2011 Paper F3 QandA Sample Download v1

Practice Questions and Answers ACCA Paper F3: Financial Accounting (International)MAIN PAGE

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ACCA Paper F3: FINANCIAL ACCOUNTING

(INTERNATIONAL) Practice Questions and Answers

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Main PageCopyright statementFor the ladies only10 Golden Rules for a Computer-based ExaminationComputer Based Exams

SyllabusThe structure of the syllabusIntellectual levelsLearning hoursGuide to exam structureGuide to examination assessmentAimMain capabilitiesRelational diagram of main capabilitiesRationaleDetailed syllabusApproach to examining the syllabus

Study GuideA The content and purpose of financial reportingB The qualitative characteristics of financial information and the fundamental bases of

accounting C The use of double-entry and accounting systemsD Recording transactions and eventsE Preparing a trial balance F Preparing basic financial statements

Your Study MaterialThe syllabus outline and our Questions and Answers pathway through it Click here

In ADDITION there are THREE tests. Click below.

TestsDiagnostic Test – 1 Questions Answers

Diagnostic Test – 2 Questions Answers

Diagnostic Test – 3 Questions Answers

ACCA Paper F3Financial Accounting

(International) +AddVance

Practice Questions and Answers

“Where shall I begin, please your majesty?” he asked. “Begin at the beginning,” the king said gravely, “and go on till you come to the end: then stop.”

Lewis CarrollThrough the Looking-Glass






The syllabus outline and our pathway through it ….

Syllabus section

Main topic Pages

Questions Answers

A The context and purpose of financial reporting 22 36

B The qualitative characteristics of financial information and the fundamental bases of accounting

45 48

C The use of double-entry and accounting systems 50 71

D Recording transactions and events 85 112E Preparing a trial balance 131 154F Preparing basic financial statements 174 203

Diagnostic Test 1 223 241Diagnostic Test 2 247 265Diagnostic Test 3 274 286

This free sample shows the first 16 questions and answers of Diagnostic Test 3






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+AddVance

Financial Accounting (International)

DIAGNOSTIC TEST - 3

QUESTION PAPER

Time allowed: 2 hours

All FIFTY questions are compulsory and MUST be attempted

Do NOT attempt this test until you are ready for the test.






1 Which books of prime entry the following transactions would be entered into.

1 Your business pays B Smith (a supplier) $300.00.2 Your accounts manager asks you for $10 urgently in order to buy a box of paper.3 You pay B Boston $200.4 D Jay pays you $100.5 You send W Whythe (a customer) an invoice for £250.6 You receive an invoice from C Jeans for $550.7 S Samuels (a customer) returns goods to the value of $50.8 You return goods to A Green to the value of $400.

A Petty cash bookB Cash bookC Sales returns day bookD Sales day bookE Purchase returns day bookF Purchases day book (2 marks)

2 Sales tax is:

A Charged by businesses on taxable supplies.B A direct tax levied on sales of goods and services.C An indirect tax levied on the sales of goods and services.D Administered by the Treasury. (2 marks)

3 How is closing inventory incorporated in the financial statements?

A Debit: balance sheet Credit: income statementB Debit: income statement Credit: balance sheet (1 mark)

4 When adjusting profit before tax to arrive at cash generated from operations, a decrease in receivables is added to profit before tax. Is this statement:

A FalseB True (1 mark)

5 During a period, Cee Co has the following transactions on receivables control account. Sales $125,000, cash received $50,000, discounts allowed $2,000. The balance carried forward is $95,000. What was the opening balance at the beginning of the period?

A $20,000 debitB $18,000 debitC $22,000 debitD $22,000 credit (2 marks)

AA

A

A

A

AA






6 A business has opening payables of $75,000 and closing payables of $65,000. Cash paid to suppliers was $65,000 and discounts received $3,000. What is the figure for purchase?

A $78,000B $55,000C $58,000D $52,000 (2 marks)

7 Which of the following accounting items may have control accounts in the nominal ledger?

1 Cash.2 Inventories.3 Salaries and wages.4 Receivables and payables.

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

8 What is the double entry to record a purchase of office tables for $3,000?

A Debit cash $3,000, credit purchases $3,000.B Debit non-current assets $3,000, credit cash $3,000. (1 mark)

9 Profits for the year are $65,000. A, B and C share profits in the ratio 2:2:1. Opening balances on their current accounts were $15,000, $12,000 and $10,000 respectively. If each partner had drawings of $10,000, what is the closing balance on B’s account?

A $26,000B $18,000C $28,000D $16,000 (2 marks)

10 What is the double entry to record a credit sale of $30?

A Debit sales $30, credit cash $30.B Debit cash $30, credit sales $30.C Debit sales $30, credit receivables $30.D Debit receivables $30, credit sales $30. (2 marks)

11 The balance on an expense account will go to the I & E account. However, the balance on a liability account is written off to capital.

A NoB Yes (1 mark)

AA

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12 Which of the following statements regarding non-current asset accounting is correct?

A Non-current assets should be re-valued to reflect rising prices.B All non-current assets should be re-valued each year.C Non-current assets may be re-valued at the discretion of management. Once re-valuation

has occurred it must be repeated regularly for all non-current assets in a class.D Management can choose which non-current assets in a class of non-current assets

should be re-valued. (2 marks)

13 A company has a provision for warranty claims b/f of $50,000. It does a review and decides that the provision needed in future should be $45,000. What is the effect on the financial statements?

Income statement Balance sheetA Increase expenses by $5,000 Provision $45,000B Increase expenses by $5,000 Provision $50,000C Decrease expenses by $5,000 Provision $45,000D Decrease expenses by $5,000 Provision $50,000 (2 marks)

14 MAS’s trial balance includes the following items: non-current assets $50,000, inventory $15,000, payables $10,000, receivables $5,000, bank $110,000, allowance for receivables $1,000.

What is the figure for current assets?

A $134,000B $170,000C $180,000D $129,000 (2 marks)

15 A company issues 50,000 $1 shares at a price of $1.25 per share. How much should beposted to the share premium account?

A $60,000B $50,000C $62,500D $12,500 (2 marks)

16 In the published accounts of CeeJay Co, the profit for the period is $7,000,000. The balance of retained earnings at the beginning of the year is $1,000,000. If dividends of $5,000,000 were paid, what is the closing balance of retained earnings?

A $8,000,000B $3,000,000C $1,000,000D $2,000,000 (2 marks)

A

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A

A






17 An irrecoverable debt arises in which of the following situations?

A The customer goes bankrupt.B A customer pays part of the account.C The invoice is not yet due for payment.D An invoice is in dispute. (2 marks)

18 What is the double entry to record a credit sale of $200 to A?

A Debit receivables ledger (A’s account) $200, credit sales $200B Debit receivables $200, credit sales $200 (1 mark)

19 What is included in the cost of purchase of inventories according to IAS 2?

A Purchase price plus import duties plus transport costs less trade discount.B Purchase price less trade discount.C Purchase price plus transport costs less trade discount.D Purchase price less import duties less trade discount. (2 marks)

20 Individual customer accounts are kept in which ledger?

A Receivables ledgerB Nominal ledgerC General ledgerD Trade accounts receivable (2 marks)

21 A business has net assets of $70,000 at the beginning of the year and $80,000 at the end of the year. Drawings were $25,000 and a lottery win of $5,000 was paid into the business during the year. What was the profit for the year?

A $30,000 lossB $10,000 lossC $10,000 profitD $30,000 profit (2 marks)

22 Which of the following headings is not a classification of cash flows in IAS 7?

A InvestingB OperatingC FinancingD Administration (2 marks)

23 What is a journal used for?

A To make adjustments to the double entry.B To correct errors and clear suspense account.C To correct errors.D To correct errors and post unusual transactions. (2 marks)

A

A

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24 AyBee Co has development expenditure of $500,000. Its policy is to amortise development expenditure at 2% per annum. Accumulated amortisation brought forward is $20,000. What is the charge in the income statement for the year’s amortisation?

A $9,600B $20,000C $10,000D $400 (2 marks)

25 Given the facts in question above, what is the amount shown in the balance sheet for development expenditure?

A $490,000B $470,000C $500,000D $480,000 (2 marks)

26 Which of the following are common reasons for differences between the cash book and the bank statements?

1 Contra entries2 Errors3 Timing differences4 Omissions

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

27 Which of the following items are non-current assets?

1 Inventory2 Land3 Machinery4 Bank loan

A 2 onlyB 2 and 3C 1, 2 and 3D 2, 3 and 4 (2 marks)

A

A

A

A






28 Which of the following statements regarding depreciation is correct?

A A change in the chosen depreciation method is a change in accounting policy which should be disclosed.

B Depreciation charges must be based upon the carrying value of an asset (less residual value if appropriate).

C All non-current assets must be depreciated.

D Straight line depreciation is usually the most appropriate method of depreciation.(2 marks)

29 What must be done with a suspense account before preparing a balance sheet?

A Include in liabilitiesB Include in assetsC Write it off to capitalD Clear it to nil (2 marks)

30 All petty cash claims are automatically paid from petty cash.

Is this statement:

A FalseB True (1 mark)

31 When a cash purchase of $117.50 is made (including sales tax at 17.5%) the entries are:

A Debit Cash 117.50Credit Purchases 117.50

B Debit Purchases 100.00Debit Sales tax 17.50Credit Cash 117.50

C Debit Purchases 117.50Credit Cash 117.50

D Debit Cash 100.00Debit Sales tax 17.50Credit Purchases 117.50

(2 marks)

32 Which of the following is not a book of prime entry.

A Sales day bookB JournalC Purchase day bookD Sales invoice (2 marks)

A

A

A

A

A






33 Heating paid during the year is $14,000. There was an opening accrual b/f of $500. A bill for the quarter ended 31 January 2010 was $900. What is the heating charge in the income statement for the year ended 31 December 2009?

A $14,400B $13,900C $14,000D $14,100 (2 marks)

34 What are the objectives of the IASB?

A To issue IFRSsB To enforce IFRSs (1 mark)

35 Sales returns of $220 have inadvertently been posted to the purchase returns, although the correct entry has been made to the accounts receivable control. A suspense account needs to be set up for how much?

A $220 debitB $220 creditC $440 debitD $440 credit (2 marks)

36 Ceeta has the following opening balances on its ledger accounts.

$Trade account receivable 5,000Fixtures 2,000Bank account 1,200Loan 4,000

(a) What is the total assets figure?

A $8,200B $6,200C $4,000D $2,000

(b) What is the opening figure for capital?

A 3,200B 2,000C 8,200D 4,200 (2 mark)

A

A

A

A






37 Which of the following is the correct formula for cost of sales?

A Opening inventory – closing inventory + purchasesB Opening inventory + closing inventory – purchasesC Opening inventory – purchases + closing inventoryD Purchases – closing inventory + sales (2 marks)

38 A business usually has a mark-up of 20% on cost of sales. During a year, its sales were $90,000. What was the cost of sales?

A $18,000B $75,000C $15,000D $72,000 (2 marks)

39 A trial balance may still balance if some of the balances are wrong.

Is this statement correct?

A NoB Yes (1 mark)

40 A company has the following extract from a balance sheet.

2010 2009$’000 $’000

Share capital 2,000 1,000Share premium 500 NilLoan stock 750 1,000

What is the cash flow from financing activities for the year?

A $1,250 outflowB $1,750 outflowC $1,250 inflowD $1,750 inflow (2 marks)

41 A bank statement shows a balance of $1,200 in credit. An examination of the statement shows a $500 cheque paid in per the cash book but not yet on the bank statement and a $1,250 cheque paid out but not yet on the statement. In addition the cash book shows deposit interest received of $50 but this is not yet on the statement. What is the balance per the cash book?

A $500 overdrawnB $500 in handC $1,900 overdrawnD $1,900 in hand (2 marks)

A

A

A

A

A






42 What is the purchase returns day book used to record?

A Details of goods returned to suppliersB Details of goods returned by customersC Supplier’s invoicesD Customer’s invoices (2 marks)

43 How does a company account for a contingent asset that is not probable?

A As an asset in the balance sheetB It does nothingC By way of note (2 marks)

44 What happened in 2005 for listed companies in the EU?

A IFRSs to be used for consolidated financial statements.B IFRSs to be used for all financial statements. (1 mark)

45 Sales tax is due on all sales. Is this statement correct?

A NoB Yes (1 mark)

46 A company has the following information about property, plant and equipment.

2010 2009$’000 $’000

Cost 750 600Accumulated depreciation 250 150Net book value 500 450

Plant with a net book value of $75,000 (original cost $90,000) was sold for $30,000 during the year.

What is the cash flow from investing activities for the year?

A $95,000 outflowB $210,000 outflowC $210,000 inflowD $95,000 inflow (2 marks)

47 A company has a balance on share premium account of $50,000 and on retained earnings of $75,000. Issued share capital is 400,000 25cents shares. The company decides to make a bonus issue of one for one. What are the closing balances on share premium and retained earnings?

Share premium Retained earningsA $25,000 NilB $10,000 $15,000C Nil $25,000D ($50,000) $75,000 (2 marks)

A

A

A

A

A

A






48 Which of the following items are non-adjusting events?

1 Inventory destroyed by flood two days before the balance sheet date.

2 Fall in value of an investment between the balance sheet date and the date the financial statements are finalised.

3 A customer goes bankrupt.

A 1 onlyB 2 onlyC 3 onlyD None of the above (2 marks)

49 Which of the following items is an intangible asset?

A VanB LandC BuildingsD Patents (2 marks)

50 Irrecoverable debts are $5,000. Trade accounts receivable at the year end are $120,000. If an allowance for receivables of 5% is required, what is the entry for irrecoverable debts and allowance for receivables in the income statement?

A $10,750B $6,000C $5,000D $11,000 (2 marks)

A

A

A






THE END OF DIAGNOSTIC TEST 3






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Financial Accounting (International)

DIAGNOSTIC TEST - 3

ANSWER GUIDES






OVERVIEW OF ANSWERS FOR DIAGNOSTIC TEST 3

Questionnumber

Marksavailable

Answer Questionnumber

Marks available

Answer

1 2 26 2

2 2 27 2

3 1 28 2

4 1 29 2

5 2 30 1

6 2 31 2

7 2 32 2

8 1 33 2

9 2 34 1

10 2 35 2

11 1 36 2

12 2 37 2

13 2 38 2

14 2 39 1

15 2 40 2

16 2 41 2

17 2 42 2

18 1 43 2

19 2 44 1

20 2 45 1

21 2 46 2

22 2 47 2

23 2 48 2

24 2 49 2

25 2 50 2

Total marks available : 90Time allowed : 2 hours

SCROLL SCREEN BY SCREEN TO SEE EACH ANSWER INDIVIDUALLY






1 1 B Cash book2 A Petty cash book3 B Cash book4 B Cash book5 D Sales day book6 F Purchases day book7 C Sales returns day book8 E Purchase returns day book

2 C Correct

A Only sales tax registered traders can charge sales tax.

B Incorrect, the consumer has a choice as to whether or not to consume so sales tax is only chargeable when this choice is exercised.

D Incorrect, sales tax is administered by the tax authorities.

3 A DEBIT: Inventory in hand (balance sheet)CREDIT: Closing inventory (trading account)

4 B True

5 C

RECEIVABLES CONTROL$ $

Balance b/f (bal figure) 22,000 Cash 50,000Sales 125,000 Discounts allowed 2,000

Balance c/f 95,000147,000 147,000

If you had answer D, you reversed the double entry and so produced a payables control account. In answer A, you omitted the discounts allowed figure; while in answer B you put discounts allowed on the debit instead of the credit side of the control account.

6 C PAYABLES CONTROL$ $

Bank 65,000 Opening payables 75,000Discount received 3,000 Purchases (bal fig.) 58,000Closing payables 65,000 .

133,000 133,000

7 D

8 B

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9 C CURRENT ACCOUNTSA B C A B C$ $ $ $ $ $

Drawings 10,000 10,000 10,000 Opening bal 15,000 12,000 10,000Closing bal 31,000 28,000 13,000 Profits 2:2:1 26,000 26,000 13,000

41,000 38,000 23,000 41,000 38,000 23,000

10 D

11 A When an expense account is balanced off, the balance is transferred to the income and expense account. When a liability account is balanced off, the balance is carried forward to the next accounting period.

12 C Correct

A Incorrect, non-current assets may be reduced in value as well as being increased.

B Non-current assets may be revalued, there is no requirement to do so in IAS 16.

D Incorrect, all non-current assets in a class must be revalued.

13 CPROVISION ACCOUNT

$ $I & E account 5,000 Balance b/f 50,000Balance c/f 45,000 .

50,000 50,000

Note: We are debiting provision account $5,000 and so crediting income statement $5,000. Therefore, we are decreasing expenses.

14 DCurrent assets $Inventory 15,000Receivables (5,000 - 1,000) 4,000Bank 110,000

129,000

15 D (50,000 x 25 cents) = $12,500

16 B $’000Retained earningsOpening balance 1,000Profit for the period 7,000

8,000Dividends paid (5,000)Closing balance 3,000

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2011 Paper F3 QandA Sample Download v1

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