Paper F3
 

ACCA
 

Financial Accounting

Mock Exam 2
 

Questions
(Duration: 3 hours)
LSAM
 
 Mock Exam - 2 (Questions)

ALL questions are compulsory

QUESTION 1
The receivables ledger control account at 1 May had balances of $43,000 debit and $1,000
credit. During May, sales of $150,000 were made on credit. Receipts from credit customers
amounted to $130,000 and discounts allowed totalled $700. Sales returns amounted to
$1,400. Refunds of $1,100 were made to credit customers.

What is the closing net balance at 31 May?

(2 marks)

QUESTION 2
The following information has been provided by Barbara, a limited liability company:

Motor vehicle account (at cost)

$000 $000
Opening balance b/d 400 Disposals 60
Bank (purchase of a 80 Closing balance c/d 420
new car during the year)
___ ___
480 480
___ ___

Opening balance b/d 420

Motor vehicle – Accumulated depreciation account

$000 $000
Disposals 12 Opening balance b/d 144
Closing balance c/d ??? Depreciation expense ???
(taken to the income
___ statement) ___

___ ___

The company’s depreciation policy is to charge depreciation at 20% per annum on a reducing
balance basis.

What is the statement of comprehensive income (SOCI) charge and the closing balance on
the accumulated depreciation account?

SOCI Closing balance c/d

$000 $000
A 57.6 189.6
B 84 216
C 55.2 187.2
D 67.2 199.2 (2 marks)

LondonSAM 1 F3 - Financial Accounting

 Mock Exam - 2 (Questions)
ACCA F3 (INT) Financial Accounting

QUESTION 3
The following extracts of Sam, a limited liability company, has been provided:

$000
Share capital (50 cents shares) 400
Share premium 300
Accumulated profits 900

A bonus issue of 2 shares for every 1 was made during the year.

The company would like to use the reserves in the most efficient manner so there is a
maximum amount available for dividend purposes.

What is the double entry for recording the above transaction?

$000
A Dr Share capital 800
Cr Share premium 300
Cr Accumulated profits 500

B Dr Share premium 200

Cr Share capital 200

C Dr Accumulated profits 800

Cr Share capital 800

D Dr Share premium 300

Dr Accumulated profits 500
Cr Share capital 800 (2 marks)

QUESTION 4
Jack and Mack have been in partnership for a number of years.

Mack has provided the following information:

Opening current account balance $1,000 (Dr)

Drawings $90,000
Salary $12,000
Interest on capital $3,000
Interest on drawings $5,000
Share of profits during the year $110,000

What is the closing current account balance of Mack?

A $119,000 Cr
B $31,000 Cr
C $29,000 Cr
D $34,000 Cr (2 marks)

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- Financial Accounting
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QUESTION 5
The petty cash account records all the bank transactions of the business.

A Yes
B No (1 mark)

QUESTION 6
Which of the following errors will result in an adjustment to the suspense account?

(i) Error of omission.

(ii) Single entry.
(iii) Casting error of a ledger account.
(iv) Error of reversal.
(v) Error of principle.
(vi) Two debit entries.

A All of them
B (i), (ii) and (iii)
C (ii), (iii) and (vi)
D (ii), (iv), (v) and (vi) (2 marks)

QUESTION 7
The following bank reconciliation statement has been prepared by an inexperienced
bookkeeper:

$
Balance per bank statement 41,200
Add: Bank error – bank incorrectly debited another customer's cheque 1,500
Less: Outstanding cheques presented after date (40,100)
Add: Deposits credited after date 28,100
______
Overdraft per cash book (51,700)
______

Assuming the balance per the bank statement of $41,200 is correct, what should be the
balance in the cash book?

A $54,700 overdrawn
B $30,700
C $51,700
D $30,700 overdrawn (2 marks)

KAPLAN
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Financial 20
Accounting
 Mock Exam - 2 (Questions)
ACCA F3 (INT) Financial Accounting

QUESTION 8
Which of the following bodies comprises The Regulatory Framework for International
Accounting Standards?

(i) International Accounting Standards Committee

(ii) Financial Reporting Review Panel
(iii) Standards Advisory Council
(iv) International Financial Reporting Interpretations Committee

A (i), (ii) and (iii) only

B (i), (iii) and (iv) only
C (i), (ii) and (iv) only (1 mark)

QUESTION 9
The following ledger account has been provided by Pablo, a limited liability company:

Motor vehicles account (at NBV)

$ $
Balance b/f 78,000 Disposal 23,000
Revaluation reserve 15,000 Depreciation 28,000
Disposal
(part exchange allowance) 12,000
Bank (payment for new
motor vehicles) 16,000 Balance c/f 70,000
_______ _______
121,000 121,000
_______ _______

The motor vehicle disposed of during the year was sold at a profit of $5,000.

What amount would appear in the statement of cash flows as the net inflow/outflow for motor
vehicles?

A $16,000 outflow
B $12,000 inflow
C $2,000 inflow
D $5,000 outflow (2 marks)

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LondonSAM of 20 4 KAPLAN
F3 PUBLISHING
- Financial Accounting
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Corporate Mock

QUESTION 10
Bob provides the following information as at 31 December 20X6:

$
Receivables (before any adjustments) 269,000
Irrecoverable debts to be written off 9,000
Specific allowances 16,000
General allowances to be 10%
Opening allowances at 1January 20X6 41,000

What will be the statement of comprehensive income charge for irrecoverable debts and
allowances for receivables for the year ended 31 December 20X6?

A $9,600 debited to the statement of comprehensive income

B $8,600 debited to the statement of comprehensive income
C $8,000 debited to the statement of comprehensive income
D $8,400 debited to the statement of comprehensive income (2 marks)

QUESTION 11
Ami, is a sole trader, provides the following information for the month of January:

Price Value
Units $ $
1st Opening inventory 100 2.10 210
4th Purchases 700 2.60 1,820
8th Sales 600
15th Purchases 900 2.70 2,430
28th Sales 910

What is the value of the closing inventory at the end of January if Ami adopts the first in first
out (FIFO) method of inventory valuation?

(2 marks)

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Financial 20
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 Mock Exam - 2 (Questions)
ACCA F3 (INT) Financial Accounting

QUESTION 12
The following sales tax account for the quarter has been prepared by an inexperienced book
keeper:

Sales tax
$ $
Bal b/d (owed to the tax 22,000
authority)
Sales tax on sales (output 250,000 Sales tax on purchases 295,000
tax) (input tax)
Bank (payment of opening 22,000 Sales tax on sales returns 10,000
sales tax balance)
Bal c/d 55,000
_______ _______
327,000
_______ 327,000
_______

Bal b/d 55,000

What is the correct closing sales tax balance?

A Cr $55,000
B Dr $35,000
C Dr $55,000
D Cr $11,000 (2 marks)

QUESTION 13
On 1 September 20X7, William had inventory of $590,000. During the month, sales totalled
$2,200,000 and purchases $1,820,000. On 30 September 20X7 a fire destroyed some of the
inventory. The undamaged goods were valued at $390,000. The business operates with a
standard gross profit mark up of 10%.

Based on this information, what is the cost of the inventory destroyed in the fire?

A $40,000
B $410,000
C $380,000
D $20,000 (2 marks)

QUESTION 14
According to IAS 16 Property, Plant and Equipment, when a building is revalued then its
revalued amount should be depreciated over its revised remaining useful life.

A True
B False (1 mark)

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QUESTION 15
At 1 July 20X6 a business had prepaid $100 for rent in relation to June 20X6. During the year
a total of $1,200 was paid. Included within this amount is $360 paid in relation to quarter
ending 31 July 20X7.

What amount should be shown in the statement of comprehensive income (SOCI) and
statement of financial position (SOFP) in respect of rent for the year ended 30 June 20X7?

(SOCI) (SOFP)
A $1,180 $120 accrual
B $1,220 $100 prepaid
C $1,180 $120 prepaid
D $940 $360 prepaid (2 marks)

QUESTION 16
The following summary has been provided by Joe for the year ended 30 September 20X7:

Dr Cr
$ $
Total 120,000 132,000
Suspense account 12,000
_______ í
_______
132,000
_______ 132,000
_______

Which of the errors below will reduce the suspense account balance?

A Credit sales of $2,000 were not recorded

B A payment received from a credit customer of $280 was correctly recorded in the
customer's account but debited to the bank account by $200
C Discounts received of $198 were recorded by debiting payables by $198 and
crediting discounts allowed by $189
D Motor repair expenses of $150 was debited to the motor van account and credited to
the bank account (2 marks)

QUESTION 17
Norman, a limited liability company, has been carrying out researching a new product. In the
year ended 30 April 20X7 $720,000 was spent on the project. Included in the $720,000 was
$90,000 spent on a new machine, which had an expected life of 5 years. This project was not
successful therefore it was terminated at the year end 30 April 20X7.

How should this expenditure be treated in the financial statements of Norman for the year
ended 30 April 20X7?

A $810,000 must be written off to the statement of comprehensive income

B $720,000 must be capitalised as an intangible asset and amortised over 5 years. The
$90,000 must be written off to the statement of comprehensive income
C $810,000 must be capitalised and written off to the statement of comprehensive
income over 5 years
D $630,000 must be written off to the statement of comprehensive income. $90,000
must be capitalised as a tangible asset and depreciated over 5 years (2 marks)

KAPLAN
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ACCA F3 (INT) Financial Accounting

QUESTION 18
Johnson, a limited liability company, has provided the following information:

Building cost $780,000

Accumulated depreciation $540,000

The company decided to revalue the building to $500,000.

What is the double entry to record the above transaction?

A Dr Accumulated depreciation $540,000

Cr Building cost $280,000
Cr Revaluation reserve $260,000

B Dr Revaluation deficit $280,000

Cr Building cost $280,000

C Dr Building cost $260,000

Cr Revaluation reserve $260,000

D Dr Building cost $280,000

Dr Revaluation reserve $260,000
Cr Accumulated depreciation $540,000 (2 marks)

QUESTION 19
A company receives a settlement discount of $70 from a supplier. The amount is debited to
the discounts received account. As a result, gross profit is:

A Understated by $70
B Understated by $140
C Overstated by $70
D Unaffected (2 marks)

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Corporate Mock

QUESTION 20
Shane sells three products: A, B and C. At the company's year end, the inventory held is as
follows:

Cost Selling price

$ $
A 1,200 1,500
B 6,200 6,100
C 920 930

At sale, a commission of 5% of the selling price is payable by the company to its agent.

What is the total value of the inventory (rounded to the nearest $) in the business accounts?

A $7,879
B $8,094
C $8,320
D $8,545 (2 marks)

QUESTION 21
In times of rising prices, the historical cost convention:

A Overstates asset values and understates profits

B Understates asset values and overstates profits (1 mark)

QUESTION 22
A company receives rent for subletting part of its office block.

Rent receivable quarterly in advance, is received as follows:

Date of receipt Period covered $

1 October 20X6 3 months to 31 December 20X6 15,000
30 December 20X6 3 months to 31 March 20X7 15,000
4 April 20X7 3 months to 30 June 20X7 18,000
1 July 20X7 3 months to 30 September 20X7 18,000
1 October 20X7 3 months to 31 December 20X7 18,000

What figures, based on these receipts, should appear in the company’s financial statements
for the year ended 30 November 20X7?

Statement of comprehensive income Statement of financial position

A $84,000 Accrued income (Dr) $3,000
B $84,000 Prepaid income (Cr) $6,000
C $68,000 Accrued income (Cr)$£3,000
D $68,000 Prepaid income (Cr) $6,000 (2 marks)

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QUESTION 23
Joan is in the process of reconciling the total payables ledger control account with that of the
total of the individual payables ledger balances.

$
Payables ledger control account balance (PLCA) 42,000
Total of the individual purchase ledger balances (LIST) 41,500

The following errors have been discovered:

(i) The purchases return day book was under casted by $2,000.
(ii) A credit purchase invoice of $2,600 was omitted.
(iii) Credit balances of $500 in the list of balances were recorded as debit balances.

What are the adjusted balances for the payables ledger control account and the total of the
individual list of purchase ledger balances?

PLCA LIST
A $42,600 $42,600
B $43,100 $43,100
C $42,600 $45,100
D $43,100 $42,600 (2 marks)

QUESTION 24
R, S and T are in partnership. The profits of the partnership for the year ended 30 June 20X7
have currently been appropriated as follows:

R $120,000
S $50,000
T $50,000

The partnership agreement states that S is entitled to a guaranteed minimum profit share of
$65,000. The profit sharing ratio is 2:3:1.

What share of the profits is each partner entitled to in the year ended 30 June 20X7 after
adjusting for the guaranteed profit share for S?

R S T

(2 marks)

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QUESTION 25
Which of the following are adjusting events according to IAS 10 Events After the Reporting
Date?

(i) The discovery of bad debts after the year end.

(ii) Issue of shares after the year end.
(iii) Fire damaging part of the building after the year end.
(iv) The sale of inventory below cost after the year end.
(v) Discovery of fraud or error after the year end.

A (i) and (iv) only

B (i), (iv) and (v) only
C (i), (ii), (iii) and (v) only
D (i) and (v) only (2 marks)

QUESTION 26
Which of the following four statements about accounting concepts or principles are correct?

Statement 1
The money measurement concept states that items in accounts are initially measured at their
net realisable amounts.

Statement 2
Comparability usually implies consistency in accounting policies from one period to another.

Statement 3
Information in financial statements needs to be neutral.

Statement 4
Gains are increases in ownership interest resulting from contributions from owners.

A Statements 1 and 3 only

B Statements 2 and 4 only
C Statements 2 and 3 only
D Statement 3 only (2 marks)

QUESTION 27
All errors of omissions are identified in a computerised accounting system.

A Yes
B No (1 mark)

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ACCA F3 (INT) Financial Accounting

QUESTION 28
Frank, a limited liability company, provides the following extracts from the statement of
financial position for the years ended 31 December:
20X5 20X6
$000 $000
Accumulated profits 70,000 92,000
10% Loan notes 20,000 20,000
Tax payable 15,000 28,000

There was no adjustment for under/over provision for tax in the year ended 31 December
20X6. No interim dividends were paid during the year.

What is the profit from operations (profit before interest and tax) for the year ended
31 December 20X6?

$000
A 62,000
B 39,000
C 37,000
D 52,000 (2 marks)

QUESTION 29
Owen, a limited liability company, had provided a tax liability in the last year’s accounts
amounting to $50,000. This year the company paid $20,000 to settle the liability.

The current year’s tax liability is estimated at $60,000.

What is the tax charge in Owen’s statement of comprehensive income (SOCI) and the
statement of financial position (SOFP) entry for the current year?

SOCI SOFP
A $30,000 $60,000
B $60,000 $30,000
C $30,000 $30,000
D $60,000 $60,000 (2 marks)

QUESTION 30
A company owns a non-current asset which has an expected useful life of four years. The
asset originally cost $9,000. What is the depreciation charge in the second year of the asset's
life on the straight line basis and on the reducing balance basis at 25%?

(Calculations should rounded to the nearest whole number)

Straight line Reducing balance

$ $
A 1,800 2,250
B 2,250 1,688
C 1,800 1,688
D 2,250 2,250 (2 marks)

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QUESTION 31
Omar, a limited liability company, has the following reserves:

(i) Share premium.

(ii) Accumulated profits.
(iii) General reserves.
(iv) Revaluation reserves.

Which of the following reserves are capital reserves and revenue reserves?

Capital reserves Revenue reserves

A (i) and (iii) (ii) and (iv)
B (i) and (iv) (ii) and (iii) (1 mark)

QUESTION 32
Which of the following statements is true?

(i) A revaluation gain/reserve arises when the net book value is greater than the
revalued amount.
(ii) Revenue is normally recognised when goods are delivered to the customer and they
are accepted by the customer.
(iii) Irrecoverable debts will arise only if there is a cash sale.
(iv) When adjusting for accrued expenditure the profit will increase.

A All the above statements are true

B None of the statements are true
C Only statements (i) and (iv) are true
D Only statement (ii) is true (2 marks)

QUESTION 33
A sole trader took some goods costing $2,500 from inventory for his own use. The normal
selling price of the goods is $3,000.

Which of the following journal entries would correctly record this?

A Dr Drawings $2,500
Cr Purchases $2,500

B Dr Drawings $3,000
Cr Purchases $3,000

C Dr Purchases $2,500
Cr Drawings $2,500

D Dr Drawings $3,000
Cr Sales $3,000 (2 marks)

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ACCA F3 (INT) Financial Accounting

QUESTION 34
Denise has provided the following information:

Opening cash in till balance $500

Closing cash in till balance $400
Net cash takings banked $21,500
Cash expenses paid $230
Cash drawings $150

What is the amount of cash sales for the period?

(2 marks)

QUESTION 35
Bill and Jill have been in partnership for a number of years, sharing profits and losses in the
ratio of 2:1. They decide to admit Hill as a partner. The profit and loss sharing ratio has been
changed to 3:2:1 for Bill, Jill and Hill respectively.

The goodwill for the partnership has been agreed at $30,000. Hill has also introduced
$80,000 capital into the partnership business. It has been decided not to maintain a goodwill
account.

What is the capital account balance of Hill after adjusting for the goodwill?

A $85,000
B $70,000
C $90,000
D $75,000 (2 marks)

QUESTION 36
Which of the following is correct?

A A debit entry increases an expense

A credit entry reduces the capital
A debit entry increases the sales

B A credit entry increases a liability

A debit entry increases an asset
A credit entry increases profit

C A debit entry increases a loss

A credit entry reduces the sales
A debit entry increase the receivables

D A debit entry reduces an asset

A credit entry increase a liability
A debit balance increases the drawings (2 marks)

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QUESTION 37
The following balances have been extracted by Juliet:

$000
Capital 4,000
Sales 28,000
Purchases 26,000
Expenses 1,000
Assets 40,000
Liabilities 38,000

She prepared a trial balance, unfortunately the totals did not agree. She left the difference in a
suspense account.

What is the suspense account balance?

$000
A 1,000 Debit
B 3,000 Credit
C 3,000 Debit
D 1,000 Credit (2 marks)

QUESTION 38
A Journal is a book of prime entry.

A True
B False (1 mark)

QUESTION 39
At the year end the following balances are extracted from the books of Zina:

$ $
Receivables 269,000
Opening allowance for receivables 21,000

Further irrecoverable debts were discovered at the year end amounting to $9,000. It has been
decided to write off these balances.

The closing allowance for receivables has been set at 10%.

What will be the net closing balances for receivables that will be shown in the statement of
financial position?

A $269,000
B $242,100
C $255,000
D $234,000 (2 marks)

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QUESTION 40
The statement of financial position records all the assets, capital and liabilities at the year
end. However, the statement of comprehensive income records all the income and
expenditure for the year ended.

Are the above statements correct?

A Yes
B No (1 mark)

QUESTION 41
Steve, a sole trader is registered for sales tax. His sales inclusive of sales tax are $329,000
and his purchases exclusive of sales tax are $290,000. What is the amount of sales tax owing
to or recoverable from the tax authorities?

The sales tax rate is 17.5%.

A $1,750 recoverable
B $1,750 owing
C $14,384 owing
D $14,384 recoverable (2 marks)

QUESTION 42
The closing bank balance of Mario in his records is $2,850 credit.

The following further information has been provided:

(i) Unpresented cheques $285.

(ii) Bank charges not yet recorded $56.
(iii) Receipt from customer of $385 paid directly to the bank has not been recorded.
(iv) The bank has recorded a standing order belonging to another customer totalling $89
in Mario’s bank statement. Mario has not yet entered this in his bank account.

What is the adjusted closing bank account balance of Mario?

A $3,179 debit
B $2,717 credit
C $2,521 credit
D $2,432 credit (2 marks)

QUESTION 43
The purchases cost of goods of a business must be recoded after deduction of both trade and
cash/settlement discounts.

A True
B False (1 mark)

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QUESTION 44
A business has bought plant and machinery at cost of $28,875. The following additional cost
was incurred:

(i) Delivery costs $1,500.

(ii) Legal costs $875.
(iii) Maintenance contract for the next 3 years of $2,100
(iv) Testing and training costs before the machine could be brought into use of $3,100.

What is the total capital expenditure for the plant and machinery?

A $36,450
B $31,250
C $30,375
D $34,350 (2 marks)

QUESTION 45
A business has an old motor car which had a net book value of $5,500.

It was part exchanged for a new motor car. The part exchange value given was $6,000.The
amount paid for the new car was $18,000.

What is the profit /loss of the old car and the total cost of the new car?

Old car New car

A Loss $500 Cost $24,000
B Profit $500 Cost $24,000
C Profit $500 Cost $23,500
D Loss $500 Cost $23,500 (2 marks)

QUESTION 46
A company made a profit for the year of $21,000, after accounting for depreciation of $1,200.

During the year, receivables increased by $500, inventories decreased by $300 and payables
increased by $600. Non-current assets were sold at their net book value for $4,500.

What was the increase in cash and bank balances during the year?

(2 marks)

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ACCA F3 (INT) Financial Accounting

QUESTION 47
Which of the statements below is false?

A Assets are resources controlled by a business due to a past transaction which will
lead to future economic benefits
B Liabilities are obligations to transfer future economic due to past transactions
C Gains recognised in financial statements can be realised or unrealised
D Revenue is only recognised once the business receives payment from a customer
(2 marks)

QUESTION 48
Prior period adjustments are adjusted against the opening accumulated profits.

A True
B False (1 mark)

QUESTION 49
The following are the extracts of the records of Peter, a limited liability company:

20X7 20X6
$ $
Share capital 32,000 30,000
Share premium 4,000 1,000
5% Loan notes 34,000 40,000

What cash inflow/outflow will be shown in the statement of cash flows under the heading of
Financing?

A Net cash inflow $5,000

B Net cash inflow $1,000
C Net cash outflow $1,000
D Net cash outflow of $6,000 (2 marks)

QUESTION 50
Which of the following statements are true according to IAS 38?

(1) All development expenditure should be written off immediately to the statement of
comprehensive income as soon as the expenditure is incurred.
(2) Development expenditure must only be capitalised if certain criteria are met.
(3) All research expenditure should be capitalised as an intangible asset.
(4) Development expenditure that is capitalised should be amortised, starting from when
the expenditure is incurred.
(5) One of the criteria to be met in considering whether or not development expenditure
can be capitalised is whether the project is technically feasible.

A (2), (4) and (5)

B (1), (3) and (4)
C (2) and (5)
D (2) and (3) (2 marks)

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