Fa2 Mock 1 Answers
Fa2 Mock 1 Answers
Fa2 Mock 1 Answers
Wilma has a record of an asset which she cannot find. This discrepancy would be
explained if no record was made when the asset was sold.
However, the supplier's invoice not yet being received would not explain the
discrepancy as this would only be the case if there was a physical asset but no record.
2 Correct Answer
$199
The charge to the statement of profit or loss will include the irrecoverable debt written
off of $320 less the reduction in the receivables allowance of $121 (1,368 - 1,247) which
equals $199
3Correct Answer
Consistency
Applying the same accounting treatment to similar items across different accounting
periods demonstrates consistency.
4 Correct Answer
Information which is capable of making a difference in the decisions made by
users
5 Correct Answer
Weighted average will report a lower profit than first-in first-out
Profit for the year is affected by the method of inventory valuation
As the cost of inventory has increased during the year first-in first-out will show a higher
figure for closing inventory than weighted average. This means that weighted average
will show a higher figure for cost of sales and so a lower profit.
Petra should value inventory at the lower of cost and net realisable value, not on the
basis that gives the lowest profit.
6 Correct Answer
True:
The bank general ledger account includes all cash receipts from customers
The trade receivables general ledger presents the sum of all customer account
balances only
A non-current asset register includes a description of each asset, its cost and
accumulated depreciation
False:
The total purchases for the period can be calculated using the purchases returns
general ledger account only
Both purchases and purchase returns general ledger accounts would be required to
calculate purchases for the period.
8 Correct Answer
The bank has levied charges on Elaine's account which have not been Yes
recorded by Elaine
A cheque payable to S Wright has not been presented at the bank No
If the bank has levied charges then these need to be recorded in the bank account in
the general ledger.
Unpresented cheques are part of the bank reconciliation and are not adjusted for in the
bank ledger account.
9 Correct Answer
$3,567
10 Correct Answer
Current asset $121,991
Current liability nil
11 Correct Answer
Cash received from a customer
A debit to the cash account shows that money has been received so this rules out a
cash purchase or cash payment. As the credit entry is to trade receivables it cannot be
a cash sale. So the correct answer is cash received from a customer.
12 Correct Answer
$93,582
$
Amount owed at the end of the year 11,552
Payments to suppliers 95,886
107,438
Less amount owed at beginning of (13,856)
year
Purchases 93,582
13 Correct Answer
The total amount due to the business from its customers
The trade receivables ledger account (also known as the receivables account) is an
account in which records are kept of transactions involving all customers in total.
The balance on the trade receivables ledger account at any time will be the total amount
due to the business at that time from its customers, and will agree with the total of the
list of individual customer balances.
14 Correct Answer
$98,995
Grace achieves a 25% mark up on her sales. This means that sales are 125% and so
cost of sales is 100 / 125 x 120,600 = 96,480.
15 orrect Answer
Margin - 20%
Mark up - 25%
16 Correct Answer
Dr Trade receivables $3,000 Cr Table sales $2,250 Cr Chair sales $750
The left hand side of a T-account shows debit entries and the right hand side shows
credit entries. Therefore, the amounts shown in the ledger accounts are:
$
Trade receivables 3,000 Dr
Table sales 2,250 Cr
Chair sales 750 Cr
So the accounting entry that would have resulted in these amounts in the ledger
accounts is:
Dr Trade receivables $3,000 Cr Table sales $2,250 Cr Chair sales $750
17 Correct Answer
1 and 2 only
The bank balance is reconciled with the bank statement and not supplier statements.
18 Correct Answer
Process manual journal entries to correct for any amounts in the suspense
account
Accrue for expenses incurred in the week preceding year end for which the
invoice was received after year end
Incorrect answers:
Accrue for any expenses incurred after the year end for which the invoice was received
in the same period - Expenses incurred after year end are accounted for in the next
accounting period
Process manual journal entries for the difference between actual and budgeted sales -
Only income earned may be recognised
19 Correct Answer
To identify entries which have been generated by the bank, but not Yes
recorded in the bank ledger account
To identify errors in the entries in the bank ledger account Yes
The purpose of a bank reconciliation is to identify entries put through by the bank but
not recorded in the bank ledger acount, and to identify errors in the entries in the bank
ledger account.
20 Correct Answer
$122,500
The profit for the year needs to be grossed up for the irrecoverable debt and split
between the period before and after R joined. It will be allocated as follows:
21 Correct Answer
Dr Sales returns
Cr Trade receivables
The credit note will increase sales returns and reduce the amount owed by the
customer. So the correct posting is debit sales returns, credit trade receivables.
22 Correct Answer
$29,125
23 Correct Answer
Assets which are expected to be converted into cash in the short term
Current assets usually consist of items like inventory, receivables and cash. These are
all cash or expected to be turned into cash in the short term.
24 Correct Answer
Dr Drawings
Cr Inventories
Assets removed for personal use are drawings – the asset decreases and drawings are
increased.
25 Correct Answer
$ 750
26 Correct Answer
$96,000
So sales are 100% and cost of sales are 75% (Profit = 100% - 75% = 25%)
False:
Using the FIFO method guarantees that inventories are valued at the lower of cost
and net realisable value
The FIFO method values inventories on the assumption that the first inventories
purchased/ generated are the first to be sold; leaving the most recent units purchased in
inventories. There is no method that guarantees inventories are valued at the lower of
cost and net realisable value – this is achieved by reviewing all inventory line items in a
separate exercise.
28 Correct Answer
$71,600
James $ $
Goodwill written back (3/6) 18,000 Bal b/f 68,000
Bal c/f 71,600 Goodwill introduced (3/5) 21,600
89,600 89,600
29 Correct Answer
$7300
30 Correct Answer
Accrued expenses increase the value of liabilities
31 Correct Answer
Office cleaning expenses, cash and trade payables
The correct entry should have been debit office cleaning expenses, credit cash.
Therefore correcting entries will be needed to office cleaning expenses, cash and trade
payables.
32 Correct Answer
Both 1 and 2
Entries need to be made in the non-current asset register whenever a non-current asset
is disposed of.
33 Correct Answer
Dr Trade receivables Cr Sales
This is a credit sale and so no entries should be made to the cash account. The correct
double entry is: debit trade receivables, credit sales.
34 Correct Answer
Dr Purchases 1,820
Cr Trade payables 1,820
Incorrect answers:
Dr Purchases 1,820
Cr Trade payables 1,820
Incorrect amount (credit notes of $1,000 deducted) but with correct journal entry
35 Correct Answer
$50210
36 Correct Answer
Profit will decrease by $18,000 and net assets will decrease by $18,000
The straight line depreciation charge is $9,000 (90,000 x 10%). The reducing balance
charge is $27,000 (90,000 x 30%). Extra depreciation is $18,000 (27,000 - 9,000). This
would reduce Paul's profit by $18,000 and reduce net assets by $18,000.
37 Correct Answer
$4,000
Mikel should make a provision for the amount he is likely to pay in this case $4,000.
38 Correct Answer
Shannon issued Brogan a $1,600 credit note for goods returned which had been
omitted from Brogan's accounting system
Brogan input a $1,600 purchase invoice from Shannon to the purchases module
twice
Incorrect answers:
Brogan made a $1,600 payment to Shannon before the year end which had not been
reflected on Shannon’s statement of account - A payment not recognised by the
supplier would make the supplier statement balance higher than the balance shown in
Brogan’s accounting system
Tony's original purchase will have been debited to stationery and credited to trade
payables so this is now reversed:
41 Correct Answer
$1,098 accrual
Vikki needs to make an accrual for two months' electricity of $1,098 (1,647/3 x 2) to
accrue for costs related to September and October 20X8.
42 Correct Answer
Assets unchanged Liabilities unchanged Capital unchanged
Dr Prepayments
Cr Insurance expenses
This means that expenses (therefore, capital) net out to nil, as do assets overall.
43 Correct Answer
1 and 2 only
Interest on a loan from a partner and salaries for employees form part of the business
costs and should be included in the calculation of net profit. Salaries for partners are an
allocation of profit.
44 Correct Answer
His profit will be increased by $563
If Trevor receives the $563 in the following year it will be credited to the statement of
profit or loss and so increase profit by $563.
The correct option is financial statements are intended to provide useful information to a
number of user groups.
46 Correct Answer
Dr Non-current assets Cr Bank
The purchase of the non-current asset will be recorded as: debit non-current assets,
credit bank. The financing of the purchase is a separate transaction.
47 Correct Answer
Statement of profit or loss Debit
Statement of financial position Credit
48 Correct Answer
$39,300
Carl's account will increase by interest on capital $5,100 and his share of profit $34,200
(2/5 x (98,500 - 7,900 - 5,100)) which totals $39,300.
49 Correct Answer
Dr Sales returns Cr Trade receivables
Rosario needs to increase sales returns and reduce the amount owed by trade
receivables. Therefore the correct entry is debit sales returns and credit trade
receivables.
50 Correct Answer
2 only
The bank account in the general ledger will be updated to take account of items 1 and
3. However, item 2 will remain as an adjustment on the reconciliation statement.