A £5,100 overdrawn

B £6,000 overdrawn

C £6,250 overdrawn
D. £6,450 overdrawn
Q 23. 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?
A. Understated by £18,400
B. Understated by £16,800
C. Overstated by £18,400
D. Overstated by £16,800
Q24. 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
Q25. An organisation restores its petty cash balance to £250 at the end of each month. During October, the
total expenditure column in the petty cash book was calculated as being £210, and the imprest was restored by
this amount. The analysis columns posted to the nominal ledger totalled only £200.
Which one of the following would this error cause?
A The trial balance being £10 higher on the debit side
B The trial balance being £10 higher on the credit side
C No imbalance in the trial balance
D The petty cash balance being £10 lower than it should be
Long question:
Quentin Co has prepared the following trial balance at 31 December 20X2 (£’000)

Issued equity shares of £1 800

10% irredeemable preference shares of £1 each 200

Trade receivable and trade payable 1840 1866

Cash 230

Inventory at 1.1.X2 1950

6% debentures 1000
Sales 9500
Rental income 200
Debenture interest paid 30
Administration and general expense 650
Administration salaries 275
Distribution expense 616
Purchases 5125

Salaries associated with manufacture of goods 300

Delivery inwards 100

Property cost 300
Retain earnings 1263
Freehold land, at cost 2120
Plant and machinery at cost 2000
Acc Depreciation, Plant and machinery 900
Allowance for receivables 100
Goodwill 300
Suspense account 13
Income tax at 31 December 20X1 20
1. Closing inventories at cost amounted to £2,030,000. Within this
valuation is an item of 20,000 was count two times in errors
2. During the year, company received of £5000 from a customer in
respect of a balance that had previously been written off. The receipt
was correctly included in the cash at bank account but the system
was unable to match this transaction. At the year end the dishonor of
a cheque received for £1200 needs to be accounted for and the debt
related to it needs to be written off. And the allowance needs to be
reduced by £20,000
3. At the year end, a customer returned in good condition, some
goods which had been sold to him in October for £10,000 and which
had cost £7,500. The company returned goods that had cost £1,800
to the supplier and received a credit note for them. These
transactions have not been accounted for.
4. Company owns a number of properties which are rented to
tenants. Cash received from tenants in the year ended was £83,460
which has been included as rental income in the year. The following
information is available for the year end: rent in advance is 14,460
and rent in arrears is 870.
5. At 1 January 20X2, it traded in a plant which had cost £24,000
on 1 April 20X0 for a new plant which cost £34,600, transferring
£18,000 to the sellers bank account in full settlement of the
purchase. However the system was unable to match this transaction.
Plant and machine is depreciated at 20% straight line basic and
allocated to cost of sale. Loss/gain of disposal is allocated to cost of
sale. Property cost is charged 25% to distribution cost and 75% to
administrative expense.
6. During the year, company made a 1 for 2 right issue at £1,2 per
share and this was taken up in full. These transactions are not
accounted for.
7. 20X1 income tax paid in 20X2 is £18,000, which is omitted.
The estimated income tax due for the year end 20X2 is £25,000
8. An impairment review has shown that 10% should be written off
goodwill. The charge should be to administrative expense
9. The revenue figure includes £50,000 in relation to pre-orders for
a new product which will be released in March 20X3.
Statement of profit and loss (£’000)

Sale
COS
Gross profit
other income (rent income
Ad expense
Dis cost
FC
profit before tax
tax expense
net profit

Statement of financial position

NCA
Freehold land, at cost
Plant and machinery at cost
Goodwill
CA
Inventory
TR
Accrual income
Prepayment
Cash and cash equivalent
total asset
Equity
Share capital
Share premium
RE
Irredeemable preference
Liabilities
NCL
Debenture
CL
TP
Accruals
Deffered income
Tax payable
Total equity + liabilities