
$169,000
Micro Co acquired 90% of the $100,000 ordinary share capital of Minnie Co for $330,000 on 1 January 20X9 when the retained
earnings of Minnie Co were $156,000. At the date of acquisition the fair value of plant held by Minnie Co was $20,000 higher than its
carrying amount. The fair value of the non-controlling interest at the date of acquisition was $75,000.
What is the goodwill arising on the acquisition of Minnie Co?
309.
•
•
•
•
•
$149,000
$129,000
$54,000
$74,000
$169,000
Which of the following should be accounted for in the consolidated financial statements of Company A
using equity accounting?
1 An investment in 51% of the ordinary shares of W Co
2 An investment in 20% of the preference (non-voting) shares of X Co
3 An investment in 33% of the ordinary shares of Y Co
4 An investment in 20% of the ordinary shares of Z Co, and an agreement with other shareholders
to appoint the majority of the directors to the board of Z Co
310.
•
•
•
•
•
3 and 4 only
3 only
2 and 3 only
2 only
1 and 4 only
Which of the following statements is/are correct?
1 If a company owns more than 50% of the ordinary shares of another company, the investment will always be classified as a
subsidiary.
2 Consolidated accounts are required for a group of companies in order to represent the legal form, rather than the substance, of the
relationship between the parent and its
subsidiaries.
3 An trade investment is an entity in which an investor has significant influence, which is neither a subsidiary or a joint venture of the
investor.
311.
•
•
•
•
•
1 only
None of the statements are correct
2 only
All three statements are correct
1 and 2 only
The following figures related to Sanderstead Co and its subsidiary Croydon Co for the year ended
31 December 20X9.
Sanderstead Co
Croydon Co
$
$
Revenue
600,000
300,000
Cost of sales
(400,000)
(200,000)
Gross profit
200,000
100,000
During the year Sanderstead Co sold goods to Croydon Co for $20,000, making a profit of $5,000.
These goods were all sold by Croydon Co before the year end.
What are the amounts for total revenue and gross profit in the consolidated statement of profit
or loss of Sanderstead Co for the year ended 31 December 20X9?
312.
•
•
•
•
•
Revenue
$880,000
Revenue
$900,000
Revenue
$905,000
Revenue
$900,000
Revenue
$880,000
Gross profit
$295,000
Gross profit
$300,000
Gross profit
$305,000
Gross profit
$295,000
Gross profit
$300,000
Hardy has 90% subsidiary, Lawrence. During the year ended 31 December 20X2 Lawrence sold goods to Hardy for $25,000 which was
at mark up of 25%. At 31 December 20X2 $10,000 of these goods remained unsold.
313.
In the consolidated statement of profit or loss for the year ended 31 December 20X2 what will gross profit be reduced by?
•
•
•
•
•
2500
3000
2250
1800
2000
Hardy has 90% subsidiary, Lawrence. During the year ended 31 December 20X2 Lawrence sold goods to Hardy for $25,000 which was
at mark up of 25%. At 31 December 20X2 $10,000 of these goods remained unsold.
314.
In the consolidated statement of profit or loss for the year ended 31 December 20X2 what will revenue be reduced by?
•
•
•
•
•
22750
18750
20000
25000
22000
P owns 80% of the equity share capital of S The profit after tax of S for the year ended 31 December 20X6 was $60 million. During
20X6, P sold goods to S for $4 million at cost plus 20%. At the year end 50% of these goods were left in the inventory of S.
315.
What is non-controlling interest share of the after-tax profit of S for the year ended 31 December 20X6?
•
•
•
•
•
$10.36 million
$11.68 million
$11.6 million
$12 million
$11.36 million
Mercedes Co has owned 100% of Benz Co since incorporation. At 31 March 20X9 extracts from their individual statements of financial
position were as follows.
Mercedes Co
Benz Co
$
$
Share capital
100,000
50,000 Retained earnings
450,000
120,000
Total
550,000
170,000
316.
During the year ended 31 March 20X9, Benz Co had sold goods to Mercedes Co for $50,000. Mercedes Co still had these goods in
inventory at the year end. Benz Co uses a 25% mark up on all goods.
What were the consolidated retained earnings of Mercedes Group at 31 March 20X9?
•
450000
•
•
•
•
580000
570000
560000
557500
Patience Co has a subsidiary, Bunthorne Co. During 20X1 Bunthorne Co sold goods to Patience Co for
$40,000 which was cost plus 25%. At 31 December 20X1 $20,000 of these goods remained unsold.
What will revenue will be reduced by in the consolidated statement of profit or loss for the year
ended 31 December 20X1?
317.
•
•
•
•
•
$20,000
$45,000
$32,000
$30,000
$40,000
Entity X acquired sixty per cent of the issued equity shares of entity Z on 1 October 20X3. During the year ended 31 December 20X3, X
and Z had sales revenue of $2 million and $1.5 million respectively. During the post-acquisition period, X made sales to Z of $0.1
million.
What is the group sales revenue figure for the year ended 31 December 20X3?
318.
•
•
•
•
•
$2.375 million
$2.5 million
$3.5 million
$2.275 million
$3.4 million
Entity T acquired eighty per cent of the issued equity shares of entity S on 1 July 20X6. The sales revenue for the year ended 31 March
20X7 for entity T and entity S was $5 million and $3 million respectively. During the post-acquisition period, S made sales to T of $0.5
million.
What is the group sales revenue figure for the year ended 31 March 20X7?
319.
•
•
•
•
•
$8.0 million
$5.0 million
$7.25 million
$7.5 million
$6.75 million
Entity F acquired eighty per cent of the issued equity shares of entity G on 1 July 20X6. The cost of sales for the year ended 31 March
20X7 for entity F and entity G were $10 million and $4 million respectively. During the post-acquisition period, F made sales to G of
$1.6 million. The intra-group sales were made at a mark-up of twenty-five per cent. At the year end, one quarter of the goods sold by F
to G remained within G’s inventory.
What was the group cost of sales figure for the year ended 31 March 20X7?
320.
•
•
•
•
•
$12.600 million
$12.320 million
$11.320 million
$11.480 million
$12.480 million
On 1 June 20X5 Hightown acquired control of Southport. During the year ended 30 September 20X5, Hightown and Southport had cost
of sales of $10 million and $6 million respectively. During the post-acquisition period, Hightown had sales to Southport of $1.8 million.
These sales had been made at a mark-up of twenty per cent and at the year end, one third of the goods remained within Southport’s
inventory.
What was the group cost of sales figure for the year ended 30 September 20X5?
321.
•
•
•
•
•
$10,800
$12,500
$11,300
$10,300
$10,000
WX acquired 75% of the equity share capital of YZ several years ago. At 31 March 20X6 WX had goods
in inventory valued at cost of $60,000, that had been purchased from YZ at a mark-up of 20%.
What is the effect on the profit attributable to the non-controlling interest, and the profit attributable to
the parent company for the year ended 31 March 20X6?
322.
•
•
•
•
•
X Co acquired 80% of the equity share capital in Y Co on 31 July 20X6. Extracts from the two
companies' statements of profit or loss for the year ended 30 September 20X6 were as follows:
X Co
Y Co
$'000
$'000
Revenue
3 400
2 400
Cost of sales
1 500
1 800
During the year ended 30 September 20X6, Y Co sold goods for $5 000 each month to X Co, at a mark up of 25%. At the end of the
year X Co had 50% of these goods left in inventory.
What is the group gross profit for the year ended 30 September 20X6?
323.
•
•
•
•
•
$2,004,000
$1,901,000
$1,901,000
$2,001,000
$1,904,000
Sand Co acquired 80% of the equity share capital of Sun Co several years ago. In the year to
31 December 20X4, Sand Co made a profit after taxation of $120,000 and Sun Co made a profit after
taxation of $35,000. During the year Sun Co sold goods to Sand Co at a price of $40,000. The profit
mark-up was 40% on the sales price. At 31 December 20X4, 25% of these goods were still held in the
inventory of Sand Co.
What profit is attributable to the parent company in the consolidated statement of profit or loss of the
Sand Group for the year to 31 December 20X4?
324.
•
•
•
•
•
$144,000
$154,000
$151,000
$148,000
$144,800
Tin Co acquired 90% of the equity share capital of Drum Co on 1 April 20X3. The following information relates to the financial year to
31 December 20X3 for each company.
Tin Co
Drum Co
$’000
$’000
Retained earnings at 1 January 20X3
840
170
Profit for the year
70
60
Retained earnings at 31 December 20X3
910
230
Neither company paid any dividends during the year.
What profit is attributable to the parent company in the consolidated statement of profit or loss of the
Tin Group for the year to 31 December 20X3?
325.
•
•
•
•
•
326.
decrease by $3,000; decrease by $9,000
None of them
no effect; decrease by $5,000
decrease by $2,500; decrease by $7,500
no effect; decrease by $12,000
$83,500
$108,000
$124,000
$110,500
$115,000
On 1 April 20X7 Possum Co acquired 60% of the share capital of Koala Co for $120,000. During the
year Possum Co sold goods to Koala Co for $30,000, including a profit margin of 25%. 40% of these
goods were still in inventory at the year end.
The following extract was taken from the financial statements of Possum Co and Koala Co at 31 March
20X8.
Possum Co
Koala Co
$'000
$'000
Revenue
750
400
Cost of sales
(420)
(100)
Gross profit
330
300
What is the consolidated gross profit of the Possum group at 31 March 20X8?
•
•
•
•
•
$640,600
$622,500
$633,000
$627,000
$627,600
Spring Co has held 75% of the equity share capital of Summer Co for many years. Cost of sales
for each entity for the year ended 31 December 20X8 was as follows.
$
Spring Co
200,000
Summer Co
160,000
During the year Spring Co sold goods costing $10,000 to Summer Co for $16,000. At the year
end, all these goods remained in inventory.
What figure should be shown as cost of sales in the consolidated statement of profit or loss of
the Spring Group for the year ended 31 December 20X8?
327.
•
•
•
•
•
$345,000
$344,000
$360,000
$350,000
$370,000
Tom owns 100% of Pepper. During the year Tom sold goods to Pepper for a sale price of $1,044,000 generating a profit margin of 25%.
40% of these goods had been sold on by Pepper to external parties at the end of the reporting period. Which one is true?
328.
•
•
•
•
•
$125,280 is adjusted for unrealised profit in Tom's consolidated P&L statement
$104,400 is adjusted for unrealised profit in Tom's consolidated P&L statement
$83,520 is adjusted for unrealised profit in Tom's consolidated P&L statement
$156,600 is adjusted for unrealised profit in Tom's consolidated P&L statement
$200,600 is adjusted for unrealised profit in Tom's consolidated P&L statement
Purple Co
Silver Co
$
79,300
(54,990)
24,310
Revenue
Cost of sales
Gross profit
329.
$
29,900
(17,940)
11,960
Purple Co had made sales to Silver Co during the year of $5,000. Purple Co had originally purchased the goods at a cost of $4,000. Half
of these items remained in the inventory of Silver Co at the year end.
What should be the consolidated revenue for the year ended 30 September 20X2?
•
•
•
•
•
$65,600
$70,430
$69,530
$68,430
$50,400
Purple Co
Revenue
Cost of sales
Gross profit
330.
Silver Co
$
79,300
(54,990)
24,310
$
29,900
(17,940)
11,960
Purple Co had made sales to Silver Co during the year of $5,000. Purple Co had originally purchased the goods at a cost of $4,000. Half
of these items remained in the inventory of Silver Co at the year end.
What should be the consolidated revenue for the year ended 30 September 20X2?
•
•
•
•
•
$105,700
$104,700
$104,200
$95,230
$108,700
P Co acquired 60% of the equity of S Co on 1 April 20X5. The statements of profit or loss of the two companies for the year ended 31
December 20X5 are set out below.
65,000 36,000
Profit before tax
39,000
24,000
331.
P Co
S Co
S Co ( 9 /12)
Revenue
27,000 Gross profit
105,000 44,000
62,000
32,000
24,000 Income taxes
18,000
170,000 80,000
33,000 Admin. expenses
23,000
8,000
60,000 Cost of sales
43,000
12,000
6,000 Profit for the year
9,000
What is the portion of profit attributable to the NCI for the year ended 31 December 20X5?
•
•
•
•
•
24000
18000
20000
10800
7200
P Co acquired 60% of the equity of S Co on 1 April 20X5. The statements of profit or loss of the two companies for the year ended 31
December 20X5 are set out below.
65,000 36,000
Profit before tax
39,000
24,000
332.
P Co
S Co
S Co ( 9 /12)
Revenue
27,000 Gross profit
105,000 44,000
62,000
32,000
24,000 Income taxes
18,000
170,000 80,000
33,000 Admin. expenses
23,000
8,000
60,000 Cost of sales
43,000
12,000
6,000 Profit for the year
9,000
What is the portion of profit attributable to the owner of S co for the year ended 31 December 20X5?
•
•
•
•
•
18000
25000
15000
10800
24000
Pumpkin has held 90% of the equity share capital of Squash for many years. Cost of sales for each entity for the year ended 31
December 20X3 was as follows.
Pumpkin
$100,000
Squash
$80,000
During the year, Squash sold goods costing $5,000 to Pumpkin for $8,000. At the year end, all these goods remained in inventory.
333.
What figure should be shown as cost of sales in the consolidated statement of profit or loss of the Pumpkin group for the year ended 31
December 20X3?
•
•
•
•
•
150000
140000
180000
200000
175000
Wheeler Co
Brookes Co
Cost of sales
Gross profit
Administrative expenses
Profit before tax
Income taxes
Profit for the year
334.
$'000
630
470
105
365
65
300
$'000 Revenue
300
200
150
50
10
40
1,100
500
Wheeler Co purchased 80% of the issued share capital of Brookes Co in 20X0.
What is the whole amount of profit attributable to the owner - Wheeler Co for the year ended 30 April 2007?
•
•
•
•
•
250
270
400
332
300
Keswick Co acquired 80% of the share capital of Derwent Co on 1 June 20X5. The summarised draft statements of profit or loss for
Keswick Co and Derwent Co for the year ended 31 May 20X6 are shown below:
Revenue
Cost of sales
Gross profit
Operating expenses
Profit before tax
Tax
Profit for the year
335.
Keswick Co
$000
8,400
(4,600)
3,800
(2,200)
1,600
(600)
1,000
Derwent Co
$000
3,200
(1,700)
1,500
(960)
540
(140)
400
During the year Keswick Co sold goods costing $1,000,000 to Derwent Co for $1,500,000. At 31 May 20X6, 30% of these goods
remained in Derwent Co’s inventory
What will be the consolidated profit for the year ended 31 May 20X6
•
•
•
•
•
1750
1500
1000
1250
1850
On 1 January 20X6, Hyndland acquired ninety per cent of the issued equity capital of Shawfield. In exchange for gaining control of
Shawfield, Hyndland made immediate cash payment of $3 per share acquired and also issued one new share of $0.5 nominal value per
share for each share acquired. At the date of acquisition, Shawfield had issued share capital of 200,000 shares of $1 nominal value, a
share premium account balance of $100,000 and retained earnings of $590,000. On 1 January 20X6, the fair value of the non-controlling
interest in Shawfield was $75,000. In addition, at the date of acquisition, Shawfield had several items of property plant and equipment
which together had a fair value of $90,000 and a carrying amount of $70,000. The fair value of a $0.5 equity share of Hyndland at 1
January 20X3 was $2.00 per share. There has been no impairment of goodwill. What was goodwill on acquisition of Shawfield for
inclusion in the consolidated financial statements of Hyndland for the year ended 30 September 20X6?
336.
•
•
•
•
•
$85,000
$360,000
$65,000
$75,000
$180,000
On 1 July 20X5 Huyton acquired sixty per cent of the equity shares of Speke. For the year ended 31 December 20X5, Huyton made a
profit after tax of $600,000 and Speke had a
profit after tax of $400,000. During the post-acquisition period, Huyton sold goods to Speke which included a profit element of $20,000.
At the year-end, one quarter of the goods sold by Huyton to Speke remained within the inventory of Speke. What was the noncontrolling interest share of the group profit after tax for the year
ended 31 December 20X5?
337.
•
•
•
•
•
$320,000
$160,000
$80,000
$120,000
$75,000
Honey Co acquired 75% of Bee Co on 1 April 20X3, paying $2 for each ordinary share acquired. The fair value of the non-controlling
interest at 1 April 20X3 was $300. Bee Co’s
individual financial statements as at 30 September 20X3 included:
Statement of financial position: $
Ordinary share capital ($1 each) 1,000
Retained earnings 710
––––––
1,710
––––––
Statement of profit or loss:
Profit after tax for the year 250
Profit accrued evenly throughout the year.
What was goodwill on acquisition at 1 April 20X3?
338.
•
•
•
•
•
$125
$215
$750
$90
$240
Panther acquired 80% of the equity shares in Seal on 31 August 20X2. The statements of profit or loss for Panther and Seal for the year
ended 31 December 20X2 were as follows:
Panther
Seal
$
$
Revenue
100,000
62,000
Cost of sales
25,000
16,000
During October 20X2, sales of $6,000 were made by Panther to Seal. None of these items remained in inventory at the year-end. What
is the consolidated revenue for Panther Group or the year ended 31 December 20X2?
339.
•
•
•
•
•
$162,000
$114,667
$121,000
$121,357
$156,000
Tulip acquired 70% of the equity shares of Daffodil on 1 March 20X2. The following extracts are from the individual financial
statements of profit and loss for each entity for the year ended 31 August 20X2:
Tulip
Daffodil
$
$
Revenue
61,000
23,000
Cost of sales
(42,700)
(13,800)
––––––– –––––––
Gross profit
18,300
9,200
What should be the consolidated gross profit for the year ended 31 August 20X2?
340.
•
•
•
•
•
$27,500
$22,900
$24,000
$21,300
$24,740
Venus acquired 75% of Mercury’s 100,000 $1 ordinary shares on 1 November 20X4. The consideration comprised $2 cash per share
plus one share in Venus for every share
acquired in Mercury. Shares in Venus have a nominal value of $1 and a fair value of $1.75. The fair value of the non-controlling interest
was $82,000 and the fair value of the net assets acquired was $215,500. What should be recorded as goodwill on acquisition of Mercury
in the consolidated Mercury Group financial statements?
341.
•
•
•
•
•
$91,500
$147,750
$241,500
$141,500
$151,500
Which of the following statements is most likely to indicate an investment by one entity in another which should be recognised and
accounted for as an associate?
342.
•
•
•
•
•
Ownership of less than 20% of the ordinary shares in another entity
Ownership of between 20% and 50% of the ordinary shares of another entity
Ownership of 100% of the ordinary shares of another entity
All of them
Ownership of over 50% and less than 100% of the ordinary shares of another entity
Stress acquired 100% of the ordinary share capital of Full on 1 October 20X7 when Full’s retained earnings stood at $300,000. Full’s
statement of financial position at 30 September 20X9 was as follows:
$000
Assets
Property, plant and equipment 1,800
Current assets 1,000
––––––
2,800
––––––
Equity and reserves
Share capital 1,600
Retained earnings 500
Current liabilities 700
––––––
2,800
––––––
On 1 October 20X7 the fair value of land included within Full’s non-current assets was $400,000 greater than the carrying amount.
Stress had non-current assets at 30 September 20X9 at a carrying amount of $2.2m. What is the total amount for non-current assets that
will appear on the consolidated statement of financial position at 30 September 20X9?
343.
•
•
•
•
•
$4,320,000
$4,400,000
$4,380,000
$5,400,000
$4,000,000
Salt owns 70% of Pepper and sells goods to Pepper valued at $1,044 at a mark-up of 20%.
40% of these goods were sold on by Pepper to external parties at the year end. What is the provision for unrealised profit (PURP)
adjustment in the group financial
statements?
344.
•
•
•
•
•
$69.60
$104.40
$83.52
$73.22
$125.28
The following extracts are provided from the statements of financial position of Dora and Diego at the year-end:
Dora
Diego
$000
$000
Current assets
Inventory
200
100
Receivables
540
160
Cash
240
80
Current liabilities
Payables
320
180
Dora’s statement of financial position includes a receivable of $40,000 due from Diego.
In the consolidated statement of financial position what will be the correct amounts for receivables and payables?
345.
•
•
•
•
•
Payables $306,000, Receivables
Payables $460,000, Receivables
Payables $294,000, Receivables
Payables $294,000, Receivables
Payables $360,000, Receivables
$660,000
$660,000
$694,000
$654,000
$760,000
At 1 January 20X8 Williams acquired 65% of the share capital of Barlow for $300,000. At that date the share capital of Barlow
consisted of 400,000 ordinary shares of 50c each and its reserves were $60,000. At 31 December 20X9 the reserves of Williams and
Barlow were as follows:
Williams $200,000
Barlow $75,000
The fair value of the non-controlling interest was valued at $50,000 at the date of acquisition. In the consolidated statement of financial
position of Williams and its subsidiary Barlow at 31 December 20X9, what amount should appear for non-controlling interest?
346.
•
•
•
•
•
$55,000
$55,250
$76,250
$5,250
$50,000
At 1 January 20X6 Gary acquired 60% of the share capital of Barlow for $35,000. At that date the share capital of Barlow consisted of
20,000 ordinary shares of $1 each and its
reserves were $10,000. At 31 December 20X9 the reserves of Gary and Barlow were as follows:
Gary $40,000
Barlow $15,000
At the date of acquisition the fair value of the non-controlling interest was valued at $25,000. In the consolidated statement of financial
position of Gary and its subsidiary Barlow at 31 December 20X9, what amount should appear for non-controlling interest?
347.
•
•
•
•
•
$28,000
$27,000
$24,000
$25,000
$29,000
At 1 January 20X6 Fred acquired 75% of the share capital of Barney for $750,000. At that date the share capital of Barney consisted of
20,000 ordinary shares of $1 each and its reserves were $10,000. The fair value of the non-controlling interest was valued at $150,000 at
1 January 20X6. In the consolidated statement of financial position of Fred and its subsidiary Barney at 31 December 20X9, what
amount should appear for goodwill?
348.
•
•
•
•
•
$750,000
$870,000
$150,000
$930,000
$720,000
At 1 January 20X8 Tom acquired 80% of the share capital of Jerry for $100,000. At that date the share capital of Jerry consisted of
50,000 ordinary shares of $1 each and its reserves were $30,000. At 31 December 20X9 the reserves of Tom and Jerry were as follows:
Tom $400,000
Jerry $50,000
In the consolidated statement of financial position of Tom and its subsidiary Jerry at 31 December 20X9, what amount should appear for
group reserves?
349.
•
•
•
•
•
$400,000
$416,000
$438,000
$426,000
$404,000
At 1 January 20X4 Yogi acquired 80% of the share capital of Bear for $1,400,000. At that date the share capital of Bear consisted of
600,000 ordinary shares of 50c each and its
reserves were $50,000. The fair value of the non-controlling interest was valued at $525,000 at the date of acquisition. In the
consolidated statement of financial position of Yogi and its subsidiary Bear at 31 December 20X8, what amount should appear for
goodwill?
350.
•
•
•
•
•
$630,000
$1,050,000
$550,000
$450,000
$1,575,000