Diskusi Mid Test - Meeting 7

MEETING 7
QUIZ
DISCUSSION
According to the Conceptual Framework, which qualitative
characteristics enhance the usefulness of information that is
relevant and faithfully represented?
a. Comparability, understandability, timeliness, verifiability.
b. Consistency, prudence, measurability, verifiability.
c. Consistency, reliability, measurability, timeliness.
d. Materiality, understandability, measurability, reliability.
Comparability, understandability,
timeliness, verifiability.
Which of the following is classified as revenue expenditure?
a. Purchase of machinery for use in production
b. Purchase of inventories for resale
c. Purchase of a warehouse to store inventory
d. Purchase of a motor vehicle to deliver goods to customers
Purchase of inventories for resale

Which THREE of the following users of financial statements
are likely to be interested in the financial statements of a
small private company?
a. Stock market analysts
b. Company employees
c. The company's bank
d. Institutional shareholders
e. Suppliers
Company employees, The company’s

bank, suppliers
Which TWO of the following are source documents?
a. Goods received note
b. Invoice to a customer
c. Purchase order to a supplier
d. Cheque to a supplier
e. Delivery note to a customer
Invoice to a customer, Cheque to a

supplier
A business paid out £12,450 in net wages to its employees. In respect of these
wages, the following amounts were shown in the statement of financial
position.
No other deductions were made.

Employees' gross wages, before deductions , were:
12,450 + 2,480 + 1,350 = £16,280

38,600 + 3,500 = £42,100
 A sole trader had receivables of £2,700 at 1 May and during May made
cash sales of £7,200, credit
sales of £16,500 and received £15,300 from his customers.
 The balance on his receivables account at the end of May was…
The petty cash float in a business has an imprest amount of £200. At the
end of March vouchers in the petty cash box totalled £136 and the
amount of cash remaining in the box was £54.
Which of the following explains the difference?
a. A petty cash voucher for £10 is missing
b. An employee was given £10 too little when making a petty cash
claim
c. An employee reimbursed petty cash with £10 in respect of postage
stamps used, but no voucher was prepared
d. A voucher for £10 was put in the box but no payment was made to
the employee
A petty cash voucher for £10 is missing

Rochelle has a debit balance of £26 in Staint plc's payables ledger. Which of
the following would, alone, explain this balance?
a. Staint plc paid an invoice for £26 even though Rochelle had issued a
credit note in respect of it.
b. Staint plc bought and paid for some goods for £26 which it then returned,
but Rochelle has not yet issued a credit note.
c. Staint plc received a credit note for £26 from Rochelle but posted it to the
account of Nashalle.
d. Staint plc paid a cheque to Rochelle for £53 in respect of an invoice for
£79.
Staint plc paid an invoice for £26 even

though Rochelle had issued a credit
note in respect of it.
A company's trial balance failed to agree, the totals being:
Debit £815,602
Credit £808,420
Which of the following errors could fully account for the difference?
a. The omission from the trial balance of the prepayments asset account
£7,182
b. Interest paid of £3,591 debited to the interest received account, in error
c. No entries made in the records for cash purchases totalling £7,182
d. Bank overdraft of £3,591 was included in the trial balance as a debit
Bank overdraft of £3,591 was

included in the trial balance as
a debit
Winn Ltd has opening trade payables of £24,183 and closing trade payables of
£34,655. Purchases for the period totalled £254,192 (£31,590 relating to cash
purchases).
Total payments recorded in the payables ledger for the period were:
$24,183 + (254,192 - 31,590) - 34,655

= $212,130
James paid an invoice from a credit supplier and took advantage of the early
settlement discount offered. When the invoice was received and recorded,
James did not expect to take the discount.
What is the correct double entry to record the payment of the invoice?
a. Debit Payables, Credit Cash at bank account
b. Debit Cash at bank account, Debit Purchases, Credit Payables
c. Debit Payables, Credit Purchases, Credit Cash at bank account
d. Debit Cash at bank account, Credit Purchases, Credit Payables
Debit Payables, Credit Purchases, Credit

Cash at bank account
The cash at bank account shows a bank balance of £5,675 overdrawn at 31 August 20X5. It is
subsequently discovered that a standing order payment for £125 has been entered twice, and
that a dishonoured cheque for £450 has been debited in the cash at bank account instead of
being credited.
The correct bank balance should be…
a. £5,100 overdrawn
b. £6,000 overdrawn
c. £6,250 overdrawn
d. £6,450 overdrawn
Which of the following items should be treated as a capital item in the
financial statements of a large shop?
1. Purchase of fixed shelving units
2. Payment of wages
3. Repairs to fixed shelving units
(1) only
In the trade payables of Magma plc, an invoice of £807 from Ferdinand has
been recorded as a credit note. After correcting this error, the trade payables
balance will be:
a. Reduced by £807
b. Reduced by £1,614
c. Increased by £807
d. Increased by £1,614
£807 should have been credited to payables, but instead it was

debited to payables. The payables ledger should be credited
with £807, to correct the error and £807 again to record the
invoice ie, increase by 2 x £807 = £1,614 (D)
On reviewing its cash at bank account and the transaction report downloaded
from its electronic banking system, Probla plc discovers the following errors:
1. A cheque from a credit customer for £1,095 was recorded in trade
receivables and cash at bank account as £1,509.
2. A cheque to a credit supplier for £89 was entered incorrectly in trade
payables and the cash at bank account as £98.
What is the journal entry to correct these errors ?
Debit Receivables £414, Credit Payables

£9, Credit Cash £405
Your firm values inventory using AVCO. At 1 June 20X8 there were 60 units
in inventory valued at £12 each. On 8 June, 40 units were purchased for £15
each, and a further 50 units were purchased for £18 each on 14 June. On 21
June, 75 units were sold for £20.00 each.
The value of closing inventory at 30 June 20X8 was
$1,110
In preparing its financial statements for the current year, a company's closing
inventory was understated by £300,000.
What will be the effect of this error if it remains uncorrected?
a. The current year's profit will be overstated and next year's profit will be
understated.
b. The current year's profit will be understated but there will be no effect on
next year's profit.
c. The current year's profit will be understated and next year's profit will be
overstated.
d. The current year's profit will be overstated but there will be no effect on
next year's profit.
The current year's profit will be
understated and next year's profit will
be overstated.
What is the correct treatment of a trade discount received from a credit
supplier?
a. Assess the likelihood of the discount being taken up and only account for
if likely.
b. Deducted from the list price with the net amount recorded in the
purchases account.
c. Recorded in the journal.
d. Deducted from the invoice total with the net amount recorded in the cash
at bank account.
Deducted from the list price with the net

amount recorded in the purchases account.
Muse plc began trading on 1 January 20X8 and had zero inventories at that
date. During 20X8 it made purchases of £455,000, incurred delivery inwards
of £24,000, and delivery outwards of £29,000. Closing inventories at 31
December 20X8 were £52,000.
What is the correct amount for cost of sales for the year ended 31 December
20X8?
a. £456,000
b. £432,000
c. £427,000
d. £531,000
Which of the following is a consideration in the application of ICAEW’s Code
of Ethics?
a. Whether or not the activity is remunerated.
b. That the client or employer is an ICAEW member, student, affiliate or
member firm.
c. If an action brings discredit to the profession.
d. Whether or not the activity is prohibited by existing laws or regulations.
If an action brings discredit to the

profession.
The trial balance of Knight plc as at 31 May 20X0 includes an allowance for
receivables of £2,050. Subsequently a review of the receivables ledger reveals
that debts totalling £985 are considered irrecoverable and are to be written off.
Knight plc has reviewed it’s remaining trade receivables and decides that an
allowance for receivables of £2,157 is required at year end.
What irrecoverable debt expense will the statement of profit or loss for the
year ended 31 May 20X0 include?
a. £878
b. £985
c. £1,092
d. £2,157
At 31 December 20X2 a company's receivables totalled £400,000 and an
allowance for receivables of £50,000 had been brought forward from the year
ended 31 December 20X1.
It was decided to write off debts totalling £38,000 and to adjust the allowance
for receivables to £36,200.
What charge for irrecoverable debts should appear in the company's statement
of profit or loss for the year ended 31 December 20X2?
a. £36,200
b. £51,800
c. £38,000
d. £24,200

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MEETING 7

Purchase of inventories for resale

Company employees, The company’s

Invoice to a customer, Cheque to a

No other deductions were made.

12,450 + 2,480 + 1,350 = £16,280

A petty cash voucher for £10 is missing

Staint plc paid an invoice for £26 even

Bank overdraft of £3,591 was

$24,183 + (254,192 - 31,590) - 34,655

Debit Payables, Credit Purchases, Credit

£807 should have been credited to payables, but instead it was

Debit Receivables £414, Credit Payables

Deducted from the list price with the net

If an action brings discredit to the

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