F3 (FA/FFA) – Chapter 12 – PART D – CBE MCQs – ACCA

These are ACCA F3 (FA/FFA) Financial Accounting MCQs for Part-D of the Syllabus “Recording transactions and events”.

These multiple-choice questions (MCQs) are designed to help ACCA F3 students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

Please note:

  • Students should not attempt these MCQs until they have finished the entire chapter.
  • All questions are compulsory, so please do not skip any.

We hope that these MCQs will be a valuable resource for students preparing for the ACCA F3 (FA/FFA) exam.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course:ACCA – Associations of Chartered Certified Accountants
Fundamental Level:Knowledge, FIA – Foundation in Accounting
Subject:Financial Accounting
Paper:F3 – FA/FFA
Chapter:Provisions and contingencies
Chapter Number:12 of the Practice and Exam Kit
Syllabus Area:D – “Recording transactions and events”
Questions Type:CBE MCQs
Exam Section:Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part D of the Syllabus; “Recording transactions and events” of ACCA F3 (FA/FFA) Financial Accounting Module.

Time

These MCQs are not time-bound. Take your time and solve them without stress. Pay proper attention and focus. Do not rush or hesitate

Result

Students will get their F3 CBE MCQs Test results after they finish the entire test. They will also be able to see the correct and incorrect answers, as well as explanations for the incorrect questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “( select all those which are correct/ or incorrect)“.
Drop-down: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

 

0 votes, 0 avg
38

F3 - Chapter 12 - Part A - MCQs

Course: ACCA - FIA
Subject:
F3 (FA/FFA) Financial Accounting
Syllabus Area: D - Recording transactions and events
Chapter in Kit: 12 - Provisions and contingencies
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

  1. If you are using mobile, turn on the mobile rotation and solve the MCQs on wide screen for better experience.

REQUEST

  1. Please rate the quiz and give us feedback once you completed the quiz.
  2. Share with ACCA students on social media such as, Facebook Groups, Whatsapp, Telegram, etc.

1 / 13

Montague's paint shop has suffered some bad publicity as a result of a customer claiming to be suffering from skin rashes as a result of using a new brand of paint sold by Montague's The customer launched a court action against Montague in November 20X3, claiming damages of $5,000. Montague's lawyer has advised him that the most probable outcome is that he will have to pay the customer $3,000.

What amount should Montague include as a provision in his financial statements for the year ended 31 December 20X3?

$         

2 / 13

Which of the following statements about the requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets are correct?

  1. A contingent asset should be disclosed by note if an inflow of economic benefits is probable.
  2. No disclosure of a contingent liability is required if the possibility of a transfer of economic benefits arising is remote.
  3. Contingent assets must not be recognized in financial statements unless an inflow of economic benefits is virtually certain to arise.

3 / 13

Which of the following items does the statement below describe?

According to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, 'A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity's control'

4 / 13

X Co sells goods with a one year warranty and had a provision for warranty claims of $64,000 at 31 December During the year ended 31 December 20X1, $25,000 in claims were paid to customers. On 31 December 20X1, X Co estimated that the following claims will be paid in the following year:

What amount should X Co record in the statement of profit or loss for the year ended 31 December 20X1 in respect of the provision?

5 / 13

Which of the following statements about contingent assets and contingent liabilities are correct?

  1. A contingent asset should be disclosed by note if an inflow of economic benefits is probable.
  2. A contingent liability should be disclosed by note if it is probable that a transfer of economic benefits to settle it will be required, with no provision being made.
  3. No disclosure is required for a contingent liability if it is not probable that a transfer of economic benefits to settle it will be required.
  4. No disclosure is required for either a contingent liability or a contingent asset if the likelihood of a payment or receipt is remote.

6 / 13

A former director of Biss Co has commenced an action against the company claiming substantial damages for wrongful dismissal. The company's solicitors have advised that the former director is unlikely to succeed with his claim, although the chance of Biss Co paying any monies to the ex-director is not remote. The solicitors' estimates of Biss Co's potential liabilities are:

According to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, how should this claim be treated in Bliss Co's financial statements?

7 / 13

Which of the following best describes a provision according to IAS 37 Provisions, Contingent Liabilities and Contingent Assets?

8 / 13

Which of the following statements about provisions and contingencies is TRUE?

9 / 13

When a provision is needed that involves a number of outcomes, the provision is calculated using the expected value of expenditure.

The expected value of expenditure is the total expenditure of:

10 / 13

Doggard Co is a business that sells second hand If a car develops a fault within 30 days of the sale, Doggard Co will repair it free of charge.

At 30 April 20X4 Doggard Co had made a provision for repairs of $2,500. At 30 April 20X5 Doggard Co calculated that the provision should be $2,000.

What entry should be made for the provision in Doggard Co's statement of profit or loss for the year to 30 April 20X5?

11 / 13

The following items have to be considered in finalising the financial statements of Q, a limited liability company:

  1. The company gives warranties on its The company's statistics show that about 5% of sales give rise to a warranty claim.
  2. The company has guaranteed the overdraft of another The likelihood of a liability arising under the guarantee is assessed as possible.
According to IAS 37 Provisions, Contingent Liabilities and Contingent assets, Which of the following items should be Disclosed By Note Only in the financial statements?

12 / 13

Mobiles Co sells goods with a one year warranty under which customers are covered for any defect that becomes apparent within a year of purchase. In calendar year 20X4, Mobiles Co sold 100,000 units.

The company expects warranty claims for 5% of units sold. Half of these claims will be for a major defect, with an average claim value of $50. The other half of these claims will be for a minor defect, with an average claim value of $10.

What amount should Mobiles Co include as a provision in the statement of financial position for the year ended 31 December 20X4?

13 / 13

Wanda Co allows customers to return faulty goods within 14 days of At 30 November 20X5 a provision of $6,548 was made for sales returns. At 30 November 20X6, the provision was re-calculated and should now be $7,634.

What should be reported in Wanda Co's statement of profit or loss for the year to 31 October 20X6 in respect of the provision?

Leave a Reply

Your email address will not be published. Required fields are marked *