CIMA

CERTIFICATE IN BUSINESS ACCOUNTING

PAPER C2
FUNDAMENTALS OF FINANCIAL ACCOUNTING

COURSE TEST 4
QUESTION PAPER

Answer all questions

CMC2CT10(N) CT4 Questions

CC210 C2 CT (4)

CMC2CT10(N) CT4 Questions

You must attempt all questions.

Each correct answer will score two marks. No deduction will be made for wrong answers.
An answer sheet is provided on the last page of this test. You must indicate your answer in the box provided.
No workings should be submitted on the answer sheet
1

P Limiteds balance sheet as at 31 October 2008 included:

$
300,000
100,000
60,000
105,300
565,300

50c ordinary share capital

$1 6% preference share capital
Share premium
Retained profit

No new shares have been issued during the year. On 1 April 2008 the company paid an interim dividend
of 2c per share on the ordinary shares and half of the annual preference dividend. A final dividend of 3c
per share on the ordinary shares and the remainder of the preference dividend had been proposed as at
31 October 2008.
The total dividend for the year ended 31 October 2008 should be $
2

Shearer & Co sell three products Basic, Super and Luxury. The inventory records at the year end show
the following:
Basic
Super
Luxury
$ per unit
$ per unit
$ per unit
Original cost
6
9
18
Estimated selling price
9
12
15
Selling and distribution costs
1
4
5

Units
200

Units in inventory

Units
250

Units
150

The value of inventory at the year end should be $

3

The double entry to record a discount granted by a supplier is

A

Debit payables, credit discounts allowed

Debit payables, credit discounts received

Debit discounts received, credit payables

Debit payables, credit purchases

A company's bank statement shows an overdraft of $3,204 at 31 March 2008. The statement includes
bank charges of $46 which have not yet been recorded in the company's cash book. The statement does
not include cheques for $780 paid to suppliers, nor an amount of $370 received from a receivable; both of
these amounts appear in the bank statement for April 2008.
If the company prepares a balance sheet at 31 March 2008, the figure for the bank overdraft should be
$

CMC2CT10(N) CT4 Questions

A companys issued share capital consists of $100,000 in 6% $1 preference shares and $50,000 in 50c
ordinary shares. Its net profit for the year was $76,000 and the directors wish to pay an ordinary dividend
for the year of 5c per share.
The company's retained profit for the year is $

Which of the following would cause an error in only the sales ledger when carrying out a control account
reconciliation?
A

Invoice omitted from the sales day book

Transposition error in filling in the sales ledger from an invoice sent out

Transposition error in filling in the sales day book from an invoice sent out

Miscasting the total of the sales day book

During the year to 31 May 20X8, Liz Limited had an authorised share capital of 500,000 ordinary shares
of 25c of which half have been issued, and 100,000 $1 7% preference shares which are all in issue.
An interim ordinary dividend of 2c per share was paid during the year and a final dividend for the year of
3c per share had been declared and is to be paid on 1 October 20X8.
Total dividends for the year ended 31 May 20X8 are

A companys share capital consists of 20,000 25c ordinary shares, all of which were issued at a premium
of 20%. The market value of the shares is currently 70c each.
The balance on the ordinary share capital account is $

10

When performing a reconciliation between the bank statement and a business cash book, which of the
following would require an entry into the cash book?
1.
2.
3.
4.
5.

Deposits credited after date

Direct debit appearing on bank statement only
Bank charges
Bank error
Cheque presented after date

2, 3 and 4

1 and 5

2 and 3

All of them

Shortfall Limiteds bank statement shows a balance of $2,030 overdrawn. The bank statement includes
bank charges of $50, which have not been entered in the cash book. There are unpresented cheques
totalling $730 and deposits not yet credited of $800. The bank statement incorrectly shows a direct debit
payment of $200, which belongs to another customer.
The figure for the bank overdraft in the balance sheet should be $

CMC2CT10(N) CT4 Questions

11

A sales ledger reconciliation was prepared by the bookkeeper of Corduroy and Co as at 31 March 2007
but one heading was illegible.
Sales Ledger Control Account
$
31.3.07 Balance b/f

25,320

Sales day book overcast

Amended balance c/f

25,320

1,000
24,320
25,320

$
23,890
(280)
710
24,320

Total per sales ledger listing

Credit listed as debit
Other difference

Assuming the reconciliation has been prepared correctly, the other difference is most likely to be:

12

Contra settlement omitted from the memorandum ledgers.

Invoice omitted from the sales day book.

Balance omitted from the sales ledger listing.

Debit side overcast when individual customer account balanced off.

At 1 April 20X8 the share capital and share premium account of a company were as follows:
$
Share capital 300,000 ordinary
shares of 25c each

75,000

Share premium account

200,000

During the year ended 31 March 20X9 the following events took place:
1.

On 1 October 20X8 the company made a rights issue of one share for every five held, at $1.20
per share.

2.

On 1 January 20X9 the company made a bonus issue of one share for every three in issue at that
time using the share premium account to do so.

The correct balance on the share capital account is $

CMC2CT10(N) CT4 Questions

FUNDAMENTALS OF FINANCIAL ACCOUNTING COURSE

TEST 4
Answer Sheet
Name: ..........................................................................

Date: ..........................................................................

Student number: ....................................................

1
2
3
4
5
6
7
8
9
10
11
12

CMC2CT10(N) CT4 Questions

BPP House, Aldine Place, London W12 8AA

Tel: 0845 0751 100 (for orders within the UK)
Tel: +44 (0)20 8740 2211
Fax: +44 (0)20 8740 1184
www.bpp.com/learningmedia

CIMA
CERTIFICATE IN BUSINESS ACCOUNTING
PAPER C2
FUNDAMENTALS OF FINANCIAL ACCOUNTING

COURSE TEST 4
SOLUTIONS

CMC2CT10(N) CT4 Solutions

CC210 C2 CT (4)

CMC2CT10(N) CT4 Solutions

SOLUTIONS TO COURSE TEST 4

1

$36,000

$4,700

$3,614

$65,000

$19,500

$5,000

10

$1,760

11

12

$120,000

CMC2CT10(N) CT4 Solutions

WORKINGS
1

$36,000
$
30,000
6,000
36,000

Ordinary (5c x 600,000)

Preference (6% x 100,000)
2

$4,700
Cost
$
6
9
18

Basic
Super
Luxury
3

$3,614

Net realisable
value
$
8
8
10

Lower of cost &

NRV
$
6
8
10

$
200
250
150

Value
$
1,200
2,000
1,500
4,700

$
(3,204) OD
(780)
370
(3,614)

Bank balance per bank statement

Unpresented cheques
Outstanding lodgements
per balance sheet
5

Units

$65,000
$76,000- ($100,000 6%) - ($50,000/$0.50 5c)

The sales ledger is updated from the original invoice. Errors in the sales day book will therefore
not affect the sales ledger. A, C and D are all errors in the sales day book.

Ordinary:
Preference:

20,000 x 25c = $5,000

10

$1,760

250,000 x 5c =
100,000 x 7% =

12,500
7,000
19,500

Balance per bank statement

Less unpresented cheques
Add outstanding lodgements
Add bank error
11

(2,030)
(730)
800
200
(1,760)

A:

A contra settlement would reduce the total on the sales ledger.

B:

An invoice omitted from the sales daybook would not affect the sales ledger.

D:

If the debt side of the customer's account was overcast, his balance would be too high and
would need to be reduced.

CMC2CT10(N) CT4 Solutions

12
Opening balance
$75,000
x 1/5 x $0.25
$0.25
$90,000
) x 1/3 x $0.25
Bonus issue (
$0.25

Rights issue

$
75,000

15,000

30,000
120,000

CMC2CT10(N) CT4 Solutions

CMC2CT10(N) CT4 Solutions

BPP House, Aldine Place, London W12 8AA

Tel: 0845 0751 100 (for orders within the UK)
Tel: +44 (0)20 8740 2211
Fax: +44 (0)20 8740 1184
www.bpp.com/learningmedia