Financial
Accounting
June 2012
Time allowed: 2 hours
ALL 50 questions are compulsory and MUST be attempted.
Do not open this paper until instructed by the supervisor.
This question paper must not be removed from the examination
hall.
Kaplan Publishing/Kaplan Financial
Paper F3
ACCA REVISION MOCK
ACCA F3: FINANCIAL ACCOUNTING
© Kaplan Financial Limited, 2012
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2
KAPLAN PUBLISHING
REVISION MOCK QUESTIONS
ALL 50 questions are compulsory and MUST be attempted
1
2
Which of the items listed below could appear in a company’s statement of cash flows?
(i)
Dividends received.
(ii)
Bonus issue.
(iii)
Irrecoverable debts.
(iv)
Proceeds of a sale of a non-current asset.
(v)
Surplus on the revaluation of a non-current asset.
A
(i), (ii) and (iv)
B
(i), (ii) and (iii)
C
(i) and (iv)
D
(ii) and (v)
(2 marks)
The following bank reconciliation has been prepared by the company’s bookkeeper as at
31 July 20X9:
Overdraft per bank statement
Add: Unpresented cheques
Less: Lodgements/deposits credited
Bank overdraft per cash book
$
7,700
18,300
30,600
––––––
4,600
––––––
What is the correct balance per the cash book?
3
A
$4,600 overdraft
B
$4,600 positive
C
$20,000 positive
D
$20,000 overdraft
(2 marks)
A company lets out a number of properties. The total rent received in the year ended 31
July 20X9 was $902,400. The following amounts were received in advance or were in
arrears at the dates shown:
Rent received in advance
Rent in arrears ( all subsequently received )
31 July 20X9
$
61,300
33,500
1 August 20X8
$
27,600
41,700
What amount of rental income should appear in the statement of comprehensive income
for the year ended 31 July 20X9?
A
$944,300
B
$860,500
C
$821,700
D
$876,900
KAPLAN PUBLISHING
(2 marks)
3
ACCA F3: FINANCIAL ACCOUNTING
4
At 1 August 20X8 a company had receivables of $26,000 and an allowance for receivables
of $1,860.
During the year ended 31 July 20X9 credit sales totalled $300,000, payments from credit
customers were received amounting to $295,000 debts totalling $6,800 were written off. At
31 July 20X9 it was decided to write off further irrecoverable debts amounting to $2,600. At
31 July 20X9 it was decided to make an allowance for receivables of 10% at the year end.
What figure should appear in the company’s statement of comprehensive income for the
net irrecoverable debt expense for the year ended 31 July 20X9?
5
A
$11,260
B
$11,560
C
$9,700
D
$9,100
(2 marks)
Extracts from the income statement of XYZ Ltd for the year to 31/12/Y0 are provided
below:
Revenue
Cost of sales
Operating profit
$2,170,000
($682,000)
$258,000
What is the gross profit margin?
6
A
12%
B
38%
C
69%
D
42%
(2 mark)
On 1 August 20X8 Ernie was owed $45,300 by his credit customers. During the year
Ernie’s credit sales totalled $523,720. Discounts allowed totalled $3,500, returns from
customers were $2,800 and dishonoured cheques amounted to $4,800. On 31 July 20X9
Eric was owed $48,720 from his credit customers.
What was the amount received from credit customers during the year ended 31 July
20X9?
4
A
$509,200
B
$514,000
C
$525,640
D
$518,800
(2 marks)
KAPLAN PUBLISHING
REVISION MOCK QUESTIONS
7
Patel, a limited liability company, has provided the following details relating to motor
vehicles for the year ended 31 August 20X9:
1 September 20X8
1 November 20X8
1 January 20X9
1 March 20X9
1 March 20X9
Opening balance at cost
Disposals of car at cost
Purchase for cash for new vehicles
Acquired a new vehicle, details provided are:
− Part exchange allowance for an old car
− Cash paid
Cost of old car disposed
$
280,000
48,000
60,000
18,000
12,000
18,000
The company’s policy is to charge depreciation at 20% per year on the straight line basis,
with proportionate depreciation in the years of purchase and disposal.
What should be the depreciation charge for the year ended 31 August 20X9?
8
9
A
$57,200
B
$59,000
C
$64,400
D
$57,800
(2 marks)
Marble’s sales are $600,000, cost of sales $475,000. Mark up is:
A
126%
B
26%
C
21%
D
79%
(2 marks)
A business carried out an inventory count on 8 August 20X9 and valued its inventory at
cost of $17,800. During the period from 1 August to 8 August the following transactions
took place:
Purchases
$5,400
Sales
$8,160
The mark up was 20% on cost.
What is the correct value of closing inventory at cost at 31 July 20X9?
A
$19,200
B
$20,560
C
$18,928
D
$16,400
KAPLAN PUBLISHING
(2 marks)
5
ACCA F3: FINANCIAL ACCOUNTING
10
The following sales tax account has been provided by Bobby for the quarter ended 31 July
20X9. The account was prepared by an inexperienced book keeper.
Bal b/d (amount owing to the
tax authority)
Sales (sales tax element)
Bal b/d
Sales tax account
Bank (part payment on account
to the tax authority)
45,800
587,500
Purchases (sales tax element)
Purchases returns
(sales tax element)
Bal c/d
––––––
633,300
––––––
20,800
564,000
19,975
28,525
––––––
633,300
––––––
28,525
What is the correct sales tax balance for the quarter ended 31 July 20X9?
11
A
$21,475 debit
B
$68,475 credit
C
$28,525 credit
D
$48,500 credit
(2 marks)
A company had provided income tax for the previous year of $80,000 however, it paid
income tax of $77,000 this year. At the year-end, the company estimates that $76,000 is
owed in relation to income tax for the current year.
What amount will be shown in the statement of comprehensive income for the current
year-end in respect of the income tax?
12
A
$79,000
B
$76,000
C
$73,000
D
None of the above
(2 marks)
Coal Ltd acquired 60% of the ordinary share capital of Fire Ltd on 31/12/X8 for $120,000.
At this date the net assets of Fire Ltd were $150,000 and the fair value of the non
controlling interest was $45,000.
What was the good will arising on acquisition?
(2 marks)
6
KAPLAN PUBLISHING
REVISION MOCK QUESTIONS
13
Mistique Ltd made sales of $200,000. At the start of the period inventory was valued at
$20,000. At the end of the period Mistique Ltd had made a gross profit of $5,000 and held
inventory valued at $35,000. $20,000 of the purchases were paid in cash.
Their statement of financial position showed money owed from credit customers at
$75,000 and money owed for purchases at $35,000.
Mistique Ltd’s payable days were:
14
A
61 days
B
67 days
C
Insufficient detail to calculate
D
144 days
(2 marks)
An extract of the statements of financial position of Harry plc and its subsidiary William
plc at 31 December X9 are set out below:
Current Assets:
Inventory
Trade Receivables
Harry plc
William plc
$3,150
$2,000
$1,250
$1,500
In the year to 31 December X9 Harry plc sold inventory to William plc valued at $1,000, half
of these goods remained in the inventories giving rise to unrealised profit. Harry charged
William at cost plus a mark-up of 25%.
What is the value of inventory recorded in the group accounts for year end 31 Dec X9?
(2 marks)
15
Which of the following are books of prime entry?
(i)
Cash book
(ii)
Bank statements
(iii)
The journal
(iv)
Sales returns day book
(v)
The general ledger
A
All the above
B
(i), (ii) and (iii) and (iv)
C
(i), (iii) and (iv) and (v)
D
(i), (iii) and (iv)
KAPLAN PUBLISHING
(2 marks)
7
ACCA F3: FINANCIAL ACCOUNTING
16
17
Which of the accounting standards listed below give guidance on tangible and intangible
non-current assets?
A
IAS 2 and IAS 16
B
IAS 7 and IAS 10
C
IAS 16 and IAS 38
D
IAS 2 and IAS 7
(2 marks)
A company has provided the following balances:
Payables ledger control account
$18,000
List of total individual payables
$18,200
The book keeper has also provided the following additional information:
(i)
A credit purchase invoice amounting to $100 was not recorded anywhere.
(ii)
The purchase day book was undercast by $200.
(iii)
Debit balances totalling $100 were not included in the list of the total individual
payables balances.
What is the corrected balance on the payables ledger control account and the list of total
individual payables balances?
18
8
Payables ledger
control account
Total individual
payables balances
A
$18,300
$18,300
B
$18,300
$18,200
C
$17,900
$18,400
D
$18,200
$18,200
(2 marks)
Which of the items below would be included in the statement of changes in equity?
(i)
Opening balance of the share premium account.
(ii)
Profit for the year.
(iii)
Dividends proposed after the year end.
(iv)
Revaluation surplus.
(v)
Issue of shares.
A
All the above
B
(i), (ii) and (iii) and (iv)
C
(i), (ii) and (iv) and (v)
D
(i), (iii) and (iv) and (v)
(2 marks)
KAPLAN PUBLISHING
REVISION MOCK QUESTIONS
19
The following errors have been discovered in the records of Ami, a limited liability
company:
(i)
The rent account was credited with a payment of rent amounting to $3,000. The
bank account was correctly recorded.
(ii)
Credit sales totalling $2,000 were not recorded in the books.
(iii)
A payment of $89 was correctly recorded in the bank account but was debited in the
payables as $98.
What was the original suspense account figure before the above errors were discovered?
(2 marks)
20
Sara, a limited liability company, depreciates its plant and machinery at 20% per annum
on the reducing balance basis on assets held at the period end.
On 1 January 20X9 it held a machine which had cost $20,000 in the year ended 31
December 20X7. In the year ended 31 December 20X9 the company part-exchanged this
machine for a new machine. The amount paid for the new machine was $17,000 and a part
exchange allowance of $13,000 was allowed for the old machine.
What is the profit or loss on disposal of the old machine?
21
A
Profit $800
B
Profit $3,000
C
Loss $200
D
Profit $200
(2 marks)
Filo owns 70% of Pastry and sells goods to Pastry for $4,000 marking a profit margin of
25%. At the year end Pastry recorded 25% of these goods in closing inventory having
failed to find a buyer.
What is the unrealised adjustment required in the group accounts?
A
$250
B
$175
C
$1000
D
$200
KAPLAN PUBLISHING
(2 marks)
9
ACCA F3: FINANCIAL ACCOUNTING
22
William, a limited liability company, has the following building in its financial statements
as at 30 June 20X9:
Cost
Accumulated depreciation
Net book value
$1,200,000
$(300,000)
–––––––––
$900,000
–––––––––
It has been decided to revalue the property to $1,800,000 on 1 July 20X9.
What is the double entry to record the above revaluation?
$
23
A
Dr
Dr
Cr
Cost
Accumulated depreciation
Revaluation reserve
600,000
300,000
900,000
B
Dr
Cr
Cost
Revaluation reserve
900,000
900,000
C
Dr
Cr
Cost
Revaluation reserve
600,000
600,000
D
Dr
Cr
Cr
Revaluation reserve
Cost
Accumulated depreciation
900,000
600,000
300,000
(2 marks)
The following items are listed in the company’s financial statements as at 31 August
20X9:
Payables
Cash
Buildings
Receivables
Inventory
Bank overdraft
$
20,000
2,000
80,000
15,000
21,000
5,000
What is the capital at 31 August 20X9?
(2 marks)
10
KAPLAN PUBLISHING
REVISION MOCK QUESTIONS
24
25
Which of the following statements is incorrect?
A
Under the consistency concept items must always be treated in the same way even if
circumstances change.
B
According to the money measurement concept only items which can be objectively
expressed in monetary terms should be included in the financial statements.
C
The prudence concept involves an exercise of caution when making estimates in
financial statements. It therefore ensures that assets and income are not overstated
and losses and liabilities are not understated.
D
According to the materiality concept an item is material if its omission or
misstatement might reasonably be expected to influence the economic decisions of
the users.
(2 marks)
A company made a profit of $250,000 for the year after charging depreciation of $28,000.
During the year it paid off a loan of $50,000, made payments for non-current assets
totalling $90,000, issued shares for $100,000 and had an increase in inventories of $18,000.
What will be the increase in cash and bank balances at the end of the year?
26
A
$256,000
B
$192,000
C
$220,000
D
$260,000
(2 marks)
Handy, a limited liability company, has the following balances in its statement of financial
position as at 30 June 20X8 and 30 June 20X9:
Current liabilities
Taxation payable
Proposed dividends (declared before the year end)
Non-current liabilities
10% Loan notes
Capital and reserves
Retained profits
30 June
20X9
$
30 June
20X8
$
16,000
4,000
10,000
2,000
70,000
70,000
105,000
55,000
What is the profit before interest and tax of Handy for the year ended 30 June 20X9?
A
$82,000
B
$78,000
C
$77,000
D
$28,000
KAPLAN PUBLISHING
(2 marks)
11
ACCA F3: FINANCIAL ACCOUNTING
27
28
Which of the following is not a profitability ratio?
A
ROCE
B
Gross Profit Margin
C
Asset Turnover
D
Acid Test Ratio
(2 marks)
If Y Ltd’s ROCE is 26.4 % and its Operating Profit Margin is 26.7%, what is its asset
turnover to two decimal places?
(2 marks)
29
30
Which of the following statements is correct?
A
All research and development expenditure must be written off in the period during
which the expenditure is incurred
B
Dividends proposed after the year end must be accrued in the accounts
C
Contingent liabilities should always be provided in the accounts
D
A change in an accounting policy will result in a prior period adjustment
(2 marks)
The following information relates to Barbara’s business for the year ended 30 June 20X9:
Sales
Returns outwards
Opening inventory
Carriage outwards
Carriage inwards
Purchases
Goods withdrawn by the owner
Closing inventory
Discounts received
$
800,000
12,000
60,000
3,800
4,500
780,000
1,600
62,000
5,500
What is the expected gross profit for the year?
12
A
$31,100
B
$7,100
C
$62,455
D
$70,000
(2 marks)
KAPLAN PUBLISHING
REVISION MOCK QUESTIONS
31
Max acquired 100% of the share capital of Ruby on 1 Jan 20X7. At this time Ruby’s
retained earnings stood at $15,000. Below is an extract of the statements of financial
position of the two companies at the 31 Dec 20X9.
Share Capital
Share Premium
Retained Earnings
Max
$
100,000
20,000
50,000
Ruby
$
50,000
5,000
20,000
The group retained earnings figured included in the consolidated statement of financial
position as at 31 Dec X9 is:
32
A
$50,000
B
$70,000
C
$65,000
D
$55,000
(2 marks)
Camilla, is a sole trader, she had 100 units of inventory which cost $2.20 per unit at the
beginning of January. Throughout the month she made the following sales and purchases:
Units
Price
$
Value
$
2.50
1,375
2.70
1,944
7th
Purchases
550
8th
Sales
400
14th
Purchases
720
23rd
Sales
530
What is the value of the closing inventory at the end of January if Ami adopts the FIFO
method of inventory valuation?
A
$1,188
B
$1,100
C
$1,137
D
$918
KAPLAN PUBLISHING
(2 marks)
13
ACCA F3: FINANCIAL ACCOUNTING
33
Sarah, a limited liability company, has a balance on a development project at the
beginning of the year amounting to $720,000.
During the year ended 30 June 20X9 further costs of $120,000 were incurred. The project
was completed during the year and production and sales started on 1 April 20X9. The
project is expected to last for 4 years from 1 April 20X9.
How much of the costs should be charged to the statement of comprehensive income
(SOCI) for the year ended 30 June 20X9 and how much should be capitalised in the
statement of financial position (SOFP) as at 30 June 20X9?
34
(SOCI)
$
(SOFP)
$
A
210,000
630,000
B
45,000
795,000
C
52,500
785,500
D
None
840,000
(2 marks)
On 31 August, the cash book balance of Alex, a limited liability company, shows a credit
balance of $550.
It was discovered that bank charges of $80 and an amount received from a customer
directly into the bank of $400 was not yet recorded. There were unpresented cheques of
$800 and uncleared lodgements/deposits of $300 at the year-end. The bank had deducted
in error from Alex’s account a payment of $60 relating to another customer.
What is the balance in the bank statement?
35
A
$210 Cr
B
$670 Dr
C
$1,310 Cr
D
$230 Dr
(2 marks)
Hilary, a limited liability company, has the following capital structure:
100,000 Ordinary shares of 50c each
10,000 20% Preference Shares of $1 each
$
50,000
10,000
The preference shareholders have had their dividend paid during the year.
The following information has been provided for ordinary shareholders:
14
(i)
Dividends declared before the year-end but not yet paid were 5 cents per share.
(ii)
Dividends declared after the year-end were 3 cents per share.
KAPLAN PUBLISHING
REVISION MOCK QUESTIONS
What are the dividends that should be included in the statement of changes in equity
(SOCIE) and the statement of financial position (SOFP) for the year ended 31 March 20X9?
36
(SOCIE)
$
(SOFP)
$
A
8,500
6,500
B
7,000
5,000
C
7,000
6,500
D
2,000
Nil
(2 marks)
Yvette, a limited liability company, has had the following changes in its share capital and
loans during the year.
(i)
A bonus issue of $70,000.
(ii)
A rights issue of $120,000.
(iii)
A repayment of $80,000 10% loan notes.
(iv)
A receipt of $130,000 8% loan notes.
What amount would appear under the financing activities heading of the statement of
cash flows?
37
A
$240,000 net inflow
B
$120,000 net inflow
C
$50,000 net inflow
D
$170,000 net inflow
(2 marks)
At 1 September 20X8 a company had a receivables balance of $540,000 and an allowance
for receivables of $5,400. During the year ended 31 August 20X7 credit sales were
$2,500,000 and amounts received from credit customers totalled $2,485,000. It was
decided to adjust for the following:
(i)
To write off debts of $55,000.
(ii)
To make a specific allowance of $10,000.
(iii)
To make a general allowance of 10%.
What figure will appear in the company’s statement of financial position for net receivables
at 31 August 20X9 after adjusting for the above items?
A
$500,000
B
$490,000
C
$441,000
D
$450,000
KAPLAN PUBLISHING
(2 marks)
15
ACCA F3: FINANCIAL ACCOUNTING
38
39
IAS 2 states that inventory should be valued at the lower of cost and net realisable value.
When arriving at the cost of inventory, which of the following should not be included?
A
Import duties
B
Purchase cost
C
Storage
D
Carriage inwards
(2 mark)
Topp acquired 80% of the share capital of Tipp one year ago for $900,000. At the time
Tipp had retained earnings of $100,000 and share capital of $480,000.
At acquisition the fair value of the buildings owned by Tipp exceeded their carrying value by
$300,000. The fair value of the NCI at acquisition was $325,000.
What was the goodwill on acquisition figure to include in the consolidated statement of
financial position?
40
41
A
$345,000
B
$645,000
C
$445,000
D
$800,000
(2 marks)
Which of the following source documents can be entered into a business’s books of prime
entry?
A
Goods received note
B
Cheque received from a customer
C
Purchase order to a supplier
D
Delivery note to a customer
(2 marks)
The following details have been provided for a business:
Opening payables
Credit purchases
Cash purchases
Payments to credit suppliers
Discounts allowed
Discounts received
Sales ledger contra
Returns inwards
Returns outwards
$
35,800
400,000
58,000
348,000
32,000
28,000
14,000
3,500
5,800
What should be the closing balance on the payables control account at the year end?
16
A
$38,300 credit
B
$68,000 credit
C
$40,000 credit
D
$98,000 credit
(2 marks)
KAPLAN PUBLISHING
REVISION MOCK QUESTIONS
42
The statement of financial position of Robert, a limited liability company, as at 31
December 20X8 and 20X9 showed proposed dividends declared before the year end of
$60,000 and $65,000 respectively. The statement of changes in equity for the year ended
31 December 20X9 showed dividends of $100,000.
How much should be shown in the statement of cash flows of Robert for the year ended
31 December 20X9 relating to the dividends paid?
43
A
$100,000
B
$40,000
C
$105,000
D
$95,000
(2 marks)
At 30 April 20X9 James had three items of closing inventory that had been valued as
follows:
Cost
$560
$1,400
$320
Product A
Product B
Product C
NRV
$550
$1,600
$296
Included in the cost of product A was storage costs of $30 and freight costs of $10, product
C costs included storage of $20.
The correct value of closing inventory to be included in James financial statements should
be:
44
A
$2,206
B
$2,246
C
$2,226
D
$2,280
(2 marks)
A company’s trial balance totals were:
Debit
Credit
$42,333
$27,689
A suspense account was opened for the difference.
Which one of the following errors would have the effect of increasing the difference
when corrected?
A
No entry has been made in the accounting records for cash sales of $2,795
B
The cash in hand balance of $1,000 was omitted from the trial balance
C
$8,000 paid for a motor van has been correctly recorded in the cash book and
debited to the motor expenses account
D
$6,000 received from a credit customer has been correctly recorded in the cash book
and debited to the payables account
(2 marks)
KAPLAN PUBLISHING
17
ACCA F3: FINANCIAL ACCOUNTING
45
During the year ended 31 March 20X9, Jonathan recorded a sales return of $686 in the
sales returns day book as $868. Control accounts are maintained as integral part of
double entry by the business.
What is the journal entry required to correct this error?
Debit
46
Credit
A
Sales ledger control
$182
Sales returns
$182
B
Sales returns
$182
Sales ledger control
$182
C
Suspense
$182
Sales returns
$182
D
Sales returns
$182
Suspense
$182
(2 marks)
The following information relates to a business for the year ended 31 March 20X9:
Purchases
Opening inventory
Closing inventory
Sales returns
Purchase returns
Carriage inwards
Carriage outwards
Goods withdrawn by the owner
$170,000
$20,000
$18,000
$4,000
$3,500
$600
$200
$700
What is the cost of sales for the business for the year ended 31 March 20X9?
47
18
A
$169,100
B
$168,000
C
$168,400
D
$170,400
(2 marks)
Which of the following is correct?
A
A debit entry increases assets
A debit entry increases drawings
A credit entry decreases profit
B
A credit entry decreases liabilities
A credit entry increases capital
A credit entry increases profit
C
A credit entry decreases assets
A debit entry increases drawings
A debit entry increases profit
D
A credit entry increases liabilities
A credit entry increases capital
A credit entry increases profit
(2 marks)
KAPLAN PUBLISHING
REVISION MOCK QUESTIONS
48
49
Which of the following lists comprises the qualitative characteristics that financial
information should possess according to the IASB's Framework for the Preparation and
Presentation of Financial Statements?
A
Relevance, reliability, comparability, understandability
B
Relevance, reliability, prudence, understandability
C
Comparability, reliability, consistency, relevance
D
Measurability, comparability, reliability, understandability
(2 marks)
Andrew’s business is renting premises at a cost of $24,000 per annum.
However, on 1 July 20X9 the landlord increased the rent by 10%. At 1 January 20X9 Andrew
had a prepaid expense of $750 in respect of rent, and during the year ended 31 December
20X6 Andrew had paid a total of $25,700 to his landlord.
What amounts will appear in the statement of comprehensive income (SOCI) for the year
ended 31 December 20X9, and in the statement of financial position (SOFP) as at
31 December 20X9 in respect of rent?
50
(SOCI)
(SOFP)
A
$25,200
$1,250 accrual
B
$25,200
$1,250 prepayment
C
$25,700
$1,250 prepayment
D
$24,850
$750 prepayment
(2 marks)
At 30 April 20X9, Phoenix, a limited liability company, was being sued by an ex-employee
for wrongful dismissal. Phoenix has been advised that the claim is 95% likely to succeed,
and that damages of $200,000 will be payable if the claim does succeed.
How should this matter be treated in the financial statements of Phoenix for the year
ended 30 April 20X9?
A
The matter should be ignored
B
The matter should be disclosed by note
C
A provision should be made for $190,000
D
A provision should be made for $200,000
KAPLAN PUBLISHING
(2 marks)
19
ACCA F3: FINANCIAL ACCOUNTING
20
KAPLAN PUBLISHING