The Institute of Chartered Accountants in England and Wales

ICAEW: Accounting
Certificate Level

Final Mock 1 - Questions

Time allowed 90 minutes

Accounting – Final mock

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Accounting – Final mock

1 Goldberg
The following trial balance was extracted from the nominal ledger of Goldberg plc on
31 December 20X1:

£ £
Sales 2,284,900
Inventories at 1 January 20X1 71,000
Purchases 1,052,100
Distribution costs 172,100
Administrative expenses 437,000
Irrecoverable debts expense 29,000
Loan interest paid 4,500
Land and buildings cost 800,000
Plant and equipment cost 224,000
Motor vehicles cost 48,800
Land and buildings accumulated depreciation at 1 January 20X1 33,000
Plant and equipment accumulated depreciation at 1 January 20X1 44,800
Motor vehicles accumulated depreciation at 1 January 20X1 24,400
Trade receivables 226,900
Cash at bank 12,600
Ordinary share capital (£1 shares) 250,000
Share premium 125,000
Bank loan 150,000
Retained earnings 101,800
Ordinary dividends paid 25,000
Trade payables 89,100
3,103,000 3,103,000
The following adjustments have yet to be accounted for:
(1) The company depreciates all its non-current assets on a straight line basis with zero residual values. Land
included in non-current assets cost £250,000 and buildings are depreciated over 50 years.
Plant and equipment is depreciated over 5 years and Motor vehicles are depreciated over four years.
Depreciation is charged as follows:
Depreciation on: Charged to:
Buildings Administrative expenses
Motor vehicles Distribution expenses
Plant and equipment Cost of sales
(2) Goldberg plc sells three products (Product Z1, Product Z2 and Product Z3). Inventory at
31 December 20X1 is made up of the following:
Item Z1 Z2 Z3
Units 1,100 2,000 1,200
Cost per unit (£) 25 15 18
100 of the units of Z3 sustained minor damage when being moved from one inventory area to another.
As a result these will only be sold for half of their normal selling price of £30 per unit.

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Accounting – Final mock

(3) Goldberg plc rents offices at a cost of £48,000 per year and pays quarterly in arrears. The last rental
payment made during 20X1 covered the quarter ending 31 October 20X1. The invoice for the following
quarter to 31 January 20X2 is yet to be received. Rent is charged to administrative expenses.
(4) Trade receivables at 31 December 20X1 include a balance of £2,300 in relation to a customer having
severe financial difficulties. Goldberg considers it very unlikely this amount will ever be recovered and
have decided to write the debt off as irrecoverable. The Irrecoverable debts expense is included in other
operating expenses.
(5) The company received the bank loan on 1 February 20X1. The loan is repayable in full on 31 July 20X9.
Interest is charged at a fixed rate of 6% per annum.
(6) A company employee dismissed during the year initiated a legal action against Goldberg in November
20X1. The likely outcome is an out of court settlement for £20,000. Provisions are charged to
administrative expenses.
(7) Income tax for the year ended 31 December 20X1 is yet to be provided for. It is estimated that £140,000
of income tax will be payable.
Requirement
Prepare the statement of profit or loss for Goldberg plc for the year ended 31 December 20X1 and the
statement of financial position at that date.
Statement of profit or loss for the year ended 31 December 20X1
£
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other operating expenses
Operating profit / (loss)
Finance costs
Profit / (loss) before tax
Income tax expense
Profit / (loss) for year

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Accounting – Final mock

Statement of financial position at 31 December 20X1

£
ASSETS
Non-current assets
Land and buildings
Plant and equipment
Motor vehicles
Current assets
Inventories
Trade receivables
Prepayments
Cash and cash equivalents
Total assets

EQUITY AND LIABILITIES

Equity
Ordinary share capital
Preference share capital
Share premium
Retained earnings
Non-current liabilities
Borrowings
Current liabilities
Borrowings
Trade payables
Accruals
Provisions
Income tax payable
Total equity and liabilities

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Accounting – Final mock

2 Tariq has been unable to calculate his business' profit or loss for the year ended 31 December 20X7 as fire
destroyed most of his accounting records. He has, however, been able to provide the following
information.
(1) Net assets at 31 December 20X6 were £31,600 and £42,900 at 31 December 20X7.
(2) He introduced capital during the year of £6,000 cash.
(3) He took cash drawings of £8,000 and goods with a selling price of £1,000. The cost of the goods was
£700.
What was Tariq's profit for the year ended 31 December 20X7?
A £3,400
B £13,300
C £14,000
D £26,000

3 A company purchases a machine for £100,000 on 1 January 20X5. The machine has an estimated useful
life of 10 years. On 1 January 20X8 the company enhances the machine by adding additional software
controls costing £40,000. These are expected to have the same remaining useful life as the machine.
The additional annual depreciation on the machine will be:
A £4,000
B £4,444
C £5,000
D £5,714

4 F, G and H are partners sharing residual profits in the ratio 3:2:1. The partnership agreement provides for
interest on capital at the rate of 6% per annum and for a salary for G of £10,000 per annum. Net profit for
20X7 was £100,000 and the balances on partners' capital accounts during the year were: F £40,000; G
£30,000; H £20,000.
What is H’s share of residual profits for 20X7?
A £14,100
B £15,300
C £28,200
D £42,300

5 A sole trader sold goods for cash for £1,000 which had cost £700.
Which elements of the accounting equation will change due to this transaction?
A Assets and liabilities only
B Assets and capital only
C Capital and liabilities only
D Assets only

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Accounting – Final mock

6 The following data has been extracted from the payroll records of a business for the month of May 20X7.
£
Net amount paid to employees 114,000
PAYE 38,000
Employer's NIC 15,600
Employees' NIC 13,400
The wage expense for the month is
A £181,000
B £152,000
C £143,000
D £114,000

7 Cooks Ltd has a petty cash float with an imprest amount of £250. At the end of March vouchers in the
petty cash box totalled £144 and the amount of cash remaining in the box was £86.
Which of the following explains the difference?
A A petty cash voucher for £20 is missing.
B An employee was given £20 too little when making a petty cash claim.
C An employee reimbursed petty cash with £20 in respect of postage stamps used, but no voucher
was prepared.
D A voucher for £20 was put in the box but no payment was made to the employee.

8 According to the Conceptual Framework for Financial Reporting, information about an entity's financial
performance helps users to:
A understand the return that the entity has generated on its economic resources
B assess the entity's ability to meet its financial commitments as they fall due
C predict how future profits and cash flows will be distributed among those with an interest in the
entity
D asses the entity's adaptability to changes in its operating environment

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Accounting – Final mock

9 A sole trader has the following information about its fixed assets.
20X7 20X6
£'000 £'000
Cost 750 600
Accumulated depreciation 250 150
Net book value 500 450

Plant with a net book value of £75,000 (original cost £90,000) was sold for £30,000 during the year 20X7.
What is the cash flow from capital expenditure for the year 20X7?
A £95,000 inflow
B £210,000 inflow
C £210,000 outflow
D £95,000 outflow

10 In the year ended 31 December 20X8 Vulcan plc, a retailer, had sales totalling £4,200,000. The mark-up
was 25% of cost. Inventories at 1 January 20X8 had a cost of £600,000 and at 31 December 20X8 of
£680,000.
What was the total of the company’s purchases during the year ended 31 December 20X8?
A £3,280,000
B £3,360,000
C £3,440,000
D £3,830,000

11 Robert buys and sells inventory during November 20X7 as follows.

Cost
Units per unit
£
5 November Opening inventory 60 8
6 November Purchases 80 9
11 November Sales at £20 each 70
14 November Purchases 60 10
20 November Sales at £21 each 40
27 November Purchases 50 11
Robert values his inventory on a FIFO basis.
What was the value of closing inventory at 30 November 20X7?
A £1,316
B £1,320
C £1,380
D £1,420

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Accounting – Final mock

12 Samech purchased a new car, giving his old car in part exchange. The bookkeeper recorded the following
entries.
DR Motor vehicles – Total price of new car
CR Cash – Cash paid for new car
CR Disposals – Part exchange value
DR Disposals – Original cost of old car
CR Motor vehicles – Original cost of old car
No other entries were made.
Which TWO of the following entries must be made in addition to the above?
A Dr Cash at bank account with the part exchange value
B Cr Accumulated depreciation account with the accumulated depreciation of the old car
C Dr Accumulated depreciation account with the accumulated depreciation of the old car
D Cr Disposals account with the accumulated depreciation of the old car
E Dr Disposals account with the accumulated depreciation of the old car

13 As at 1 June 20X8 Fara plc had 200,000 25p equity shares, which it issued in 20X2 at 80p each fully paid. It
also had 100,000 £1 5% irredeemable preference shares issued at par in 20X3. On 31 January 20X9 Fara
plc made a further issue of 50,000 £1 irredeemable 5% preference shares at £1.20 fully paid. On the same
date Fara plc made a 1 for 5 bonus issue of equity shares. Fara plc wishes to use the share premium in
respect of the bonus issue.
In its statement of financial position as at 31 May 20X9 Fara plc will have share premium of:
A £100,000
B £110,000
C £120,000
D £150,000

14 Pinot plc is a VAT registered retailer. All transactions attract VAT at the rate of 20%. For the month of
31 December 20X7, Pinot plc sold goods on credit for £31,300 exclusive of VAT and goods for cash of
£1,260 inclusive of VAT. Pinot plc also purchased goods for resale on credit for £28,800 inclusive of VAT.
It did not have any balance on its VAT account at 1 December 20X7.
What is the balance on Pinot plc's VAT account at 31 December 20X7?
A £1,460 credit
B £291 debit
C £1,670 credit
D £543 debit

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Accounting – Final mock

15 Wanda Ltd provides a warranty on goods sold which allows customers to return faulty goods within one
year of purchase. At 30 November 20X5, Wanda Ltd had a warranty provision of £6,548. During the year
to 30 November 20X6, the cost of warranty claims was £3,720. At 30 November 20X6, the warranty
provision was calculated as £7,634.
What is the amount of the warranty expense that should be included in Wanda Ltd's statement of profit
or loss for the year to 30 November 20X6?
A £7,634
B £1,086
C £4,806
D £2,634

16 On 1 April 20X7 Midge's allowance for receivables stood at £5,558. During the year:
(1) Cash of £900 was received from a credit customer whose debt had been written off many years ago.
(2) A debt of £2,100 was deemed irrecoverable and was to be written off.
At 31 March 20X8 Midge determined that the allowance for receivables needed to be £7,170.
What is the charge for irrecoverable debts expense in Midge's statement of profit or loss for the year
ended 31 March 20X8?
A £3,712
B £2,812
C £1,612
D £712

17 D and I are in partnership, sharing profits equally.

On 1 July 20X7 C joins the partnership. Under the new partnership agreement profits will be shared by D,
I and C in the ratio of 5:3:2 respectively with the following salaries:
I £30,000 pa
C £36,000 pa
Profit accrues evenly over the year. The partnership profit for the year ended 31 December 20X7 was
£360,000.
At 31 December 20X7 how should the profits for the year be appropriated?
D I C
A £147,000 £154,200 £58,800
B £147,000 £124,200 £22,800
C £163,500 £131,100 £29,400
D £163,500 £149,100 £47,400

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Accounting – Final mock

18 Which of the following transactions would normally be automatically matched by the accounting system
from the electronic banking report?
A Bonus issue of shares
B Payment of an invoice to a credit supplier
C Redemption of preference shares
D Sale proceeds of non-current assets

19 The trial balance of Kanine Bros as at 31 May 20X7 includes the following:
Debit Credit
£ £
Trade receivables 60,500
Allowance for receivables at 1 June 20X6 1,420
Subsequently a review of the receivables ledger reveals the following:
Debts totalling £2,100 are considered irrecoverable and are to be written off. The business wishes to
reduce the allowance for receivables to £800.
What is the irrecoverable debt charge or credit to be included in the statement of profit or loss for the
year ended 31 May 20X7?
A £1,480 charge
B £120 credit
C £1,480 credit
D £120 charge

20 During the year ended 31 July 20X8 George takes goods from the business for his own consumption with
a selling price of £4,800. George’s business operates a constant mark-up on cost of 20%.
What is the correct double entry to record these drawings?
Debit £ Credit £
A Stock 4,800 Sales 4,800
B Drawings 4,000 Purchases 4,000
C Drawings 3,840 Purchases 3,840
D Drawings 4,800 Sales 4,800

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Accounting – Final mock

21 Faringdon plc records £5,274 overdrawn as the bank balance in its statement of financial position at 31
December 20X0 after reconciling to the year end bank statement. The bank statement showed interest
charged of £78 which had not previously been recorded in the cash at bank account. The company noted
that payments of £564 and receipts of £1,875 have not yet appeared on the bank statement.
The bank statement at the year end showed an overdrawn balance of:
A £3,963
B £6,507
C £6,585
D £6,663

22 Sneaky plc acquired a truck on 31 December 20X1, the end of its reporting period, for £60,000. It
transferred £15,000 to the seller and handed over an old truck with a carrying amount at that date of
£18,200. This truck had cost £55,000. A further sum of £25,000 was then due to the supplier of the truck
as the final payment.
The only entries made before the initial trial balance was drawn up were to debit suspense with £40,000,
credit cash at bank £15,000 and credit other payables £25,000.
As well as crediting suspense with £40,000, which of the following sets of adjustments should Sneaky plc
record when preparing its final trial balance?
A Dr Truck – cost £5,000, Dr Truck – accumulated depreciation £18,200, Dr Disposal £16,800
B Dr Truck – cost £60,000, Dr Truck – accumulated depreciation £36,800, Cr Disposal £56,800
C Dr Truck – cost £5,000, Dr Truck – accumulated depreciation £36,800, Cr Disposal £1,800
D Dr Truck – cost £60,000, Dr Truck – accumulated depreciation £18,200, Cr Disposal £38,200

23 A summarised version of Leah plc's initial trial balance for the year ended 30 September 20X3 is as follows:
Initial trial balance Trial balance (summary)
£ £
Profit after tax 68,574
Total non-current and current assets 998,230
Current and non-current liabilities 150,344
Share capital 50,000
Retained earnings 734,656
Suspense 5,344
1,003,574 1,003,574

It has now been discovered that the bookkeeper was unsure where to record insurance costs for the current
year of £5,344, so he credited cash at bank and posted the other side of the entry to the suspense account.
When this error is corrected, the balance of retained earnings for inclusion in the statement of financial
position will be:
A £729,312
B £740,000
C £797,886
D £808,574

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Accounting – Final mock

24 Peter’s draft accounts show a loss of £22,000 for the year. On investigation you discover the following.
(1) £2,000 of repairs had been incorrectly recorded as a purchase of non-current assets (machinery) on
the last day of the year.
(2) Cash of £500, received in respect of a debt written off many years ago, had been credited to
receivables.
(3) Closing inventory includes items costing £1,000 which have already been recorded as sold.
What is the adjusted loss for the year?
A £25,500
B £24,500
C £23,500
D £19,500

25 Vargo plc is finalising its financial statements as at 30 June 20X4. In its initial trial balance at that date
Vargo plc has a figure for tax payable as at 1 July 20X3 of £32,810. The total tax charge in the statement
of profit or loss for the year to 30 June 20X4 is £35,450, and tax paid in the year was £31,960.
The tax payable balance that will appear in Vargo plc's statement of financial position as at 30 June 20X4
is:
A £29,320
B £34,600
C £35,450
D £36,300

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