These are ACCA F3 (FA/FFA) Financial Accounting MCQs for Part-F of the Syllabus “Preparing basic financial statements”.

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.

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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:	Preparing basic financial statements
Chapter Number:	19 of the Practice and Exam Kit
Syllabus Area:	F – “Preparing basic financial statements”
Questions Type:	CBE MCQs
Exam Section:	Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part F of the Syllabus; “Preparing basic financial statements” of ACCA F3 (FA/FFA) Financial Accounting Module.

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F3 - Chapter 19 - Part F - MCQs

Course: ACCA - FIA
Subject: F3 (FA/FFA) Financial Accounting
Syllabus Area: E - Preparing a trial balance
Chapter in Kit: 19 - Preparing basic financial statements
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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1 / 16

The draft statement of financial position shown below has been prepared for Shuswap, a limited liability company, as at 31 December 20X4:

	Cost	Accumulated depreciation	Carrying value
	$'000	$'000	$'000
Assets
Non-current assets
Land and buildings	‏‏‏‎ ‎9,000	‏‏‎ ‎‏‏‏‎ ‎1,000	‏‏‏‎ ‎‏‏‎ ‎8,000
Plant and equipment	21,000	‏‏‏‎ ‎9,000	12,000
	30,000	10,000	20,000
Current assets
Inventories			‏‏‏‎‏‏‎ ‎ ‎3,000
Receivables			‏‏‏‎‏‏‎ ‎ ‎2,600
Cash at bank			‏‏‎ ‎‏‏‏‎ ‎1,900
Total assets			27,500

*Equity and liabilities*
Equity
Issued share capital (ordinary shares of 50c each)			‏‏‎ ‎‏‏‏‎ ‎6,000
Retained earnings			12,400

Non-current liabilities
Loan notes (redeemable 20Y0)			‏‏‏‎ ‎2,000

Current liabilities
Trade payables			‏‏‎ ‎‏‏‏‎ ‎2,100
			22,500
Suspense account			‏‏‎ ‎‏‏‏‎ ‎5,000
			27,500

TASK

Some inventory items included in the draft statement of financial position at cost $500,000 were sold after the reporting date for $400,000, with selling expenses of $40,000.

Which of the following statements is correct?

Inventory should be credited with $140,000 at 31.12.20X4

No adjustment should be made because the inventory was sold after the year end.

Inventory should be debited with $140,000 at 31.12.20X4

Cash should be credited with $140,000 at 31.12.20X4

2 / 16

The draft statement of financial position shown below has been prepared for Shuswap, a limited liability company, as at 31 December 20X4:

	Cost	Accumulated depreciation	Carrying value
	$'000	$'000	$'000
Assets
Non-current assets
Land and buildings	‏‏‏‎ ‎9,000	‏‏‎ ‎‏‏‏‎ ‎1,000	‏‏‏‎ ‎‏‏‎ ‎8,000
Plant and equipment	21,000	‏‏‏‎ ‎9,000	12,000
	30,000	10,000	20,000
Current assets
Inventories			‏‏‏‎‏‏‎ ‎ ‎3,000
Receivables			‏‏‏‎‏‏‎ ‎ ‎2,600
Cash at bank			‏‏‎ ‎‏‏‏‎ ‎1,900
Total assets			27,500

*Equity and liabilities*
Equity
Issued share capital (ordinary shares of 50c each)			‏‏‎ ‎‏‏‏‎ ‎6,000
Retained earnings			12,400

Non-current liabilities
Loan notes (redeemable 20Y0)			‏‏‏‎ ‎2,000

Current liabilities
Trade payables			‏‏‎ ‎‏‏‏‎ ‎2,100
			22,500
Suspense account			‏‏‎ ‎‏‏‏‎ ‎5,000
			27,500

TASK

The suspense account is made up of two items:

The proceeds of issue of 4,000,000 50c shares at $1.10 per share, credited to the suspense account from the cash book.
The balance of the account is the proceeds of sale of some plant on 1 January 20X4 with a carrying amount at the date of sale of $700,000 and which had originally cost $1,400,000. No other accounting entries have yet been made for the disposal apart from the cash book entry for the receipt of the proceeds. Depreciation on plant has been charged at 25% (straight-line basis) in preparing the draft statement of financial position without allowing for the sale. The depreciation for the year relating to the plant sold should be adjusted for in full.

What is the profit or loss on disposal of the plant?
$ ________ Profit / Loss

3 / 16

The draft statement of financial position shown below has been prepared for Shuswap, a limited liability company, as at 31 December 20X4:

	Cost	Accumulated depreciation	Carrying value
	$'000	$'000	$'000
Assets
Non-current assets
Land and buildings	‏‏‏‎ ‎9,000	‏‏‎ ‎‏‏‏‎ ‎1,000	‏‏‏‎ ‎‏‏‎ ‎8,000
Plant and equipment	21,000	‏‏‏‎ ‎9,000	12,000
	30,000	10,000	20,000
Current assets
Inventories			‏‏‏‎‏‏‎ ‎ ‎3,000
Receivables			‏‏‏‎‏‏‎ ‎ ‎2,600
Cash at bank			‏‏‎ ‎‏‏‏‎ ‎1,900
Total assets			27,500

*Equity and liabilities*
Equity
Issued share capital (ordinary shares of 50c each)			‏‏‎ ‎‏‏‏‎ ‎6,000
Retained earnings			12,400

Non-current liabilities
Loan notes (redeemable 20Y0)			‏‏‏‎ ‎2,000

Current liabilities
Trade payables			‏‏‎ ‎‏‏‏‎ ‎2,100
			22,500
Suspense account			‏‏‎ ‎‏‏‏‎ ‎5,000
			27,500

TASK

The suspense account is made up of two items:

The proceeds of issue of 4,000,000 50c shares at $1.10 per share, credited to the suspense account from the cash book.
The balance of the account is the proceeds of sale of some plant on 1 January 20X4 with a carrying amount at the date of sale of $700,000 and which had originally cost $1,400,000. No other accounting entries have yet been made for the disposal apart from the cash book entry for the receipt of the proceeds. Depreciation on plant has been charged at 25% (straight-line basis) in preparing the draft statement of financial position without allowing for the sale. The depreciation for the year relating to the plant sold should be adjusted for in full.

What is the amount of the depreciation adjustment that should be made for the year to 31.12.20X4?
$ ________

4 / 16

The draft statement of financial position shown below has been prepared for Shuswap, a limited liability company, as at 31 December 20X4:

	Cost	Accumulated depreciation	Carrying value
	$'000	$'000	$'000
Assets
Non-current assets
Land and buildings	‏‏‏‎ ‎9,000	‏‏‎ ‎‏‏‏‎ ‎1,000	‏‏‏‎ ‎‏‏‎ ‎8,000
Plant and equipment	21,000	‏‏‏‎ ‎9,000	12,000
	30,000	10,000	20,000
Current assets
Inventories			‏‏‏‎‏‏‎ ‎ ‎3,000
Receivables			‏‏‏‎‏‏‎ ‎ ‎2,600
Cash at bank			‏‏‎ ‎‏‏‏‎ ‎1,900
Total assets			27,500

*Equity and liabilities*
Equity
Issued share capital (ordinary shares of 50c each)			‏‏‎ ‎‏‏‏‎ ‎6,000
Retained earnings			12,400

Non-current liabilities
Loan notes (redeemable 20Y0)			‏‏‏‎ ‎2,000

Current liabilities
Trade payables			‏‏‎ ‎‏‏‏‎ ‎2,100
			22,500
Suspense account			‏‏‎ ‎‏‏‏‎ ‎5,000
			27,500

TASK

The suspense account is made up of two items:

The proceeds of issue of 4,000,000 50c shares at $1.10 per share, credited to the suspense account from the cash book.
The balance of the account is the proceeds of sale of some plant on 1 January 20X4 with a carrying amount at the date of sale of $700,000 and which had originally cost $1,400,000. No other accounting entries have yet been made for the disposal apart from the cash book entry for the receipt of the proceeds. Depreciation on plant has been charged at 25% (straight-line basis) in preparing the draft statement of financial position without allowing for the sale. The depreciation for the year relating to the plant sold should be adjusted for in full.

What is the balance of the Share Capital Account?
$ ________

5 / 16

The draft statement of financial position shown below has been prepared for Shuswap, a limited liability company, as at 31 December 20X4:

	Cost	Accumulated depreciation	Carrying value
	$'000	$'000	$'000
Assets
Non-current assets
Land and buildings	‏‏‏‎ ‎9,000	‏‏‎ ‎‏‏‏‎ ‎1,000	‏‏‏‎ ‎‏‏‎ ‎8,000
Plant and equipment	21,000	‏‏‏‎ ‎9,000	12,000
	30,000	10,000	20,000
Current assets
Inventories			‏‏‏‎‏‏‎ ‎ ‎3,000
Receivables			‏‏‏‎‏‏‎ ‎ ‎2,600
Cash at bank			‏‏‎ ‎‏‏‏‎ ‎1,900
Total assets			27,500

*Equity and liabilities*
Equity
Issued share capital (ordinary shares of 50c each)			‏‏‎ ‎‏‏‏‎ ‎6,000
Retained earnings			12,400

Non-current liabilities
Loan notes (redeemable 20Y0)			‏‏‏‎ ‎2,000

Current liabilities
Trade payables			‏‏‎ ‎‏‏‏‎ ‎2,100
			22,500
Suspense account			‏‏‎ ‎‏‏‏‎ ‎5,000
			27,500

TASK

The suspense account is made up of two items:

The proceeds of issue of 4,000,000 50c shares at $1.10 per share, credited to the suspense account from the cash book.
The balance of the account is the proceeds of sale of some plant on 1 January 20X4 with a carrying amount at the date of sale of $700,000 and which had originally cost $1,400,000. No other accounting entries have yet been made for the disposal apart from the cash book entry for the receipt of the proceeds. Depreciation on plant has been charged at 25% (straight-line basis) in preparing the draft statement of financial position without allowing for the sale. The depreciation for the year relating to the plant sold should be adjusted for in full.

What is the balance of the Share Premium Account?
$ ________

6 / 16

You are presented with the following trial balance of Malright, a limited liability company, at 31 October 20X7.

	DEBIT	CREDIT
	$'000	$'000
Building at cost	740
Buildings, accumulated depreciation, 1 November 20X6		60
Plant at cost	220
Plant, accumulated depreciation, 1 November 20X6		110
Bank balance		70
Revenue		1,800
Purchases	1,140
Inventory at 1 November 20X6	160
Cash	20
Trade payables		250
Trade receivables	320
Administrative expenses	325
Allowance for receivables, at 1 November 20X6		10
Retained earnings at 1 November 20X6		130
$1 ordinary shares		415
Share premium account		80
	2,925	2,925

TASK

The allowance for receivables is to be increased to 5% of trade receivables. The allowance for receivables is treated as an administrative expense.

The amount included in the statement of profit or loss after the allowance is increased to 5% of trade receivables is $ _________

7 / 16

You are presented with the following trial balance of Malright, a limited liability company, at 31 October 20X7.

	DEBIT	CREDIT
	$'000	$'000
Building at cost	740
Buildings, accumulated depreciation, 1 November 20X6		60
Plant at cost	220
Plant, accumulated depreciation, 1 November 20X6		110
Bank balance		70
Revenue		1,800
Purchases	1,140
Inventory at 1 November 20X6	160
Cash	20
Trade payables		250
Trade receivables	320
Administrative expenses	325
Allowance for receivables, at 1 November 20X6		10
Retained earnings at 1 November 20X6		130
$1 ordinary shares		415
Share premium account		80
	2,925	2,925

TASK

Plant is depreciated at 20% per annum using the reducing balance method and buildings are depreciated at 5% per annum on their original cost. Depreciation is treated as a cost of sales expense.

Calculate the depreciation charge for the below for the year ended 31 October 20X7. Use the information above to help you.

Buildings $ __________

8 / 16

You are presented with the following trial balance of Malright, a limited liability company, at 31 October 20X7.

	DEBIT	CREDIT
	$'000	$'000
Building at cost	740
Buildings, accumulated depreciation, 1 November 20X6		60
Plant at cost	220
Plant, accumulated depreciation, 1 November 20X6		110
Bank balance		70
Revenue		1,800
Purchases	1,140
Inventory at 1 November 20X6	160
Cash	20
Trade payables		250
Trade receivables	320
Administrative expenses	325
Allowance for receivables, at 1 November 20X6		10
Retained earnings at 1 November 20X6		130
$1 ordinary shares		415
Share premium account		80
	2,925	2,925

TASK

Plant is depreciated at 20% per annum using the reducing balance method and buildings are depreciated at 5% per annum on their original cost. Depreciation is treated as a cost of sales expense.

Calculate the depreciation charge for the below for the year ended 31 October 20X7. Use the information above to help you.

Plant $ __________

9 / 16

You are presented with the following trial balance of Malright, a limited liability company, at 31 October 20X7.

	DEBIT	CREDIT
	$'000	$'000
Building at cost	740
Buildings, accumulated depreciation, 1 November 20X6		60
Plant at cost	220
Plant, accumulated depreciation, 1 November 20X6		110
Bank balance		70
Revenue		1,800
Purchases	1,140
Inventory at 1 November 20X6	160
Cash	20
Trade payables		250
Trade receivables	320
Administrative expenses	325
Allowance for receivables, at 1 November 20X6		10
Retained earnings at 1 November 20X6		130
$1 ordinary shares		415
Share premium account		80
	2,925	2,925

TASK

Closing inventory is $75,000.

Ignoring the depreciation charge calculated earlier, what is the cost of sales for the year?

$ __________

10 / 16

You are presented with the following trial balance of Malright, a limited liability company, at 31 October 20X7.

	DEBIT	CREDIT
	$'000	$'000
Building at cost	740
Buildings, accumulated depreciation, 1 November 20X6		60
Plant at cost	220
Plant, accumulated depreciation, 1 November 20X6		110
Bank balance		70
Revenue		1,800
Purchases	1,140
Inventory at 1 November 20X6	160
Cash	20
Trade payables		250
Trade receivables	320
Administrative expenses	325
Allowance for receivables, at 1 November 20X6		10
Retained earnings at 1 November 20X6		130
$1 ordinary shares		415
Share premium account		80
	2,925	2,925

TASK

An invoice of $15,000 for energy costs relating to the quarter ended 30 November 20X7 was received on 2 December 20X7. Energy costs are included in administrative expenses.

The double entry to post the year end adjustments for energy costs is:

DEBIT Administrative expenses
CREDIT Accrual

The amount to be posted within the year end adjustment double entry above is $ __________

11 / 16

The information below has been extracted from the books of Tonson, a limited liability company, as at 31 October 20X6.

	DEBIT	CREDIT
	$'000	$'000
Inventory at 1 November 20X5	350
Administrative expenses	1,106
Share premium account		200
Retained earnings at 1 November 20X5		315
Allowance for receivables at 1 November 20X5		40
Sales revenue		5,780
Bank		79
Returns inward	95
Trade payables		340
Loan note interest	33
Trade receivables	900
Purchases	3,570
7% loan notes		470
Irrecoverable debts	150
$1 ordinary shares		1,800
Accumulated depreciation at 1 November 20X5
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Buildings		360
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Motor Vehicles		80
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Furniture and equipment		420
Land at cost	740
Buildings at cost	1,500
Motor vehicles at cost	240
Furniture and equipment at cost	1,200
	9,884	9,884

TASK

Buildings are depreciated at 5% of cost. At 31 October 20X6 the buildings were professionally valued at $1,800,000 and the directors wish this valuation to be incorporated into the financial statements.

Depreciation is to be charged as follows:

Motor vehicles at 20% of carrying amount
Furniture and equipment at 20% of cost

What will be the carrying amount of the Land in the financial statements at 31 October 20X6?

12 / 16

The information below has been extracted from the books of Tonson, a limited liability company, as at 31 October 20X6.

	DEBIT	CREDIT
	$'000	$'000
Inventory at 1 November 20X5	350
Administrative expenses	1,106
Share premium account		200
Retained earnings at 1 November 20X5		315
Allowance for receivables at 1 November 20X5		40
Sales revenue		5,780
Bank		79
Returns inward	95
Trade payables		340
Loan note interest	33
Trade receivables	900
Purchases	3,570
7% loan notes		470
Irrecoverable debts	150
$1 ordinary shares		1,800
Accumulated depreciation at 1 November 20X5
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Buildings		360
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Motor Vehicles		80
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Furniture and equipment		420
Land at cost	740
Buildings at cost	1,500
Motor vehicles at cost	240
Furniture and equipment at cost	1,200
	9,884	9,884

TASK

Depreciation is to be charged as follows:

Motor vehicles at 20% of carrying amount
Furniture and equipment at 20% of cost

What will be the carrying amount of the Building in the financial statements at 31 October 20X6?

13 / 16

The information below has been extracted from the books of Tonson, a limited liability company, as at 31 October 20X6.

	DEBIT	CREDIT
	$'000	$'000
Inventory at 1 November 20X5	350
Administrative expenses	1,106
Share premium account		200
Retained earnings at 1 November 20X5		315
Allowance for receivables at 1 November 20X5		40
Sales revenue		5,780
Bank		79
Returns inward	95
Trade payables		340
Loan note interest	33
Trade receivables	900
Purchases	3,570
7% loan notes		470
Irrecoverable debts	150
$1 ordinary shares		1,800
Accumulated depreciation at 1 November 20X5
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Buildings		360
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Motor Vehicles		80
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Furniture and equipment		420
Land at cost	740
Buildings at cost	1,500
Motor vehicles at cost	240
Furniture and equipment at cost	1,200
	9,884	9,884

TASK

Depreciation is to be charged as follows:

Motor vehicles at 20% of carrying amount
Furniture and equipment at 20% of cost

What will be the carrying amount of the Motor vehicles in the financial statements at 31 October 20X6?

14 / 16

The information below has been extracted from the books of Tonson, a limited liability company, as at 31 October 20X6.

	DEBIT	CREDIT
	$'000	$'000
Inventory at 1 November 20X5	350
Administrative expenses	1,106
Share premium account		200
Retained earnings at 1 November 20X5		315
Allowance for receivables at 1 November 20X5		40
Sales revenue		5,780
Bank		79
Returns inward	95
Trade payables		340
Loan note interest	33
Trade receivables	900
Purchases	3,570
7% loan notes		470
Irrecoverable debts	150
$1 ordinary shares		1,800
Accumulated depreciation at 1 November 20X5
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Buildings		360
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Motor Vehicles		80
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Furniture and equipment		420
Land at cost	740
Buildings at cost	1,500
Motor vehicles at cost	240
Furniture and equipment at cost	1,200
	9,884	9,884

TASK

Depreciation is to be charged as follows:

Motor vehicles at 20% of carrying amount
Furniture and equipment at 20% of cost

What will be the carrying amount of the Furniture and equipment in the financial statements at 31 October 20X6?

15 / 16

The information below has been extracted from the books of Tonson, a limited liability company, as at 31 October 20X6.

	DEBIT	CREDIT
	$'000	$'000
Inventory at 1 November 20X5	350
Administrative expenses	1,106
Share premium account		200
Retained earnings at 1 November 20X5		315
Allowance for receivables at 1 November 20X5		40
Sales revenue		5,780
Bank		79
Returns inward	95
Trade payables		340
Loan note interest	33
Trade receivables	900
Purchases	3,570
7% loan notes		470
Irrecoverable debts	150
$1 ordinary shares		1,800
Accumulated depreciation at 1 November 20X5
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Buildings		360
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Motor Vehicles		80
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Furniture and equipment		420
Land at cost	740
Buildings at cost	1,500
Motor vehicles at cost	240
Furniture and equipment at cost	1,200
	9,884	9,884

TASK

During October 20X6 a bonus issue of one for ten shares was made to ordinary shareholders. This has not been entered into the books. The share premium account was used for this purpose.

What will be the balance on the Share capital account following the bonus issue?

16 / 16

The information below has been extracted from the books of Tonson, a limited liability company, as at 31 October 20X6.

	DEBIT	CREDIT
	$'000	$'000
Inventory at 1 November 20X5	350
Administrative expenses	1,106
Share premium account		200
Retained earnings at 1 November 20X5		315
Allowance for receivables at 1 November 20X5		40
Sales revenue		5,780
Bank		79
Returns inward	95
Trade payables		340
Loan note interest	33
Trade receivables	900
Purchases	3,570
7% loan notes		470
Irrecoverable debts	150
$1 ordinary shares		1,800
Accumulated depreciation at 1 November 20X5
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Buildings		360
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Motor Vehicles		80
‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎‏‏‎ ‎Furniture and equipment		420
Land at cost	740
Buildings at cost	1,500
Motor vehicles at cost	240
Furniture and equipment at cost	1,200
	9,884	9,884

TASK

During October 20X6 a bonus issue of one for ten shares was made to ordinary shareholders. This has not been entered into the books. The share premium account was used for this purpose.

What will be the balance on the Share premium account following the bonus issue?