F3 (FA/FFA) – Chapter 7 and 8 – 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:Tangible non-current assets
Chapter Number:07 and 08 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.

 

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F3 - Chapter 7 and 8 - Part A - MCQs

Course: ACCA - FIA
Subject:
F3 (FA/FFA) Financial Accounting
Syllabus Area: D - Recording transactions and events
Chapter in Kit: 07 and 08 - Tangible non-current assets
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.
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1 / 41

What is the purpose of charging depreciation in financial statements?

2 / 41

Which of the statements below correctly states the purpose of the asset register?

3 / 41

Y purchased some plant on 1 January 20X0 for $38,000. The payment for the plant was correctly entered in the cash book but was entered on the debit side of the plant repairs account.

Y charges depreciation on the straight line basis at 20% per year, with a proportionate charge in the years of acquisition and disposal, and assuming no scrap value at the end of the life of the asset.

How will Y's profit for the year ended 31 March 20X0 be affected by the error?

4 / 41

Which of the following should be disclosed for tangible non-current assets according to IAS 16 Property, Plant and Equipment?

  1. Depreciation methods used and the total depreciation allocated for the period
  2. A reconciliation of the carrying amount of non-current assets at the beginning and end of the period
  3. For revalued assets, whether an independent valuer was involved in the valuation
  4. For revalued assets, the effective date of the revaluation

5 / 41

Which of the following statements is/are TRUE?

6 / 41

Company J's head office building had a carrying amount of $400,000 at 1 January 20X4 and 30 years useful life remaining. It was revalued on that date to $600,000 with no change to the useful life.

On 1 January 20X6, following a property slump, it was sold for $450,000.

What amount (if any) should be charged against profit or loss as loss on disposal?

7 / 41

A company's policy is to charge depreciation on plant and machinery at 20% per year on cost, with proportional depreciation for items purchased or sold during a year.
The company's plant and machinery at cost account for the year ended 30 September 20X3 is shown below.

What should be the depreciation charge for plant and machinery (excluding any profit or loss on the disposal) for the year ended 30 September 20X3?

8 / 41

Which one of the following assets may be classified as a non-current asset in the financial statements of a business?

9 / 41

Alpha sells machine B for $50,000 cash on 30 April 20X4. Machine B cost $100,000 when it was purchased and has a carrying amount of $65,000 at the date of disposal. What are the journal entries to record the disposal of machine B?

 

10 / 41

The plant and machinery at cost account of a business for the year ended 30 June 20X4 was as follows:

The company's policy is to charge depreciation at 20% per year on the straight line basis, with proportionate depreciation in the years of purchase and disposal.

What should be the depreciation charge for the year ended 30 June 20X4?

11 / 41

On 1 January 20X7 a building with a carrying amount of $700,000 was revalued to $750,000. The remaining useful life at that date was 25 years.

On 1 January 20X9 the building was sold for $800,000.

What profit on disposal of the building will be reported in the statement of profit or loss for the year ended 31 December 20X7?

12 / 41

Gamma purchases a motor vehicle on 30 September 20X1 for $15,000 on credit. Gamma has a policy of depreciating motor vehicles using the reducing balance method at 15% per annum, pro rata in the years of purchase and sale.

What are the correct ledger entries to record the purchase of the vehicle at 30 September 20X1 and what is the depreciation charge for the year ended 30 November 20X1?

13 / 41

At 31 December 20X3 Q, a limited liability company, owned a building that had cost $800,000 on 1 January 20W4.

It was being depreciated at 2% per year.

On 31 December 20X3 a revaluation to $1,000,000 was recognized. At this date the building had a remaining useful life of 40 years.

What is the balance on the revaluation surplus at 31 December 20X3 and the depreciation charge in the statement of profit or loss for the year ended 31 December 20X4?

14 / 41

Which of the following best explains what is meant by 'capital expenditure'?

15 / 41

A business purchased a motor car on 1 July 20X3 for $20,000. It is to be depreciated at 20 per cent per year on the straight line basis, assuming a residual value at the end of five years of $4,000, with a proportionate depreciation charge in the years of purchase and disposal.

The $20,000 cost was correctly entered in the cash book but posted to the debit of the motor vehicles repairs account.

How will the business profit for the year ended 31 December 20X3 be affected by the error?

16 / 41

An organisation's asset register shows a carrying amount of $145,600. The non-current asset account in the nominal ledger shows a carrying amount of $135,600. The difference could be due to a disposed asset not having been deducted from the asset register.

Which one of the following could represent that asset?

17 / 41

B acquired a lorry on 1 May 20X0 at a cost of $30,000. The lorry has an estimated useful life of four years, and an estimated resale value at the end of that time of $6,000. B charges depreciation on the straight line basis, with a proportionate charge in the period of acquisition.

What will the depreciation charge for the lorry be in B's accounting period to 30 September 20X0?

18 / 41

Which of the following items should be included in current assets?

(i) Assets which are not intended to be converted into cash
(ii) Assets which will be converted into cash in the long term
(iii) Assets which will be converted into cash in the near future

19 / 41

Gusna Co purchased a building on 31 December 20X1 for $750,000. At the date of acquisition, the useful life of the building was estimated to be 25 years and depreciation is calculated using the straight-line method. At 31 December 20X6, an independent valuer valued the building at $1,000,000 and the revaluation was recognised in the financial statements. Gusna's accounting policies state that excess depreciation arising on revaluation of non-current assets can be transferred from the revaluation surplus to retained earnings.

Which of the following is CORRECT debit / credit entries to record the transfer of excess depreciation?

20 / 41

An asset register showed a carrying amount of $67,460. A non-current asset costing $15,000 had been sold for $4,000, making a loss on disposal of $1,250. No entries had been made in the asset register for this disposal.

What is the correct balance on the asset register, once the disposal has been accounted for?
$_______.

21 / 41

A company purchased an asset on 1 January 20X3 at a cost of $1,000,000. It is depreciated over 50 years by the straight line method (nil residual value), with a proportionate charge for depreciation in the year of acquisition and the year of disposal. At 31 December 20X4 the asset was re-valued to $1,200,000. There was no change in the expected useful life of the asset.

The asset was sold on 30 June 20X5 for $1,195,000.

What profit or loss on disposal of the asset will be reported in the statement of profit or loss of the company for the year ended 31 December 20X5?

22 / 41

Banjo Co purchased a building on 30 June 20X8 for $1,250,000. At acquisition, the useful life of the building was 50 years. Depreciation is calculated on the straight-line basis. 10 years later, on 30 June 20Y8 when the carrying amount of the building was $1,000,000, the building was revalued to $1,600,000. Banjo Co has a policy of transferring the excess depreciation on revaluation from the revaluation surplus to retained earnings.

Assuming no further revaluations take place, what is the balance on the revaluation surplus at 30 June 20Y9?

23 / 41

Banter Co purchased an office building on 1 January 20X1. The building cost was $1,600,000 and this was depreciated by the straight line method at 2% per year, assuming a 50-year life and nil residual value. The building was re-valued to $2,250,000 on 1 January 20X6. The useful life was not revised. The excess depreciation charge will be transferred from the revaluation surplus to retained earnings each year. The company's financial year ends on 31 December.

What is the balance on the revaluation surplus at 31 December 20X6?
$_______

24 / 41

Senakuta Co purchased a machine with an estimated useful life of 5 years for $34,000 on 30 September 20X5. Senakuta Co planned to scrap the machine at the end of its useful life and estimated that the scrap value at the purchase date was $4,000. On 1 October 20X8, Senakuta revised the scrap value to $2,000 due to the decreased value of scrap metal.

What is the depreciation charge for the year ended 30 September 20X9?

25 / 41

Baxter Co purchased an asset for $100,000 on 1.1.X1. It had an estimated useful life of 5 years and it was depreciated using the straight line method. On 1.1.X3 Baxter Co revised the remaining estimated useful life to 8 years.

What is the carrying amount of the asset at 31.12.X3?

26 / 41

A company bought a property four years ago on 1 January for $ 170,000. Since then property prices have risen substantially and the property has been revalued at $210,000.

The property was estimated as having a useful life of 20 years when it was purchased.

What is the balance on the revaluation surplus reported in the statement of financial position?

27 / 41

Which one of the following would occur if the purchase of computer stationary was debited to the computer equipment at cost account?

28 / 41

Which one of the following statements correctly describes non-current assets?

29 / 41

Which of the following statements describes current assets?

30 / 41

Which one of the following costs would be classified as revenue expenditure on the invoice for a new company car?

31 / 41

A car was purchased by a newsagent business in May 20X0 for:

Cost
$10,000
Road tax
$150
----------
Total
$10,150
----------

The business adopts a date of 31 December as its year end.

The car was traded in for a replacement vehicle in August 20X3 at an agreed value of $5,000.

It has been depreciated at 25% per annum on the reducing balance method, charging a full year's depreciation in the year of purchase and none in the year of sale.

What was the profit or loss on disposal of the vehicle during the year ended December 20X3?

$_______ profit.

32 / 41

W bought a new printing machine. The machine was purchased for $80,000. The installation costs were $5,000 and the employees received training on how to use the machine, at a cost of $2,000. Before using the machine to print customers' orders, a test was undertaken and the paper and ink cost $1,000.

What should be the cost of the machine in the company's statement of financial position?
$_______

33 / 41

Gusna Co purchased a building on 31 December 20X1 for $750,000. At the date of acquisition, the useful life of the building was estimated to be 25 years and depreciation is calculated using the straight-line method. At 31 December 20X6, an independent valuer valued the building at $1,000,000 and the revaluation was recognised in the financial statements. Gusna's accounting policies state that excess depreciation arising on revaluation of non-current assets can be transferred from the revaluation surplus to retained earnings.

What is the depreciation charge on the building for the year ended 31 December 20X7?

34 / 41

Evans Co purchased a machine with an estimated useful life of 10 years for $76,000 on 30 September 20X5. The machine had a residual value of $16,000.

What are the ledger entries to record the depreciation charge for the machine in the year ended 30 September 20X8?

35 / 41

A manufacturing company receives an invoice on 29 February 20X2 for work done on one of its machines. $25,500 of the cost is actually for a machine upgrade, which will improve efficiency. The accounts department do not notice and charge the whole amount to maintenance costs. Machinery is depreciated at 25% per annum on a straight-line basis, with a proportional charge in the years of acquisition and disposal.

By what amount will the profit for the year to 30 June 20X2 be understated?

36 / 41

The carrying amount of a company's non-current assets was $200,000 at 1 August 20X0. During the year ended 31 July 20X1, the company sold non-current assets for $25,000 on which it made a loss of $5,000.

The depreciation charge for the year was $20,000. What was the carrying amount of non- current assets at 31 July 20X1?

37 / 41

Lance is entering an invoice for a new item of equipment in the accounts. The invoice shows the following costs:

Water treatment equipment
$39,800
Delivery
$1,100
Maintenance charge
$3,980
Sales tax
$7,854
Invoice total
$52,734

Lance is registered for sales tax. What is the total value of capital expenditure on the invoice?

38 / 41

Which of the following costs would be classified as capital expenditure for a restaurant business?

39 / 41

On 1 October 20X1, X Co purchased a property for $400,000. The property had a useful life of 40 years and was depreciated on a straight-line basis. On 1 October 20X5, the property was revalued to $432,000. The remaining useful life at that date was 36 years. The company wishes to make the allowed transfer of excess depreciation between the revaluation surplus and retained earnings.

Which of the following correctly records the transfer at 30 September 20X6?

40 / 41

A non-current asset (cost $15,000, depreciation $10,000) is given in part exchange for a new asset costing $20,500. The agreed trade-in value was $5,500.

Which of the following will be included in the statement of profit or loss?

41 / 41

What are the correct ledger entries to record an acquisition of a non-current asset on credit?

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