ACCA Paper F3 (Financial Accounting)

ACCA Paper F3 (Financial Accounting)

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  •  -
  • ACCA Paper F3 (Financial Accounting)

    Please chose answer to each multiple choice question.
  • FM=50 Marks (25Q X 2 Marks)

    PM=25 Marks

    Total Time Allowed : 1 hr (60 Mins)

  • 1. Which of the following are advantages of trading as a limited liability company?
    1 Operating as a limited liability company makes raising finance easier because additional shares can be issued to raise additional cash.
    2          Operating as a limited liability company is more risky than operating as a sole trader because the shareholders of a business are liable for all the debts of the business whereas the sole trader is only liable for the debts up to the amount he has invested.


    A 1 only
    B 2 only
    C Both 1 and 2
    D Neither 1 or 2

  • 2. Which of the items listed below could appear in an entity’s statement of changes in equity?


    (i) Profit for the year.
    (ii) Closing inventory.
    (iii) Loans.
    (iv) Proposed dividends.
    (v) Dividends paid.

  • 3. Which of the following choices comprises the four enhancing qualitative characteristics of financial information based upon the IASB's Conceptual Framework for Financial Reporting?


    A Comparability, verifiability, timeliness and understandability
    B Relevance, reliability, prudence and understandability
    C Relevance, faithful representation, prudence and accruals
    D Relevance, reliability, prudence, and understandability

  • 4. Which groups of people are most likely to be interested in the financial statements of a sole trader?


    1 Shareholders of the company
    2 The business’s bank manager
    3 The tax authorities
    4 Financial analysts

    A 1 and 2 only
    B 2 and 3 only
    C 2, 3 and 4 only
    D 1, 2 and 3 only

  • 5. Which ONE of the following is NOT an objective of the IFRS Foundation?


    A Through the IASB, develop a single set of globally accepted International Financial Reporting Standards (IFRSs)
    B Promote the use and rigorous application of International Financial Reporting Standards (IFRSs)
    C Ensure International Financial Reporting Standards (IFRSs) focus primarily on the needs of global, multi-national organisations
    D Bring about the convergence of national accounting standards and IFRSs

  • 6. Which ONE of the following statements correctly describes the contents of the Statement of Profit or Loss?


    A A list of ledger balances shown in debit and credit columns
    B A list of all the assets owned and all the liabilities owed by a business
    C A record of income generated and expenditure incurred over a given period
    D A record of the amount of cash generated and used by a company in a given period

  • 7. Which of the following statements is/are true?


    1 The IFRS Interpretations Committee is a forum for the IASB to consult with the outside world.
    2 The IFRS Foundation produces IFRSs. The IFRS Foundation is overseen by the IASB.
    3 One of the objectives of the IFRS Foundation is to bring about convergence of national accounting standards and IFRSs.

    A 1 and 3 only
    B 2 only
    C 2 and 3 only
    D 3 only

  • 8. Which of the following best describes corporate governance?


    A Corporate governance is the system of rules and regulations surrounding financial reporting.
    B Corporate governance is the system by which companies and other entities are directed and controlled.
    C Corporate governance is carried out by the finance department in preparing the financial statements.
    D Corporate governance is the system by which an entity monitors its impact on the natural environment.

  • 9. Which one of the following can the accounting equation can be rewritten as?
    A Assets + profit – drawings – liabilities = closing capital
    B Assets – liabilities – drawings = opening capital + profit
    C Assets – liabilities – opening capital + drawings = profit
    D Assets – profit – drawings = closing capital – liabilities

     

  • 10. The profit made by a business in 20X7 was $35,400. The proprietor injected new capital of $10,200 during the year and withdrew a monthly salary of $500.


    If net assets at the end of 20X7 were $95,100, what was the proprietor's capital at the beginning of the year?


    A $50,000
    B $55,500
    C $63,900
    D $134,700

  • 11. Which of the following documents should accompany a return of goods to a supplier?


    A Debit note
    B Remittance advice
    C Purchase invoice
    D Credit note

  • 12. Which of the following are books of prime entry?
    1 Sales day book
    2 Cash book
    3 Journal
    4 Purchase ledger

    A 1 and 2 only
    B 1, 2 and 3 only
    C 1 only
    D All of them 

  • 13. A sole trader took some goods costing $800 from inventory for his own use. The normal selling price of the goods is $1,600.
    Which of the following journal entries would correctly record this?
                                                   Dr        Cr
                                                    $          $
    A Inventory account                800
                Purchases account                  800
    B Drawings account                800
                Purchases account                  800
    C Sales account                       1,600
                Drawings account                   1,600
    D Drawings account                800
                Sales account                          800

  • 14. Smith Co has the following transactions:
    1 Purchase of goods on credit from T Rader: $450
    2 Return of goods purchased on credit last month to T Rouble: $700


    What are the correct ledger entries to record these transactions?
    A Dr Purchases $450
       Dr Purchase Returns $700
       Cr Cash $450
       Cr Trade Payables $700


    B Dr Purchases $450
       Dr Trade Payables $700
       Cr Purchase Returns $1,150


    C Dr Purchases $450
       Dr Trade Payables $250
       Cr Purchase Returns $700


    D Dr Purchase Returns $700
       Dr Purchases $450
       Cr Trade Payables $1,150

  • 15. You are given the following information:
    Receivables at 1 January 20X3 $10,000
    Receivables at 31 December 20X3 $9,000
    Total receipts during 20X3 (including cash sales of $5,000) $85,000


    What are sales on credit during 20X3?
    A $81,000
    B $86,000
    C $79,000
    D $84,000

  • 16. Which of the following statements is/are TRUE or FALSE?
    1 Cash purchases are recorded in the purchases day book.
    2 The sales day books is used to keep a list of invoices received from suppliers.

    A Both statements are TRUE
    B Both statements are FALSE
    C Statement 1 is TRUE and statement 2 is FALSE
    D Statement 1 is FALSE and statement 2 is TRUE

  • 17. W is registered for sales tax. The managing director has asked four staff in the accounts department why the output tax for the last quarter does not equal 20% of sales (20% is the rate of tax). Which one of the following four replies she received was not correct?

    A The company had some exports that were not liable to sales tax.
    B The company made some sales of zero-rated products.
    C The company made some sales of exempt products.
    D The company sold some products to businesses not registered for sales tax.

  • 18. The following information relates to Eva Co's sales tax for the month of March 20X3:
    Sales (including sales tax) $109,250
    Purchases (net of sales tax)$64,000
    Sales tax is charged at a flat rate of 15%. Eva Co's sales tax account showed an opening credit balance of $4,540 at the beginning of the month and a closing debit balance of $2,720 at the end of the month.

    What was the total sales tax paid to regulatory authorities during the month of March 20X3?
    A $6,470.00
    B $11,910.00
    C $14,047.50
    D $13,162.17

  • 19. Alana is not registered for sales tax purposes. She has recently received an invoice for goods for resale which cost $500 before sales tax, which is levied at 15%. The total value was therefore $575.
    What is the correct entry to be made in Alana’s general ledger in respect of the invoice?
    A Dr Purchases $500, Dr Sales tax $75, Cr Payables $575
    B Dr Purchases $575, Cr Sales tax $75, Cr Payables $500
    C Dr Purchases $500, Cr Payables $500
    D Dr Purchases $575, Cr Payables $575

  • 20. The following sales tax account has been provided by Jenny for the quarter ended 30 June 20X9. The account was prepared by an inexperienced book keeper.

     

     

    What is the correct sales tax balance for the quarter ended 30 June 20X9?
    A $160,245 debit
    B $146,895 credit
    C $160,245 credit
    D $123,995 credit

  • 21. The inventory value for the financial statements of Global Co for the year ended 30 June 20X3 was based on a inventory count on 7 July 20X3, which gave a total inventory value of $950,000. Between 30 June and 7 July 20X6, the following transactions took place.
    Purchase of goods 11,750
    Sale of goods (mark up on cost at 15%) 14,950
    Goods returned by Global Co to supplier 1,500

    What figure should be included in the financial statements for inventories at 30 June 20X3?
    A $952,750
    B $949,750
    C $926,750
    D $958,950

  • 22. Which of the following costs may be included when arriving at the cost of finished goods inventory for inclusion in the financial statements of a manufacturing company?
    1 Carriage inwards
    2 Carriage outwards
    3 Depreciation of factory plant
    4 Finished goods storage costs
    5 Factory supervisors' wages

    A 1 and 5 only
    B 2, 4 and 5 only
    C 1, 3 and 5 only
    D 1, 2, 3 and 4 only

  • 23. The closing inventory at cost of a company at 31 January 20X3 amounted to $284,700.
    The following items were included at cost in the total:

    400 coats, which had cost $80 each and normally sold for $150 each. Owing to a defect in manufacture, they were all sold after the reporting date at 50% of their normal price. Selling expenses amounted to 5% of the proceeds.

    800 skirts, which had cost $20 each. These too were found to be defective. Remedial work in February 20X3 cost $5 per skirt, and selling expenses for the batch totalled $800. They were sold for $28 each.

    What should the inventory value be according to IAS 2 Inventories after considering the above items?
    A $281,200
    B $282,800
    C $329,200
    D None of these

  • 24. A company values its inventory using the first in, first out (FIFO) method. At 1 May 20X2 the company had 700 engines in inventory, valued at $190 each.
    During the year ended 30 April 20X3 the following transactions took place:
    20X2
    1 July Purchased 500 engines at $220 each
    1 November Sold 400 engines for $160,000
    20X3
    1 February Purchased 300 engines at $230 each
    15 April Sold 250 engines for $125,000

    What is the value of the company's closing inventory of engines at 30 April 20X3?
    A $188,500
    B $195,500
    C $166,000
    D None of these figures

  • 25. The information below relates to inventory item Z. March 01  50 units held in opening inventory at a cost of $40 per unitMarch 17  50 units purchased at a cost of $50 per unitMarch 31  60 units sold at a selling price of $100 per unitUnder AVCO, what is the value of inventory held for item Z at the end of March 31?A $4,000 B $1,800 C $2,000 D $2,500
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