FA2 Final Exam Result JJ23.pdf

6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams Viraksakda Long 2023-06-09 90/100p 1. Financial Accounting 1...

6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams Viraksakda Long 2023-06-09 90/100p 1. Financial Accounting 1 FA2 Final Exam for JJ2023 *This exam contains 50 questions, each worth 2 marks (100 marks in total). **All questions are compulsory. ***Duration of 2 hours (120 minutes) ****Draft paper and calculator are allowed 2. If the owner of a business takes goods from inventory for own personal use, which accounting concept should be applied to record that transaction? CLO assessed: CK1 The relevance concept The prudence concept The business entity concept The faithful representation concept Correct answer. 2/2p 3. The Conceptual Framework for Financial Reporting identifies several qualitative characteristics that make financial information useful. Which one of the following only contains qualitative characteristics of useful information contained in the Framework? CLO assessed: CK1 Prudence, consistency, understandability, faithful representation, substance over form Accruals basis, going concern concept, consistency, prudence, true and fair view Faithful representation, neutrality, substance over form, completeness, consistency, faithful and free from material error Relevance, faithful representation, timeliness, comparability, verifiability Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345d… 1/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 4. Which of the following group of statements is correct? CLO assessed: CK1 A credit entry will increase drawings A debit entry will decrease payables A debit entry will increase profit A credit entry will increase a bank overdraft Correct answer. 2/2p 5. What would a debit balance on a ledger account indicate? CLO assessed: CK1 It represents an amount owing to the entity It represents either a liability or an expense It represents either an asset or an expense It represents either a liability or revenue Correct answer. 2/2p 6. Which one of the following is a book of prime entry? CLO assessed: CK1 the sales ledger the petty cash book the sales ledger control account the purchase ledger Correct answer. 2/2p 7. All the sales of Ace, a retailer, were made at a price inclusive of sales tax at the standard rate of 10% and all purchases bore sales tax at the standard rate. For the three months ended 31 March 2023 gross sales were $22,000 and purchases were $12,000 (net). How much is due to the tax authority for the quarter? CLO assessed: CC2 Answer: 800 Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345d… 2/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 8. John made a purchase of goods from Chris which had a list price of $10,000, on which a trade discount ten percent was allowed. Chris also offered John a ten percent settlement discount if payment was received within ten days of the invoice date, and expected John to take advantage of this offer. At what cost should this purchase initially be recorded in John’s accounting records? CLO assessed: CC2 Answer: 9000 Correct answer. 2/2p 9. John made a purchase of goods from Chris which had a list price of $10,000, on which a trade discount ten percent was allowed. Chris also offered John a ten percent settlement discount if payment was received within ten days of the invoice date, and expected John to take advantage of this offer. At what value should this sale transaction initially be recorded in Chris’ accounting records? CLO assessed: CC2 Answer: 8100 Correct answer. 2/2p 10. Which of the following best explains what is meant by ‘capital expenditure’? CLO assessed: CK2 expenditure on expensive assets expenditure minor parts and accessories of non-current assets expenditure on non-current assets, including repairs and maintenance expenditure relating to the acquisition or improvement of non-current assets Correct answer. 2/2p 11. James bought a new machine. The machine cost $50,000 and delivery and installation costs were $3,000. Testing it amounted to $2,000. Training employees on how to use the machine cost of $500. What amount should James recognise as the cost of the machine for inclusion in the statement of financial position? CLO assessed: CC2 Answer: 55000 Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345d… 3/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 12. A non-current asset was purchased 1 January 20X1 for $4,800 and depreciated by 20% per annum by the reducing-balance method. It has an estimated resale value of $800 at the end of its useful life. What should be the depreciation charge for the year ended 31 December 20X2? CLO assessed: CC2 $640 $768 $800 $960 Correct answer. 2/2p 13. Dwane acquired a lorry on 1 May 2022 at a cost of $30,000. The lorry has an estimated useful life of four years, and an estimated resale value at the end of that time of $6,000. Dwane charges depreciation on the straight-line basis, with a proportionate charge in the period of acquisition. What was the depreciation charge for the lorry in Dwane''s financial statements for the year ended to 30 September 2022? CLO assessed: CC2 $2,500 $3,125 $6,000 $7,500 Correct answer. 2/2p 14. A non-current asset was purchased at the beginning of Year 1 for $4,800 and depreciated by 20% per annum by the reducing-balance method. At the beginning of Year 3 it was sold for $3,400. What was the profit or loss on disposal of the asset? CLO assessed: CC2 $328 profit $328 loss $942 profit $942 loss Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345d… 4/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 15. A receivables control account had a closing balance of $8,800. It contained a contra to the purchase ledger of $400, but this had been entered on the wrong side of the control account. What should be the correct balance on the receivables control account? CLO assessed: CC3 $8,000 $8,400 $9,200 $9,600 Correct answer. 2/2p 16. At 31 May 2023 the balance on the payables control account in Mike's general ledger is $79,800 and the total of the list of balances on the suppliers accounts is $79,080. Mike has discovered that the difference is because a payment for $80 was entered correctly in the purchases day book but was recorded as $800 on the supplier's account. What is the correct value of payables to be reported on Mike's statement of financial position at 31 May 2023? CLO assessed: CC3 Answer: 79080 Correct answer. 0/2p 17. Jane is preparing a bank reconciliation statement at 31 May 2023. The following information are available: Balance on bank statement: $1,260 overdrawn Outstanding cheques: $750 Outstanding lodgement: $2,210 Bank charges that have not yet been recorded in the cash book: $80 How should the bank balance be reported in Jane's statement of financial position at 31 May 2023? CLO assessed: CC3 $200 asset $200 liability $2,720 asset $2,720 liability Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345d… 5/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 18. Jane is preparing a bank reconciliation statement at 31 May 2023. The following information are available: Cash book balance: $250 at bank Outstanding cheques: $750 Outstanding lodgement: $2,210 Bank charges that have not yet been recorded in the cash book: $80 What should the bank statement balance be at 31 May 2023? CLO assessed: CC3 $1,210 debit $1,210 credit $1,290 debit $1,290 credit Correct answer. 2/2p 19. James runs his own business and operates an imprest system of petty cash maintaining a float of $400. At the end of November there is cash of $74.40 and vouchers of $325.60. How much will James need to pay into petty cash to maintain the float? CLO assessed: CC3 $74.40 $251.20 $325.60 $400.00 Correct answer. 2/2p 20. How should discounts which are received from suppliers for early settlement be treated when the statement of profit or loss is prepared? CLO assessed: CC1 As a deduction from the value of purchases As a deduction from the value of sales As an expense deducted from gross profit As an expense included in cost of sales Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345d… 6/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 21. Which of the following is the reason for carrying out a receivables ledger reconciliation? CLO assessed: CC3 To check that the balance on the general ledger control account is correct To check that the value of sales is correctly recorded in the general ledger To check that the entries have been made correctly in the supplier's personal accounts To check that the balance on a supplier's ledger account agrees with the supplier's statement Correct answer. 0/2p 22. John has bought goods for resale on credit from Chris. The goods cost $1,000 before sales tax, which is calculated at 10%. When the transaction is posted to the general ledger, which TWO of the following entries should be included? CLO assessed: CC1 Cr Sales tax Cr Payables control account Dr Purchases Cr Bank At least 1 correct, and max 0 wrong 1/1p At least 2 correct, and max 1 wrong 1/1p 2/2p 23. One of John's customers returned goods valued at $600. These had been sold on credit. What double entry should John post to record the return of the goods? CLO assessed: CC1 Dr Receivables ledger control $600 Cr Bank $600 Dr Bank $600 Cr Receivables ledger control $600 Dr Receivables ledger control $600 Cr Sales returns $600 Cr Sales returns $600 Cr Receivables ledger control $600 Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345d… 7/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 24. A trial balance fails to agree by $1,200. Which of the following errors could have caused the difference? CLO assessed: CC3 An insurance payment of $600 had been debited to a non-current asset account A $1,200 cheque paid to a supplier had been credited to the supplier's account in the payables ledger A non-current asset costing $600 had been credited to the purchases account A $1,200 cheque received from a customer had been credited to the customer's account in the payables ledger Correct answer. 2/2p 25. A business has cash of $1,200, trade payables of $2,600, a mortgage liability of $7,500 and land of $15,000. What should be the capital balance? CLO assessed: CC1 Answer: 16200 Correct answer. 0/2p 26. Arthur has found that an invoice for $750 for electricity expense has been posted to the correct side of the electricity expense account but the entry is for $570. What entry is needed to correct this error? CLO assessed: CC3 Dr Electricity expense $180 Cr Suspense account $180 Dr Accounts payable $180 Cr Suspense account $180 Dr Suspense account $180 Cr Electricity expense $180 Dr Suspense account $180 Cr Accounts payable $180 Correct answer. 2/2p 27. At 1 September 20X1, the balance on Wade's capital account was $31,500. In the year to 31 August 20X2, he invested an additional $35,000 of personal funds and took a bank loan of $85,000 for the business. The statement of profit or loss for the year to 31 August 20X2 reported a profit of $48,000 and Wade's drawings during the year were $30,000. What is the closing balance on Wade's capital account at 31 August 20X2? CLO assessed: CC1 Answer: 49500 Correct answer. 0/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345d… 8/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 28. Chamnan is preparing a general ledger journal entry to write off an irrecoverable debt. He knows that the debit entry should be made in the irrecoverable debt expense account. In which general ledger account should the credit entry be made? CLO assessed: CC2 Revenue account Bank account Receivables ledger control account Receivables allowance account Correct answer. 2/2p 29. Mr Nara has paid rent of $4,800 for the period 1 January 20X3 to 31 December 20X3. His first accounts are being drawn up for the nine months ended 30 September 20X3. What should his first accounts show? CLO assessed: CC2 Only a rent expense of $4,800 A rent expense of $3,600 and a prepayment of $1,200 A rent expense of $3,600 and accrued income of $1,200 A rent expense of $4,800, with an explanatory note that this is the usual charge for 12 months Correct answer. 2/2p 30. Kanha is preparing his trial balance at 31 October 20X3. At 1 November 20X2 he had an accrual of $297 for telephone expenses. During the year to 31 October 20X3 he paid invoices for telephone charges up to 31 October 20X3 of $4,580. What balance should Kanha include in his initial trial balance at 31 October 20X3 for telephone expenses? CLO assessed: CC2 $4,283 debit $4,283 credit $4,877 debit $4,877 credit Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345d… 9/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 31. The electricity account for the year ended 30 April 20X5 was as follows: Electricity accrued at 1 May 20X4: $260 Payments made during the year in relation to: Quarter ending 30 June 20X4: $400 Quarter ending 30 September 20X4: $350 Quarter ending 31 December 20X4: $425 Quarter ending 31 March 20X5: $450 What amount for should be included in the statement of profit or loss for the year ended 30 April 20X5? CLO assessed: CC2 Answer: 1365 Correct answer. 0/2p 32. Paul needs to adjust his draft year-end accounts to record a prepayment of $3,000 and an accrual of $800. How will Paul's profit be affected by including the prepayment and the accrual? CLO assessed: CC2 Net profit will increase by $2,200 Net profit will reduce by $2,200 Net profit will increase by $3,800 Net profit will reduce by $3,800 Correct answer. 2/2p 33. Marie runs a restaurant. In August 20X5 she received a letter from a lawyer representing a customer who claimed he suffered food poisoning after eating in the restaurant. The customer is claiming damages of $6,000. Marie offered to pay $600. Her lawyer's advice is that the case is likely to go to court and Marie is likely to be required to pay $3,000. The lawyer also advised that the court case is unlikely to take place before April 20X6. What amount should be provided for in respect of the claim in Marie's final accounts for the year ended 30 September 20X5? CLO assessed: CC2 $600 $3,000 $6,000 Nil Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345… 10/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 34. At 30 April 20X3 the total amount owed to Neardey by his customers was $64,865. At the same date, Neardey calculated that his receivables allowance is $3,775. How should these balances be reported in Neardey' statement of financial position as at 30 April 20X3? CLO assessed: CC2 $61,090 as a current asset $61,090 as a current liability $64,865 as a current asset and $3,775 as a current liability $64,865 as a current liability, and $3,775 as a current asset Correct answer. 2/2p 35. At 31 December 20X2 a company's receivables totalled $800,000 and an allowance for receivables of $100,000 had been brought forward from the year ended 31 December 20X1. It was decided to write off debts totalling $76,000 and to adjust the allowance for receivables to 10% of the receivables. What charge for receivables expense should appear in the company's statement of profit or loss for the year ended 31 December 20X2? CLO assessed: CC2 $48,400 $56,000 $102,000 Correct answer. 2/2p 36. Which of the following is the correct formula to calculate cost of goods sold? CLO assessed: CC2 Purchases – Opening inventory – Closing inventory Purchases + Opening inventory + Closing inventory Purchases – Opening inventory + Closing inventory Purchases + Opening inventory – Closing inventory Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345d… 11/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 37. Which TWO of the following should be included in inventory cost? CLO assessed: CK2 Carriage outwards Carriage inwards Administrative costs Import duties At least 1 correct, and max 0 wrong 1/1p At least 2 correct, and max 1 wrong 1/1p 2/2p 38. An inventory record card shows the following details: January 1: 50 units in inventory at a cost of $10 per unit January 4: 90 units purchased at a cost of $15 per unit January 10: 65 units sold January 20: 30 units purchased at a cost of $20 per unit January 26: 40 units sold What was the value of inventory at 31 January using the first in, first out (FIFO) method? CLO assessed: CC2 $725 $975 $1,000 $1,125 Correct answer. 2/2p 39. An inventory record card shows the following details: January 1: 50 units in inventory at a cost of $10 per unit January 4: 90 units purchased at a cost of $15 per unit January 10: 65 units sold January 20: 30 units purchased at a cost of $20 per unit January 26: 40 units sold What should be the cost of goods sold for the month of January using the first in, first out (FIFO) method? CLO assessed: CC2 $1,050 $1,325 $1,575 $2,100 https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345… 12/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams Correct answer. 2/2p 40. Maine valued her inventory at 30 June at its cost of $25,000. This includes some items which cost $2,100 which have been difficult to sell. Maine intends to have these items repackaged at a cost of $350. She can then sell them for $1,000. What will be the value of closing inventory in Maine's accounts at 30 June? CLO assessed: CC2 Answer: 23550 Correct answer. 2/2p 41. At 31 May 20X3 Jane had a loan with an outstanding balance of $60,000. She is required to repay $1000 on the 10th of each month. How should the loan be reported on her statement of financial position at 31 May 20X3? CLO assessed: CC1 As a current liability of $60,000 As a non-current liability of $60,000 As a current liability of $48,000 and a non-current liability of $12,000 As a current liability of $12,000 and a non-current liability of $48,000 Correct answer. 2/2p 42. Mike's trial balance includes a balance for his drawings. How should this balance be treated in the final accounts? CLO assessed: CC1 As a reduction in capital As an increase in capital As expenses in the statement of profit or loss As an income in the statement of profit or loss Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345… 13/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 43. When the extended trial balance is being completed, in which column should the balance in allowance for receivables be entered? CLO assessed: CC1 Statement of profit or loss debit Statement of profit or loss credit Statement of financial position debit Statement of financial position credit Correct answer. 2/2p 44. Assume that an extended trial balance has been prepared but the result for the year has not yet been calculated. The totals of the statement of profit or loss and the statement of financial position columns are: Statement of profit or loss Dr $473,954 Cr $485,890 Statement of financial position Dr $172,546 Cr $160,610 Which of the following is the correct result for the year? CLO assessed: CC1 A loss of $11,936 A loss of $313,346 A profit of $313,346 A profit of $11,936 Correct answer. 2/2p 45. James and Dwayne are in partnership sharing profits and losses in the ratio 3:4. The statement of profit or loss for the year to 31 May 20X3 reported a net profit of $35,000. James is entitled to a salary of $14,000 per annum. What was Dwayne's share of the profit for the year to 31 May 20X3? CLO assessed: CC1 $9,000 $12,000 $20,000 $23,000 Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345… 14/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 46. Ant and Dec are in partnership. In the year to 31 October 20X3, Ant's drawings were $36,000 and the following entries were made in the partnership appropriation account for Ant: Salary $13,000 Interest on drawings $3,600 Share of residual profit $25,500 At 1 November 20X2, the balance on Ant's current account was $49,600 (credit). What was the balance on Ant's current account at 31 October 20X3? CLO assessed: CC1 $48,500 $55,700 $84,500 $91,700 Correct answer. 2/2p 47. Mara and Kara were equal partners in a business, each with capital of $240,000. It was agreed that Janna should join the partnership, with all three partners sharing profits equally. For the purpose of admitting the new partner, the value of the goodwill of the business was agreed at $180,000, but goodwill would not be maintained in the accounts. Janna introduced $160,000 in cash to the business. What was the balance on the capital account of Mara immediately after the admission of Janna to the partnership? CLO assessed: CC1 $240,000 $270,000 $300,000 $330,000 Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345… 15/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 48. Anna and Karen have been in partnership sharing profits and losses equally. At 1 March 20X1 the total value of the balances on their capital and current accounts was $550,000. At that date Nina was admitted to the partnership and it was agreed that: (1) The partners would share profits and losses equally (2) Goodwill would be valued at $150,000 (3) Goodwill would not be maintained in the books of the partnership (4) Nina would introduce cash to ensure that her opening capital balance is nil How much cash must Nina contribute? CLO assessed: CC1 $25,000 $50,000 $75,000 $150,000 Correct answer. 2/2p 49. In the year to 30 April 20X3, John's sales were $364,000. All of his sales were made at a mark up of 30%. His opening inventory value was $23,600 and his closing inventory value was $19,400. What was the value of John's purchases in the year to 30 April 20X3? CLO assessed: CC1 $250,600 $275,800 $280,000 $284,200 Correct answer. 2/2p 50. In the last 12 months, Janine's capital balance increased by $13,596. In the year her drawings totalled $29,200 and she introduced additional capital of $5,800. What is Janine's net profit or loss for the year? CLO assessed: CC1 $9,804 profit $9,804 loss $36,996 profit $36,996 loss Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345… 16/17 6/11/23, 9:17 AM Exam.net - Easy-to-use and secure digital exams 51. If James normally earns a mark-up on cost of sales of 25%, what is the gross profit margin? CLO assessed: CC1 20.00% 30.00% 33.33% 35.00% Correct answer. 2/2p https://exam.net/pdf-builder/students/44695733?expires=1702188065&locale=en&settingsId=302245&signature=725f89effaac6a9fc43a17e777345… 17/17