F3 – (FA) – MCQ’s Quiz – #2 | ACCA

1. Which of the following are correct?

1. The statement of financial position value of inventory should be as close as possible to net realisable value.
2. The valuation of finished goods inventory must include production overheads.
3. Production overheads included in valuing inventory should be calculated by reference to the company's normal level of production during the period.
4. In assessing net realisable value, inventory items must be considered separately, or in groups of similar items, not by taking the inventory value as a whole.

2. At 1 January 20X5 a company had an allowance for receivables of $18,000

2. At 31 December 20X5 the company's trade receivables were $458,000.

It was decided:
(a) To write off debts totalling $28,000 as irrecoverable
(b) To adjust the allowance for receivables to the equivalent of 5% of the remaining receivables

What figure should appear in the company's statement of profit or loss for the total of debts written off as irrecoverable and the movement in the allowance for receivables for the year ended 31 December 20X5?

4. Alpha buys goods from Beta. At 30 June 20X5 Beta's account in Alpha's records showed $5,700 owing to Beta. Beta submitted a statement to Alpha as at the same date showing a balance due of $5,200.

Which one of the following could account fully for the difference?

5. Which of the following statements are correct?

1. A company might make a rights issue if it wished to raise more equity capital.
2. A rights issue might increase the share premium account whereas a bonus issue is likely to reduce it.
3. A bonus issue will generate cash for a company.
4. A rights issue will always increase the number of shareholders in a company whereas a bonus issue will not.

6. Sigma's bank statement shows an overdrawn balance of $38,600 at 30 June 20X5. A check against the company's cash book revealed the following differences:

1. Bank charges of $200 have not been entered in the cash book.
2. Lodgements recorded on 30 June 20X5 but credited by the bank on 2 July $14,700.
3. Cheque repayments entered in cash book but not presented for payment at 30 June 20X5 $27,800.
4. A cheque payment to a supplier of $4,200 charged to the account in June 20X5 recorded in the cash book as a receipt.

Based on this information, what was the cash book balance before any adjustments?

8. Which of the following statements are correct?

1. All non-current assets must be depreciated.
2. If property accounted for in accordance with IAS 16 Property, Plant and Equipment is revalued, the gain on revaluation is shown in the statement of profit or loss.
3. If a tangible non-current asset is revalued, all tangible assets of the same class should be revalued.
4. In a company's published statement of financial position, tangible assets and intangible assets must be shown separately.

9. Tinsel Co has 5 million $1 issued ordinary shares. At 1 May 20X0 Fairy Co purchased 60% of Tinsel Co's $1 ordinary shares for $4,000,000. At that date Tinsel Co had net assets with a fair value of $4,750,000 and a share price of $1.10. Fairy Co valued the non-controlling interest in Tinsel Co at acquisition as $2,200,000.

What is the total goodwill on acquisition at 1 May 20X0?

10. Which journal entry is required to record goods taken from inventory by the owner of a business?

11. Which of the following should NOT be disclosed in the note to the financial statements for inventories?

12. The following information is available for a sole trader who keeps no accounting records:

Net business assets at 1 July 20X4 --> $186,000
Net business assets at 30 June 20X5 --> $274,000

During the year ended 30 June 20X5:

Cash drawings by proprietor --> $68,000
Additional capital introduced by proprietor --> $50,000
Business cash used to buy a car for the proprietor's wife, who takes no part in the business--> $20,000

Using this information, what is the trader's profit for the year ended 30 June 20X5?

13. The figures shown in the table below are an extract from the financial statements of Ridgeway (capital employed is $1.5m).

What is the return on capital employed (ROCE)?

14. At 30 June 20X4 a company's allowance for receivables was $39,000. At 30 June 20X5 trade receivables totalled $517,000. It was decided to write off debts totaling $37,000. The allowance for receivables was to be adjusted to the equivalent of 5 percent of the trade receivables.

What figure should appear in the statement of profit or loss for these items?

15. 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 Alta in Ordan's records 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 allowed for in Alta's statement.
2. Alta has not allowed for 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 is the remaining difference between the two companies' records after adjusting for these items?

16. Which TWO of the following items could appear in a company's statement of cash flows?

17. Which of the following material events that took place after the reporting date, but before the financial statements were approved, are non-adjusting when applying IAS 10 Events After the Reporting Period?

(i) Inventory held at the reporting date was sold for less than cost.
(ii) Capital raised by issuing shares at a premium.
(iii) A company reorganization which results in discontinuing a line of activity producing 25% of its profit.
(iv) The settlement of a claim for compensation from a former employee wrongly dismissed just before the reporting date.

18. On 1 January 20X5 a company purchased some plant.

The invoice showed

Modifications to the factory building costing $2,200 were necessary to enable the plant to be installed.

What amount should be capitalised for the plant in the company's records?

20. Which of the following statements apply when producing a consolidated statement of financial position?

(1) All intra-group balances should be eliminated.
(2) Intra-group profit in year-end inventory should be eliminated.
(3) Closing inventory held by subsidiaries needs to be included at fair value.