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Fraud can be conducted by employees or management. Management fraud can be hard to detect and may not seem like fraud at all as often company performance improves.
Which ONE of the following would be an example of management fraud?
Refer to the exhibit.
A company has the following debt in the statement of financial position
The finance cost to be charged to the income statement is
The suspense account of a company was opened with a credit balance of $360 when the trial balance failed to agree.
This could have arisen because
Refer to the Exhibit.
Wilton Limited is preparing its year-end accounts and is calculating a revised allowance for receivables.
An aged receivables schedule shows the following position:
Included in the 3 months plus debt is an amount of $2,300 for a customer that has recently gone into liquidation. The current allowance for receivables is $4,200.
The charge to the income statement for the period and the net receivables figure on the statement of financial position will be:
Refer to the Exhibit.
Soffit plc is calculating its irrecoverable debt charge and allowance for receivables for inclusion in its year-end accounts. Based on an aged receivables schedule, it is estimated that an allowance for receivables of $125,820 is required.
In addition, a specific allowance for receivables of $18,640 is also required for two customers who are experiencing cash flow difficulties. There are also two customers who have gone into receivership while owing the company $6,300. The current allowance for receivables is $156,000.
Which is the correct entry to be made to the accounts to record these transactions?
An audit trail is an essential part of an efficient, complete accounting system
Why is an audit trail important?
Refer to the Exhibit.
The following information is given at a manufacturer ' s year end:
Using some or all of the above figures, the correct figure for factory cost of goods completed is:
Refer to the Exhibit.
Which of the following accounting entries are required to record a loss arising on disposal of a non-current asset?
The accounting entries required to record a loss arising on disposal of a non-current asset are
The Framework is described as a conceptual framework when used in the creation of new accounting standards.
Which ONE of the following describes the approach of the Framework?
An invoice to Sammy has been entered in the sales day book as $85 instead of $58.
To correct the position, which of the following procedures should be adopted?
UVW is preparing its manufacturing account for the year ended 30 June 20X7 The following information is available:
What is UVWs prime cost for year ended 30 June 20X7?
If the royalty cost falls on items used in the manufacturing process, which TWO of the following would be true?
BCD has the following balances for the year ended 31 December 20X8:
What is the trade payables balance of BCD at 31 December 20X8? Give your answer to the nearest $ " 000.
Refer to the exhibit.
The trial balance of Monchu Partnership, as at 30 June 2006, has a suspense account. Subsequent investigations revealed that:
(1) A payment of £352 to Mr. Tan was posted as £325.
(2) A remittance of £450 received from Arumugam was credited to Armits accounts.
(3) Salaries of £12000 have not been posted from the cash book.
Monchu suggested the following adjustments:
The appropriate journal entries are:
Which of the following does not necessarily need to be true for something to be treated as an asset in an entity ' s statement of financial position?
Refer to the Exhibit.
The sales day book for the last month, appeared as follows:
The entries which should be made in the ledger accounts are:
The answer is:
Refer to the exhibit.
The following extracts from the statement of financial position and income statement for Company S are available:
Included in operating profit was depreciation of $120,000 and a loss on disposal of non-current assets of $48,000.
The cash generated from operations for year 2 would be:
A company ' s financial statements show a gross profit of $15 million. A major error in the inventory value system has been discovered resulting in an overstatement on opening inventory of $1.2 million and an understatement in closing inventory of $1.5 million.
What is the correct gross profit figure for the period?
The trial balance shows the debit total as $200 less than the credit total.
This could be due to:
A business has come to you for advice. There are about to start trading and want to ensure that they keep appropriate accounting records that will grow with their business, save time and produce useful information. They have already established books of prime entry.
Which of the following would you also suggest they use?
What will be the effect on the draft financial statements if the closing inventory figure is increased?
On 1 April 2006, a company was owed $13,560 by a customer. During the month of April the customer purchased goods for $6,800 and returned goods valued at $1,200. A cheque for $8,480 was received from the customer but was subsequently dishonored by the bank. The balance on the customer ' s account at the end of the month is:
LMN ' s totals for its sales day book and its cash receipts book for the month ended 31 January 20X6 are as follows
What is the total value for sales that LMN will post to the sales account in the nominal ledger for January 20X6?
Which of the following is an example of where the historic cost convention should be applied?
The Subscriptions Receivable account of a club commenced the year with subscriptions in arrears of £250 and subscriptions in advance of £375.
During the year £62,250 was received in subscriptions, including £200 of the arrears, and £600 for next year ' s subscriptions. Subscriptions still owing at the end of the year amounted to £180.
The amount to be taken to the Income and Expenditure for the year is
An external audit is an independent examination of, and expression of opinion on the financial statements of an entity.
Who of the following appoints the external auditor?
Refer to the Exhibit.
Transactions are often categorized between capital and revenue
Which of the following combinations are correct?
The statement of cash flow is a primary statement.
Which of the following gives the best description of the information provided to users by a statement of cash flow?
Which of the following transactions would be classified as a capital transaction?
Refer to the Exhibit.
The following information is available for a company for the period:
The value of sales invoices for the period was:
Which THREE of the following items would be classified as " capital transactions " ?
Refer to the exhibit.
The following is an extract from the trial balance of a business for its most recent year:
Gross profit has already been calculated as being $75,000. Depreciation is to be provided at 25% on the reducing balance, and the allowance for receivables for doubtful debts is to be amended to 5% of receivables.
Using some or all of the above figures, the correct net profit is
The balances of the trial balance of CDE for the year ended 31 May 20X4 is as follows
What must the balance on the share capital account be at 31 May 20X4 if the trial balance is to balance? Give your answer in $’000
Company H receives a 10% discount on its order from supplier GD. Which ONE of the following does the discounted amount count as for Company H?
W and Partners has an opening capital balance at 1 January of £14,640 credit.
During the period there was an increase in assets of £6,820 and an increase in liabilities of £5,400.
The balance on the capital account at the end of the period is:
Principles based accounting uses a conceptual basis to provide guidelines for preparing financial statements.
Which ONE of the following is an example of this approach?
Accounting standards are used to produce the financial statements of all business entities.
Which ONE of the following best describes why accounting standards are needed?
Non-current assets can be divided between intangible and tangible assets.
Which THREE of the following are intangible assets?
Refer to the Exhibit.
At the beginning of the year, the balance on the allowances for receivables account was £5000, representing 2% of receivables. At the end of the year, receivables amounted to £150000, but it was decided that the provision should be increased to 3% of receivables.
Which of the following set of figures would result?
The answer is:
The system of double entry book keeping relies upon accuracy of entries
Which of the following combinations represent credit balances?
Which one of the following is an example of where the accrual or matching convention should be applied?
The purpose of the external audit is the examination of, and expression of opinion on the financial statements of an entity.
What is the purpose of internal audits?
Which ONE of the following organizations issues International Accounting Standards (IFRS’s)?
Refer to the Exhibit.
John, an employee of Kelt Ltd, earns gross wages for a week of £425.76.
Income tax is deducted at a rate of 25% on all earnings in excess of £85.00 per week and he is also liable to pay National Insurance contributions of 9% of his total earnings. Employers national insurance contributions are at a rate of 10.5%.
What are the correct ledger entries in the accounts of Kelt Ltd?
The answer is:
The following are extracts from CD ' s financial statements for the year to 31 December 20X2:
What is the return on capital employed percentage (ROCE) for CD for the year ended 31 December 20X2?
The balance on LMN ' s cash account at 31 December 20X6 is $108,000 (debit) On performing the monthly bank reconciliation the following is discovered.
• a payment of $2,000 made to a supplier has not yet appeared on the bank statement,
• an automated receipt from a customer for $5,000 has not yet been recorded in the cash book, and
• a pigment to a supplier of $1,500 was incorrectly recorded in the cash book as $1,050
The balance showing on the bank statement at 31 December 20X6 is
Which THREE of the following internal controls are procedures to help detect errors?
Refer to the Exhibit.
A business which is not VAT registered, purchased stationery items on credit costing £500 excluding VAT. The rate of VAT on the goods was 17.5%.
What are the correct ledger entries?
The answer is:
In a cash flow statement, which one of the following would not be found under the section " cash flows from operating activities " ?
Refer to the Exhibit.
A company that is VAT-registered has the following transaction for the month of March. All purchases were in respect of goods for resale and all items were subject to VAT at 17.5%.
Opening inventory was $16,200 and closing inventory was $18,400.
The gross profit for the period was
Refer to the Exhibit.
Which of the following items should be included in the valuation of inventory in a manufacturing company?
As well as independence other essential elements of internal audit can be identified.
Which THREE of the following would be classed as essential elements of internal audit?
One of the main responsibilities of internal auditors is to check the operational systems within their organization to establish whether the system ' s internal controls are sufficient and in full operation.
Which THREE of the following are examples of internal controls?
Refer to the exhibit.
A suspense account shows a credit balance of $230 which has arisen because of the recording of a gas bill twice in the gas account.
In order to correct the error, which one of the following journal entries is required?
The correct journal entry is
Refer to the Exhibit.
A company has the following chart of accounts:
The sales director of the northern region wants to know what the total sales of widgets are for the first quarter of the year.
Which code would he request for his report?
Refer to the exhibit.
ABC issued 200,000 $0.50 equity shares at a price of $1.80. This amount was received in cash
What is the correct journal to record this issue?
A company has a receivables balance at the end of the year of £120,000. The company maintains an allowance for receivables at 3% of closing receivables. The opening balance on the allowance was £ 2,880. During the year bad debts of £ 3,000 were written off
The total charge for bad debts for the year is £
The financial statements are produced in accordance with relevant accounting standards. This compliance ensures the requirement of fair presentation of transactions and events is met
How is this compliance emphasized?
MHJ purchased an asset for £53,500, which incurred a delivery charge of £20,000. MHJ decided to set a depreciation rate of 15% per annum for the asset.
In its second year, the asset is re-valued at 180% of the net carrying value of the previous year.
What will be the asset ' s net carrying amount by the end of its second year?
Refer to the exhibit.
A business has the following capital and long-term liabilities:
It calculates its gearing ratio as the proportion of debt to total capital.
At the end of the current year, its gearing ratio, compared with that of the previous year, is:
On 1 January 2001, a company owed a supplier £840.
During the month of January the company purchased goods for £1400 and returned goods valued at £200. A payment of £200 was made towards the outstanding balance. The supplier offered a discount of 5% on purchases.
The balance on the supplier ' s account at the end of the period is:
Company X wants to find the total of all the transactions from its sales account. Where should Company Xlook?
STU has an accounting period end of 31 December 20X8 During the year STU paid $4,800 for business insurance to cover the year to 30 June 20X9 The amount paid for business insurance for 30 June 20X8 was $4,500.
What is the insurance expense to be recognized in the statement of profit or loss of STU for the year ended 31 December 20X8? Give your answer to the nearest $
Which of the following is an example of where the materiality convention should be applied?
DE has the following incomplete non-current register extract at 301 at December 20X7:
What is the useful economic life (UEL) (in years) of this asset which should be entered into the non-current asset register?
EFG pays employees $10 per hour The following rates of tax and social security are applicable.
An employee works 38 hours in a week.
What is the amount employee receives for one week’s work? Given you answer to the nearest $.
AB sold a machine for $15,000 The machine had originally cost $160,000 and al the dale of disposal had a carrying value of $26,000.
The journal entry lo record this disposal is:
A)
B)
C)
D)
Financial statements should present fairly the financial position, financial performance and cash flows of an entity. In virtually all circumstances, a fair presentation is achieved by..........
Which of the following?
A ledger account is opened with a credit balance of $400. During the period the account is credited with $5,800 and debited with $6,500
What balance will open this account in the following period?
Refer to the Exhibit.
The following totals appear in a company ' s daybooks for the month of May. VAT is recoverable on all purchases which were in respect of goods for resale.
Opening inventory was £350,00 and closing inventory was $37,500.
The gross profit for the period was
FGH has extracted its trial balance from its nominal ledger for the year ended 31 March 20X6 The items below have a value greater than SNil Which are debit and which are credit balances?
Refer to the exhibit.
The following information is available about the ordinary shares of a public limited company:
A shareholder who purchased 20,000 shares at a price of $1.90 will receive a dividend of
The Finance Director of EFG company has made the following statements regarding the recording of expenditure relating to the entity ' s property, plant and equipment (PPE) in the nominal ledger.
Which THREE of the following statements are true?
A purchase of fixed assets was debited to the purchases account.
This resulted in:
Which THREE of the following would be recorded as a debit balance in the trial balance?
A company has total equity of $350,000 and a 5% debenture of $150,000. The net profit before interest for the period was $60,000.
The return on equity is
ABC produces accounts lo the year ended 31 December annually Extracts from the most recent financial statements are.
Calculate the average inventory days ratio for the year ended 31 December 20X4.
Give your answer to the nearest day
Refer to the Exhibit.
A club receives the following fees in its first two years of operations:
Entrance fees are to be recognized over a period of 5 years while life membership fees are to be credited over a period of 10 years.
The total amount of fees which will be recognized in the income and expenditure account for each of the two years is:
At 1 January 20X8 JKL has share capital of $500,000 and share premium $270,000. The nominal value of each equity share is 50 cents On 31 July 20X8 JKL made a 1 for 4 bonus issue.
What is the balance on share premium following the bonus issue of shares? Give your answer to the nearest $ ' 000
A trader commenced business with capital of $20,000. At the end of the financial year he had receivables of $10,000, payables of $6,000, inventory of $12,000, cash of $4,000 and non-current assets costing $16,000.
The profit/loss for the period was:
A company which is VAT-registered receives an invoice for goods purchased for resale totaling $2,585 from a supplier that is not VAT-registered. VAT is at the rate of 17.5%.
The correct entry to record the invoice is:
A)
B)
C)
D)
Refer to the exhibit.
ABC has the equity balances at the end of year 1.
During year 2 ABC issues 100,000 new shares at a price of $1.10
What is the balance on share premium at the end of year 2?
Refer to the exhibit.
A company has the following equity balances at the beginning of the year
During the year the company made a bonus issue of 1 for 4 shares
What are the equity balances after this issue?
IAS 2 Inventories does not permit the use of the last in. first out (LIFO) method of valuing inventory In a time of rising prices, which of the following is a reason for this?
Which one of the following is unlikely to be identified by the ratio analysis of a company ' s financial statements?
On 1 March, a company made a payment of $6,000, in respect of rent for the quarter 1 March - 31 May. The company ' s year end was 31 March.
What will be the amount of the prepayment shown in the accounts at the year end?
TESTED 02 May 2026
