FIA FA2 Mock 1

Question 1 of 50

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A payable ledger control balance will be treated in the final accounts as?

Select one of the following:

  • An asset

  • A liability

  • An item of revenue in the income statement

  • An expense in the income statement

Question 2 of 50

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A trade receivable is?

Select one of the following:

  • A person owing money to the business in return for goods supplied

  • A person to whom the business owes money in return for goods supplied

  • A person to whom the business owes money which was lent to finance the trading operations of the business

  • A person who has purchased goods from the business

Question 3 of 50

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What is the main purpose of an accounting system in a business?

Select one of the following:

  • To generate the business accounts

  • To calculate the tax payable by a business

  • To record, summarise and present information from documentation generated by business transactions

  • To enable the owner to know if the business is trading profitably

Question 4 of 50

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Which of the following is an example of an item of revenue expenditure?

Select one of the following:

  • Insurance of goods in transit to customers

  • Import duties charged on a new non-current asset for the business

  • Wages of employees installing a new non-current asset into the business premises

  • A new delivery van

Question 5 of 50

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Which of the following is the accounting equation?

Select one of the following:

  • Assets + Liabilities = Capital + Profit – Drawings

  • Assets – Liabilities = Capital + Profit + Drawings

  • Assets – Liabilities = Capital + Profit – Drawings

  • Assets + Liabilities = Capital – Profit + Drawings

Question 6 of 50

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Which of the following would be classed as revenue expenditure for a shop?
1 Assistants’ wages
2 Business rates paid
3 Purchase of a new shop counter
4 Repainting the outside of the shop

Select one of the following:

  • 1 and 2

  • 1, 2 and 3

  • 1,2 and 4

  • 3 and 4

Question 7 of 50

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The profit earned by a business in 2010 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 2010 were $101,700, what were the closing net assets?

Select one of the following:

  • 35000

  • 39400

  • 168400

  • 180000

Question 8 of 50

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Why is it important that a business distinguishes between current and non-current liabilities in its statement of financial position?

Select one of the following:

  • So the owners know how much is owed by the business at all times

  • So that users of the financial statements can assess the ability of the business to continue as a going concern

  • So that users of the financial statements can assess the level of business debt due for repayment within a fairly short time

  • So that users of the financial statements can assess the solvency of the business

Question 9 of 50

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Which of the following is a current liability?

Select one of the following:

  • A bank overdraft

  • Capital

  • Goodwill

  • A loan from a director of the company repayable in two years’ time

Question 10 of 50

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Which of the following best explains the term ‘current asset’?

Select one of the following:

  • An asset currently in use by a business

  • Something a business has or uses, which is likely to be held only for a short time

  • An amount owed to somebody else which is due for repayment soon

  • Money which the business currently has in its bank account

Question 11 of 50

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Which of the following should be classified as a current asset?

Select one of the following:

  • Trade payables

  • Drawings

  • Trade receivables

  • Capital

Question 12 of 50

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Michael has just started-up a business. He introduced $20,000 of his own savings, equipment worth $5,000 and obtained a bank loan of $2,000. What is the correct balance on Michael’s capital account following these transactions?

Select one of the following:

  • 20000

  • 27000

  • 25000

  • 22000

Question 13 of 50

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Which of the following would not be classified as capital expenditure?

Select one of the following:

  • The purchase of a new van

  • The delivery charges for the van

  • The signwriting on the van

  • The road fund licence

Question 14 of 50

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Which of the following should be classified as current assets?

Select one of the following:

  • Payable

  • Motor vehicles

  • Discounts received

  • Tax refunds due

Question 15 of 50

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Which of the following is a current asset?

Select one of the following:

  • Bank deposit account

  • Premises

  • Computer

  • Tools

Question 16 of 50

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Which of the following are examples of revenue expenditure?

Select one or more of the following:

  • Purchase of a secondhand delivery van

  • Purchase of inventories for resale

  • Repairs to the delivery van

  • Insurance of the delivery van

Question 17 of 50

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Which of the following are examples of capital expenditure?
(1) Purchase of a new computer for office use
(2) Purchase of a secondhand computer for office use
(3) Repairs to the computer
(4) Purchase of additional hardware

Select one of the following:

  • (1) only

  • (1) and (4)

  • (1), (2) and (4)

  • All four

Question 18 of 50

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Which of the following is the correct version of the accounting equation?

Select one of the following:

  • Non-current assets – current assets = capital – current liabilities + non-current liabilities

  • Non-current assets + current assets + current liabilities = capital + non-current liabilities

  • Current assets + non-current assets = capital + current liabilities + non-current liabilities

  • Capital = current assets + non-current assets + current liabilities + non-current liabilities

Question 19 of 50

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At the beginning of the year, the balance on Ian’s capital account was $53,691.
During the year Ian made drawings of $19,500 and net loss for the year was $22,222.
What is the balance on Ian’s capital account at the end of the year?

Select one of the following:

  • 11969

  • 95413

  • 50969

  • 56413

Question 20 of 50

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Which of the following are not recognised as users of the financial statements prepared by a business?

Select one of the following:

  • Lenders

  • Competitors

  • Suppliers

  • Customers

Question 21 of 50

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At 1 April 20X0 the balance on Shaan’s capital account is $71, 534. In the next year she invests an additional $20,000 of personal funding and negotiates a $30,000 loan for the business. The profit for the year ended 31 March 20X1 was $21,345 and Shaan’s drawings for the year came to $14,754.
What is Shaan’s closing capital at 31 March 20X1?

Select one of the following:

  • 128125

  • 78125

  • $127, 633

  • 98125

Question 22 of 50

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Dina purchased some equipment on 1 April 20X1 for $20,000. She incurred transportation costs of $1,000 and installation costs of $500. Shortly after the
installation Dina incurred a further $200 of costs because she moved the equipment after installation. In so doing she had to change the machines configuration and it malfunctioned. Dina depreciates 20% per annum on the reducing balance basis.
What is the net book value of the equipment at the year-ended 30 June 20X1?

Select one of the following:

  • 16000

  • 17360

  • 17200

  • 16800

Question 23 of 50

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Which one of the following statements correctly describes the difference between current liabilities and non-current liabilities?

Select one of the following:

  • Current liabilities are amounts which it is currently known must be paid, while non-current liabilities are amounts which might need to be paid in the long term

  • Current liabilities are amounts which must be paid within the next year, while non-current liabilities are amounts which must be paid in more than one year

  • Current liabilities are amounts under a certain value, while non-current liabilities are amounts greater than that value

  • Current liabilities are amounts for which there is currently a known value, while the value of non-current liabilities requires confirmation

Question 24 of 50

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Mehroz purchases a new car for $20,000. She pays for the new car by part-exchanging her old car and paying $12,000 in cash. The old car cost $15,000 two years ago. Mehroz had been depreciating the car using the straight line method over a five year useful life.
What is the profit or loss on disposal of the old car?

Select one of the following:

  • $1,000 loss

  • $1,000 profit

  • $3,000 loss

  • $3,000 profit

Question 25 of 50

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A non-current was purchased at the beginning of Year 1 for $2,400 and depreciated by 20% per annum by the reducing balance method. At the beginning of Year 4 it was sold for $1,200. The result of this was:

Select one of the following:

  • A loss on disposal of $240

  • A loss on disposal of $29

  • A profit on disposal of $29

  • A profit on disposal of $240

Question 26 of 50

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Which of the following is an acceptable definition of depreciation?

Select one of the following:

  • Matching the purchase cost of an asset to the period over which maintenance

  • Matching the cost of an asset to the expected economic benefit it will generate

  • Matching the cost of an asset to its eventual sales price

  • Matching the cost of an asset to its fair value

Question 27 of 50

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Which of the following defines an asset?

Select one of the following:

  • An item owned by an entity that will lead to future economic benefits;

  • A physical item that can be sold;

  • An item controlled by an entity that will lead to future economic benefits;

  • An item that can be converted into cash.

Question 28 of 50

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A company bought a machine on 1 October 20X2 for $52,000. The machine had an expected life of eight years and an estimated residual value of $4,000.
On 31 March 20X7, the machine was sold for $35,000. The company’s year-end is 31 December. The company uses the straight-line method for depreciation and it charges a full year’s depreciation in the year of purchase and none in the year of sale.
What is the profit or loss on disposal of the machine?

Select one of the following:

  • Loss $13,000

  • Profit $7,000

  • Profit $10,000

  • Profit $13,000

Question 29 of 50

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A car was purchased for $12,000 on 1 April 20X1 and has been depreciated straight line over a five year useful life, assuming no residual value.
The company policy is to charge a full year’s depreciation in the year of purchase and no depreciation in the year of sale. The car was part exchanged for a replacement vehicle on 1 August 20X4 for an agreed figure of $5,000.
What was the profit or loss on the disposal of the vehicle for the year ended 31 December 20X4?

Select one of the following:

  • Loss $2,200

  • Loss $1,400

  • Loss $200

  • Profit $200

Question 30 of 50

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Jay has purchased some equipment. He is registered for sales tax. The following entries have been entered into the purchase day book:
Fax machine $35,000
Delivery $500
Sales tax at 20% $7,000
First year maintenance $1,000
Invoice Total $43,500
What is the total value to be posted to the non-current asset cost account?

Select one of the following:

  • 42500

  • 35500

  • 36500

  • 43500

Question 31 of 50

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From the following details, calculate the closing bank statement balance:
Unpresented/outstanding cheques 5,000
Deposits not credited (lodgements) 4,850
Closing bank balance in the records of the business before adjustments shown below 50,000
Bank charges 250
Dishonoured cheques 400

Select one of the following:

  • 49350

  • 49200

  • 50300

  • 49500

Question 32 of 50

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Which of the following is not a characteristic of a standing order?

Select one of the following:

  • Used to make regular payments from an account

  • The payment amount is fixed

  • The recipient of the payment initiates each payment

  • The amount of payment can be varied

Question 33 of 50

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On 1 January 2007, a business sells a van which it bought on 1 January 2004 for $6,000 and has depreciated each year at 25% pa by the straight-line method. It trades in this van for a new one costing $10,000 and pays the supplier $9,200 by cheque.
What is the profit or loss on the disposal of the old van?

Select one of the following:

  • $700 loss

  • $800 profit

  • $1,500 profit

  • $1,500 loss

Question 34 of 50

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Malaika, 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.

Select one of the following:

  • Profit $800

  • Profit $3,000

  • Loss $200

  • Profit $200

Question 35 of 50

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Pinto’s bank reconciliation statement shows outstanding lodgements paid in by Pinto of $3,800 and outstanding cheques to suppliers of $3,500. His bank account in his ledger shows a debit balance of $25,000.
What balance does Pinto’s bank statement show?

Select one of the following:

  • 25000

  • 24700

  • 25300

  • 32300

Question 36 of 50

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At the start of a month, accounts receivable owed $4,529. During the month total sales were $16,540 of which 40% were for cash. Cash was received from receivables of $7,231 during the month.
What was the balance of accounts receivable at the end of the month?

Select one of the following:

  • 1836

  • 3914

  • 5144

  • 7222

Question 37 of 50

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The cash book shows a bank balance of $5,675 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?

Select one of the following:

  • $5,100 overdrawn

  • $6,000 overdrawn

  • $6,250 overdrawn

  • $6,450 overdrawn

Question 38 of 50

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The following information is available about a business:
Opening payables $14,550
Closing payables $12,560
Payments for purchases in the period $85,460
Of the payments, $35,640 were for cash purposes. What is the amount of purchases on credit for the period?

Select one of the following:

  • 47830

  • 48810

  • 49820

  • 83470

Question 39 of 50

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Receivables at 1 April were $8,450. Transactions during the month were credit sales of $19,600, cheques received from receivables of $22,430, sales returns of $1,000 and a contra with a credit supplier of $540. What was the balance on the receivables control account at 30 April?

Select one of the following:

  • 4080

  • 4620

  • 6080

  • 12820

Question 40 of 50

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The closing balance on the trade payables account for a period was $3,528. During the period, cash paid to creditors was $11,583. The opening balance on the trade paybles’ account was $2,660.
What were the credit purchases for the period?

Select one of the following:

  • 10715

  • 11798

  • 12451

  • 13534

Question 41 of 50

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During a three-month period, a business made sales of $69,200 plus sales tax at 17.5%. The balance on the receivables account at the start of the period was $5,329 and at the end of the period $4,771.
How much cash was received from receivables during the period?

Select one of the following:

  • 68642

  • 69758

  • 80752

  • 81868

Question 42 of 50

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On 1 August 20X8 Ez was owed $45,300 by his credit customers. During the year Ez’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 Ez was owed $48,720 from his credit customers.
What was the amount received from credit customers during the year ended 31 July 20X9?

Select one of the following:

  • 509200

  • 514000

  • 525640

  • 518800

Question 43 of 50

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The trade receivables control account balance is $1,000 and the total of the individual trade receivables balances is $850.
Which of the following errors could account for this difference?

Select one of the following:

  • A receipt from a credit customer $150 was recorded twice in the receivables ledger and control account

  • A receipt from a credit customer $150 was not recorded at all in the receivables ledger

  • A receipt from a credit customer $150 was not recorded at all in the control account

  • A receipt from a credit customer $150 was recorded twice in the control account

Question 44 of 50

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The balance on the payables ledgers control account was $3,446. it was then discovered that the total from the cash book payments during the period has been posted as $14,576 instead of $14,756. It was also discovered that the discounts received for the period of $392 had not been posted at all.
What is the correct balance on the payables ledgers control account?

Select one of the following:

  • 2874

  • 3234

  • 3658

  • 4018

Question 45 of 50

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Why would you not send a statement to an account written off as an irrecoverable debt?

Select one of the following:

  • Doing so would advise the receivable there is no need to pay

  • Doing so would encourage the receivable to pay

  • It is against the law of contract to do so

  • It is against data protection legislation to do so

Question 46 of 50

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An account receivable is for $800. The customer is experiencing severe difficulties and has agreed to return goods costing $600. The supplier decides to write off the remaining amount. What is the double entry to record this?

Select one of the following:

  • Dr Account receivable $800; Cr Sales returns $600; Cr irrecoverable debts $200

  • Dr irrecoverable debts $200; Dr Bank $600; Cr Sales returns $800

  • Dr irrecoverable debts $200; Dr Sales returns $600; Cr Account receivable $800

  • Dr Sales returns $800; Cr irrecoverable debts $200; Cr Bank $600

Question 47 of 50

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At 30 June 20X1 Cook was owed $44,320 by his customers. His receivables allowance brought forward from the previous year was $9,500. At the end of each
year he estimates the value of the allowance equivalent to 10% of receivables. What entry should be made in the income statement to adjust the receivables
allowance for the year ended 30 June 20X1?

Select one of the following:

  • $4,432 debit

  • $4,432 credit

  • $5,068 debit

  • $5,068 credit

Question 48 of 50

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At 30 June 20X1 Mark has receivables of $100,450 and an allowance brought forward of $5,550. At the end of the year a customer, who owed $4,500, is declared bankrupt. The debt is now considered to be irrecoverable. The allowance is to be calculated based upon 2% of receivables at the year-end.
What figure will appear in the statement of financial position at 30 June 20X1 for receivables?

Select one of the following:

  • 94031

  • 88592

  • 88481

  • 95950

Question 49 of 50

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The following details have been provided for a business:
Opening payables 35,800
Credit purchases 400,000
Cash purchases 58,000
Payments to credit suppliers 348,000
Discounts allowed 32,000
Discounts received 28,000
Sales ledger contra 14,000
Returns inwards 3,500
Returns outwards 5,800
What should be the closing balance on the payables control account at the year end?

Select one of the following:

  • $38,300 credit

  • $68,000 credit

  • $40,000 credit

  • $98,000 credit

Question 50 of 50

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A company receives news that a major customer has been declared bankrupt. The double entry required to write off the debt is:

Select one of the following:

  • Debit Irrecoverable debts
    Credit Receivables

  • Debit Allowance for receivables
    Credit Receivables

  • Debit Irrecoverable debts
    Credit Payables

  • Debit Receivables
    Credit Irrecoverable debts

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FIA FA2 Mock 1

Shaikh Emad Gohar
Quiz by , created about 2 years ago

Quiz on FIA FA2 Mock 1, created by Shaikh Emad Gohar on 08/10/2014.

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