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introductory financial accounting for business

CIMA Fundamentals Of Financial Accounting Practice And Revision Kit 1st Edition BPP Learning Media - Solutions

International Financial Reporting Standards (IFRSs) should be used:(i) To provide examples of best financial reporting practice for national bodies who develop their own requirements(ii) To ensure
The following are objectives of the IFRS Foundation:(i) Through the IASB, develop a single set of globally accepted International Financial Reporting Standards (IFRSs)(ii) Promote the use and
Regulations on the financial statements of all companies come from four main sources:(i) Company Law(ii) National GAAP/International Financial Reporting Standards(iii) Taxation authorities(iv) The
Fill in the blanks.The IFRS _________________ _________________ issues _________________ _________________ which aid users’ interpretation of IFRSs.
Which of the following statements is/are true?1 The IFRS Interpretations Committee is a forum for the IASB to consult with the outside world.2 The IFRS Foundation produces IFRSs. The IFRS Foundation
The IFRS Foundation appoints the members of which other bodies?A IFRS Advisory Council B International Accounting Standards Board C IFRS Interpretations Committee D The IFRS Advisory Council, the
Who does the IFRS Interpretations Committee report to?A International Accounting Standards Committee Foundation B Standards Advisory Council C International Accounting Standards Board D The Trustees
Which of the following provides advice to the International Accounting Standards Board (IASB) as well as informing the IASB of the implications of proposed standards for users and preparers of
What is the role of the IASB?A Oversee the standard setting and regulatory process B Formulate international financial reporting standards C Review defective accounts D Control the accountancy
Who issues International Financial Reporting Standards?A The IFRS Advisory Committee B The stock exchange C The International Accounting Standards Board D The government
Identify one of the roles of the International Accounting Standards Board.A Oversee the standard setting and regulatory process B Formulate international financial reporting standards C Raise finance
Which body liaises with national accounting standard setters to achieve convergence?A IFRS Foundation B IFRS Advisory Council C International Accounting Standards Board D IFRS Interpretations
Who raises finance to support the regulatory system?A IFRS Foundation B IFRS Advisory Council C International Accounting Standards Board D IFRS Interpretations Committee
What is the role of the International Financial Reporting Standards (IFRS)?A To ensure financial statements are correct B To give accountancy students material to study C To provide instructions as
What is the role of the International Financial Reporting Standards (IFRS) Interpretations Committee?A Oversee the standard setting and regulatory process B Formulate international financial
State whether you agree with the following suggestion made by the managing director.‘Capitalise all research expenditure’.YES/NO
State whether you agree with the following suggestion made by the managing director:‘Do not allow for depreciation for the year to 31 December 20X7.’YES/NO
State whether you agree with the following suggestion made by the managing director:‘Make no further provision for obsolete inventory and consider crediting the statement of comprehensive income
Dee has given you a piece of paper with two statements about accounting concepts.(a) A business continues in existence for the foreseeable future.(b) Revenues and expenses should be recognised in the
The accounting concept to be considered when the owner of a business uses business funds to pay for his private household expenses, is the:A Separate entity concept B Fair presentation concept C
CIMA’s recent annual report mentions how they create value from the interaction between CIMA employees, students, members, employers, partners and industry bodies and society.Which type of capital
Which qualitative characteristic of financial information can be achieved through a combination of consistency and disclosure?A Comparability B Understandability C Verifiability D Relevance
If, at the end of the financial year, a company makes a charge against the profits for stationery consumed but not yet invoiced, this adjustment is in accordance with the concept of:A Materiality B
Which basic accounting concept is being followed when a charge is made for depreciation?A Accruals B Consistency C Going concern D Materiality
According to the IASB's Conceptual Framework for Financial Reporting, which TWO of the following are part of faithful representation?1 It is neutral.2 It is relevant.3 It is presented fairly.4 It is
Which of the following may appear as current liabilities in a company's statement of financial position?1 A revaluation surplus 2 Loan due for repayment within 1 year 3 Income tax payable 4 Preferred
The IASB's Conceptual Framework for Financial Reporting gives four enhancing qualitative characteristics.What are these four characteristics?A Consistency, understandability, faithful representation,
Which accounting concept states that omitting or misstating this information could influence users of the financial statements?A The consistency concept B The accruals concept C The materiality
Sales revenue should be recognised when goods and services have been supplied; costs are incurred when goods and services have been received.Which accounting concept governs the above?A The
Listed below are some comments on accounting concepts.1 Financial statements always treat the business as a separate entity.2 Materiality means that only items having a physical existence may be
Inventory days and receivables days are:Inventory days Receivables days A 36 52 B 36 88 C 63 52 D 63 88
The gross and net profit margins are:Gross Net A 21% 42%B 71% 36%C 42% 36%D 42% 21%
Non-current asset turnover is:A 0.781 times B 1.875 times C 2.553 times D 3.529 times
A business operates on a gross profit margin of 331/3%. Gross profit on a sale was $800, and expenses were $680. The net profit percentage is:A 3.75%B 5%C 11.25%D 22.67%
Arrange the following current assets in order of increasing liquidity (least to most liquid).(i) Inventory(ii) Cash(iii) Receivables(iv) Prepayments A (ii), (iv), (iii), (i)B (i), (ii), (iii), (iv)C
A firm buys materials on 2 months' credit, and they spend 2 months in inventory and 0.5 months in production. Finished goods are normally retained for 3 months before sale and on average, receivables
Working capital is?A Non-current assets + net current assets B Current assets – current liabilities C Total assets – total liabilities D Liquid current assets – current liabilities
An increase in selling prices may lead to which of the following effects?A Asset turnover will increase B Profit margins will fall C Profit margins may increase, subject to a fall in asset turnover D
The draft statement of financial position of B at 31 March 20X8 is set out below.$ '000s $'000s Non-current assets 450 Current assets: Inventory 65 Receivables 110 Prepayments 30 205 Current
From the following information regarding the year to 31 August 20X6, what is the payables' payment period?$Sales 43,000 Cost of sales 32,500 Opening inventory 6,000 Closing inventory 3,800 Payables
The gross profit mark-up is 40% where:A Sales are $120,000 and gross profit is $48,000 B Sales are $120,000 and cost of sales is $72,000 C Sales are $100,800 and cost of sales is $72,000 D Sales are
A company has the following details extracted from its statement of financial position:$'000 Inventories 1,900 Receivables 1,000 Bank overdraft 100 Payables 1,000 Its liquidity position could be said
A company's gearing ratio would rise if:A A decrease in long-term loans is less than a decrease in shareholders' funds B A decrease in long-term loan is more than a decrease in shareholders' funds C
A business has the following trading account for the year ending 31 May 20X8:$ $Sales turnover 45,000 Opening inventory 4,000 Purchases 26,500 30,500 Less closing inventory 6,000 24,500 Gross profit
During the year ended 31 October 20X7, your organisation made a gross profit of $60,000, which represented a mark-up of 50%. Opening inventory was $12,000 and closing inventory was $18,000.The rate
Adam has stated the following disadvantage to users of the statement of cash flows. Which one is a valid disadvantage?A Under IAS 7 Statement of cash flows, an entity may use any format for their
Using the direct method, what is Big Time Co's cash flow from operating activities?A $3,425 B $3,775 C $1,425 D $6,775
Adam and Jo have two different views. Who is correct, and why?A Adam is correct. A profitable business should not waste management time on cash flow issues.B Adam is correct. A profitable business
Part of the process of preparing a company's statement of cash flows is the calculation of cash inflow from operating activities.Which of the following statements about that calculation (using the
Which of the following items could appear in a company's statement of cash flows?1 Surplus on revaluation of non-current assets 2 Proceeds of issue of shares 3 Proposed dividend 4 Irrecoverable debts
The following information is an extract from the statements of financial position of DCF.31 August 20X3 31 August 20X2$'000 $'000 Inventory 20 14 Trade receivables 16 18 Bank 12 10 48 42 Trade
In a statement of cash flows, the issue of shares appears under which heading?A Cash flows from operating activities B Investing activities C Financing activities D Cash and cash equivalents
In a statement of cash flows, purchase of non-current assets appears under which heading?A Cash flows from operating activities B Investing activities C Financing activities D Cash and cash
A company has the following non-current asset transactions. Purchases of non-current assets costing $1,500,000 Profit on sales of assets $50,000 (carrying amount $250,000) Depreciation
A business has the following payments and receipts during its accounting period. Issue of shares $500,000 Loan repaid $250,000 Share premium received $150,000 Proceeds of a rights issue
The following information was extracted from the statements of financial position of Z at 31 December 20X2 and at 31 December 20X1:20X2 20X1$'000 $'000 Inventory 100 140 Receivables 150 130 Trade
When comparing two statements of financial position, you notice that:(i) Last year, the company had included in current assets investments of $10,000. This year, there are no investments in current
The following information relates to CFS:$'000 Machinery Cost at 1 January 20X2 80 Additions 20 Disposal (10)Cost at 31 December 20X2 90 Accumulated depreciation at 1 January 20X2 15 Depreciation
APM provides the following note to non-current assets in its statement of financial position.Plant and machinery Cost Depreciation Carrying value$'000 $'000 $'000 Opening balance 25 12 13
In a statement of cash flows, interest paid appears under which heading?A Cash flows from operating activities B Investing activities C Financing activities D Cash and cash equivalents
During the year ended 31 December 20X5, the following expenditure was incurred:$Prime cost 720,000 Factory overheads 72,000 The closing work in progress was $350,000 The factory cost of goods
The total depreciation charge for the year ended 31 December 20X4 was $ ____________________ .
The prime cost of production for the year ended 31 December 20X4 was $ ____________________ .
Your firm has the following manufacturing figures.$Prime cost 56,000 Factory overheads 4,500 Opening work-in-progress 6,200 Factory cost of goods completed 57,000 Closing work-in-progress is:A $700 B
The following information relates to NV Co for the year ended 31 July 20X3.$'000 Direct materials 160 Direct labour 200 Prime cost 360 Carriage outwards 880 Depreciation of delivery vehicles 30
You are given the following information for the year ended 31 October 20X7:$Purchases of raw materials 112,000 Returns inwards 8,000 Decrease in inventories of raw materials 8,000 Direct wages 42,000
The production cost of finished goods is?A Prime cost plus production overheads plus opening WIP less closing WIP B Prime cost plus production overheads C Prime cost plus opening WIP less closing WIP
At the start of the year, a manufacturing company had inventories of raw materials of $18,000 and inventories of finished goods of $34,000. There was no work in progress.During the year, the
An increase in the figure for work-in-progress will:A Increase the prime cost B Decrease the prime cost C Increase the cost of goods sold D Decrease the factory cost of goods completed
Your company sells goods on 29 December 20X3, on sale or return; the final date for return or payment in full is 10 January 20X4. The costs of manufacturing the product are all incurred and paid for
The prime cost of goods manufactured is the total of:A All factory costs before adjusting for work-in-progress B All factory costs of goods completed C All materials and labour D Direct factory costs
If work-in-progress (WIP) decreases during the period, then:A Prime cost will decrease B Prime cost will increase C The factory cost of goods completed will decrease D The factory cost of goods
The following information relates to a company at its year end.$Inventory at beginning of year:Raw materials 10,000 Work-in-progress 2,000 Finished goods 34,000 Inventory at end of year:Raw materials
The prime cost of goods manufactured is the total of:A Raw materials consumed B Raw materials consumed and direct wages C Raw materials consumed, direct wages and direct expenses D Raw materials
The following information is for the year ended 31 October 20X0.$Purchases of raw materials 56,000 Returns inwards 4,000 Increase in inventory of raw materials 1,700 Direct wages 21,000 Carriage
Fill in the figure below.Share premium ____________________ General reserve ____________________ Given below are extracts from the trial balance of FG at 31 March 20X2 after preparation of the draft
Fill in the figure below.$Given below are extracts from the trial balance of FG at 31 March 20X2 after preparation of the draft statement of profit or loss.$Share capital (50 cents ordinary shares)
The amended balance on retained earnings at 31 March 20X2 was $ ______________________ Given below are extracts from the trial balance of FG at 31 March 20X2 after preparation of the draft statement
In a set of company accounts, which would normally increase administration expenses?A Reduction in the allowance for receivables B Depreciation of machinery in the factory C Payment of the audit fee
A company has authorised capital of 50,000 5% preference shares of $2 each and 500,000 ordinary shares with a par value of 20c each. All of the preference shares have been issued, and 400,000
Which ONE of the following does NOT form part of the equity capital of a limited company?A Preference share capital B Share premium C Revaluation reserve D Ordinary share capital
Retained earnings would decrease if a company:A Sets aside profits to pay future dividends B Transfers amounts into 'general reserves'C Issues shares at a premium D Pays dividends
Which of the following items may appear as current liabilities in a company's statement of financial position?1 Revaluation surplus 2 Loan due for repayment within one year 3 Taxation 4 Preference
When a company makes a rights issue of equity shares, which of the following effects will the issue have?1 Assets are increased 2 Retained earnings are reduced 3 Share premium account is reduced 4
A company has $500,000, 15% debentures which were originally issued at par. The company had paid interest half yearly but the final instalment is outstanding at the year end.Which of the following
According to the illustrative financial structure in IAS 1 Presentation of financial statements, where should dividends paid during the year be disclosed?A Statement of profit or loss and other
At 1 January 20X0, the capital structure of Q, a limited liability company, was as follows:$Issued share capital 1,000,000 ordinary shares of 50c each 500,000 Share premium account 300,000 On 1 April
Which one of the following items does not appear under the heading 'equity and reserves' on a company statement of financial position?A Share premium account B Retained earnings C Revaluation surplus
A limited liability company issued 50,000 ordinary shares of 25c each at a premium of 50c per share. The cash received was correctly recorded but the full amount was credited to the ordinary share
At 30 June 20X2 a company's capital structure was as follows:$Ordinary share capital 500,000 shares of 25c each 125,000 Share premium account 100,000 In the year ended 30 June 20X3, the company made
Fill in the figures.Summarised statement of financial position at 31 May 20X6$ $Non-current assets __________________ Current assets __________________ Less current liabilities __________________ Net
The rent and insurance charge for the year is $ _________________________ .
The gross profit for the year is $ _________________________ .
In the year to 31 May 20X6, Julie paid $2,500 for property repairs. Her bookkeeper treated this as capital expenditure.What is the effect of this error on Julie's profit for the year to 31 May 20X6,
What amount should have been reported as expenses in Anna’s statement of profit or loss?A $10,400 B $10,740 C $11,490 D $17,190
What was Anna's gross profit?A $4,710 B $15,110 C $15,450 D $16,200
The trial balance of EHL does not balance and the debits exceed the credits by $2,300. The following errors are discovered: The single column manual cash book receipts column was undercast by
Which of the following statements are correct?(i) A inventory valuation should include carriage in.(ii) A inventory valuation should exclude carriage out.A Both correct B Both incorrect C (i)
E bought computer equipment on 1 January 20X0 for $24,000 and estimated that it would have a useful life of five years and a residual value of $2,000. E uses the straight line method of
Gladys has prepared her draft final accounts, which show a net profit of $24,952 and closing capital of$75,841. She has now found that a supplier's invoice for $250 for advertising expenses was not

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