Fundamentals of financial accounting (BA3) Practice Test

Questions # 111:

Entity V has a cost of sales of £23,850 for last year. Entity V's opening inventories for the year were £15,800, and its closing inventories were £3,570. Entity V had a gross profit margin of 240% for last year.

What was Entity V's inventories turnover figure to the nearest whole number for last year?

Options:

Questions # 112:

BCD has the following balances for the year ended 31 December 20X8:

Question # 112

What is the trade payables balance of BCD at 31 December 20X8? Give your answer to the nearest $"000.

Question # 112

Options:

Questions # 113:

Which TWO of the following are transactions that would be recorded in the sales ledger control account?

Options:

Irrecoverable debts

Cash received from credit customers

Cash sales.

Cash paid to credit suppliers.

Credit purchases.

Questions # 114:

Company X is a private limited oil company. Which of the following are relevant for Company X's integrated report?

Options:

Risk of oil prices falling

Risk of share prices falling

Risk posed by competing oil companies and sustainable energy sources

Need for report to be concise

Questions # 115:

IAS 2 Inventories does not permit the use of the last in. first out (LIFO) method of valuing inventory In a time of rising prices, which of the following is a reason for this?

Options:

Purchases are overstated

Closing inventory is understated.

Cost of sales are understated

Gross profit is overstated

Questions # 116:

What will be the effect on the draft financial statements if the closing inventory figure is increased?

Options:

An increase in cost of sales and an increase in the inventory figure in the balance sheet

A decrease in cost of sales, a decrease in gross profit and an increase in the inventory figure in the balance sheet

A decrease in cost of sales, an increase in gross profit and an increase in closing inventory in the balance sheet

An increase in cost of sales, a decrease in gross profit and an increase in closing inventory in the balance sheet

Questions # 117:

After calculating your company's profit for the year, you discover that:

(a) A non-current asset costing £2,000 has been included in the purchases account; the asset has not been included in the closing inventory figure; nor has it been depreciated by the normal 25% per annum

(b) Closing inventory of raw materials, costing £500, have been treated as closing inventory of stationery.

These two errors have had the effect of.

Options:

Understating gross profit by £2,500 and understating net profit by £1,500

Understating both gross profit and net profit by £2,500

Understating gross profit by £2,000 and understating net profit by £2,500

Understating both gross profit and net profit by £1,500

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