Feb/March 2018

Which of the following would not count as a purpose of ledger accounts?

The accounting system

A business shows a provisional profit for the year of $\$182750$. The adjustments below have not yet been taken into account. 1 a reduction of $\$2800$ in the provision for doubtful debts 2 rent of $\$3900$ paid by the tenant in advance at the year end What is the actual profit for the year?

Preparation of financial statements

In the absence of a partnership agreement, which rule does not apply?

Types of business entity

The partnership of Ravi and Tania, who divided profits equally, was dissolved. Before dissolution, the capital accounts stood at Ravi $50000$ and Tania $60000$. Before dissolution, the current account balances were Ravi $35000$ credit and Tania $35000$ credit. The loss on disposal of partnership net assets was $10000$. How much money did each partner receive when the partnership was dissolved?

Types of business entity

A company makes an issue of $50000$ ordinary shares of $\$5$ each at a premium of $\$15$. It also makes a $4\%$ debenture issue of $\$300000$. By what amount do the net assets of the company increase?

Preparation of financial statements

Which statements are descriptions of a capital reserve?

Preparation of financial statements

The excerpt below comes from a statement of changes in equity. In the year concerned, these events took place: (1) An interim dividend of $4875$ was paid. (2) A final dividend of $6000$ was proposed. (3) $2500$ was transferred to the general reserve. What was the balance of retained earnings at the end of the year?

Preparation of financial statements

The following figures have been taken from a business’s financial statements. Revenue $=135000$, total capital employed $=575000$, non-current assets $=180000$. Calculate the non-current asset turnover.

Analysis and communication of accounting information

X Limited’s statement of financial position as at $31$ December $2017$ gives the following amounts (in $\$000$): non-current assets $1350$, current assets $140$, ordinary share capital $900$, general reserve $150$, $10\%$ debentures $200$, current liabilities $90$, retained earnings $150$. The profit from operations for the year was $65000$ and the finance costs were $20000$. What is the return on capital employed for $2017$?

Analysis and communication of accounting information

Which type of business would make use of a job costing system of accounting?

Traditional costing methods

What does direct cost mean?

Costs and cost behaviour

Which accounting concepts are relevant to depreciation?

Accounting for non-current assets

Employees at a company receive $\$6.80$ per hour for a standard $40$-hour week. For overtime, a $50\%$ premium is paid, and a production bonus of $\$0.25$ per unit is also earned on all units made above $350$. A minimum weekly wage of $\$330$ is guaranteed. One employee worked $45$ hours last week and made $410$ units. What was the employee’s gross pay for that week?

Costs and cost behaviour

Adam keeps his inventory records using AVCO (perpetual inventory) in order to determine its value. Which statement is correct?

The accounting system

Which statements concerning absorption costing are correct?

Traditional costing methods

How do you calculate the margin of safety?

Costs and cost behaviour

A business gives the following data for a product: Variable cost per unit $16$, selling price per unit $30$, total fixed costs $35000$, budgeted profit $95000$. How many units must it make in order to achieve the budgeted profit?

Costs and cost behaviour

A business gives the following financial data. Selling price $41$ per unit, direct materials $5$, direct labour $8$, variable overhead $3$, fixed overhead $4$, profit $21$. Determine the marginal cost per unit.

Costs and cost behaviour

Which factor decides the optimum production plan in a limited resource situation?

Costs and cost behaviour

A business produces two products. The figures per unit are as follows: product X selling price $20$, direct labour $10$, direct materials $4$; product Y selling price $30$, direct labour $20$, direct materials $2$. Total fixed costs amount to $\$54\,000$. Only $3000$ units of Y can be produced and sold. What number of units of product X must be produced and sold to break even?

Costs and cost behaviour

A company operates using absorption costing and produces and sells only one product. In the previous month, budgeted overheads came to $\$60\,000$. Planned output was $15\,000$ units, while planned sales were $14\,000$ units. The company now chooses to use marginal costing principles for the previous month. What impact will this have on profits?

Costs and cost behaviour

A business has recorded the following total costs over the previous two months. Month 1: $8000$ units produced, total costs $\$31\,800$. Month 2: $10\,000$ units produced, total costs $\$36\,700$. What was the total fixed cost per month?

Costs and cost behaviour

On 1 January 2015, a motor vehicle was bought for $\$12000$. Its estimated residual value was $\$7000$, and its expected life was 5 years. Depreciation was worked out month by month using the straight-line method. The vehicle was disposed of on 30 June 2017, resulting in a loss on disposal of $\$2560$. What amount was received as the sale proceeds?

Accounting for non-current assets

A company has only recently put in place a budgetary control system. Workers have suggested the following explanations for materials costs exceeding the budgeted amount.

Costs and cost behaviour

The information below concerns a motor vehicle that was part-exchanged for a new vehicle during the year. cost of old vehicle $\$20000$ accumulated depreciation at the date of sale $\$8000$ profit on disposal $\$3000$ cost of new vehicle $\$25000$ The remaining amount due for the new vehicle was settled from the business bank account. How much was paid from the bank account?

Accounting for non-current assets

The table gives data from a purchases ledger control account at the end of the year. payments made to suppliers $\$36000$ purchases made on credit $\$55000$ discounts received $\$7800$ closing balance carried down (balancing figure) $\$35000$ What was the credit balance brought down at the start of the year?

The accounting system

A sole trader takes goods out for personal use. In what way does this change his financial statements?

The accounting system

Which mistake would prevent a trial balance from balancing?

Reconciliation and verification

Which group would be recorded only on the credit side of a sales ledger control account?

Reconciliation and verification

The company’s year-end is 31 December. On that date, its inventory records indicated 600 units of inventory at a cost of $\$10$ per unit. On 31 December, a fire completely destroyed 100 units and left another 50 units damaged. Repairing these would cost $\$7$ per unit. No adjustment had been made to the inventory records for the fire. The selling price is $\$15$ per unit. What inventory value should be shown in the financial statements at 31 December?

Preparation of financial statements

Delph began trading on 1 July 2016. For the year ending 30 June 2017, he gave details about his sales and purchases.

Reconciliation and verification

The extract below comes from the statement of financial position of X Limited at 31 December 2016.

The accounting system

Paul and Angela run a partnership, sharing profits and losses in the ratio of $3:2$ respectively. Separate current accounts are not kept. On $1\ \text{May}\ 2017$, Rachael joined the partnership.

Types of business entity

K Limited operates two production departments, one making bicycles and the other scooters. The information given is used to work out costs and selling prices.

Traditional costing methods

Refer to Source A1 in the Insert.

Preparation of financial statements

Refer to Source A2 in the Insert. Extra information: John wants to work with Raj once more, but he is suggesting that they set up a partnership and share profits and losses equally. Raj is unsure whether he ought to do this.

Preparation of financial statements

Consult Source A3 in the Insert.

Business acquisition and merger

Read Source A4 from the Insert booklet.

Preparation of financial statements

Section B covers Cost and Management Accounting. Refer to Source B1 in the Insert.

Budgeting and budgetary control

Look at Source B2 in the Insert.

Investment appraisal