CIMA CO2 Official Learning System - Fundamentals of Financial Accounting
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MOCK ASSESSMENT 2
MOCK ASSESSMENT C2
720
Question 43
The following information relates to B Ltd for the year ended 31 August 20X7.
$
Retained profi t for the year 25,000
Net cash infl ow from operating activities 23,000
Dividend paid 2,000
P r o fi t on sale of non-current assets 500
Proceeds on sale of non-current assets 6,000
Taxation paid 1,000
Interest paid 3,500
Payments for non-current assets 7,000
Issue of debentures 4,000
The statement of cash fl ows will show:
decrease/increase .................. in cash of $ ..................
Question 44
The property in Credit Crunch Ltd has been revalued from $300,000 to $400,000, and
the tax on the gain is $25,000.
Complete the following items to enter the above information.
Amount included in total comprehensive income $
Amount included in statement of changes in equity $
Property in statement of fi nancial position $
Revaluation reserve $
Non-current liabilities $
Question 45
DRP Ltd operates an imprest system for petty cash. On 1 May the fl oat was $325. It was
decided that this should be increased to $400 at the end of May.
During May, the cashier paid $15 for gardening, $120 for stamps and $175 for repairs.
The cashier received $40 from staff for the private use of the telephone and $70 for a cash
sale. The amount to be drawn from the bank account for petty cash at the end of May is:
$..................
Question 46
An audit trail in a computerised accounting system is:
(A) a history of all transactions on a ledger account.
(B) information regarding all transactions in a period.
(C) a list of all transactions automatically posted from day books to ledgers.
(D) a list of all transactions checked by the internal auditor.
MOCK ASSESSMENT 2
721
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Question 47
The following are extracts from the fi nancial statements of RSVP plc for the year ended
31 March 20X8.
$’000
Issued ordinary shares of $1 450
Share premium account 75
Income statement reserve 40
Debenture 50
P r o fi t before interest for the year ended 31 March 20X8 85
The return on total capital employed is:
.................. %
Question 48
There was a fi re at the premises of NGO Ltd during the year ended 30 November 20X9
and the accounting records were partly destroyed. The accountant is trying to prepare
the fi nancial statements from these incomplete records. She discovers that the electricity
account was overpaid by $400 on the 1 December 20X8 and that there was $300 owing
on 30 November 20X9. During the year, electricity payments totalled $3,000.
The charge to the income statement for electricity for the year ended 30 November
20X9 is:
$ ..................
Question 49
In order to confi rm that fi nancial statements show a true and fair view (fair presentation),
the external auditor should ensure that the fi nancial statements comply with:
(A) internal procedures as specifi ed by the directors.
(B) the stock exchange listed company regulations.
(C) the accounting conventions.
(D) international fi nancial reporting standards.
Question 50
CO Ltd purchased equipment for $60,000 on 1 July 20X5 with an estimated residual
value of $4,000. The company’s accounting year end is 31 December. It is CO Ltd’s policy
to charge a full year’s depreciation in the year of purchase. CO Ltd depreciates its equip-
ment on the reducing balance basis at 25% per annum.
The carrying amount of the equipment at 31 December 20X8 should be:
$..................
MOCK ASSESSMENT 2
MOCK ASSESSMENT C2
722
Illustrative computer-based assessment 2: Solutions
Solution 1
Answer: (B) Convention: Realisation
Solution 2
Cash book Bank statement
$ $
Balance per cash book/bank statement (5,200) (6,800)
Unpresented cheques (1,100)
Bank charges (400)
Receipts not credited by bank 1,700
Dishonoured cheques (600)
(6,200) (6,200)
Answer: $6,800
Solution 3
$’000
Prime cost 370
Factory indirect overheads 560
Increase in WIP (65)
Factory cost of goods completed 865
Solution 4
Answer: (A), (B)
Solution 5
$’000
Additions (30)
Asset disposal – cost 20
– depreciation (3)
– carrying amount 17
P r o fi t on disposal 3
Proceeds on disposal 20
Cash outfl ow (10)
MOCK ASSESSMENT 2
723
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Solution 6
Gas account
D r C r
$ $
20X3
May 1 Bal b/f ($2,100 2/3) 1,400
May 31 Bank 2,800
Jul. 31 Accrual ($3,900 2/3) 2,600
Jul. 31 Income statement 4,000
5,400 5,400
Solution 7
Answer: (D)
Solution 8
Answer: (D)
Solution 9
Rent account
D r C r
$ $
1 Jul. 20X2 Bal b/f ($900 1/3) 300
1 Aug. 20X2 Bank 900
1 Nov. 20X2 Bank 900
1 Feb. 20X3 Bank 1200
1 May 20X3 Bank 1200
30 Jun. 20X3 Income statement 4,100
30 Jun. 20X3 Bal c/d ($1200 1/3) 400
4,500 4,500
Rent expense $4,100 Accrual $nil Prepayment $400
MOCK ASSESSMENT 2
MOCK ASSESSMENT C2
724
Solution 10
$
Cost machine 20,000
Expected residual value (2,000)
18,000
Annual depreciation charge
$18,000/4 4,500
Cost machine 20,000
Depreciation charge 3 years ($4500 3) (13,500)
Carrying amount 6,500
Proceeds (5,500)
Loss on disposal 1,000
Solution 11
$’000
Inventories (6,000)
Receivables 2,000
Payables (4,000)
Cash outfl ow (8,000)
Solution 12
Answer: (A), (B), (C)
Solution 13
Answer: (C), (F)
Solution 14
$
Cost machine 32,000
Expected residual value (4,000)
28,000
Annual depreciation charge
$28,000/5 5,600
Cost machine 32,000
Depreciation charge 2 years ($5600 2) (11,200)
Carrying amount 20,800
Depreciation charge 20 3 & 20 4
($20,800/2) 10,400
MOCK ASSESSMENT 2
725
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Solution 15
$
Receivables 4,000
Bank 12,000
16,000
Payables 8,000
Quick (acid) test 2:1
Solution 16
Answer: (B)
Solution 17
Fees – year ended 31 December 20X3
$
Annual fees 10,000
Joining fees $(11000 $13000)/4 6,000
Life membership fees $(7000 $5000)/10 1,200
17,200
Solution 18
800 shares at 25¢ $200
Dividends 5% $10
Solution 19
$’000
X1 15
X2 6
X3 14
35
Solution 20
Answer: (D)
Solution 21
Answer: (A)
Solution 22
Answer: (A)
MOCK ASSESSMENT 2
MOCK ASSESSMENT C2
726
Solution 23
Answer: (D)
Solution 24
Income
statement
Payroll
control Net pay
Gross salary 5,000 5,000
Tax deducted (500) (500)
Employer’s social security tax 400 400
Employee’s social security tax 350 (350)
Employer’s contribution to pension fund 190 190
Employee’s contribution to pension fund 210 (210)
Voluntary deduction for payment to charity 30 (30)
Net pay
5,590 1,680 3,910
Solution 25
$
Estimated cost equipment introduced 3600
Additional equipment 1700
Equipment sold (300)
5 , 000
Estimated cost equipment December 20X4 (3,900)
Depreciation charge – year ended 31 December 20X4 1,100
Solution 26
Overstatement $2,000
Solution 27
Debit Credit
$ $
Opening balance 20,000 Bank 155,000
Sales 170,000 Bad debts 3,000
Contra 2,000
Returns 6,000
Closing balance 24,000
190,000 190,000
MOCK ASSESSMENT 2
727
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Solution 28
Yes No
Dividends ✓
Total comprehensive
income for the year
✓
Directors ’ salaries ✓
Revaluation of property ✓
Taxation ✓
Solution 29
Date Units
Average Price ($) Total ($)
1 Apr. 80 17 1360
6 A p r .
30 19 570
110 17.55 1930
20 Apr. 45 20 900
155 18.26 2830
25 Apr. (100) 18.26 (1826)
30 Apr. 55 18.26 1004
Solution 30
$’000
Prime cost 164
Factory overheads 227
391
Opening work in progress 82
Closing work in progress (131) (49)
Factory cost of goods completed 342
Solution 31
Account
Dr ($) Cr ($)
Legal fees 6000
VAT 1050
Trade payable 7050
Solution 32
Answer: (D)
Solution 33
Prudence convention
MOCK ASSESSMENT 2
MOCK ASSESSMENT C2
728
Solution 34
ROCE Operating profi t margin Net asset turnover
22% 5.5% 4
Solution 35
Answer: (B)
Solution 36
Answer: (D)
Solution 37
$28,000 365/$125,000 82 days
Solution 38
Statement of
fi nancial position
Receivables
$ %
Allowance for receivables
$
1 month 18,000 0% 0
1–2 months 30,000 1% 300
2–3 months 14,000 10% 1,400
3 months 12,000 30% 3,600
5,300
Allowance
$
Allowance
$
IS A/c
$
1 May 20X2
6,000
30 April 20X3
5,300 700 Credit
Income statement $700 credit Statement of
fi nancial position
$5,300
Solution 39
Answer: (A), (B)
Solution 40
Accounting convention Qualitative characteristic
Timely ✓
Material ✓
Relevant ✓
Objective ✓
Complete ✓
MOCK ASSESSMENT 2
729
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Solution 41
$
1 Oct. 20X6 Opening balance 1,300
Invoice 1,800
Cheque (1,728)
Discount (72)
Goods returned (170)
31 Oct. 20X6 Closing balance 1,130
Solution 42
Answer: (C)
Solution 43
$
Net cash infl ow from operating activities 23,000
Dividend paid (2,000)
Proceeds on sale of non-current assets 6,000
Taxation paid (1,000)
Interest paid (3,500)
Payments for non-current assets (7,000)
Issue of debentures 4,000
Increase 19,500
Solution 44
Complete the following items to enter the above information.
Amount included in total comprehensive income $75,000
Amount included in statement of changes in equity $75,000
Property in statement of fi nancial position $400,000
Revaluation reserve $75,000
Non-current liabilities $25,000
Solution 45
1 May Balance 325
Gardening (15)
Stamps (120)
Repairs (175)
Telephone 40
Sales 70
125
Drawn from bank 275
31 May Balance 400