MOCK EXAM FA2
1. When carrying out a reconciliation between the non-current asset in her asset register and the
assets which she can physically identify, Wilma could not find one of the assets which is recorded in
her asset register.
Could each of the following reasons explain the discrepancy?
YES
NO
The supplier’s invoice has not yet been received
No record was made when the asset was sold
2. Jerome’s receivables ledger has balances totaling $57,840. He has decided to write off an
irrecoverable debt of $320.His receivables allowance at the last year end was $1,368. He has
calculated that this should be revised to $1,247.
What is the resulting charge of Jerome’s statement of profit or loss?
$____________
3. “A business should apply the same accounting treatment to similar items from one accounting
period to the next”
What accounting principle is described by the statement above?
a) Going concern
b) Materiality
c) Consistency
d) Business entity
4. Which of the following statements describes the qualitative characteristics of RELEVANCE?
a) Information which can be easily be understood
b) Information which is free from material error
c) Information which is unbiased
d) Information which is capable of making a difference in decisions made by users
5. Since Petra commenced trading cost of the items she sells has increased. Petra is trying to decide
how her profit of the year will be affected by method she uses to value her inventory.
Which TWO of the following statements are correct?
a) First -in First-out will report a lower profit than weighted average
b) Weighted average will report a lower profit than first-in first-out
c) Petra should value the inventory on the basis that reports the lowest profit
d) Profit of the year is affected by the method of inventory valuation
6. Agnes sold some items of inventory for $1,950 cash. She has bought items for $2,622.
How are her assets and capital effected by sale?
a) Assets increased by $672, Capital increased by $2,622
b) Assets reduced by $2,622, Capital reduced by $672
c) Assets reduced by $672, Capital reduced by $672
d) Assets reduced by $1950, Capital reduced by $672
MOCK EXAM FA2
7. Wasim has prepared the following receivables reconciliation
$
Total of list of balances
19,738
Discount not recorded in personal account
__(29)__
Balance on receivables control account
19,709
Invoice not recorded in day book
1,627
21,336
Contra with payables ledger not recorded
(2,628)
18,708
What value should be reported in Wasim’s statement of financial position for receivables?
$
8. Elaine is preparing her bank reconciliation and has noted some errors
Do each of these errors require an entry in the bank account in her general ledger?
Yes
no
The bank has levied charges on her account
A cheque payable to S Wright has not been presented at the bank
9. Bill uses the first-in first-out (FIFO) method of inventory valuation. At 1 May 2018 , he had 60 units
of inventory at total value of $1,320. The movement in inventory in May 2018 was:
Receipts 14 May: 120 units at $22.20
26 May: 150 units at $22.30
Sales
18 May: 90 units
28 May: 80 units
What is the value of Bill’s inventory at 31 May 2018
$______________
10. Ethal’s trail balance includes following balances:
$
Trade receivables
136,853 DR
Receivables allowances
14,862 CR
Assuming there are no other balances, what current asset and current liability balances should be
reported on Ethal’s statement of financial position?
Nil
$14,862
$121,911
$136,853
Current liability
Current asset
11. Estelle has prepared the following journal entry:
DR Cash
$500
CR T Simpkins $500
What is the correct narrative for the journal entry?
MOCK EXAM FA2
12.
13.
14.
15.
a) Cash sale to T Simpkins
b) Cash received from T Simpkins
c) Cash paid to T Simpkins
d) Cash purchase from T Simpkins
At 31 October 2016 Gina Dobbs owed her suppliers $13,856. During the year to 31 October 2017 her
payments to suppliers totaled $95,886 and at 31 October 2017 she owed her suppliers $11,552.
What is the value of Gina’s credit purchases for the year to 31 October 2017?
$_______________
In the general ledger, what should the balance on the receivables ledger control account show?
a) The total amount owed by the business to its suppliers
b) The total amount due to the business from its customers
c) The difference between the amount owed to its suppliers and due from customers
d) The total amount received from customers during the accounting period
In the year to 30 November 2017, Grace Smith obtained a 25% markup on all her sales. Her sales for
the year totalled $120,600. Her opening inventory was valued at $9,340 and her closing inventory
was valued at $11,855
What was value of Grace’s purchases for the year 30 November 2017?
$____________
In the year 31 May 2019, Ina’s sales were $174,820 and her cost of sales was $139,856
What were her gross profit margin and markup?
20
25
Markup
Margin
16. A company has the following ledger accounts:
$
Table and chair sales
Receivables control account
$
3,000
Table sales
$
$
Receivables control account 2,250
Chair sales
$
$
Receivables control account 750
MOCK EXAM FA2
Which of the following accounting entries would result in the amounts shown in these accounts?
DR sales return $2,250
CR table sales $3000
DR receivables control account CR table sales $2,250
CR Chair sales $750
$3000
DR table sales return $2,250
DR chair sales return $750
CR receivables control account
$3000
DR table sales $2,250
DR chair sales $750
CR recievables control account
$3000
17. Does each of the following require an suspense account
Yes
o
The debit and credits of trail balance did not agree
o
A customer paid $190 to settle an invoice with value of $109
no
18. Val has extended and totalled her extended trial balance, but has not entered the profit or loss for the
period. The total of the statement of financial position debit column is less than the total of the
statement of financial position credit column
Which of the following is correct?
a) Val has made a profit, and the total of stamen of profit or loss debit column will be greater
than the total of the statement of profit or loss credit column
b) Val has made a loss, and the total of statement of profit or loss debit column will be less
than the total of statement of profit or loss credit column.
c) Val has made a loss, and the total of the statement of profit or loss debit column will be
greater than the total of statement of profit or loss credit column.
d) Val has made a profit, and the total of stamen of profit or loss debit column will be greater
than the total of statement of profit or loss credit column.
19. Do each of the following correctly describe why a bank reconciliation statement is prepared?
Yes
no
o To identify errors in cashbook.
o
o
o To identify entries which have been generated by the bank, but not
o
o
recorded in the cashbook.
20. P and Q are in partnership sharing profits equally.
On 30 June 2015, R joined the partnership and it was agreed that from that date all three partners
should share in profit equally.
In the year ended 31 december 2015, the profit amounted to$300,000, accruing evenly over the
year, after charging an irrecoverable debt of $30,000 which it was agreed to borne equally by P and
Q only.
MOCK EXAM FA2
21.
22.
23.
24.
25.
26.
What should P’s total profit share be for the year ended 31 december 2015?
$___________
Which of the following is the correct journal entry to record a credit note issued to a customer for
goods returned?
a) Dr sales return Cr cash
b) Dr cash Cr sales return
c) Dr trade receivables Cr sales returns
d) Dr sales return Cr trade receivables
At 1 November 2018 the value of Claudia’s net assets was $127,554. At 31 october 2019 the value
was $174,529. During the year to 31 October 2019 Claudia introduced $35,000 of capital and her
drawings were $17,150.
What was Claudia’s profit for the year to 31 October 2019?
$__________
Which of the following statements correctly describe current assets?
a) Assets which are used to conduct the organization’s current business
b) Assets which are not expected to be converted into cash in short term
c) Assets which are expected to be converted into cash in the short term
d) Assets which are currently located on the business premises
Simeon has the following ledger balances in his general ledger at 30 September 2018:
$
Capital
6,260
Cash at bank
890
Expenses
17,410
Non-current assets
31,845
Opening inventory
4,820
Purchases
71,470
Payables
6,930
Receivables
15,870
Sales
129,970
Simeon thinks there could be an error in the ledger as he thinks he thinks he may have posted only
one side of a journal entry.
What is the total of credit side of Simeon’s trail balance?
$____________
What is the purpose of trail balance?
a) To keep the assets and liabilities of the business separate from the personal assets and
liabilities of the business owners
b) To use instead of a set of final accounts if the business is small
c) To keep a record of the total value of a number of similar but individual items in the ledger
accounts
d) To highlight certain errors that may have occurred in the double entry accounting system
Bill obtains 25% margin on all his sales. In the year to 31 March 2010 he bought goods with the total
value of $69,000. His closing inventory cost $3,000 less than his opening inventory.
MOCK EXAM FA2
What is the value of bill’s sales in the year to 31 March 2010?
$____________
27. Shari is carrying out the reconciliation between the balance on her trade payables account in the
general ledger and the list of balances in the purchase ledger. She has found the following errors:
1. A credit balance on suppliers account has been listed as a debit balance
2. An invoice was recorded in purchase day book for the wrong value
3. No record has been made of discount received from supplier
Which of these errors require an entry in the trade payables account in the general ledger?
28.
29.
30.
31.
a) 1 and 2 only
b) 2 and 3 only
c) 1, 2 and 3
d) 1 and 3 only
James and Claude are in partnership sharing profit in the ratio 3:2. On 1 June 2017 they decide to
admit Ramon as a partner and change the profit sharing ratio to 3:2:1 to James Claude and Ramon
respectively.
Their capital account balances were as follows on 1 June 2017:
James ($)
Claude ($)
Capital accounts
68,000 Cr
52,000Cr
The goodwill of the partnership as been valued at $36,000. Ramon pays $14,000 into the
partnership. This includes $6,000 for his share of goodwill. Goodwill is not recorded in the accounts
What is James’ capital balance immediately after Ramon has been admitted as a partner?
a) $68,000
b) $71,600
c) $89,600
d) 54,400
Total of Kara’s extended trail balance are:
Statement of profit or loss
statement of financial position
Debit
Credit
Debit
Credit
$122,182
$113,528
$122,173
$130,827
What is Kara’s result for the year?
a) A profit of $8,654
b) A loss of $8,654
c) A profit of $8,645
d) A loss of $8,645
which of the following statement is correct?
a) Prepaid expenses reduce the value of assets
b) Accrued expenses increase the value of liabilities
c) An accrued expense is recorded when the payment is made
d) A prepayment arises when expense is incurred before it is paid
Gayle paid for office cleaning in cash. She made the following entries in the ledger:
MOCK EXAM FA2
Dr trade payables
Cr office cleaning expenses
Which accounts require an entry to correct this?
a) Office cleaning expense and cash only
b) Office cleaning expenses and trade payables only
c) Cash and trade payables only
d) Office cleaning expenses, cash and trade payables
32. In which of the following circumstances would an entry be made in non current register?
1) When an asset is traded in
2) When asset is scrapped
a) neither 1 nor 2
b) 2 only
c) 1 only
d) Both 1 and 2
33. When goods are sold to a customer on credit, what accounting entries should be recorded?
a) Dr sales account
Cr trade receivables account
b) Dr sales account
Cr cash account
c) Dr cash account
Cr sales account
d) Dr trade receivables account Cr sales account
34. When preparing the reconciliation between the balance on the receivables ledger account in her
general ledger and the total of the list of balances from personal ledger Avril discovered the
following errors:
1) An invoice of $375 was entered in the daybook as credit note
2) An addition error meant that a customer’s balance was understated in personal ledger
3) Avril agreed to offset a balance in receivables ledger against a balance in payables ledger,
but no entries were made
Which of the errors require an entry in general ledger?
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1 , 2 and 3
35. In Sally’s cash receipts for July the trade receivables column showed a total of $2500
What does this amount represent?
a) The amount owed to Sally by customers at the end of July
b) The discounts allowed to credit customers for July
c) The amount paid by credit customers during July
d) The amount invoiced to customers during July
36. On 1 January 2018, Paul purchased plant and equipment costing $90,000. Paul’s depreciation policy
is to use straight line basis over 10 years assuming a nil residual value
MOCK EXAM FA2
37.
38.
39.
40.
41.
What will be the effect on Paul’s profit and net assets for the year end December 2018 if he
changes his policy to the reducing balance basis at 30% per annum?
a) Profit will decrease by $18,000 and net assets will decrease by $18,000
b) Profit will increase by $18,000 and net assets will decrease by $18,000
c) Profit will increase by $9,000 and net assets will increase by $9,000
d) Profit will decrease by $18,000 and net assets will increase by $18,000
Mikel has been contacted by a customer because a part he supplied has damaged one of the
customer’s machines. The customer has asked Mikel to pay costs of $5,500
Mikel’s offer to pay $3000 has been refused by the customer leading to legal action. Mikel’s solicitor
has told him that court case will not take place until late 2021, and that it is almost certain that he
will be required to pay $4000
What provision should Mikel make in his statement of financial position at 20 April 2020?
a) $5,500
b) $4,000
c) $3,000
d) Nil
When the trail balance is extended in which column should the value of opening inventory be
entered?
a) Statement of profit or loss Dr
b) Statement of profit or loss Cr
c) Statement of financial position Dr
d) Statement of financial position Cr
Tony returned items of office stationery to his supplier and his supplier send him a credit note
What entries are required in Tony’s ledger?
a) Dr trade payables
Cr office stationery
b) Dr goods for resale – returns Cr trade payables
c) Dr trade payables
Cr goods for resale-returns
d) Dr office stationery
Cr trade payables
Joan has traded in a non-current asset. The entries in her journal include:
Dr non-current asset at cost
Cr asset disposal
What aspect of the transaction is recorded by this entry?
a) Transfer of the original cost of the old non-current asset on disposal
b) Cash payment for the purchase of new non-current asset
c) Cash Trade-in value of the old non-current asset
d) proceeds from disposal of the old non-current asset
Vikki is preparing her final accounts for the year to 31 October 2018. The most recent invoice in her
records for electricity was a charge of $1,647 for the three months to 31 August 2018.
What post trail balance adjustment should Vikki make?
a) $1,098 prepayment
b) $549 prepayment
c) $1,098 accrual
MOCK EXAM FA2
42.
43.
44.
45.
46.
d) $549 accrual
On 23 May 2017, Julie used cash to pay the rent on her business premises for the three months to
31 August 2017 in advance.
On 23 May 2017, how is Julie’s accounting equation effected by this transaction?
a) Assets reduced
liabilities unchanged capital unchanged
b) Assets unchanged
liabilities reduced
capital reduced
c) Assets unchanged
liabilities unchanged capital unchanged
d) Assets reduced
liabilities unchanged capital reduced
Which of the following items should be included in the calculation of the net profit for a
partnership?
1) Interest on loan from a partner
2) Salaries for employees
3) Salaries for partners
a) 1 and 3 only
b) 1 ,2 and 3
c) 2 and 3 only
d) 1 and 2 only
During the year to 30 April 2018 Trevor wrote off a debt of $563 as irrecoverable.
If in the year to 30 April 2019 Trevor receives the $563 which was written off how will his financial
statements for that year be affected by the receipt?
a) His receivables balance will be increased by $563
b) His profit will be reduced by $563
c) His receivables will be reduced by $563
d) His profit will be increased by $563
Which of the following statement is correct?
a) Financial statements of a sole trader must be prepared by a qualified accountant
b) Financial statements do not provide useful information to lenders
c) Financial statements are intended to meet the needs of a number of user groups
d) All information needs of the owner are met by the financial statements
Chimwe purchased a new non-current asset, and paid for this by cheque. At the same time, a bank
loan was raised to provide some funds needed for the purchase
What entry correctly records the purchase of non-current asset?
a) Dr non-current asset
Cr bank
b) Dr non-current asset
Cr bank loan
c) Dr bank
Cr non-current asset
d) Dr bank loan
Cr non-current asset
MOCK EXAM FA2
47. Are each of the following statement true or false?
True
false
If there is a difference between the balance on the receivables ledger
control account and the total of the list of balances from the receivables
ledger the balance on the control account is always correct
The receivables ledger control account balance must be correct if it agrees
with the total of the list of balances from the receivables ledger
48. Alec and Carl are in partnership sharing profits and losses in the ratio 3:2. The statement of profit or
loss for the year to 31 October 2018 reports a profit of $98,500
Interest on capital has been calculated as:
$
Alec
7,900
Carl
5,100
Both capital and current accounts are maintained in the books of partnership. Neither partner made
any drawings in the year to 31 October 2018
What is the increase in the balance on Carl’s current account in the year to 31 October 2018?
$_____________
49. Rosario sold goods to Dino on credit. Two weeks later Dino returned the goods
What general ledger entry should Rosario should make to record the return of the goods?
a) Dr receivables
Cr sales return
b) Dr sales return
Cr receivables
c) Dr purchase returns
Cr payables
d) Dr payables
Cr purchase returns
50. The bank account in Trish’s general ledger has a credit balance of $358
The difference between this balance and the balance on her bank statement is due to :
1) Trish incorrectly recording the value of a cheque paid to a supplier for $245 as $254
2) A lodgment of $283 that has still to be credited by bank
3) The bank charging interest of $104 on her overdraft
After correcting the bank account in Trish’s general ledger, which of the above items should appear as
an adjustment on the bank reconciliation statement?
a)
b)
c)
d)
1 only
2 only
1, 2 and 3
1 and 2 only