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Question;Chapter;5;Accounting;for adjustments;1.A business has the following items in its;accounts at its year end 31 December 2001;?000;Opening;stock at 1 January 2001 5;Closing;stock at 31 December 2001 10;Purchases;for 2001 90;Purchase;returns in 2001 2;Which;is the correct figure for cost of goods sold in 2001?;(a);?85 000.;(b);?83 000.;(c);?95 000.;(d);?93 000.;2.The following figures relate to the rent;and rates payable expense for a business in 2001.;?000;Rent;paid in advance at 1 January 2001 5;Rates;in arrears at 1 January 2001 2;Payments;in 2001 35;Rates;paid in advance at 31 December 2001 4;Rent;in arrears at 31 December 2001 6;Which;is the correct figure for rent and rates expense in the profit and loss account;for the year;ended;31 December 2001?;(a);?34 000.;(b);?35 000.;(c);?36 000.;(d);?40 000.;3.A company owns some land and buildings for;which the following details are relevant;Cost;of land ?50 000, cost of buildings ?100 000, estimated life of buildings 20;years, estimated residual;value;of buildings ?2000, estimated residual value of land ?50 000.;The;company uses the straight line depreciation method.;Which;is the correct annual depreciation charge for this asset?;(a);?4000.;(b);?4900.;(c);?7400.;(d);?7500.;4.A company has trade debtors at its year;end amounting to ?218 000. One of the debtors, value;?8000;is now known to be uncollectable.The company takes a 5% provision for bad debts;each year;and;last year?s provision amounted to ?2000.Which figure will appear in the profit;and loss account;as;the total bad debt charge for the year?;(a);?18 900.;(b);?18 500.;(c);?16 500.;(d);?10 500.;5.Which of the following accounting concepts;are being followed when a company operates a provision;for;bad debts account?;(a);Consistency, prudence, accruals, going concern.;(b);Accruals, consistency, going concern.;(c);Prudence, consistency, going concern.;(d);Prudence, accruals, going concern.;6.The double entry required to write off a;specific bad debt is;(a);Debit sales, credit trade debtor.;(b);Debit profit and loss, credit trade debtor.;(c);Debit trade debtor, credit profit and loss.;(d);Debit profit and loss, credit provision for bad debts.;7.;A company has calculated that it has made a net loss of ?107 000 for the year;before the following;additional;adjustments;?000;Depreciation;of plant 15;Write;off bad debts amounting to 3;Reduce;the provision for bad debts by 1;Accrue;for outstanding wages amounting to 4;Which;is the corrected net loss taking account of the above adjustments?;(a);?116 000.;(b);?127 000.;(c);?128 000.;(d);?130 000.;Chapter;6;Company;accounts;1.XYZ Ltd has a net profit before tax of;?267 000, taxation amounts to ?87 000, a dividend on ordinary;share;capital of ?45 000 has been declared and the company will transfer ?50 000 to a;capital reserve.;What;is the retained profit figure for the year?;(a);?180 000.;(b);?135 000.;(c);?85 000.;(d);?267 000.;2.XYZ Ltd issues 500 000 new ordinary ?1;shares at an issue price of ?1.50 and makes a bonus issue of;new;shares amounting to 50 000 ?1 ordinary shares.The company also increases its;authorized ordinary;share;capital by 550 000 ?1 ordinary shares. By how much will the balance sheet;ordinary;share;capital account increase?;(a);?800 000.;(b);?550 000.;(c);?750 000.;(d);?1 350 000.;3.An ordinary share dividend is;(a);Part of the company profits used to reward the shareholders for their;investment.;(b);Interest on money lent to the company by its shareholders.;(c);An expense of running the company.;(d);The directors? remuneration.;4.XYZ Ltd has declared an ordinary share;dividend of ?200 000 at 31.12.2001.Which of the following;correctly;explains the accounting entries for the dividend at the year end?;(a);Expense in profit and loss account, creditor on the balance sheet.;(b);Appropriation of profit, reserve on the balance sheet.;(c);Appropriation of profit, current liability on the balance sheet.;(d);Expense in profit and loss account, reserve on the balance sheet.;5.Statements of Standard Accounting Practice;and Financial Reporting Standards should be;complied;with when preparing the final accounts of a limited company because;(a);The Companies Act 1985 demands that they are used.;(b);The auditors will insist they are followed.;(c);The directors are under a legal obligation to ensure they are followed.;(d);They ensure that the accounts present a ?true and fair view?.;6.Below is shown a draft summarized balance;sheet of XYZ Ltd at 31.12.2001 before certain adjustments;?000;Net;assets 880;Ordinary;share capital (?1 shares) 350;Share;premium account 50;Capital;reserve 120;Profit;and loss account 360;880;The;company decides to increase the value of its net assets by including an upward;revaluation of;its;buildings of ?50 000, it also decides to transfer an additional sum of ?150 000;from its profit and;loss;account to capital reserves and, finally, a dividend of ?60 000 is proposed.;Which;of the following is the correct net asset figure as a result of including these;transactions?;(a);?870 000.;(b);?1 090 000.;(c);?1 140 000.;(d);?1 020 000.

 

Paper#44989 | Written in 18-Jul-2015

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