Oct/Nov 2025

Which row shows one benefit and one drawback of being a sole trader?

Types of business entity

After Neil got a bank statement, he brought the cash book up to date. He then drew up a bank reconciliation statement. Which item was shown on the bank reconciliation statement?

Reconciliation and verification

A sales invoice issued to Jane has not been entered in the books of prime entry. Which accounts are impacted by this error?

Reconciliation and verification

All sales made by a business are on credit. At the close of July, the balance on its sales ledger control account was $20 000. In August, these transactions were entered. credit sales: $150 000 receipts from credit customers: $135 000 returned cheques: $5 000 returns inwards: $11 000 What balance was on the sales ledger control account at the end of August?

The accounting system

In its trading year, a business spent $5750 on advertising. Of this total, $500 related to the following financial year. How would the proper treatment of the $500 be shown in the financial statements?

Preparation of financial statements

A trader has worked out a provisional loss for the year of $320. Nevertheless, the adjustments below still need to be carried out. 1. Irrecoverable debts of $930 were recovered. 2. The allowance for irrecoverable debts had been $520. The needed allowance is 5% of trade receivables. Trade receivables amounted to $9600. What is the adjusted profit or loss for the year?

Reconciliation and verification

Jaime gave the information below. capital at the start of the year: $14 000 capital at the end of the year: $12 300 loan received during the year: $4 000 cash drawings: $17 200 private phone charges paid by the business: $300 What was the profit for the year?

The accounting system

Which list shows the entries that ought to be credited to a partner’s current account?

The accounting system

X and Y are partners, and they divide profits and losses in the ratio 3 : 2 respectively. Interest on drawings is 5%. In the year ended 31 December, each of X and Y withdrew an amount equal to their own partner’s salary. Interest on drawings charged to X was $550, and to Y was $450. The profit for the year was $94 000, and loan interest paid to X was $3000. What was Y’s share of the residual profit?

Preparation of financial statements

What treatment is given to any premium on a share issue?

The accounting system

The table sets out a company’s capital. ordinary shares of $1.00 each: $200 000 share premium account: $80 000 revenue reserves: $160 000 The following changes then have to be carried out (in the order shown): • a one-for-one bonus issue • a rights issue of 100 000 ordinary shares of $1.00 each at $1.40 per share The company wants to keep the amount available for dividend payments as high as possible. What will the company’s ordinary share capital, share premium and revenue reserves be?

The accounting system

At the end of a financial period, a business had these assets and liabilities. 1 non-current assets at carrying value 2 current assets 3 non-current liabilities 4 current liabilities How is the capital of the business worked out?

Preparation of financial statements

Which stakeholders would concentrate mainly on a business’s liquidity? 1. government 2. lenders 3. public-interest and environmental bodies 4. suppliers

Analysis and communication of accounting information

The financial statements of a company give the information below. profit from operations: $125\,000$; profit for the year: $116\,000$; shareholders’ equity: $423\,000$; long-term loan: $80\,000$; current liabilities: $45\,000$. Calculate the return on capital employed.

Analysis and communication of accounting information

A business owner has given the details below. average inventory: $\$15\,000$; rate of inventory turnover: $8$ times; mark-up: $25\%$. What is the business’s revenue?

Analysis and communication of accounting information

An employee is on a $40$-hour working week and earns $\$8$ per hour. For each unit made in less time than the target, she is paid a bonus equal to $30\%$ of the hourly rate for the time saved. The target production time is $30$ minutes per unit. In the previous week, she worked for $40$ hours and made $90$ units. What was her total pay for that week?

Costs and cost behaviour

In what situations are unit costing and job costing used?

Traditional costing methods

What is the best method for allocating the factory rent to each department?

Traditional costing methods

The table sets out a factory’s output data for one week. budgeted production: $10\,000$ units; budgeted production overheads: $\$50\,000$; actual production overheads: $\$60\,000$; under-absorption of overheads: $\$5\,000$. What was the actual production level in the week?

Traditional costing methods

A business uses marginal costing. How is contribution worked out?

Costs and cost behaviour

The information below relates to a manufacturing business: revenue from sales is $\$800\,000$; variable costs are $\$480\,000$; fixed costs are $\$280\,000$. What sales revenue is needed for the business to earn a profit of $\$200\,000$?

Costs and cost behaviour

The budgeted figures for June are: production of $5000$ units; sales of $4000$ units; sales revenue of $\$180\,000$; direct materials and labour costing $\$130\,000$; variable overheads of $\$15\,000$; and fixed overheads of $\$25\,000$. Opening inventory is nil. Using marginal costing, Calculate the budgeted profit for June.

Costs and cost behaviour

Which documents can be used to confirm that a sales transaction has taken place? 1 delivery note 2 price quotation 3 sales invoice 4 sales order

Reconciliation and verification

What are the principal assumptions in cost-volume-profit analysis?

Costs and cost behaviour

At the year end, a business creates an allowance for irrecoverable debts. Which accounting concepts are being used? 1 the matching / accruals concept 2 materiality 3 prudence 4 substance over form

The accounting system

The owner of a business has just bought a new delivery vehicle and paid the amounts shown below. Delivery vehicle: $28000$ Fitting shelves in the vehicle: $3000$ Painting the business logo on the side of the vehicle: $2000$ What was the total capital expenditure?

Accounting for non-current assets

Which of the following statements are true? 1 Revenue income includes receipts from letting out part of the business premises. 2 Capital income includes proceeds from the sale of non-current assets. 3 Capital income includes loans obtained by a business.

The accounting system

Motor vehicles bought for $530000$, at the beginning of the year, have been depreciated incorrectly for the entire year by the straight-line method at $10\%$ rather than $25\%$. After posting the entries, the ledger balances are: Motor vehicles at cost: $530000$ Provision for depreciation of motor vehicles: $53000$ Which entries will correct the error?

Accounting for non-current assets

Vehicle X was acquired at a cost of $80000$. Its useful life was five years, and it was expected to be sold for $5000$ at the end of that period. Depreciation for vehicles is calculated by the straight-line method. After three years of use, Vehicle X is replaced by vehicle Y. The purchase cost of vehicle Y is partly paid using the part exchange value of $20000$ for vehicle X. Calculate the loss on disposal of vehicle X.

Accounting for non-current assets

The trial balance fails to agree, so a suspense account is created. Subsequently, the following mistakes are discovered and the suspense account is fully cleared. 1. A sales invoice for $1240 was left out of the books entirely. 2. The total purchases amount was recorded as $85 600. It ought to have been $87 580. 3. Rent paid of $2600 was entered correctly in the cash book, but it was recorded as $6200 in the rent account. What was the opening balance on the suspense account?

Reconciliation and verification

A company needs to obtain finance to construct a factory. Which action would be suitable to safeguard the interests of the existing shareholders?

Types of business entity

At 31 December, the following details are given about a company's banking transactions. Balance at bank per bank statement: $22650; uncleared deposits: $3110; unpresented cheques: $6290; bank credit recorded twice by bank in error: $650. What amount for bank should be entered in the statement of financial position at 31 December?

Reconciliation and verification

A business keeps control accounts as part of its double entry system. The balance on the purchases ledger control account is $\$8232$. However, this does not match the total of the balances in the purchases ledger. The difference is explained by the following. 1. An item in the purchases returns journal for $\$72$ has been entered on the credit side of the individual trade payable’s account in the purchases ledger. 2. An item for discounts received in the cash book for $\$54$ has been entered in the purchases ledger as a debit to the individual trade payable’s account for $\$45$. What was the total of balances in the purchases ledger before these errors were corrected?

Reconciliation and verification

The sales ledger control account contained the following entries: 1. contra with the purchases ledger control account $\$500$, debit 2. discount allowed $\$600$, debit 3. irrecoverable debts written off $\$1200$, debit Which of these entries need correction?

Reconciliation and verification

Which item would be entered on the credit side of a statement of profit or loss?

Preparation of financial statements

On 1 January 2024, a sole trader let out part of his business office for $\$500$ each month for 24 months. In the year ended 31 December 2024, he was paid the following amounts: • rent of $\$5500$ • rent deposit of $\$500$ refundable at the end of month 24. Which amounts should be included in the statement of financial position at 31 December 2024?

Preparation of financial statements

What entry, when recorded in the statement of profit or loss for a sole trader, would cause profits to rise?

Preparation of financial statements

A partnership keeps both capital accounts and current accounts for its partners. Which accounting entry should be used to record interest on capital for partner X?

The accounting system

Lee and Mia are partners, and they share profits and losses in the ratio $4:3$ respectively. When their appropriation account for the year was prepared, an error occurred because interest on drawings was left out: Lee $\$90$ and Mia $\$50$. By what amount will Lee’s current account balance fall when this mistake is corrected?

Preparation of financial statements

The information below has been taken from the draft statement of financial position for a limited company on 31 December. ordinary share capital: $\$900000$ share premium: $\$80000$ general reserve: $\$96000$ retained earnings (opening): $\$230000$ profit for the year: $\$145000$ What is the largest dividend the limited company is able to declare?

Preparation of financial statements

Which of the following are internal users of financial information? 1. the bank 2. the directors 3. the employees 4. prospective investors

Analysis and communication of accounting information

Which items are recorded in the credit column of a trial balance?

The accounting system

A trader works out his trade receivables turnover to be 89 days. What was the denominator (bottom figure) used in the calculation?

Analysis and communication of accounting information

The information below has been taken from the financial statements of a limited company. Statement of profit or loss for the year: operating profit: $\$59800$ finance costs: $\$12000$ profit for the year: $\$47800$ Statement of financial position at year end: equity: ordinary share capital: $\$700000$ retained earnings: $\$72500$ total equity: $\$772500$ non-current liabilities: $10\%$ debentures: $\$120000$ What is the return on capital employed?

Analysis and communication of accounting information

A firm produces only one kind of product. The information below is given. Output and total cost: 600 units → $\$4200$ 800 units → $\$5200$ What is the fixed cost per unit?

Costs and cost behaviour

W Limited is uncertain about whether to apply marginal costing or absorption costing. Which row shows the correct answer?

Costs and cost behaviour

J Limited produces custom pieces of furniture in customers’ own homes. When it prepares job quotations, the business applies a mark-up of 40%. It received an enquiry from a potential customer living 10 kilometres away. Material costs would be $400 and labour costs $240. The business charges $2 per kilometre for each part of the journey. What price will the company quote for the job?

Costs and cost behaviour

A manufacturing company applies absorption costing. For one month, the information for the cutting department is shown below. Budget: overheads $40000, machine hours 2800, labour hours 2600. Actual: overheads $44000, machine hours 2700, labour hours 2900. What overhead absorption rate would have been applied?

Traditional costing methods

A business gives the information below. Number of units produced and sold: 48000. Direct materials ($3 per kg): $298000. Direct labour ($4 per labour hour): $240000. Fixed selling costs: $150000. Variable selling costs: $24000. Fixed production overheads are absorbed at $10 per labour hour. Calculate the total absorption cost per unit.

Traditional costing methods

Which definition correctly describes margin of safety in dollars?

Analysis and communication of accounting information

Calculate the total contribution if a company recorded sales revenue of $500000 and total costs of $400000. Fixed costs amounted to $120000.

Costs and cost behaviour

The data below are provided. Sales: $250000. Variable production costs: $150000. Fixed production costs: $30000. Gross profit: $70000. Fixed administrative costs: $50000. Profit for the year: $20000. Calculate the break-even point.

Costs and cost behaviour

A trader sells goods for $6600 to a customer on 31 March 2025, which is the final day of his financial year. He does not issue an invoice until three days afterwards. He is told that the $6600 sale ought to be included in the financial statements for the year ended 31 March 2025. Which accounting concepts are being applied?

Preparation of financial statements

What limitations does cost-volume-profit analysis have?

Costs and cost behaviour

An item of capital expenditure has been recorded as revenue expenditure. What effect does this have on non-current assets and on the loss for the year?

Accounting for non-current assets

At the start of the year, Y Limited bought a motor van and paid the following expenditure: motor van $50000; delivery of motor van $4500; upgrading the engine $6000; 2-year maintenance contract $4000; annual licence fee $1200. The motor van is to be depreciated at 20% by the straight-line method. What is the total amount of expenses to be included in the statement of profit or loss for the year?

Accounting for non-current assets

A business uses the straight-line method to charge depreciation on its property. At the beginning of the year, the property was revalued upwards, with the remaining useful life unchanged. Compared with the previous year, how do the expenses and the carrying value of the property at the end of the current year change?

Accounting for non-current assets

X Limited bought a property for $100000 on 1 January 2010. The property had an estimated useful life of 50 years. On 1 January 2024, the property was revalued to $119000. The total estimated useful life still remained 50 years from 1 January 2010. What is the depreciation charge for the year ended 31 December 2024?

Accounting for non-current assets

The two totals on a trial balance failed to match. Consequently, a suspense account was opened with a credit balance of $1720. To date, two errors have been found: 1. The balance on the purchases returns account of $440 was left out of the trial balance. 2. The bank overdraft balance was recorded too low by $90. What will be the revised credit balance of the suspense account once these errors are corrected?

Reconciliation and verification

The total shown in the discount column on the debit side of the cash book was posted to the discount received account. Which accounts must be used to put right this error?

Reconciliation and verification

What advantages does operating as a partnership have?

Types of business entity

The purchase price of a new machine has been posted to the repairs account. What kind of error is this?

The accounting system

A suspense account was set up to show the discrepancy on a trial balance. Following more checks, the errors below were found. 1. Discount received of $250 had been entered on the debit side of the discount allowed account. The posting to the trade payable account had been done correctly. 2. Electricity refund of $170, recorded correctly in the cash book, had been classified as electricity expense. 3. Machine installation of $440 had been recorded as machine repairs. Once the errors had been corrected, the trial balance balanced. What was the opening credit balance of the suspense account?

Reconciliation and verification

An accountant drew up a bank reconciliation statement. He identified the following differences between the bank statement and the cash book. 1. a sum received from a customer by credit transfer 2. bank charges 3. unpresented cheques Which of these differences will have to be entered in the cash book in order to bring it up to date?

Reconciliation and verification

A business keeps control accounts as part of the double entry system. On 31 December, the $23 400 balance in the sales ledger control account did not match the combined total of the individual sales ledger balances. The following errors were found. 1. A sales invoice for $1800 had been recorded in the sales journal as $1880. 2. A discount allowed of $200 to a customer had not been entered. 3. Sales of $1200 had been posted to the incorrect side of a customer's account. What is the correct balance in the sales ledger control account at 31 December?

Reconciliation and verification

A statement of profit or loss reports a draft loss for the year of $9450. Nevertheless, the following mistakes have been found. 1. Depreciation of $10 000 on non-current assets has been wrongly recorded by applying the straight-line method at 25% per annum. The true depreciation rate is 20% per annum. 2. No entry has been made for goods withdrawn by the owner for personal use, $720. What is the corrected draft loss?

Reconciliation and verification

At the close of Year 2, the total of trade receivables, before any deduction for the allowance for irrecoverable debts, was unchanged from the figure at the end of Year 1. No irrecoverable debts arose in either year. In Year 2, the sole trader lowered the allowance rate for irrecoverable debts. What effect does this action have on profit for the year and on current assets?

Reconciliation and verification

Jane has now finished her first year of trading as a sole trader. The following information is given for the year ended 31 December: - profit for the year: $89 200 - bank loan at 31 December: $10 000 - drawings for the year: $46 500 - capital at 31 December: $202 000 - capital introduced during the year: $20 000 How much capital did Jane have when the business started?

Preparation of financial statements

In what way is a partnership appropriation account prepared?

Preparation of financial statements

Tom's current account was in credit. A partner's salary of $5000 and interest on drawings of $800 had both been entered on the wrong side of his current account. What effect did these mistakes have on the balance of his current account?

Reconciliation and verification

A company gives the following figures: - ordinary shares of $0.50 each: $84 000 - retained earnings: $50 000 - total equity: $134 000 These transactions then occur. 1. The company carries out a rights issue of one new ordinary share for every two held, at $1.30. The issue is taken up in full. 2. A bonus issue of two ordinary shares for every three held is then carried out. What is the greatest possible balance of the retained earnings after these transactions?

Preparation of financial statements

A business bought a non-current asset. Half of the purchase price was settled by cheque on the purchase date. The remaining amount was paid to the supplier three months afterwards. What credit entry should be made to record this purchase on the date of acquisition?

Accounting for non-current assets

A company’s ordinary share capital is $400 000, consisting of ordinary shares valued at $0.50 each. Information about dividends for the year ending 31 December is given below: - dividends paid in the year: $0.10 per share - dividends proposed at the end of the year: $60 000 What figure should be shown for dividends in the statement of changes in equity for the year ending 31 December?

Preparation of financial statements

Why do shareholders in a public limited company examine the published financial statements? 1. to judge the return on their investment 2. to find out the current price of a share in the company 3. to think about how secure their investment is

Analysis and communication of accounting information

A trader works out his inventory turnover rate to be eight times per year. What was the numerator (top number) used in his calculation?

Analysis and communication of accounting information

A newly established manufacturing company has now finished its first operating year. The information below concerns its inventory of direct materials. Date / units / $: - 2 January: 700 units at $20 - 2 July: 300 units at $26 The following quantities were removed from inventory for production. Date / items: - 4 January: 250 items - 5 July: 450 items What would the inventory be worth at the end of the year using the AVCO (periodic) method?

Traditional costing methods

What is the function of a job cost sheet?

Traditional costing methods

The information below is given. - budgeted labour hours: 10000 - budgeted production overheads: $80000 - actual labour hours: 11000 - actual production overheads: $82000 What is the amount of production overheads under-absorbed or over-absorbed?

Traditional costing methods

Which allocation basis should be used for assigning stores overheads to the production departments?

Traditional costing methods

The details below refer to a company’s earlier accounting period. - opening inventory: 10000 units - closing inventory: 20000 units - absorption cost profit: $180000 - marginal cost profit: $100000 What was the overhead absorption rate per unit for the accounting period?

Traditional costing methods

A business has these forecast figures for its next financial period. - budgeted total fixed cost: $100000 - budgeted profit: $200000 - budgeted sales: $800000 What is the budgeted total contribution for the period?

Costs and cost behaviour

For a business, the information below is provided. - budgeted fixed costs each month: $2000 - target profit each month: $3000 - budgeted variable cost per unit: $15 - budgeted selling price per unit: $40 Fixed costs are predicted to rise by $500 per month, and variable costs are predicted to rise by $5 per unit. Which revenue value will be needed to reach the target profit?

Costs and cost behaviour

Which statements concerning the prudence concept are correct?

The accounting system

Which statements identify the assumptions made when using cost-volume-profit analysis?

Costs and cost behaviour

Arya has a single product that is sold for $100 per unit, and payment is due after a credit period of one month. Any customer buying more than 80 units receives a 5% discount. Roy bought 100 units, then returned 10 units two weeks later. How should Arya record the sales returns?

The accounting system

Which descriptions of revenue and capital expenditure are correct?

Accounting for non-current assets

A business ends its financial year on 31 December. On 1 July in the current financial year, new production machinery was bought. The business uses the straight-line method to depreciate production machinery at 20% per annum. Depreciation is calculated for every month of ownership. The estimated residual value of the new production machinery is $20000. For the current financial year, depreciation charged on the new production machinery amounted to $8000. What was the cost of the new production machinery?

Accounting for non-current assets

A new business is choosing which methods to use to calculate depreciation on non-current assets. Which statements are correct?

Accounting for non-current assets

A business owns two non-current assets. Asset X was bought on 1 Jan 2023 for $10000, uses the straight-line depreciation method, has a useful life of 5 years, and has a residual value of $2000. Asset Y was bought on 1 Jan 2023 for $20000, uses the reducing balance depreciation method at 20%, and has a nil residual value. What was the combined depreciation expense in the statement of profit or loss for the year ended 31 December 2024?

Accounting for non-current assets

At the end of the year on 31 December, closing inventory of $5000 was entered wrongly in the financial statements as $3000. What impact will this have on the financial statements for the year?

Preparation of financial statements

The balances below were taken from the books of T plc after the statement of profit or loss for the year ended 31 December 2024 had been prepared. Retained earnings include a draft profit figure of $104800. It was later found that some errors had been made while preparing the statement of profit or loss.

Preparation of financial statements

Reza runs a large retail business. Because the business has many credit customers and credit suppliers, she was advised to keep purchases ledger and sales ledger control accounts.

Reconciliation and verification

The directors of N Limited use ratios to assess the company’s performance. The figures below relate to the last two years.

Analysis and communication of accounting information

At one of B Limited’s factories, absorption costing is used to make two products, Wye and Zed. The budgeted output for January 2026 is shown below. Budgeted overheads for January 2026 amount to $67 890.

Traditional costing methods

R Limited runs a retail business. The draft statement of profit or loss below was drawn up for the year ended 31 December 2024. It has been found that mistakes were made while preparing this draft statement.

Preparation of financial statements

Samira runs a business named SJB Supplies. She prepares a bank reconciliation statement for the business at the end of every month. On 31 January 2025, the cash book balance (bank columns) for the business was $324 debit. On that same date, the bank statement showed a balance of $160 debit.

Reconciliation and verification

J Limited’s non-current assets are listed below. Its financial year finishes on 31 December, and the depreciation policy is shown here.

Accounting for non-current assets

W Limited operates one factory where it makes only one product. At present, marginal costing is used, although the directors have been thinking about changing to absorption costing.

Traditional costing methods

Fazal and Naseem are partners. They run a retail business. The details below relate to the year ended 31 December 2024.

Preparation of financial statements

A trainee accountant has just prepared the financial statements for a business for the year ended 31 December 2024. Some errors were then found. The business sells all goods with a mark-up of 20%. The draft profit for the year ended 31 December 2024 was $36960.

Preparation of financial statements

The balances shown below were recorded in the books of P plc on 1 April 2024. In the year ending 31 March 2025, the events below took place. By 31 March 2025, share capital stood at 840 000 ordinary shares of $1 each.

Preparation of financial statements

V Limited is a manufacturing business that applies absorption costing at one of its factories.

Traditional costing methods

Refer to Source A in the insert.

Preparation of financial statements

Study Source B in the insert.

Preparation of financial statements

Refer to Source C in the insert.

Regulatory and ethical considerations

Use Source A in the insert.

Business acquisition and merger

Study Source B in the insert.

Analysis and communication of accounting information

Refer to Source C in the insert.

Preparation of financial statements

Study Source A in the insert.

Preparation of financial statements

Look at Source B in the insert.

Business acquisition and merger

Consult Source C in the insert.

Investment appraisal

Consult Source A in the insert.

Investment appraisal

Refer to Source B in the insert.

Activity based costing (ABC)

Refer to Source A in the insert.

Budgeting and budgetary control

Study Source B in the insert.

Standard costing

Study Source A in the insert.

Standard costing

Use Source B from the insert.

Activity based costing (ABC)