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Suggested Answers:: Answer: 1, 2 and 4
Suggested Answers:: Answer: 1, 2 and 4
1) Which are the roles of IASB? 1) Responsibility for all IFRS technical matters;
2) Publication of IFRSs; 3) Overall supervision and governance of the IFRS
Advisory Council; 4) Final approval of interpretations by the IFRS Interpretations
Committee
2) Which items is/are true about limited liability companies? 1) A company might
make a bonus issue to raise funds for expansion; 2) Both realised and unrealised
gains and losses are included in the statement of comprehensive income
required by IAS 1
Answer: 2 only
Answer: 1, 2 and 3
5) R Co’s receivables ledger was $633,700 but not agree to control account. 3
errors found: 1) $200 credit balance was incorrectly extracted as a debit balance;
2) Invoice for $3,223 was posted as $3,232; 3) Sales returns day book was
overcast by $500
Answer: $24,760 is inventory value at 30 Nov 20X6 using first in first out
method
8)Inventory held at 31 May 20X6: 2000 units held for item A, cost $14/unit, price
$17/unit. 5000 units held for item B, cost $16/unit, price $20/unit. To sell at $17,
$5/unit modification needed for item A. According to IAS 2, what is inventory
value?
10)Which items below about intangible assets are true? 1) If certain criteria are
met, research expenditure must be recognised as an intangible asset; 2)
Goodwill may not be revalued upwards; 3) Internally-generated goodwill should
not be capitalised
Answer: After the transfer, retained earnings $895,000 & revaluation surplus
$180,000
12)Here are transactions in heat and light account: At 31 Mar 2016 $1000 gas
prepayment, $500 electricity accrual; At 31 Mar 2017 $2000 gas accrual, $1200
electricity prepayment. In the year, $5000 paid for gas, $7800 paid for electricity.
So,
Answer: $14,100 is the total heat and light expense at year ended 31
Mar 2017
14)At 30 June 20X7, RM has: loss allowance for receivables $39,000, trade
receivables $517,000. To write off debts $37,000 and to adjust loss allowance for
receivables to equivalent of 5% of trade receivables based on past events was
decided. Impact is:
15)2 items:1) BG offers 3-month warranties on its products and history shows
that about 5% of sales give rise to a warranty claim; 2) BG has guaranteed
another company overdraft. The likelihood of a liability arising under the
guarantee is possible.
17)Floyd made a rights issue of 150,000 $1 equity shares at price of $1.20 per
share. What is the correct journal to record this?
What should be the finance cost in the statement of profit or loss for the year
ended 30 September 20X6?
Answer: $65,000 should be the finance cost for the year ended 30 Sep
20X6
19)AG has a suspense account balance in its trial balance of $560 credit.
Discounts allowed of $700 have been debited to, instead of credited to, the
receivables control account found. What is the balance on suspense account
after the error adjusted?
20) H enters into transactions below with MR, a supplier who is also a customer:
1) MR buys goods from JH on credit terms; 2) JH agrees to make contra entries
in MRs’ individual ledger accounts. Which of JH’s accounting records are affected
by them?
22)Which event(s) qualify as adjusting event under IAS 10? 1) A decline in the
market value of investments; 2) The declaration of a dividend on equity shares; 3)
The determination of the cost of assets purchased before the end of the reporting
period
Answer: 3 only
23)TN maintains a purchases ledger control account in its general ledger. The
bookkeeper is extracting a trial balance from a general ledger. Which errors
cause trial balance unequal? 1) Transposition error; 2) Error of omission; 3) Error
of principle
Answer: 1, 2, 3 and 4
Answer: $2,255
Answer: 1 and 3
30) AT’s financial statements for year end 31 Dec shows: In 20X6, inventory
120000, receivables 175000, payables 215000; In 20X5, inventory 100000,
receivables 140000, payables 175000. What is the overall effect of the above on
AT’s cash flows for 20X6?
31) FD’s non-current assets at 1 Nov 20X5 had a carrying amount of $2,758,940.
During the year to 31 Oct 20X6, assets with a carrying amount of $273,790 were
sold at loss of $15,850, and new assets costing $568,900 were purchased. What
is net cash used?
Answer: $310,960 is net cash used in investing cash flows for year to 31
Oct 20X6
32) MS starts its business on 1 Jan 20X6 when has no inventories. During 20X6:
purchases $455,000, carriage inwards $24,000, carriage outwards $29,000.
Closing inventories at 31 Dec 20X6 are $52,000. Find cost of sales for year
ended 31 Dec 20X6.
Answer: $427,000
35)The financial statements of a company show that during the past year the
company has: (1) Raised a long term loan to finance the purchase of non-current
assets; (2) Reduced the value of closing inventory. How are the current ratio and
gearing affected in comparison to last year?