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NAME: MARKS OBTAINED: STATUS:

__________________ __________________ __________________

FFA 2ND MOCK SECTION A (JUN-NOV, 2012) PREPAREDBY: SALMAN RAO

Prepare By: Salman Rao

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Q-1: which of the following error could result in a suspense account being required to balance the trial balance? a. b. c. d. Cash received from credit customer treated as cash sales. One page omitted from purchase day book. Payment to suppliers of $647 recorded as $674 in the payable ledger. A suppliers invoice for $32 recorded as $23 in the purchase account.

Q-2: Which types of error dont affect the trial balance, and are therefore not revealed by the trial balance? Reversal of entries where a debit has been posted as a credit and a credit has been posted as a debit thus cancelling each other out. An error of omission where a whole double entry is completely left out of the general ledger and therefore the trial balance. A compensating error where there are equal error on the debit and credit side of the trial balance. A transposition error where the debit the debit side of the entry has been made correctly, but the figures on the credit side have been written incorrectly. Yes / No Yes / No Yes / No Yes / No

Q-3: Which three of the following errors/omission would create the need to use a suspense account for a sole trader? The owners personal telephone calls have been charged to business. In the cash book, the telephone column has been overcast. The telephone ledger account balance has been undercast. The owner has paid a business telephone bill with a personal cheque. True / False True / False True / False True / False

Q-4: Blunder boys trial balance didnt balance and a suspense account was opened to restore equality. It was discovered that: 1. The sales return day book had been overcast by $270; 2. An invoice for $2,600 was incorrectly entered in the sales day book at $6,200; 3. A cheque for $500from a credit customer had been debited to payable in error. What was the original balance on the suspense account? a. b. c. d. $500 credit $1,000 credit $3,600 credit $270 credit

Q-5: A company receives a cash discount of $35 from a supplier. The amount is debited to the discount received account, as a result net profit is: a. b. c. d. Overstated by $70 Unaffected Understated by $70 Understated by $35 Page 2

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Q-6: Which of the following error could explain a suspense account balance of $50(debit) on a preliminary trial balance? a. b. c. d. An invoice for $550was recorded as $500 in the receivable ledger. Discount received of $50 had been omitted from the trial balance. The total column of cash book payments side was overcast by $50. The credit side of cash account was undercast when the nominal ledger was balanced off.

Q-7: Clangers trial balance didnt balance and a suspense account was opened to restore equality. It was discovered that. 1. Telephone expense of $673 had been entered in the telephone account as $763; 2. A purchase invoice of $2,340 had been entered in purchased day book as $3,240; and 3. Discount received of $264 had been debited to the discounts allowed account. What was the original balance on the suspense account? $____________. Q-8: A trial balance has failed to agree. The total of debits amounted to $157,800; the credit balance totalled $155,300. The difference was posted to suspense account. Which of the following would explain this difference? a. An invoice for the purchase of inventory was omitted from the accounts. b. An invoice for advertising cost $1,125 debited to advertising account and in bank account as well. c. Local taxes paid were recorded as Dr bank $2,500; Cr local taxes $2,500. d. A sundry receipt $1,125 was debited to income and credited to cash Q-9: An item of inventory cost $60, additional import duties are $20 and a Govt. subsidy of $10 applies. The replacement cost of the inventory is $45 and its selling price is $100. Marketing costs are 10% of selling price and further cost to completion are $40. Item shows in the accounts at $________ Q-10: Trade receivable and payables in the financial statement of a sales tax registered trader will appear as described by which of the following? a. The sales tax is deducted and added to the sales tax account in the balance sheet. b. Sales tax does not appear in the balance sheet because the business simply acts as a collector on behalf of the tax authorities. c. Inclusive of sales tax in the balance sheet. d. Exclusive of sales tax in the balance sheet. Q-11: If a business is registered for sales tax, it can reclaim input tax on all its purchases. a. True b. False

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Q-12: Paper Is Us Co, manufacture stationery and make up their accounts to 30 June each year. During the inventory count at 30 June 19X8, it was discovered that a consignment of stationery of a large standard size had been damage as a result of a burst water pipe. Fortunately the damage had been confined to the edges of paper, and it would be possible to reduce this to stationery of a smaller standard size by cutting of the damage portion. The normal cost of this quantity of larger standard size paper would be $12,900 and it would sell for $16,000.an equivalent quantity of the smaller standard size paper would normally cost $8,000 to produce and sell for $10,600. The companys marketing, selling and distribution costs are calculated at 9% of cost. The estimated costs of reducing the damage paper to the smaller standard size are $500. What would be the year end value of this inventory item? Year-end value of $_________ Q-13: Which two of the following descriptions are correct? Average cost calculates a new weighted average cost calculated upon each delivery. Replacement cost is calculated as the selling price of inventory less any further cost to completion or cost of selling the inventory. FIFO assumes s that inventory is used in the order of delivery. LIFO assumes s that inventory is used in the order of delivery. True / False True / False True / False True / False

Q-14: Beta soft sells computer software and values inventory on a FIFO basis. In a period of falling prices what will be the impact on profit of using this basis of inventory valuation? a. b. c. d. Profit will increase as the value of closing inventory decrease. Profit will decrease as the value of closing inventory decrease. Profit will increase as the value of closing inventory increase. Profit will decrease as the value of closing inventory increase

Q-15: The following transactions were recorded in a companys books during one week of its trading year: Trade purchases (at list price) $4,500 Sales on credit (at list price) $6,000 Purchase of van. $10,460 Purchase of a car for a sales representative (80% business use, 20% $8,600 personal use) A settlement discount of $300 is available on the sales. All figures are given exclusive of sales tax at 17.5%. If the balance on sales tax account was $2,165 credit at the beginning of the week, what is the balance at the end of the week?
a. b. c. d. $502.50 credit $597.00 debit $597.00 credit $544.50 credit

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Q-16: For Joanne the prime cost of production of each unit of inventory is $50 (including carriage inwards of $11 and import duties of $1 on the raw material elements). Production overheads amount to $15 per unit. Currently the goods can only be sold if they are modified at a cost of $17 per unit. The selling price of each modified unit is $90 and selling costs are estimated at 10% of selling price. At what value should each unmodified unit of inventory be included in the balance sheet? a. b. c. d. $54 $81 $64 $48

Q-17: If closing inventory was overvalued by $10,000, which of the following statement are correct? a. b. c. d. Gross profit understated by $10,000 with no effect on net profit. Both net and gross profit understated by $10,000. Both net and gross profit overstated by $10,000. Gross profit overstated by $10,000 with no effect on net profit.

Q-18: Which of the following statement is correct concerning the sales figure in the income statement of a trader registered for sales tax? a. b. c. d. It will include only standard rated sales. It will include sales tax charged on sales invoices. It will be reduced by input tax charged on purchases. It excludes sales tax charged on sales invoices.

Q-19: Floor made purchases in the year which can be seen in the table below. At the yearend, 200 units are in inventory but 14 are damaged and are only worth $10 per unit. These are identified as having been part of the 11.11.X9 delivery. Floor operates a FIFO system for valuing inventory. UNITS $/UNIT 21.1.X9 100 12.00 30.4.X9 300 12.50 31.7.X9 40 12.80 1.9.X9 60 13.00 011.11.X9 80 13.50 The figure for inventory at 31.12.X9 is $_________ TOTAL($) 1,200 3,750 512 780 1,080

Q-20: Anny sold goods on credit for $100,000 plus tax @15%. She also offered a settlement discount of 5% and a bulk quantity discount of 10%. What amount she has shown in her sales invoice? $_____________

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Q-21: Opening inventory is $3,950 and closing inventory is $5,200. Sales for the year are $31,400 and these have been achieved at a mark-up of 30% on cost. What are the purchases for the year to the nearest dollar? $_____________. Q-22: A grocery business has net assets (assets less liabilities) of $36,000 at 31-Jan-X7 ant the net profit for the year to 31-Jan-X7 was $29,150. On 31-Aug-X6 the proprietor introduced additional capital of $5,000. He also withdrew $500 per month and on 24-Dec-X6 withdrew goods amounting to $250 which could be sold at $600. What were the net assets at 1-Feb-X6? $____________. Q-23: Which of the following formulae are correct? Cost of goods sold = closing inventory + purchases opening inventory. Cost of goods sold + closing inventory opening inventory = purchases. Payment to trade payable + opening payables closing payables = credit purchases. Credit sales = closing receivables + payments from trade receivables opening receivables. Correct / Incorrect Correct / Incorrect Correct / Incorrect Correct / Incorrect

O-24:The net profit earned by a business in the year ended 31 December 19X9 was $8,500. Statement of financial positions of the business at 1 January and 31 December 19X9 showed net assets $84,300 and $92,500 respectively. The proprietor made regular cash drawings of $150 per month and also pools win and put the whole of his winnings into the business as new capital. Calculate the amount by which the cost of goods withdrawn by the proprietor exceeds or falls short of the amount of his pools win. A. Goods withdrawn exceed pools winnings by $300
B. Goods withdrawn exceed pools winnings by $1,500 C. Goods withdrawn fall short of pools winnings by $300 D. Goods withdrawn fall short of pools winnings by $1,500 Q-25: What is a book of prime entry?

A. A ledger account where transactions are originally recorded. B. A record in which transactions are originally recorded before being transferred to a ledger account. C. A separate ledger where details of a particular type of transaction are recorded in parallel to the recording in the general ledger. D. A set of memorandum ledger accounts which back up the total figures recorded in the general ledger.

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Q-26: Paul's stock at 31st May 2003 cost $48,350.This included some items at a cost of $3,500,
which had been in stock tor almost a year. Paul intends to advertise these items for sale at a price of 2500.The advertising will cost $800.What value should be included in Paul's statement of financial st position at 31 May2003 for closing stock? A. $43,150 B. $46,550 C. $47,350 D. $48,150
Q-27: At 30 September 2003 the closing inventory amounted to $386,400. The following items Excluded in this total cost: (1) 1,000 items, which had cost needed $18 each. These items were all sold in October 2003 for $15 each, with selling expenses of $800 (2) Five items which had been in inventory since 1973, when they were purchased for $100 each, sold in October 2003 for $1,000 each, net of selling expenses . What figure should appear in the statement of financial position at 30 September 2003 for inventory? $__________________.

Q-28: A fire on 30 September destroyed some of a companys inventory and its inventory records. The following information is available: $ Inventory 1 September 318,000 Sales for September 612,000 Purchases for September 412,000 Inventory in good condition at 30 September 214,000 Standard gross profit percentage on sales is 25% Based on this information, what is the value of the inventory lost? A. $96,000 B. $271,000 C. $26,400 D. $57,000 Q-29: If a margin is 15% the Markup would be _______%. Q-30:

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