FA Test-3 Total points 96/115

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Name & Roll

Aung Su Myat Noe (Roll number: 5)

1-Don't put $ sign in answer. 2/2

578200
 2-Don't put $ sign in answer. 2/2

84000

3- 2/2
P is a sole proprietor whose accounting records are incomplete. All the sal
es are cash sales and during the year $50,000 was banked, 
including $5,000 from the sale of a business car. He paid $12,000 wages 
in cash  from 
the till and withdrew $2,000 per month as drawings. The cash in the till at t
he beginning and end of the year was $300 and $400 respectively. What wa
s the value of P’s sales revenue for the year? 

A $80,900

B $81,000

C $81,100

D $86,100
 4- 2/2

A $1,985 DR

B $1,985 CR

C $15,770 DR

D $15,770 CR

5-Which of the following statements is correct?  2/2

A Carriage inwards and carriage outwards are both accounted for as an

expense in the statement of proTt or loss.

B Carriage inwards and carriage outwards are both accounted for as income in
the statement of proTt or loss.

C Carriage inwards is treated as an expense and carriage outwards is treated as

income in the statement of proTt or loss.

D Carriage inwards is treated as income and carriage outwards is treated as an

expense
:
 6-Jupiter  returned  unsatisfactory  goods  to  Saturn.  The  goods  had  2/2
been  sold  on  credit 
by Saturn at $100 plus sales tax of $20. What accounting entries are requir
ed by Saturn to record the return of goods? 

A Dr Purchases $100, Dr Sales tax $20, Cr Jupiter $120

B Dr Returns outward $100, Dr Sales tax $20, Cr Jupiter $120

C Dr Returns inward $100, Dr Sales tax $20, Cr Jupiter $120

D Dr Jupiter $120, Cr Returns outward $100, Cr Sales tax $20

7-Eric  is registered  for sales tax. During October, he sold goods with a  2/2

tax exclusive price of $800 to Kevin on credit. As Kevin is buying a large qu
antity of goods, Eric reduced the price by 8%. Eric accounts for sales tax on
 all transactions at 25%. What was the gross value of the sales invoice for 
Kevin prepared by Eric? Don't put $ sign in answer.

920
:
 8-ABC Co sold goods with a  2/2
list price of $1,000 to Smith which was subject to trade discount of 5% and 
early settlement discount of 4% if the invoice was paid within 7 days. The n
ormal credit period available to credit customers is 30 days from invoice da
te. At the point of sale, Smith was not expected to take advantage of early 
settlement terms offered.  If  Smith  subsequently  paid within  7  days 
and was  eligible  for  the  settlement 
discount, what accounting entries should be made by ABC Co to record set
tlement of the amount outstanding? 

A Debit Cash $950, Debit Revenue $50 and Credit Trade receivables $1,000

B Debit Cash $950, Credit Revenue $38 and Credit Trade receivables $912

C Debit Cash $912, Debit Revenue $38 and Credit Trade receivables $950

D Debit Cash $912, and Credit Trade receivables $912

:
 9-ABC Co sold goods with a  2/2
list price of $2,500 to Jones which was subject to trade discount of 5% and
 early settlement discount of 4% if the invoice was paid within 7 days. The 
normal credit period available to credit customers is 30 days from invoice d
ate. At the point of sale, Jones was expected to take advantage of the early
 settlement terms.  If  Jones  subsequently  paid within  7  days  and was 
eligible  for  the  settlement 
discount, what accounting entries should be made by ABC Co to record set
tlement of the amount outstanding? 

A Debit Cash $2,280, Debit Revenue $95 and Credit Trade receivables $2,375

B Debit Cash $2,280 and Credit Trade receivables $2,280

C Debit Cash $2,375, Debit Revenue $125 and Credit Trade receivables $2,500

D Debit Cash $2,500, and Credit Trade receivables $2,500

:
 10- 0/2
ABC Co sold goods with a list price of $4,500 to Black which was subject t
o trade discount of 5% and early settlement discount of 4%  if the 
invoice was paid within 7 days. The normal credit period available to credit 
customers is 30 days from invoice date. At the point of sale, Black was exp
ected to take advantage of the early settlement terms offered.  If,  on  this 
occasion,  Black  did  not  pay  within  7  days  and  was  not  eligible  for 
the settlement  discount,  what  accounting  entries  should  be  made  by 
ABC  Co  to  record settlement of the amount outstanding?

A Debit Cash $4,104, Debit Revenue $396 and Credit Trade receivables $4,500

B Debit Cash $4,275, Debit Discount received $171 and Credit Trade receivables
$4,104

C Debit Cash $4,275 and Credit Trade receivables $4,275

D Debit Cash $4,275, Credit Trade receivables $4,104 and Credit Revenue $171

Correct answer

D Debit Cash $4,275, Credit Trade receivables $4,104 and Credit Revenue $171
:
 11- 2/2
ABC Co sold goods with a list price of $3,700 to White which was subject t
o trade discount of 5% and early settlement discount of 4% if the invoice w
as paid within 7 days. The normal credit period available to credit customer
s is 30 days from invoice date. At the point of sale, White was  not 
expected  to  pay  early  and  take  advantage  of  the  early  settlement 
terms offered.  If, as expected, White did not pay within the settlement disc
ount period, what accounting entries should be made by ABC Co to record 
settlement of the amount outstanding? 

A Debit Cash $3,515, and Credit Trade receivables $3,515

B Debit Cash $3,515, Credit Discount received $140.60 and Credit Trade
receivables $3,374.40

C Debit Cash $3,374.40 and Credit Trade receivables $3,374.40

D Debit Cash $3,515, Debit Revenue $185 and Credit Trade receivables $3,700
:
 12- 0/2
ABC Co sold goods with a list price of $1,400 to Green which was subject t
o trade discount of 4% and early settlement discount of 5% if the invoice w
as paid within 7 days. The normal credit period available to credit customer
s is 30 days from invoice date. At the point of sale, Green was expected to t
ake advantage of the early settlement discount terms offered.  If,  on  this 
occasion,  Green  did  not  pay  within  the  settlement  discount  period, 
what accounting  entries  should  be  made  by  ABC  Co  to  record 
settlement  of  the  amount outstanding? 

A Debit Cash $1,400 Credit Trade receivables $1,400

B Debit Cash $1,344, Credit Trade receivables $1,276.80 and Credit Revenue
$67.20

C Debit Cash $1,344 and Credit Trade receivables $1,344

D Debit Cash $1,276.80, and Credit Trade receivables $1,276.80

Correct answer

B Debit Cash $1,344, Credit Trade receivables $1,276.80 and Credit Revenue
$67.20
:
 13-Which of the following statements is correct?  2/2

A If all the conditions speciTed in IAS 38 Intangible assets are met, the directors
can chose whether to capitalise the development expenditure or not.

B Amortisation of capitalised development expenditure will appear as an item in

an entity’s statement of changes in equity.

C Capitalised development costs are shown in the statement of Tnancial

position as non-current assets.

D Capitalised development expenditure must be amortised over a period not

exceeding Tve years.

14- 2/2
Complete the following statement by selecting the appropriate wording fro
m the choice available. When  accounting  for  intangible  assets  using 
the  revaluation  model,  movements  in 
the carrying amount are…………………………………………………………………….. 

A accounted for in other comprehensive income and other components of

equity

B accounted for in the statement of proTt or loss only

C accounted for in other comprehensive income only

D accounted for on other components of equity only

:
 15- 2/2
What is the correct accounting treatment for an intangible asset with an in
definite useful life? 

A It is recognised at cost for as long as the entity has the intangible asset.

B It is recognised at cost and is subject to an annual impairment review.

C It is recognised at cost and the entity must make an estimate of estimated

useful life so that it can be amortised.

D It cannot be recognised as an intangible asset as it would not be possible to

calculate an annual amortisation charge.
:
 16-Identify whether or not  each of  the  following  items  should be  capitalised  as 
intangible assets from the following list. 

Not
Capitalised Score
capitalised

Employment costs of staff conducting rese
1/1
arch activities

Cost of constructing a working model of a 
0/1
new product

Materials and consumables  costs associa
1/1
ted with conducting scientiTc experiments

Licence purchased to permit production an
1/1
d sale of a product for ten years.

Correct answers

Capitalised Not capitalised

Cost of constructing a working model of a ne
w product
:
 17- 2/2
Complete the following statement by selecting the appropriate wording fro
m the choice available. When  accounting  for  intangible  assets  using 
the  cost model,  annual  impairment  charges are: 

A accounted for in other comprehensive income and other components of equity

B accounted for in the statement of proTt or loss only

C accounted for in other comprehensive income only

D accounted for on other components of equity only

18-
Classify each of the following costs as either a research expense or as an intangibl
e asset. 

Research Intangible
Score
expense asset

Market research costs 1/1

Patented product design costs 1/1

Product advertising 1/1

Employee training costs 1/1
:
 19-Which of the following statements best defines an intangible asset?  2/2

A An intangible asset is an asset with no physical substance

B An intangible asset is always generated internally by a business

C An intangible asset is an asset which cannot be sold

D An intangible asset is a purchased asset which has no physical substance

20-
Geranium is engaged in the following research and development projects: Identify 
how  the  costs  of  each  project  should  be  accounted  for  in  the 
financial statements. 

Written off as Capitalised as

Score
an expense an asset

Project 1 is
applying a new
technology to
the production
of heat resistant
fabric. On
completion, the
fabric will be
used in the
production of 1/1
uniforms for the
emergency
services.
Geranium has
sudcient
resources and
the intention to
complete the
project.

Project 2 is
:
 testing whether
a particular
substance can
be used as an
appetite
1/1
suppressant. If
this is the case,
it is expected be
sold worldwide
in chemists and
pharmacies.

Project 3 is
developing a
material for use
in kitchens
which is self-
cleaning and
germ resistant.
A competitor is
currently 0/1
developing a
similar material
and , for this
reason,
Geranium is
unsure whether
its project will be
completed.

Correct answers

Written off as an expense Capitalised as an asset

Project 3 is developing a
material for use in kitchens
which is self-cleaning and
germ resistant. A
competitor is currently
developing a similar
material and , for this
reason, Geranium is unsure
whether its project will be
completed.
:
 21-Don't put $ sign in answer. 2/2

147292
:
 22- 2/2

A 5,610 Amortisation charge 26,010 Accumulated amortisation

B 8,160 Amortisation charge 36,720 Accumulated amortisation

C 8,160 Amortisation charge 28,560 Accumulated amortisation

D 5,610 Amortisation charge 39,720 Accumulated amortisation

23-Campbell Co purchased a  licence at a  cost of $3,600,000  to  2/2

sell a product  for a  five‐
year term commencing 1 July 20X3, after which the licence will expire and 
cannot be renewed. It is  Campbell  Co’s  policy  to  write  off  the  cost  of 
the  licence  over the  five‐year 
term commencing from the date of purchase. What was the amortisation c
harge for the year ended 31 March 20X4? Don't put $ sign in answer.

540000
:
 24- 2/2

A 5,000 Amortisation charge 12,500 Accumulated amortisation

B 6,000 Amortisation charge 18,500 Accumulated amortisation

C 6,000 Amortisation charge 11,500 Accumulated amortisation

D 5,000 Amortisation charge 17,500 Accumulated amortisation

:
 25-
Identify which THREE of the following statements are true in relation to application 
of IAS 38 Intangible Assets. 

True False Score

Research costs should be expensed to the

1/1
statement of proTt or loss.

All types of goodwill can be capitalised. 1/1

Capitalised development  costs  that no 

longer meet the  criteria  speciTed by 
1/1
IAS 38 must be written off
to the statement of proTt or loss.

Capitalised  development  costs  are 

amortised  from
1/1
the date the assets is available to use or se
ll.

Research  costs  written  off  can  be  re-

capitalised 1/1
when the developed asset is feasible.

Only purchased intangibles can be capitalis
0/1
ed.

Correct answers

True False

Only purchased intangibles can be capitalised
.
:
 26-Don't put $ sign in answer. 2/2

453600

27-Don't put $ sign in answer. 2/2

858600
:
 28- 2/2

A 11,100 SOPL , 9,000 prepayment SOFP

B 11,700 SOPL , 9,000 prepayment SOFP

C 11,100 SOPL , 9,000 accrual SOFP

D 11,700 SOPL , 9,000 accrual SOFP

29- 2/2
Vine Co sublets part of its office accommodation to earn rental income. Th
e rent is received quarterly 
in advance on 1 January, 1 April, 1 July and 1 October. The annual rent has 
been $24,000 for some years, but it was increased to $30,000 from 1 July 2
0X5. What  amounts  for  rent  should  appear  in  Vine  Co’s  financial 
statements  for  the  year ended 31 January 20X6? 

A $27,500 SOPL , $5,000 in accrued income SOFP

B $27,000 SOPL, $2,500 in accrued income SOFP

C $27,000 SOPL , $2,500 in prepaid income SOFP

D $27,500 SOPL , $5,000 in prepaid income SOFP

:
 30- 2/2
On 1 May 20X0, A commenced business and paid an annual rent charge of 
$1,800  for the period to 30 April 20X1.  What  is  the  charge  to  the 
statement of profit or  loss and  the entry  in  the 
statement of financial position for the accounting period ended 30 Novemb
er 20X0? 

A $1,050 charge to statement of proTt or loss and prepayment of $750 in the

statement of Tnancial position.

B $1,050 charge to statement of proTt or loss and accrual of $750 in the

statement of Tnancial position.

C $1,800 charge to statement of proTt or loss and no entry in the statement of

Tnancial position.

D $750 charge to statement of proTt or loss and prepayment of $1,050 in the

statement of Tnancial position.

31-At 1 September, the motor expenses account showed 4 months’  2/2
insurance prepaid of $80 and  fuel 
costs accrued of $95. During September,  the outstanding 
fuel bill was paid, plus further bills of $245. At 30 September there was a fu
rther outstanding fuel bill of $120. What was the expense included in the st
atement of profit or loss for motor expenses for September? Don't put $
sign in answer.

385
:
 32-What was the expense? Don't put $ sign in answer. 2/2

3320

33-The  annual  insurance  premium  for  S  for  the  period  1  July  20X3  ···/2
to  30  June  20X4 
was $13,200, which is 10% more than the previous year. Insurance premiu
ms are paid on 1 July. What  is  the  statement  of  profit  or  loss  charge 
for  insurance  for  the  year  ended 31 December 20X3? Don't put $ sign in
answer.

13600

Correct answer

12600
:
 34-Farthing’s  year‐end  is  30  September.  On  1  January  20X6  Farthing  2/2
took  out  a  loan  of $100,000 with annual  interest of 12%. The  interest 
is payable  in equal  instalments on 
the first day of April, July, October and January in arrears. How much 
should  be  charged  to  the  statement  of  profit  or  loss  account  for  the 
year ended  30 September  20X6,  and  how  much  should  be  accrued  on 
the  statement  of financial position? 

A $12,000 SOPL , $3,000 SOFP

B $9,000 SOPL , $3,000 SOFP

C $9,000 SOPL , $0 SOFP

D $6,000 SOPL , $3,000 SOFP

35- 2/2
On 1 January 20X3, a business had prepaid insurance of $10,000. On 1 Aug
ust 20X3, it paid, in full, the annual insurance invoice of $36,000, to cover th
e twelve months to 31 July 20X4. What was the amount charged 
in the statement of profit or 
loss and the amount shown in the statement of financial position for the ye
ar ended 31 December 20X3? 

A 5,000 SOPL , 24,000 SOFP

B 22,000 SOPL , 23,000 SOFP

C 25,000 SOPL , 21,000 SOFP

D 36,000 SOPL , 15,000 SOFP

:
 36-Which of the following statements is false?  2/2

A Accruals decrease proTt

B Accrued income decreases proTt

C A prepayment is an asset

D An accrual is a liability

37-On  9  October,  Parker  paid  his  heat  and  power  bill  for  the  three  0/2
months  ended 30 September 20X4. The bill  included  a meter  rental 
charge of $60  for  the  three months ending  31  December  20X4  and  a 
usage  charge  of  $135  for  the  three  month  period 
to 30 September 20X4. Parker has an accounting year end date of 31 Octo
ber 20X4. Which of the following pairs of adjustments is required in relatio
n to the heat and power expense as at 31 October 20X4? 

A Rental accrual of $40 Usage prepayment of $45

B Rental accrual of $45 Usage prepayment of $40

C Rental prepayment of $40 Usage accrual of $45

D Rental prepayment of $45 Usage accrual of $45

Correct answer

C Rental prepayment of $40 Usage accrual of $45

:
 38- 0/2
In the statement of financial position at 31 December 20X5, Boris reported 
net receivables of $12,000. During 20X6 he made sales on credit of $125,0
00 and received cash from credit customers amounting to $115,500. At 31 
December 20X6, Boris decided to write off debts of $7,100 and increase th
e specific allowance for receivables by $950 to $2,100.  What was  the  net 
receivables  figure  reported  in  the  statement  of  financial  position 
at 31 December 20X6? 

A $12,300

B $13,450

C $14,400

D $15,550

Correct answer

B $13,450
:
 39- 2/2

A $275,690

B $278,090

C $320,690

D $302,090
:
 40- 2/2

A $100,175

B $93,620

C $89,320

D $97,920
:
 41- 0/2

A $6,766

B $11,034

C $6,829

D $10,971

Correct answer

A $6,766
:
 42-At  1  July  20X5,  V  Co’s  allowance  for  receivables  was  $48,000.  At  2/2
30  June  20X6, 
trade receivables amounted to $838,000. It was decided to write off $72,00
0 of these debts and adjust the specific allowance for receivables to $60,0
00. What  are  the  final  amounts  for  inclusion  in  V  Co’s  statement  of 
financial  position  at  30 June 20X6? 

A 838,000 Trade receivable , 60,000 Allowance for receivables , 778,000 Net

balance

B 766,000 Trade receivable , 60,000 Allowance for receivables , 706,000 Net

balance

C 766,000 Trade receivable , 108,000 Allowance for receivables , 658,000 Net

balance

D 838,000 Trade receivable , 108,000 Allowance for receivables , 730,000 Net

balance
:
 43-In  the year ended 30  September 20X8, Fauntleroy had  2/2
sales of $7,000,000. The year‐end receivables  amounted  to  5%  of 
annual  sales.  At  the  year  end,  Fauntleroy’s 
specific allowance for receivables equated to 4% of receivables. He also id
entified that this amount was 20% higher than at the previous year end. Dur
ing  the  year  irrecoverable  debts  amounting  to  $3,200  were  written  off 
and 
debts amounting to $450 and previously written off were recovered. What 
was the irrecoverable debt expense for the year? 

A $5,083

B $5,550

C $5,583

D $16,750
:
 44- 2/2

A $19,300

B $20,200

C $20,800

D $20,700
:
 45-G Co has been notified  0/2
that a customer has been declared bankrupt. G Co had previously made all
owance for this receivable.  Which of the following is the correct double ent
ry? 

A Allowance for receivables Dr , Receivables’ ledger control account Cr

B Receivables’ ledger control account Dr , Irrecoverable debts account Cr

C Irrecoverable debts account Dr , Receivables’ ledger control account Cr

D Receivables' ledger control account Dr , Allowance for receivables Cr

Correct answer

A Allowance for receivables Dr , Receivables’ ledger control account Cr

:
 46- 2/2

A $329,750

B $593,175

C $593,250

D $614,650

47- 2/2
The sales revenue of J Co was $2 million and its receivables were 5% of sal
es. J Co wishes to have a specific allowance for receivables of $4,000, whi
ch would make the allowance one‐
third higher than the current allowance. How will the profit for the period be
 affected by the change in allowance? 

A ProTt will be reduced by $1,000

B ProTt will be increased by $1,000

C ProTt will be reduced by $1,333

D ProTt will be increased by $1,333

:
 48- 2/2

A $800

B $1,000

C $1,150

D $1,550

49- 2/2
An increase in the allowance for receivables results in which of the followin
g? 

A An increase in net current assets

B A decrease in net current assets

C An increase in sales

D A decrease in drawings
:
 50- 0/2
At the end of 20X7, Chester’s receivable’s balance is $230,000.  He wishes t
o make specific allowance for Emily’s debt of $450 and Lulu’s debt of $980.
 Irrecoverable debts of $11,429 should be written off. What amount should 
be charged or credited to the statement of profit or loss in respect of 
irrecoverable debts and  the allowance  for  receivables  if 
the allowance at  the start of the year was $11,700? 

A $1,159 Dr

B $1,230 Dr

C $200 Cr

D $12,930 Dr

Correct answer

A $1,159 Dr

51-Which of the following is not a benefit of providing credit to customers?  2/2

A It may result in increased sales

B It may encourage customer loyalty

C It may attract new customers

D It may improve the cash iow of the business

:
 52- 2/2
Which of the following best explains the purpose of an aged receivables an
alysis? 

A To ensure that credit is not extended to unapproved customers

B To ensure that credit customers regularly purchase goods from the business

C To keep track of outstanding debts and identify overdue amounts to follow

up

D To keep track of customer addresses

53-Don't put $ sign in answer. 2/2

6966

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