F3 Class Test

1. Which of the following statements about bank reconciliations are correct? 1. In preparing a bank reconciliation, unpresented cheques must be deducted from a balance of cash at bank shown in the bank statement. 2. A cheque from a customer paid into the bank but dishonoured must be corrected by making a debit entry in the cash book. 3. An error by the bank must be corrected by an entry in the cash book. 4. An overdraft is a debit balance in the bank statement. A. 1 and 3 B. 2 and 3 C. 1 and 4 D. 2 and 4 Listed below are some possible causes of difference between the cash book balance and the bank statement balance when preparing a bank reconciliation: 1. Cheque paid in, subsequently dishonoured. 2. Error by bank 3. Bank charges 4. Lodgements credited after date 5. Outstanding cheques not yet presented. Which of these items require an entry in the cash book? A. 1 and 3 only B. 1, 2, 3, 4 and 5 C. 2, 4, and 5 only Which of the following statements about bank reconciliations are correct? 1. A difference between the cash book and the bank statement must be corrected by means of a journal entry. 2. In preparing a bank reconciliation, lodgements recorded before date in the cash book but credited by the bank after date should reduce an overdrawn balance in the bank statement. 3. Bank charges not yet entered in the cash book should be dealt with by an adjustment in the bank reconciliation statement. 4. If a cheque received from a customer is dishonoured after date, a credit entry in the cash book is required. A. 2 and 4 B. 1 and 4 C. 2 and 3 D. 1 and 3 Listed below are five potential causes of difference between a company's cash book balance and its bank statement balance as at 30 November 20X3: 1. Cheques recorded and sent to suppliers before 30 November 20X3 but not yet presented for payment. 2. An error by the bank in crediting to another customer's account a lodgement made by the company. 3. Bank charges. 4. Cheques paid in before 30 November 20X3 but not credited by the bank until 3 December 20X3. 5. A cheque recorded and paid in before 30 November 20X3 but dishonoured by the bank. Which one of the following alternatives correctly analyses these items into those requiring an entry in the cash book and those that would feature in the bank reconciliation? Cash book entry Bank reconciliation A. 1, 2, 4 3, 5 B. 3, 5 1, 2, 4 C. 3, 4 1, 2, 5 D. 2, 3, 5 1, 4 5. Cheques, which are issued by a firm and sent to one of its creditors has not yet appeared on the firms bank statement. The cheques are known as. A. A standing order. B. A dishonored cheque. C. A credit transfer. D. An outstanding cheque

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PAC Professionals and Accountancy Center

F3 Class Test
6. Which of the following items would be a timing difference in bank reconciliation? A. Bank errors B. Up resented cheques C. Direct debit not recorded in the cashbook D. Bank charges revealed by the bank statement. The cash book of Worcester shows a credit balance of $1,350. Cheques of $56 have been written to suppliers but not yet cleared the bank; uncleared lodgements amount to $128. The bank has accidentally credited Worcester's account with interest of $15 due to another customer. A standing order of $300 has not been accounted for in the general ledger. What is the balance on the bank statement? A. $993 Cr B. $993 Dr C. $1,707 Cr D. $1,707 Dr An organizations cash book has an opening balance of $485 credit. The following transactions then took place: 1. Cash sales $1,450 including sales tax of $150. 2. Receipts from customers of debts of $2,400. 3. Payments to suppliers of debts of $1,800 less 5% cash discount. 4. Dishonoured cheques from customers amounting to $250. The resulting balance in the cash book should be: A. $1,255 debit B. $1,405 debit C. $1,905 credit D. $2,375 credit Your firm's cash book at 30 April20X8 shows a balance at the bank of $2,490. Comparison with the bank statement at the same date reveals the following differences: $ Unpresented cheques 840 Bank charges not in cash book 50 Receipts not yet credited by the bank 470 Dishonoured cheque not in cash book 140 The correct bank balance at 30 April 20X8 is: A. $1,460 B. $2,300 C. $2,580 D. $3,140 Your firm's cash book shows a credit bank balance of $1,240 at 30 Apri120X9. On comparison with the bank statement, you determine that there are unpresented cheques totalling $450, and a receipt of $140 which has not yet been passed through the bank account. The bank statement shows bank charges of $75 which have not been entered in the cash book. The balance on the bank statement is: A. $1,005 overdrawn B. $930 overdrawn C. $1,475 in credit D. $1,550 in credit The following bank reconciliation statement has been prepared by an inexperienced bookkeeper at 31 December 20X5: $ Balance per bank statement (overdrawn) 38,640 Add: Lodgments not credited 19,270 57,910 Less: Unpresented cheques 14,260 Balance per cash book 43,650

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PAC Professionals and Accountancy Center

F3 Class Test
What should the final cash book balance be when all the above items have been properly dealt with? A. $43,650 overdrawn B. $33,630 overdrawn C. $5,110 overdrawn D. $.72,170 overdrawn 12. The bank statement on 31 October 20X7 showed an overdraft of $800. On reconciling the bank statement, it was discovered that a cheque drawn by your company for $80 had not been presented for payment, and that a cheque for $130 from a customer had been dishonoured on 30 October 20X7, but that this had not yet been notified to you by the bank. What is the correct bank balance to be shown in the statement of financial position at 31 October 20X7? A. $1,010 overdrawn B. $880 overdrawn C. $750 overdrawn D. $720 overdrawn The following bank reconciliation statement has been prepared by a trainee accountant: Bank reconciliation 30 September 20x2 $ Balance per bank statement (overdrawn) 36,840 Add: lodgements credited after date 51,240 88,080 Less: outstanding cheques 43,620 Balance per cash book (credit) 44,460 Assuming the amounts stated for items other than the cash book balance are correct. What should the cash book balance be? A. $44,460 credit as stated B. $60,020 credit C. $29,220 debit D. $29,220 credit Jo's bank ledger account shows a balance of $190 credit. Her bank statement reports a balance of $250 credit. Which of the following will explain the difference in full? A. Unpresented cheques of $100 and an uncleared lodgement of $30 B. Unpresented cheques of $150, the misposting of a cash receipt of $130 to the wrong side of the cash account and unrecorded bank interest received of $30 C. An unrecorded direct debit of $30, a dishonored cheque of $70 and an uncleared lodgement of $40 D. An unrecorded standing order of $60, an unpresented cheque of $110 and a bank error were by Jo's account was accidentally credited with $110 A companys cashbook shows a debit balance of 700. The bank statement as at the same date shows an overdrawn balance of 210. Which one of the following timing differences could account for the discrepancy? A. Cheques drawn but not yet presented amounted to 490 B. Cheques received but not yet cleared amounted to 490 C. Cheques drawn but not yet presented amounted to 910 D. Cheques received but not yet cleared amounted to 910 Which of the following assumptions underlie the Framework for the presentation and preparation of financial statements? A. Accruals and consistency B. Prudence and going concern C. Accruals and going concern D. Consistency and prudence Which one of the following statements is correct? A. The prudence concept requires assets to be understated and liabilities to be overstated B. To comply with the law, the legal form of a transaction must always be reflected in financial statements

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PAC Professionals and Accountancy Center

F3 Class Test
C. If a non-current asset initially recbgnised at cost is revalued, the surplus must be credited in the statement of cash flows D. In times of rising prices, the use of historical cost accounting tends to understate assets and overstate profits 18. An item of inventory which had cost $5 was sold for $7. It cost the company $6 to replace the item. At the time of the sale the $6 was the items: A. historical cost B. net realizable value C. economic value D. current cost The accounting concept which dictates that non-current assets should be valued at cost less accumulated depreciation, rather than at their enforced saleable value, is: A. Understandability B. Relevance C. Comparability D. Going concern Inventories should be valued at the lower of cost and net realizable value. Which ONE of the following accounting concepts governs this? A. Comparability B. Prudence C. Going concern Which of the following pairs of accounting concepts are most likely to be in conflict with one another? A. Comparability and understandability B. Accruals basis and going concern C. Comparability and reliability D. Relevance and reliability Which of the following statements about the Framework are true? 1. The Framework is an accounting standard. 2. It assists in harmonizing accounting practice. 3. It assists national standard setters in developing national standards. 4. It assists users of the accounts to interpret financial statements. A. 1 and 2 B. 2, 3 and 4 C. All 4 D. 1 and 3 Which one of the following is the main aim of accounting? A. To maintain ledger accounts for every asset and liability B. To provide financial information to users of such information C. To produce a trial balance D. To record every financial transaction individually Which accounting concept or convention which, in times of rising prices, tends to understate asset values and overstate profits? A. The going concern concept B. The prudence concept C. The realisation concept D. The historical cost convention Which accounting concept which requires assets to be valued at their net book value, rather than their 'break-up' value? A. The materiality concept B. The going concern concept C. The historical cost convention D. The business entity convention

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PAC Professionals and Accountancy Center