Past Paper Essay

Knowledge module Financial Accounting (International) Time allowed: 2 hours ALL FIFTY questions are compulsory and MUST be attempted. Do NOT open this paper until instructed by the supervisor. This question paper must not be removed from the examination hall. The Association of Chartered Certified Accountants Paper F3 (INT) ALL 50 questions are compulsory and MUST be attempted Please use the Candidate Registration Sheet provided to indicate your chosen answer to each multiple choice question. Should details of material adjusting or material non-adjusting events after the balance sheet date be disclosed in the notes to financial statements according to IAS 10 Events After the Balance Sheet Date? A B Adjusting events Non-Adjusting events (1 mark) 2 At 30 June 2005 a company’s allowance for receivables was $39,000. At 30 June 2006 trade receivables totalled $517,000. It was decided to write off debts totalling $37,000 and to adjust the allowance for receivables to the equivalent of 5 per cent of the trade receivables based on past events. What figure should appear in the income statement for the year ended 30 June 2006 for these items? A B C D $61,000 $22,000 $24,000 $23,850 (2 marks) 3 In times of rising prices, what effect does the use of the historical cost concept have on a company’s asset values and profit? A B C D Asset values and profit both understated Asset values and profit both overstated Asset values understated and profit overstated Asset values overstated and profit understated. (2 marks) 4 The IASB’s Framework for the preparation and presentation of financial statements gives qualitative characteristics that make financial information reliable. Which of the following are examples of those qualitative characteristics? A B C D Faithful Representation, neutrality and prudence Neutrality, comparability and true and fair view Prudence, comparability and accruals Neutrality, accruals and going concern (2 marks)5 The following bank reconciliation statement has been prepared by a trainee accountant: Overdraft per bank statement less: Outstanding cheques add: Deposits credited after date Cash at bank as calculated above $ 3,860 9,160 5,300 16,690 21,990 What should be the correct balance per the cash book? A B C D $21,990 balance at bank as stated $3,670 balance at bank $11,390 balance at bank $3,670 overdrawn. (2 marks) 6 Which of the following calculates a trader’s net profit for a period? A B C D Closing net assets + drawings – capital introduced – opening net assets Closing net assets – drawings + capital introduced – opening net assets Closing net assets – drawings – capital introduced – opening net assets Closing net assets + drawings + capital introduced – opening net assets. (2 marks) 7 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 Drawings account 800 Inventory account 800 B C Drawings account Purchases account Sales account Drawings account 800 800 1,600 1,600 (1 mark) 8 The debit side of a company’s trial balance totals $800 more than the credit side. Which one of the following errors would fully account for the difference? A B C D $400 paid for plant maintenance has been correctly entered in the cash book and credited to the plant asset account. Discount received $400 has been debited to discount allowed account A receipt of $800 for commission receivable has been omitted from the records The petty cash balance of $800 has been omitted from the trial balance. (2 marks) 3 9 A company’s income statement for the year ended 31 December 2005 showed a net profit of $83,600. It was later found that $18,000 paid for the purchase of a motor van had been debited to the motor expenses account. It is the company’s policy to depreciate motor vans at 25 per cent per year on the straight line basis, with a full year’s charge in the year of acquisition. What would the net profit be after adjusting for this error? A B C D $106,100 $70,100 $97,100 $101,600 (2 marks) 10 Should dividends paid appear on the face of a company’s income statement? A B Yes No (1 mark) 1 The following control account has been prepared by a trainee accountant: Receivables ledger control account $ Opening balance 308,600 Credit sales 154,200 Cash sales 88,100 Contras against credit balances in payables ledger 4,600 Cash received from credit customers Discounts allowed to credit customers Interest charged on overdue accounts Bad debts written off Allowance for receivables Closing balance $ 147,200 1,400 2,400 4,900 2,800 396,800 555,500 555,500 What should the closing bal ance be when all the errors made in preparing the receivables ledger control account have been corrected?