FIA FA2 Mock 1

Shaikh Emad Gohar
Quiz by , created about 5 years ago

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

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Shaikh Emad Gohar
Created by Shaikh Emad Gohar about 5 years ago
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Question 1

Question
A payable ledger control balance will be treated in the final accounts as?
Answer
  • An asset
  • A liability
  • An item of revenue in the income statement
  • An expense in the income statement

Question 2

Question
A trade receivable is?
Answer
  • 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

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

Question
Which of the following is an example of an item of revenue expenditure?
Answer
  • 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

Question
Which of the following is the accounting equation?
Answer
  • Assets + Liabilities = Capital + Profit – Drawings
  • Assets – Liabilities = Capital + Profit + Drawings
  • Assets – Liabilities = Capital + Profit – Drawings
  • Assets + Liabilities = Capital – Profit + Drawings

Question 6

Question
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
Answer
  • 1 and 2
  • 1, 2 and 3
  • 1,2 and 4
  • 3 and 4

Question 7

Question
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?
Answer
  • 35000
  • 39400
  • 168400
  • 180000

Question 8

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

Question
Which of the following is a current liability?
Answer
  • A bank overdraft
  • Capital
  • Goodwill
  • A loan from a director of the company repayable in two years’ time

Question 10

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

Question
Which of the following should be classified as a current asset?
Answer
  • Trade payables
  • Drawings
  • Trade receivables
  • Capital

Question 12

Question
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?
Answer
  • 20000
  • 27000
  • 25000
  • 22000

Question 13

Question
Which of the following would not be classified as capital expenditure?
Answer
  • The purchase of a new van
  • The delivery charges for the van
  • The signwriting on the van
  • The road fund licence

Question 14

Question
Which of the following should be classified as current assets?
Answer
  • Payable
  • Motor vehicles
  • Discounts received
  • Tax refunds due

Question 15

Question
Which of the following is a current asset?
Answer
  • Bank deposit account
  • Premises
  • Computer
  • Tools

Question 16

Question
Which of the following are examples of revenue expenditure?
Answer
  • Purchase of a secondhand delivery van
  • Purchase of inventories for resale
  • Repairs to the delivery van
  • Insurance of the delivery van

Question 17

Question
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
Answer
  • (1) only
  • (1) and (4)
  • (1), (2) and (4)
  • All four

Question 18

Question
Which of the following is the correct version of the accounting equation?
Answer
  • 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

Question
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?
Answer
  • 11969
  • 95413
  • 50969
  • 56413

Question 20

Question
Which of the following are not recognised as users of the financial statements prepared by a business?
Answer
  • Lenders
  • Competitors
  • Suppliers
  • Customers

Question 21

Question
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?
Answer
  • 128125
  • 78125
  • $127, 633
  • 98125

Question 22

Question
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?
Answer
  • 16000
  • 17360
  • 17200
  • 16800

Question 23

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

Question
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?
Answer
  • $1,000 loss
  • $1,000 profit
  • $3,000 loss
  • $3,000 profit

Question 25

Question
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:
Answer
  • 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

Question
Which of the following is an acceptable definition of depreciation?
Answer
  • 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

Question
Which of the following defines an asset?
Answer
  • 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

Question
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?
Answer
  • Loss $13,000
  • Profit $7,000
  • Profit $10,000
  • Profit $13,000

Question 29

Question
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?
Answer
  • Loss $2,200
  • Loss $1,400
  • Loss $200
  • Profit $200

Question 30

Question
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?
Answer
  • 42500
  • 35500
  • 36500
  • 43500

Question 31

Question
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
Answer
  • 49350
  • 49200
  • 50300
  • 49500

Question 32

Question
Which of the following is not a characteristic of a standing order?
Answer
  • 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

Question
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?
Answer
  • $700 loss
  • $800 profit
  • $1,500 profit
  • $1,500 loss

Question 34

Question
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.
Answer
  • Profit $800
  • Profit $3,000
  • Loss $200
  • Profit $200

Question 35

Question
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?
Answer
  • 25000
  • 24700
  • 25300
  • 32300

Question 36

Question
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?
Answer
  • 1836
  • 3914
  • 5144
  • 7222

Question 37

Question
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?
Answer
  • $5,100 overdrawn
  • $6,000 overdrawn
  • $6,250 overdrawn
  • $6,450 overdrawn

Question 38

Question
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?
Answer
  • 47830
  • 48810
  • 49820
  • 83470

Question 39

Question
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?
Answer
  • 4080
  • 4620
  • 6080
  • 12820

Question 40

Question
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?
Answer
  • 10715
  • 11798
  • 12451
  • 13534

Question 41

Question
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?
Answer
  • 68642
  • 69758
  • 80752
  • 81868

Question 42

Question
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?
Answer
  • 509200
  • 514000
  • 525640
  • 518800

Question 43

Question
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?
Answer
  • 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

Question
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?
Answer
  • 2874
  • 3234
  • 3658
  • 4018

Question 45

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

Question
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?
Answer
  • 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

Question
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?
Answer
  • $4,432 debit
  • $4,432 credit
  • $5,068 debit
  • $5,068 credit

Question 48

Question
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?
Answer
  • 94031
  • 88592
  • 88481
  • 95950

Question 49

Question
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?
Answer
  • $38,300 credit
  • $68,000 credit
  • $40,000 credit
  • $98,000 credit

Question 50

Question
A company receives news that a major customer has been declared bankrupt. The double entry required to write off the debt is:
Answer
  • Debit Irrecoverable debts Credit Receivables
  • Debit Allowance for receivables Credit Receivables
  • Debit Irrecoverable debts Credit Payables
  • Debit Receivables Credit Irrecoverable debts