Financial Accounting

Mock Test
Section: A

1. Which are the roles of IASB? 1) Responsibility for all IFRS technical matters;
2) Publication of IFRSs; 3) Overall supervision and governance of the IFRS
Advisory Council; 4) Final approval of interpretations by the IFRS
Interpretations Committee
(A) 2 only
(B) 1 and 2 only
(C) 1,2 and 3
(D) 1,2 and 4

2. Which items is/are true about limited liability companies? 1) A company might
make a bonus issue to raise funds for expansion; 2) Both realised and
unrealised gains and losses are included in the statement of comprehensive
income required by IAS 1
(A) 1 only
(B) 2 only
(C) Both 1 and 2
(D) Neither 1 nor 2

3. Which of the following are necessary characteristics of “faithful

representation” of information? (1) Information is free from bias; (2)
Information is complete within the bounds of materiality and cost; (3)
Information is free from material error
(A) 1 and 2 only
(B) 1 and 3 only
(C) 2 and 3 only
(D) 1, 2 and 3

4. Leonard, a sole trader, extracts a trial balance as at 30 April 20X7. He

subsequently discovers that drawings amounting to $38,100 have been
debited to other expenses account in error. What correcting entries must be
made?
(A) Dr Capital account and Cr Other expenses account
(B) Dr Drawings account and Cr Suspense account
(C) Dr Other expenses account and Cr Capital account
(D) Dr Suspense account and Cr Other expenses account

5. R Co’s receivables ledger was $633,700 but not agree to control account. 3
errors found: 1) $200 credit balance was incorrectly extracted as a debit
balance; 2) Invoice for $3,223 was posted as $3,232; 3) Sales returns day
book was overcast by $500
(A) $633,291 is shown in statement of financial position for accounts receivable
(B) $633,491 is shown in statement of financial position for accounts receivable
(C) $633,409 is shown in statement of financial position for accounts receivable
(D) $633,791 is shown in statement of financial position for accounts receivable
6. Here are DC’s transactions in Sep 20X6: Sales (including sales tax)
$600,000, Purchases (excluding sales tax) $450,000. DC is registered for
sales tax at 20%. On 1 September 20X6, sales tax recoverable is $2,000.
What was sales tax account balance?
(A) $8,000 Dr was sales tax account balance on 30 Sep 20X6
(B) $12,000 Dr was sales tax account balance on 30 Sep 20X6
(C) $8,000 Cr was sales tax account balance on 30 Sep 20X6
(D) $12,000 Dr was sales tax account balance on 30 Sep 20X6

7. On 30 Nov 20X6, material inventory balance of AX is 430 kg while it’s none at

start on Nov. Receipts in Nov are: 4 Nov 800 kg at $45/kg, 19 Nov 700kg at
$52/kg, 28 Nov 300kg at $60/kg. Issues in Nov are: 12 Nov 650kg, 23 Nov
720kg. Assume FIFO.
(A) $21,596 is inventory value at 30 Nov 20X6 using first in first out method
(B) $23,850 is inventory value at 30 Nov 20X6 using first in first out method
(C) $24,760 is inventory value at 30 Nov 20X6 using first in first out method
(D) $25,800 is inventory value at 30 Nov 20X6 using first in first out method

8. Inventory held at 31 May 20X6: 2000 units held for item A, cost $14/unit, price
$17/unit. 5000 units held for item B, cost $16/unit, price $20/unit. To sell at
$17, $5/unit modification needed for item A. According to IAS 2, what is
inventory value?
(A) $108,000 is inventory value held at 31 May 20X6 under IAS 2 Inventories
(B) $124,000 is inventory value held at 31 May 20X6 under IAS 2 Inventories
(C) $134,000 is inventory value held at 31 May 20X6 under IAS 2 Inventories
(D) $104,000 is inventory value held at 31 May 20X6 under IAS 2 Inventories

9. 1)All non-current assets must be depreciated; 2)If tangible non-current asset

is revalued, all tangible assets of the same class should be revalued; 3)In
statement of financial position, tangible assets and intangible assets must be
shown separately
(A) 1, 2 and 3 statements only are correct
(B) 1 and 3 statements only are correct
(C) 1 and 2 statements only are correct
(D) 2 and 3 statements only are correct

10. Which items below about intangible assets are true? 1) If certain criteria are
met, research expenditure must be recognised as an intangible asset; 2)
Goodwill may not be revalued upwards; 3) Internally-generated goodwill
should not be capitalised.
(A) 1 and 2
(B) 1 and 3 only
(C) 2 and 3 only
(D) 1,2 and 3

11. FC revalued a property on 1 Apr 2015. Annual depreciation charge is $20,000

more than the charge based on historical cost. IAS 16 is adopted on transfer
of excess deprecation. Before that: retained earnings $875,000 & revaluation
surplus $200,000.
(A) After the transfer, retained earnings $855,000 & revaluation surplus $20,000
(B) After the transfer, retained earnings $855,000 & revaluation surplus $180,000
(C) After the transfer, retained earnings $895,000 & revaluation surplus $220,000
(D) After the transfer, retained earnings $895,000 & revaluation surplus $180,000

12. Here are transactions in heat and light account: At 31 Mar 2016 $1000 gas
prepayment, $500 electricity accrual; At 31 Mar 2017 $2000 gas accrual,
$1200 electricity prepayment. In the year, $5000 paid for gas, $7800 paid for
electricity. So,
(A) $14,100 is the total heat and light expense at year ended 31 Mar 2017
(B) $12,500 is the total heat and light expense at year ended 31 Mar 2017
(C) $13,100 is the total heat and light expense at year ended 31 Mar 2017
(D) $11,500 is the total heat and light expense at year ended 31 Mar 2017

13. At 1 July 20X6 a company had prepaid insurance of $8,200. On 1 January

20X7 the company paid $38,000 for insurance for the year to 30 September
20X7. What would be seen for insurance in company’s financial statements
for year ended 30 June 20X7?
(A) Profit or loss $27,200; Statement of financial position Prepayment $19,000
(B) Profit or loss $36,700; Statement of financial position Prepayment $9,500
(C) Profit or loss $39,300; Statement of financial position Prepayment $9,500
(D) Profit or loss $55,700; Statement of financial position Prepayment $9,500

14. At 30 June 20X7, RM has: loss allowance for receivables $39,000, trade
receivables $517,000. To write off debts $37,000 and to adjust loss allowance
for receivables to equivalent of 5% of trade receivables based on past events
was decided. Impact is:
(A) $22,000 should appear in profit or loss for these items
(B) $24,000 should appear in profit or loss for these items
(C) $23,850 should appear in profit or loss for these items
(D) $61,000 should appear in profit or loss for these items

15. 2 items:1) BG offers 3-month warranties on its products and history shows
that about 5% of sales give rise to a warranty claim; 2) BG has guaranteed
another company overdraft. The likelihood of a liability arising under the
guarantee is possible.
(A) Under IFRS, item 1 is Recognise a provision, item 2 is Disclose by note only
(B) Under IFRS, item 1 is Recognise a provision, Recognise a provision
(C) Under IFRS, item 1 is Disclose by note only, No Treatment
(D) Under IFRS, item 1 is Disclose by note only, Disclose by note only

16. Prior year end on 31 Jul 20X9, CC has received a claim of $100,000 from a
customer for poor quality goods which damaged it’s factory. CC’s lawyers
have stated that 20% chance will CC successfully defend. Which one is
correct for year end 31 Jul 20X9?
(A) CC should neither provide for nor disclose the claim in financial statements
(B) CC should provide for the expected cost of the claim of $100,000 in financial
statements
(C) CC should disclose a contingent liability of $100,000 in financial statements
(D) CC should provide for an expected cost cost of $20000 in financial statements
17. Floyd made a rights issue of 150,000 $1 equity shares at price of $1.20 per
share. What is the correct journal to record this?
(A) Dr Bank $180,000; Cr Share capital 150,000, Share premium 30,000
(B) Dr Bank $180,000; Cr Share capital 180,000
(C) Dr Bank $180,000; Cr Share premium 180,000
(D) Dr Bank $150,000; Cr Share capital 120,000, Share premium 30,000

18. 3 payments made in year: 1) $40,000 interest on $800,000 10%loan notes

issued on 1 Jan 20X6. It’s payable on Jun and Dec; 2) $12,000 dividend on
200,000 6% irredeemable preference shares; 3) $5,000 dividend on 100,000
5% redeemable preference shares
What should be the finance cost in the statement of profit or loss for the year
ended 30 September 20X6?
(A) $45,000 should be the finance cost for the year ended 30 Sep 20X6
(B) $60,000 should be the finance cost for the year ended 30 Sep 20X6
(C) $65,000 should be the finance cost for the year ended 30 Sep 20X6
(D) $77,000 should be the finance cost for the year ended 30 Sep 20X6

19. AG has a suspense account balance in its trial balance of $560 credit.
Discounts allowed of $700 have been debited to, instead of credited to, the
receivables control account found. What is the balance on suspense account
after the error adjusted?
(A) $140 debit
(B) $840 debit
(C) $1,260 credit
(D) $1,960 credit

20. JH enters into transactions below with MR, a supplier who is also a customer:
1) MR buys goods from JH on credit terms; 2) JH agrees to make contra
entries in MRs’ individual ledger accounts. Which of JH’s accounting records
are affected by them?
(A) Sales day book, payables ledger and sales ledger
(B) Sales day book and sales ledger
(C) Purchase day book, payables ledger and sales ledger
(D) Purchase day book and purchases ledger

21. Jon prepares bank reconciliation with information below at 31 May 20X7:
Outstanding lodgements $5,000, Unpresented cheques $2,800, Bank charges
shown in bank statement but not recorded in cash book $125, adjusted cash
book balance debit $1,060. What was the balance as shown on the bank
statement at 31 March 20X7?
(A) $1,140 debit was the balance shown on bank statement
(B) $1,140 credit was the balance shown on bank statement
(C) $1,265 debit was the balance shown on bank statement
(D) $1,265 credit was the balance shown on bank statement

22. Which event(s) qualify as adjusting event under IAS 10? 1) A decline in the
market value of investments; 2) The declaration of a dividend on equity
shares; 3) The determination of the cost of assets purchased before the end
of the reporting period
(A) 2 only
(B) 1 and 2 only
(C) 3 only
(D) 2 and 3 only

23. TN maintains a purchases ledger control account in its general ledger. The
bookkeeper is extracting a trial balance from a general ledger. Which errors
cause trial balance unequal? 1) Transposition error; 2) Error of omission; 3)
Error of principle
(A) 1 only
(B) 1 and 2 only
(C) 2 only
(D) 1,2 and 3

24. According to IAS 2 Inventories, which of the following costs should be

included in valuing inventories of a manufacturing company? (1) Carriage
inwards; (2) Carriage outwards; (3) Depreciation of factory plant; (4) General
administrative overheads
(A) 1 and 3 only
(B) 1,2 and 4
(C) 2 and 3 only
(D) 2,3 and 4

25. Which items below must be disclosed in financial statements (including notes)
if material, according to IAS 1 Presentation of Financial Statements? 1)
Finance costs; 2) Staff costs; 3) Depreciation and amortisation expense; 4)
Movements on share capital
(A) 1 and 3 only
(B) 1,2 and 4 only
(C) 2,3 and 4 only
(D) 1, 2, 3 and 4

26. Which of the following should NOT appear in a company’s statement of profit
or loss and other comprehensive income?
(A) A loss after taxation for the financial year
(B) Dividends received from investments
(C) Dividends paid to shareholders during the year
(D) Gain on revaluation of a non current asset

27. MF drafts its fiscal year 20X6 trial balance and following income tax items are
found: Opening payable $2,091, income tax paid in 20X6 for 20X5 liability
$1,762, Closing payable $2,584. What is MF’s income expense recognised in
year 20X6?
(A) $1,269
(B) $2,584
(C) $2,255
(D) $2,913

28. Which items below could appear as separate items in statement of changes in
equity required by IAS 1? 1)Transfer to retained earnings; 2)Loss on sale of
 investments; 3)Proceeds of an issue of equity shares; 4)Dividends proposed
after the year end
(A) 1 and 3
(B) 2 and 3
(C) 1 and 4
(D) 2 and 4

29. A fire in warehouse destroyed $120,000 of BQ’s inventory on 7 Nov 20X6. It

was 30% of BQ’s inventory. Under the insurance contract, the insurer is only
liable for first $30,000 of the claim. How should it is reported for year ended
31 October 20X6?
(A) Statement of profit or loss: $nil; Disclosure in the notes: A loss of None
(B) Statement of profit or loss: $120000; Disclosure in the notes: A loss of
$30000
(C) Statement of profit or loss: $nil; Disclosure in the notes: A loss of $90,000
(D) Statement of profit or loss: $90000; Disclosure in the notes: A loss of $None

30. AT’s financial statements for year end 31 Dec shows: In 20X6, inventory
120000, receivables 175000, payables 215000; In 20X5, inventory 100000,
receivables 140000, payables 175000. What is the overall effect of the above
on AT’s cash flows for 20X6?
(A) $25,000 outflow in the year ended 31 Dec 20X6
(B) $15,000 inflow in the year ended 31 Dec 20X6
(C) $15,000 outflow in the year ended 31 Dec 20X6
(D) $25,000 inflow in the year ended 31 Dec 20X6

31. FD’s non-current assets at 1 Nov 20X5 had a carrying amount of $2,758,940.
During the year to 31 Oct 20X6, assets with a carrying amount of $273,790
were sold at loss of $15,850, and new assets costing $568,900 were
purchased. What is net cash used?
(A) $257,940 is net cash used in investing cash flows for year to 31 Oct 20X6
(B) $310,960 is net cash used in investing cash flows for year to 31 Oct 20X6
(C) $295,110 is net cash used in investing cash flows for year to 31 Oct 20X6
(D) $568,900 is net cash used in investing cash flows for year to 31 Oct 20X6

32. MS starts its business on 1 Jan 20X6 when has no inventories. During 20X6:
purchases $455,000, carriage inwards $24,000, carriage outwards $29,000.
Closing inventories at 31 Dec 20X6 are $52,000. Find cost of sales for year
ended 31 Dec 20X6.
(A) $427,000
(B) $456,000
(C) $432,000
(D) $531,000

33. Which one of following formulae may be used to calculate the profit of a
business?
(A) Opening Capital – Drawings + Capital introduced – Closing Capital
(B) Opening Capital + Drawings – Capital introduced – Closing Capital
(C) Closing Capital + Drawings – Capital introduced – Opening Capital
(D) Closing Capital – Drawings + Capital introduced – Opening Capital
34. Which of the following will be of least concern to a company’s providers of
loan finance?
(A) Current Share Price
(B) Profitability
(C) Short Term Liquidity
(D) Solvency

35. What is the effect on working capital of an increase in inventories of $500, a

decrease in the bank balance of $600 and an increase in payables of $1,400?
(A) $1,500 decrease
(B) $1,300 decrease
(C) $1,300 increase
(D) $1,500 increase

Section: B

1.

(1) What is the adjusted sales revenue for the year ended 31 December 20X6?
________________

(2) What is the cost of sales in statement of profit or loss for the year ended 31
December 20X6?
_______________
(3) What is the gross profit in statement of profit or loss for year ended 31 December
20X6?
_______________
(4) What is the sundry administrative expenses for year ended 31 December 20X6?
_______________
(5) What is the irrecoverable debt in statement of profit or loss year ended 31
December 20X6?
_______________
(6) What is the depreciation for office equipment brought forward from prior year in
statement of profit or loss for year ended 31 December 20X6?
_______________
(7) What is the total depreciation in statement of profit or loss for year ended 31
December 20X6?
_______________
(8) Should it be under current liability? Please simply state Yes or No
_______________
(9) Should it be disclosed in a note in Bonnie’s published financial statements? Please
simply state Yes or No
_______________

(10)What is the adjusted purchases for year ended 31 December 20X6?

________________
 2.

Derek’s consolidated statement of financial position at 31/12/20X6.

(1) What is the share of Ronnie’s post acquisition retained earnings?

__________
(2) What is non-controlling interest share of Ronnie’s post acquisition retained earnings
and revaluation surplus?
__________
(3) What is the unrealised profit on inventory for the year ended 31 December 20X6 in
Derek’s financial statements?
__________
(4) What is goodwill reported under non-current assets in Derek’s consolidated
statement of financial position at year ended 31 December 20X6?
__________
(5) What is Tangible reported under non-current assets in Derek’s consolidated
statement of financial position at year ended 31 December 20X6?
__________
(6) What is total non-current assets in Derek’s consolidated statement of financial
position at year ended 31 December 20X6?
___________
(7) What is inventory reported under current assets in Derek’s consolidated statement
of financial position at year ended 31 December 20X6?
___________
(8) What is trade recievables reported under current assets in Derek’s consolidated
statement of financial position at year ended 31 December 20X6?
___________
(9) What is cash and bank reported under current assets in Derek’s consolidated
statement of statement of financial position at year ended 31 December 20X6?
___________

(10) What is revaluation surplus reported under equity in Derek’s consolidated

statement of financial position at year ended 31 December 20X6?

____________

(11) What is the retained earnings reported under equity in Derek’s consolidated
statement of financial position at year ended 31 December 20X6?

____________

(12) What is non-controlling interests reported under equity in Derek’s consolidated

statement of financial position at year ended 31 December 20X6?

____________

(13) What is total equity in Derek’s consolidated statement of financial position at year
ended 31 December 20X6?

____________

(14) What is current liability in Derek’s consolidated statement of financial position at

year ended 31 December 20X6?

____________

(15) What is total equity and liability in Derek’s consolidated statement of financial
position at year ended 31 December 20X6?

____________