Questions and Answers of Accounting A Level And AS Level

The administration expenses of a business amount to $30 000. They are apportioned to three departments as follows: department A 3/2, department B 2/6, department C 1/6. It has been decided to close
The following balances have been extracted from the books of Spinners & Co. at 31 December 2003.Further information 1. Stocks at 31 December 2003:2. Expenses owing at 31 December 2003:3.
The Fabricating Company carries on a manufacturing business. Information extracted from its trial balance at 31 March 2004 is as follows.The following further information is given.Completed
A manager is paid a commission of 5% based on net profit after charging the commission. The profit before commission is $157 500. How much commission is paid to the manager? A.
Goods are transferred from the Manufacturing Account to the Trading Account at factory cost of production plus a mark-up of 20%. The transfer prices of the closing stocks of finished goods were
The following balances have been extracted from the books of the Uggle Box Manufacturing Company at 30 April 2004.Further information 1. Stocks at 30 April 2004:2. Finished goods are transferred
Goods are transferred from the factory to the warehouse at a mark-up of 33 1/3 %. At 1 April 2003, the balance on the Provision for Unrealised Profit was $17000. At 31 March 2004, the closing stock
The following balances have been extracted from Yendor's books at 31 March 2004.Further information 1. Stocks at 31 March 2004 were as follows (in $000s): raw materials $440; work in progress
A manufacturing company adds a factory profit of 25% to its cost of production. The following information is available:How much will be credited as factory profit in the Profit and Loss Account for
The following items appear in the accounts of a manufacturing company: (i) Carriage inwards. (ii) Carriage outwards (iii) Depreciation of warehouse machinery (iv) Provision for
At 30 September Fiford Ltd had a stock of 100 kg of fifolium, which had cost $5 per kilogram. In October, it made the following purchases and sales of fifolium.Required Calculate the quantity
Janice Jersey's first 6 months of trading showed the following purchases and sales of stock.Calculate Janice's profit for the 6 months ended 30 June 1990 using the following methods of stock
How should stock be valued in a balance sheet?A. At the lower of net realisable value and selling price B. At the lower of replacement cost and net realisable value C. At lower of cost and
At 31 July, L.I. Fortune Ltd had a stock of 40 litres of lifoxium, which had cost $1.50 per litre. The purchases and sales of lifoxium in August were as follows.Required Calculate L.I. Fortune
A company bought and sold goods as follows.What is the value of the stock at 6 March based on FIFO? A. $44 B. $45 C. $65 D. $66 March 1 3 5 6. Bought Units 20 100 10 20 Unit price
Discuss how the concept of prudence might be relevant when considering the valuation of Stock in Trade.
A.V. Co. had a stock of 200 digital hammers at 31 May. The hammers were valued at $5 each. Transactions in digital hammers in the month of June were as follows.Required Calculate the
Because of illness, Achmed's annual stocktaking, which should have taken place on 31 March 2001, was not completed until 7 April 2001, and was undertaken by an inexperienced member of the staff.
A company had the following stock transactions in June.What is the value of stock at 30 June based on AVCO? A. $4.292 B. $4.437 C. $4.50 D. $5.00 June 1 Purchased 50 units of
A trader has valued his opening and closing stocks using LIFO. He has now heard that LIFO is not acceptable under current accounting standards and has amended his accounts to value the stocks on
Tee and Leef are trading in partnership. Their trial balance at 31 March 2004 is as follows.Further information 1. Stock at 31 March 2004: $20 000. 2. Selling expenses prepaid at 31 March
The following trial balance has been extracted from the books of Bell and Binn at 30 April 2004.Further information 1. Stock at 30 April 2004 is valued at $27 000. 2. Bell is to be credited
Cue and Rest are partners sharing profits and losses in the ratio of 2:1. They are allowed interest at 10% per annum on capitals and loans to the partnership. Other information is as follows.The
The facts are as in exercise 1, but Tee and Leaf have a partnership agreement which includes the following terms. 1. Leef is to be credited with interest on his loan to the partnership at the
Mill has been a second-hand car dealer for some years. His Trading and Profit and Loss Account for the year ended 31 December 2003 was as follows.Mill's net profits for the previous two years were as
Stump and Bail are in partnership. Stump has lent the partnership $10 000 on which he is entitled to interest at 10%. He is also entitled to a salary of $12 000 per annum. Profits and losses are
Dellow and Coucom are in partnership in a business which has three retail departments, Television, Computing and Telephones. The following balances. were extracted from the business accounts at 30
Senter and Harf have prepared their draft Balance Sheet as at 30 June 2004 as follows.It has now been discovered that the following errors and omissions have been made. 1. Some fixtures and
Tom and Tilly shared profits and losses equally until I September 2004 when they agreed that Tilly would be entitled to a salary of $10 000 per annum from that date. Profits and losses would continue
Gohl and Poast are partners sharing profits and losses equally. Gohl has lent the partnership $8000 on which he is entitled to interest at 10% per annum. The partners are entitled to annual salaries
Wilson, Keppel and Betty were in partnership and shared profits and losses equally. They did not operate Current accounts and on 30 April 1998 their Capital accounts showed the following balances.(a)
The summarised Balance Sheet for F and G in partnership is given.F and G have previously shared profits and losses in the ratio of 2 : 1 but have now decided to change the ratio to 3 :
Vera and Ken are partners who have shared profits and losses equally. On 1 July 2005 they decide to change the profit-sharing ratio to: Vera 3/5 and Ken 2/5. The partnership assets and liabilities at
J and K are partners sharing profits and losses equally. They do not record Goodwill in the firm's books. L joins the partnership, paying $24 000 for his share of the Goodwill. Profits and
L and M are in partnership sharing profits and losses in the ratio of 3 : 2. They admit N as a partner on 1 January. On the same date the partnership net assets are revalued and show a loss on
Bell and Booker have been partners for some years, making up their accounts annually to 31 December. The partnership agreement contained the following provisions. Interest was allowed on
Hook, Line and Sinker have shared profits and losses in the ratio 3 : 2 : 1 for a number of years. On 1 July 2004, the partners agreed that, from that date, 1. Hook will be entitled to a salary
Punch and Judy have shared profits and losses in the ratio of 2: 1. On 1 October 2004 they agree to share profits and losses as follows in future: Punch 3/5, Judy 2/5. Goodwill is valued at $18 000.
P, Q and R were partners, sharing profits and losses equally. P retired and Q and R continued in partnership sharing profits and losses equally. Goodwill was valued at $60 000 but was not shown in
Wilfrid, Hide and Wyte were partners sharing profits and losses in the ratio of 3 : 2 : 1 after charging interest on capitals at 10% per annum. Their Capital and Current account balances at 1 July
S and I are partners sharing profits and losses in the ratio of 1 : 2. They admit V as a partner and revise the profit-sharing ratio to: S 2/5; T 2/5: V 1/5. Goodwill is valued at $60 000 but no
The following is the summarised Balance Sheet of Bracket & Racket Ltd, a limited company wholly owned by its two shareholders, Bracket and Racket.The company accountant resigned at the beginning
Seesaw Ltd's share capital consists of 60000 10% preference shares of $1 and 100 000 ordinary shares of $1. Profits for six years were as follows: 1998 $10 000; 1999 $5000; 2000 $7000; 2001 $4000;
A company has an authorised share capital of 100 000 ordinary shares of $0.05. It has issued 70 000 shares. The directors recommend a dividend of 6%. What will be the amount of the
Pecnut Ltd's trial balance at 31 March 2004 was as follows.Further information 1. Stock at 31 March 2004: $105 000. 2. The freehold buildings are to be revalued to $2 000 000 at 31 March
The directors of Premium Shares Ltd offered 100 000 10% preference shares of $1 at $1.20 per share. All the shares were subscribed and paid for. Required Prepare journal entries to record
A company with an authorised share capital of $200 000 has issued 100 000 ordinary shares of $1. It has also issued $100 000 6% debentures. Operating profit is $20 000. A transfer of $10 000 is to be
Freehold premises are shown in the Balance Sheet of a company as follows: Cost $60000, Net Book Value $42 000. It has been decided to revalue the premises in the books of the company at $80
The following is an extract from the Balance Sheet of Gracenote Ltd.Required Calculate the Balance Sheet value of 100 ordinary shares. Share capital and reserves 200 000 ordinary shares of
Cox Ltd's Balance Sheet at 30 September 2004 is as follows.Further information relevant to the year ended 30 September 2004: 1. Plant and machinery which had cost $180 000 was sold for
On 6 April 2004 a company paid a final dividend of $7000 in respect of its financial year ended 31 December 2003. On 1 October it paid an interim dividend of $5000 in respect of the year ending 31
The following is a company's summarised Balance Sheet.What is the Balance Sheet value of each ordinary share? A. $0.75 B. $1.50C. $0.83 D. $1.67 Share capital and reserves 1 200 000
The following are extracts from a company's Balance Sheet.It has been decided to revalue the freehold premises to $500 000. What will be the Balance Sheet value of the ordinary shares after the
Molly Coddle Ltd's trial balance at 30 April 2004 was as follows.Further information 1. Stock at 30 April 2004 was valued at $31 000. 2. Depreciation for the year is to be provided as
The trial balance of Shillyshally Ltd at 30 June 2004 is as follows.Further information 1. Stock at 30 June 2004 was valued at $38 000. 2. Account is to be taken of the following at 30 June
Ali holds 500 ordinary shares of $0.50 in Riski Ltd. He has paid in full the amount of $0.35 called up on each share. The company is unable to pay its creditors. What is the maximum amount that
Which of the following will not be shown as share capital and reserves in a company's Balance Sheet? A. Debentures B. Retained profit C. Revaluation reserve D. Share premium
Which is the safest form of investment in a limited company? A. Long-term debentures B. Ordinary shares C. Preference shares D. Short-term debentures
A shareholder sold 1000 ordinary shares of $1 for $1500. What effect will this have on the share capital of the company? A. It will decrease by $1000. B. It will decrease by $1500. C.
You have received the following financial statements of Pie Ltd for the year ended 30 April 2003, but you do not have the company's Balance Sheet for the previous year.Further information relevant to
Contraflo Ltd's Balance Sheets at 31 December 2003 and 2004, and an extract from its Profit and Loss Account for the year ended 31 December 2004, were as follows.Further information During the
Horsa Ltd's Balance Sheet at 31 July 2003 was as follows.An extract from Horsa Ltd's Profit and Loss Account for the year ended 31 July 2004 and the cash flow statement for that year are as
The following is Prophile plc's Balance Sheet at 31 October 2002.The company's accountant has prepared a budgeted Profit and Loss Account and a budgeted cash flow statement for the year ending 31
The following information is extracted from the accounts of a company.What was the operating profit for the year ended 31 December 2003? A. $194 000 B. $239 000 C. $244.000D. $289
A company has an authorised share capital of $1 000 000. The company has issued 800 000 ordinary shares of $1 at $1.20 per share. It pays $48 000 as dividend on the ordinary shares. What was the rate
The following information is extracted from the accounts of a company.How much was the cash inflow from operating activities in the year ended 30 June 2004? A. $67 000 B. $75 000 C.
The following is the summarised Balance Sheet of Otago (Bonus Offers) Ltd.The directors have decided to make a bonus issue of three new shares for every four already held. They wish to leave the
A company acquired an asset worth $5000. In full settlement of the price, the company issued 5000 ordinary shares of $1 as fully paid-up shares to the vendor. Under which heading in the cash
A company redeems 60 000 $1 redeemable preference shares at a premium of $0.25 per share. The shares were originally issued at par. No new issue of shares was made to finance the
A company purchased a motor vehicle for $25000. Settlement was made by a payment of $22000 and the part exchange of one of the company's own vehicles for $3000. The vehicle given in part exchange had
The summarised Balance Sheet of Omicron Ltd at 31 December 2002 was as follows.On 1 January 2003 before any other transactions had taken place the following had occurred: 1. redemption of all
The summarised Balance Sheet of Bonarite Ltd at 30 June 2004 was as follows.On 1 July 2004, before any other transactions had taken place, the company made a bonus issue of shares on the basis of
Istaimy plc's summarised Balance Sheet at 30 April 2001 was as follows.On 1 May 2001, before any further transactions had taken place, it was decided to redeem all the preference shares at a premium
A company issues bonus shares. How does this affect the cash flow statement? A. It will increase the management of liquid resources. B. It will increase financing. C. It will increase
Choppers Ltd's summarised Balance Sheet is as follows.The company has decided to redeem the preference shares out of the proceeds of a new issue of 150 000 ordinary shares of $1 at a price of
The following is the Balance Sheet of Joloss plc at 30 April 2002.Over the past few years Joloss plc has traded at a loss and no dividends have been paid to the shareholders during that
A company has issued 300 000 ordinary shares of $0.50 each. It makes a bonus issue of two shares for every three already held. It follows that with a rights issue of one share for every two already
The summarised Balance Sheet of Twist Ltd is as follows.The preference shares had been issued at a premium of $0.20 per share. The preference shares are to be redeemed at $1.20 per share. No new
The following is the Balance Sheet of the Erchetai partnership at 30 April 2002.On 30 April 2002, Istaimy plc acquired the business of the Erchetai partnership. The following matters were taken into
A company redeems its debentures at a premium. How may the company treat the premium on the redemption? A. Debit Bank account B. Debit Capital Redemption Reserve C. Debit Share Capital
A company, which has already issued ordinary shares of $1 each, issues 200 000 bonus shares and follows this with a rights issue of 100 000 ordinary shares at $1.50 per share. What is the
On 1 April 2004 Joel Ltd acquired the partnership business of Kay and Ola. The partnership Balance Sheet at 31 March 2004 was as follows.Further information 1. The assets (including the bank
Carol has lent $60 000 at 5% interest per annum to the firm in which she is a partner. A company has offered to buy the partnership business. Part of the purchase price consists of a debenture to be
A company paid $1.8 million to acquire the business of a sole trader. The sole trader's assets and liabilities were valued as follows.How much was paid for Goodwill? A. $650 000 B. $750
Spaid and Shuvell are partners in a business and their Balance Sheet at 31 December 2004 is as follows.The partners have accepted an offer from Digger Ltd to purchase the business for $118 000. The
The Balance Sheet of a sole trader is as follows.A company purchased the business, paying for the tangible fixed assets and the net current assets at the valuations shown above. The company
FRS 18 (Accounting policies) lists four accounting principles. Which of the following is stated by the standard to be a desirable principle? A. Accruals B. Consistency C. Going
Explain what is meant by an adjusting event. Describe the action that needs to be taken when one occurs and explain why the action is necessary.
SSAP 25 (Segmental reporting) requires companies to give separate figures for certain items for each segment. For which of the following are separate figures not required? A. Cost of
On which amount are earnings per share calculated? A. Profit after interest, tax and preference dividend B. Profit after interest, tax, preference dividend and transfer to general
Which of the following is required by FRS 4 (Capital instruments) to be disclosed by way of a note to the accounts? A. Exceptional items B. The basis on which depreciation has been
Najim wants to analyse the results of his trading for the year ended 31 December 2005 and has prepared his Trading and Profit and Loss Account and Balance Sheet. He compares these with the final
What should be disclosed by way of a note to the Balance Sheet regarding depreciation of fixed assets? A. Date of acquisition B. Estimated proceeds of disposal C. Estimated net
Information about a business is given in the following table.Which of the following is true in year 2? Turnover Cost of sales Operating expenses Profit before interest and taxation Fixed assets Net
On 1 October 2001 Manny Kyoor and his wife formed a limited company, Kyoor Ltd, to run a beautician's business, and each paid in $37 500 as share capital. The bank loaned the company a further $80
Which of the following, occurring after the Balance Sheet date, is an adjusting event?A. A capital reconstruction B. A debtor at the Balance Sheet date subsequently becoming bankrupt C. An
The following information summarises the latest set of final accounts of Worky Tout & Co., a partnership.(a) Prepare, in as much detail as possible, the Trading and Profit and Loss Account of
A financial consultant has been asked by his client for advice on the relative performance of two companies, Dunedin Ltd and Wellington Ltd. Extracts from the Profit and Loss Accounts for the year
An extract from Oitar ple's Profit and Loss Account for the year ended 30 April 2002 was as follows.Oitar ple's issued share capital and reserves at 30 April 2002 consisted of:The market price of the
Extracts from the Profit and Loss Accounts for two years for a business are given in this table:What might explain the change in the gross profit margin in year 2?A. An increase in sales B. An

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