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STUDY QUESTION BANK
ACCA
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Paper F3 | FINANCIAL ACCOUNTING
Foundations in Accountancy
Paper FFA | FINANCIAL ACCOUNTING
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ACCA
PL PAPER F3/FFA
FINANCIAL ACCOUNTING
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STUDY QUESTION BANK
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Acknowledgement
Past ACCA examination questions are the copyright of the Association of Chartered Certified
Accountants and have been reproduced by kind permission.
(ii) ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
CONTENTS
FINANCIAL STATEMENTS
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ACCOUNTING SYSTEMS
9
10
11
6
7
Victor Borissov
8 Roman
Petr
Grigory
Dana
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MCQs Double entry bookkeeping principles
4
5
6
7
7
8
1004
1007
1008
1010
1013
1016
22
10
22
21
24
23
12 A Patel 8 1019 35
13 Bohm 9 1024 10
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14 Ivan Tombs 9 1026 14
15 Viktor 10 1029 7
16 Angelo 10 1031 40
17 Stefan 11 1036 23
18 R Rybin 12 1039 27
19 Nixon 12 1044 30
20 MCQs Ledger accounting 13 1048 10
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CREDIT TRANSACTIONS
21 Damien 14 1048 5
22 Ricardo 15 1049 15
23 MCQs Credit transactions 15 1051 6
24 Dino 16 1051 10
25 A Crew 17 1052 8
26 Tomasz 17 1054 12
27 Pushkova 18 1055 15
28 Scorcese 19 1057 17
29 Tolstoy 19 1058 6
30 Haertel 20 1059 8
31 MCQs Accruals and prepayments 20 1059 16
©2014 DeVry/Becker Educational Development Corp. All rights reserved. (iii)
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
CONTENTS
32 Rookie 22 1061 10
33 Alexander 23 1062 6
34 Udot 23 1062 7
35 Popov 23 1064 6
36 Reuther 24 1065 10
37 MCQs Depreciation and disposals 24 1067 20
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RECEIVABLES AND PAYABLES
38 Krol 27 1071 6
39 Hyundai 27 1071 6
40 Dinul 28 1072 7
41 Pushkin 28 1074 9
42
43
44
45
46
INVENTORY
47
48
Ink Products
Adam
Strak
Frederik PL
MCQs Receivables and payables
C3P0
Ogay
29
29
30
30
31
33
33
1075
1075
1077
1078
1079
1082
1083
8
10
8
10
16
10
8
49 Ales 34 1084 4
50 Period-end adjustments 34 1084 40
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51 MCQs Inventory 36 1090 8
52 A Smit 37 1090 30
53 Rebecca 37 1093 20
54 Wooden Tops 38 1097 16
55 Rubens 38 1098 3
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56 Zone 39 1099 6
57 Hastings & Co 39 1099 18
58 Zenkerova 40 1100 11
59 Rankine 40 1101 40
60 Henry Williams 41 1107 40
61 MCQs Books of prime entry 42 1114 22
62 Brabantia 46 1117 9
63 Tartufo 47 1117 10
64 Racy 47 1118 15
65 Teletubby 48 1119 16
66 Robin & Co 49 1120 15
67 Showers 50 1121 15
68 Hubert 51 1121 22
69 MCQs Control account reconciliations 52 1123 8
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STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
CONTENTS
BANK RECONCILIATIONS
70 Talant 53 1123 8
71 Pringle 54 1124 5
72 White 54 1124 6
73 Gorbachev 54 1124 8
74 Jovanovich 55 1125 8
75 North Star Company 55 1125 12
76 Dealers 56 1126 15
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77 Geneva 57 1127 15
78 MCQs Bank reconciliations 57 1127 8
SUSPENSE ACCOUNTS
79 Yulia 58 1128 10
80
81
82
83
84
85
86
87
88
89
Ogre
Groan
Blackwater Transport
Smetena Newsagents
Alpha
Cosy Comforts
Rafal Jaffa
XYZ
CND
MCQs Suspense accounts
PL 59
59
60
61
62
63
63
65
66
68
1129
1129
1130
1131
1133
1136
1137
1139
1141
1143
8
15
15
18
20
20
20
18
26
10
97 Bowie 79 1162 25
INCOMPLETE RECORDS
©2014 DeVry/Becker Educational Development Corp. All rights reserved. (v)
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
CONTENTS
REGULATORY FRAMEWORK
CONCEPTUAL FRAMEWORK
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111 MCQs Conceptual framework 93 1189 12
116
117
118
119
120
MCQs IAS 1
115 Beta
Logo
Gamma
Sigma
Lark (ACCA J00)
Alpaca (ACCA J02)
PL 95
96
97
98
99
100
101
1192
1192
1194
1195
1197
1199
1200
10
20
12
18
12
20
11
121 MCQs Capital structure and finance costs 102 1201 14
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IAS 2 INVENTORIES
IAS 18 REVENUE
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STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
CONTENTS
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IAS 7 STATEMENT OF CASH FLOWS
147
148
149
C3P0
Tivoli
MCQs IAS 7
146 P&S
Happy and Sad
Faye
Honey
PL 121
123
124
126
127
128
129
1225
1227
1229
1229
1231
1232
1234
11
15
10
10
12
12
12
150 Humphrey 130 1236 10
151 Happy 130 1237 10
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152 Bing and Crosby (ACCA D10) 131 1239 12
153 MCQs Consolidated financial statements 132 1240 12
©2014 DeVry/Becker Educational Development Corp. All rights reserved. (vii)
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
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(viii) ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
1.2 Which of the following more of a disadvantage of operating as a sole trader as compared
with a partnership?
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B Limited access to finance
C Responsibility for all liabilities
D Requirements to keep accounting records
1.3 Which of the following distinguishes financial reporting from financial accounting?
1.4
A
B
C
D
B
C
PL
Making year-end adjustments to determine the financial results for the year
Collecting, analysing and summarising financial transactions
Recording actual transactions in monetary terms
Disclosure of transactions and events
(10 marks)
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
The following information is available for Jan Bartok’s business for the year ended 31 December:
$
Bank overdraft 1,200
Trade receivables 5,000
Opening inventory 1,500
Motor vehicles 2,800
Sales revenue 25,000
Drawings 2,000
Opening capital 5,000
Purchases 20,000
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Trade payables 2,000
Closing inventory 3,000
Cash in hand 100
Administration expenses 1,000
Wages 800
Required:
The following information is available for Tomas Maxim’s business for the year ended 31 December.
He started his business on 1 January.
$
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Trade payables 6,400
Trade receivables 5,060
Purchases 16,100
Sales revenue 28,400
Motor van 1,700
Drawings 5,100
Insurance 174
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Required:
Prepare a statement of profit or loss for the year ended 31 December and a statement of financial
position at that date.
(9 marks)
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STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
A Accrued expenses
B Bank overdraft
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C Drawings
D Trade payables
A A lease of land
4.4
B
C
D
A registered trademark
Royalty receipts
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An investment in a listed company
Which one of the following represents cost of goods sold in a statement of profit or loss?
A
B
C
D
Purchases – closing inventory + opening inventory
Purchases – opening inventory + closing inventory
Opening inventory + purchases + closing inventory
Closing inventory + purchases – opening inventory
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4.5 Which one of the following items of expenditure should be classified as capital
expenditure?
4.6 Which one of the following items could properly be included in non-current tangible
assets in the statement of financial position of a manufacturing business?
A $55,000 representing the use of the business’s own labour and material costs
incurred in constructing an extension to the warehouse
B $45,000 representing the salary and occupancy costs of a manager whose main
function is to prepare, control and implement capital expenditure budgets
C $25,000 spent in tracing and rectifying a serious fault in operating a production line
to restore it to normal efficiency
D $35,000 incurred in an extensive market survey, the recommendations of which
may be implemented next year
(12 marks)
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 3
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
5.1 Which one of the following statements concerning an accounting system is correct?
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C To ensure that asset disposals are authorised
D To ensure that access to assets is restricted
A Asset register
5.4
B
C
D
Inventory records
Receivables ledger
Journal
PL
Which of the following documents will all be found in a typical sales system?
A
B
C
D
Standing order, goods despatch note, customer statement
Sales order, goods received note, remittance advice
Sales invoice, goods despatch note, remittance advice
Sales invoice, goods received note, customer statement
(8 marks)
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Question 6 VICTOR BORISSOV
Victor Borissov won $10,000 in a national lottery and decided to set himself up as a computer
distributor, starting to trade on 1 April.
Required:
(a) Show the accounting equation which results from EACH of these transactions.
4 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
(1) Bought for cash a Legend ($3,000) and an Apple Mac ($2,500)
(2) Sold the Legend for $4,500 cash
(3) Received a telephone bill for $100 which he paid
(4) Sold the Apple Mac for $1,800 cash
(5) Drew $600 in cash from the business
(6) Bought an IBM for $5,600 cash.
Required:
Show the accounting equation at 31 May after ALL the above transactions. (6 marks)
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(c) Assuming the same transactions as in (b), prepare a statement of profit or loss for the
month ended 31 May and a statement of financial position at that date for Victor
Borissov’s business. (7 marks)
(22 marks)
7.1
7.2
C
D
PL
Which of the following principles underlie double entry bookkeeping?
A
B
Accounting equation, separate legal entity concept, duality concept
Accruals concept, accounting equation, business entity concept
Accounting equation, business entity concept, duality concept
Accruals concept, business entity concept, duality concept
Closing net assets can be found by using which of the following equations?
A
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Opening capital + Profit + Drawings + Capital introduced
B Opening capital + Profit – Drawings + Capital introduced
C Opening capital – Profit + Drawings + Capital introduced
D Opening capital – Profit – Drawings + Capital introduced
A trader had the following items in his statement of financial position on 31 December 2013 and 2014:
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2013 2014
$ $
Land 2,000 2,000
Cars 1,000 –
Payables 500 2,000
Receivables 2,000 2,000
Cash 500 –
Closing inventory – 6,000
Accrued expenses – 1,000
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 5
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
7.3 What was the trader’s profit for the year ended 31 December 2014?
A $1,300
B $2,700
C $6,700
D $7,700
7.4 What was the change in the above trader’s investment (in net assets) between 2013 and
2014?
A $2,000
B $2,700
C $3,000
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D $4,000
Question 8 ROMAN
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Dividends paid to shareholders
Salaries paid to partners
The following information relates to the first two months’ trading of Roman, who is in business as a
greengrocer. All transactions are on a cash basis.
5 February Received $300 from Denis as a loan repayable in two years’ time
7 February Purchased goods for $200
8 February Sold goods for $150
21 February Paid rent of $50
28 February Sold goods for $300.
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Required:
(a) Write up and close the relevant ledger accounts for the above transactions; (9 marks)
(b) Extract a list of account balances; (4 marks)
(c) Prepare a statement of profit or loss; (5 marks)
(d) Draft a statement of financial position. (4 marks)
(22 marks)
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STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Question 9 PETR
Petr commenced trading in his bakery on 5 April. All his transactions were on a cash basis, as follows:
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At 30 April Petr had $100 goods in hand.
Required:
(a) Write up, balance and close the relevant ledger accounts for the above transactions.
(8 marks)
(b)
(c) PL
Prepare the list of account balances at 30 April.
Prepare the statement of profit or loss for the month ended 30 April and a statement of
financial position at that date.
Question 10 GRIGORY
(9 marks)
(4 marks)
(21 marks)
You are given the following information on the first month’s trading of Grigory, who is in business as a
second-hand furniture dealer. All transactions are on a cash basis.
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1 January Grigory paid $5,000 into the business
2 January Bought a motor van for $600
3 January Bought goods for $1,300
4 January Received a loan from Sergei $1,000 repayable within twelve months
10 January Paid expenses on the motor van of $200
13 January Sold goods for $300
SA
Required:
(a) Write up the ledger accounts for the above transactions, including dates, descriptions
and balances. (11 marks)
(c) Prepare the statement of profit or loss for the month ended 31 January and a statement
of financial position at that date. (9 marks)
(24 marks)
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FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Question 11 DANA
The following information relates to the first two months’ trading of Dana, who is in business as a
hairdresser. All transactions are on a cash basis.
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30 April Receipts from customers $450.
Required:
(a)
(b)
(c)
(d)
PL
Write up and balance the ledger accounts for EACH month.
(4 marks)
(3 marks)
(7 marks)
(23 marks)
Question 12 A PATEL
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A Patel started business on 1 January and had the following monthly transactions:
8 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Required:
(b) Close the relevant ledger accounts as at 31 March writing up the income and
expenditure account. (5 marks)
(35 marks)
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Question 13 BOHM
Required:
7 January
9 January
10 January
11 January
12 January
13 January
14 January
PL
Purchased goods on credit from Dvorak
Some goods returned damaged to Dvorak
Paid Dvorak amount due
Sold goods on credit to Jovanovich
Jovanovich returned unsuitable goods
Sold goods for cash
Jovanovich settled his account.
1,000
100
300
50
300
The following information is available for the business of Ivan Tombs, a bookseller:
January
(1) Started business with $10,000 in business bank account
(2) Made purchases for $200 cash
SA
Required:
Show how these transactions would be recorded in the ledger accounts. Close the relevant
accounts.
(14 marks)
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FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Question 15 VIKTOR
Required:
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Write up and close the relevant ledger accounts, including trading account and income and
expenditure account, necessary to record the above transactions.
(7 marks)
Question 16 ANGELO
painters:
(1)
(2)
(3)
(4)
Pay $300 cash for shop rent
PL
The transactions described below concern the business of Angelo which retails biographies of famous
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STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Required:
(b) Write up the ledger accounts to reflect the double entries, recording credit transactions
in total accounts rather than individual accounts. (8 marks)
E
(e) Close the relevant accounts to an income and expenditure account in the general ledger.
(3 marks)
(f) Draft a statement of profit or loss and statement of financial position. (6 marks)
(40 marks)
Question 17 STEFAN
November:
1 November
3 November
5 November
PL
Stefan commenced trading on 1 November as a wine merchant. The following transactions relate to
Required:
(a) Write up and balance the relevant ledger accounts for the above transactions. (11 marks)
(c) Prepare a statement of profit or loss for the month ended 30 November and a statement
of financial position at that date. (8 marks)
(23 marks)
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FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Question 18 R RYBIN
On 1 December R Rybin started business with $5,000 in cash. He purchased fixtures and fittings for
$1,000 cash.
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10 December D Didnko 600
14 December E Ergo 800
29 December F Fesan 300
Cash sales for the month were $100. Other payments were:
$
7 December
10 December
20 December
Rent
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Electricity
Motor van
Stationery
On 31 December D Didnko settled his account in full, and Rybin paid Agladze and Buczak. On the
same date Rybin also bought a second-hand computer for $250 for use in the business, and withdrew
$100 from the business.
Required:
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(a) Write up the ledger accounts, recording credit transactions in the accounts of
individuals. (15 marks)
(c) Prepare the statement of profit or loss for the month ended 31 December and a
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(27 marks)
Question 19 NIXON
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STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
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14 January Paid wages 14
Bought goods for cash 75
15 January Paid Rich for balance owing on his account
20 January Bought for cash a new office desk 32
21 January Paid wages 17
Cash sales 110
Required:
(a)
23 January
28 January
31 January
Cash sales
Paid wages
Cash sales
PL
Paid office expenses
Harvey paid on account
(18 marks)
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(b) Extract a trial balance at 31 January. (4 marks)
(c) Prepare a statement of profit or loss for the month ended 31 January and a statement of
financial position at that date. (8 marks)
(30 marks)
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 13
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
20.2 Which of the following is the correct double entry for goods taken by a sole trader for
personal use?
A Dr Drawings
Cr Purchases
B Dr Drawings
Cr Sales
C Dr Drawings
Cr Inventory
D Dr Purchases
Cr Drawings
E
20.3 At the end of the year when ledger accounts have been closed, which one of the following
may have a credit balance?
20.4
D
B
C
D
PL
Income and expenditure account
Which one of the following errors should be detected by the extraction of a trial
balance?
Question 21 DAMIEN
Damien is a pet food wholesaler. His policy is to allow his credit customers a settlement discount of
3%. He receives from his suppliers, a discount of 5% if he settles their invoices within 30 days of
receipt and also occasionally receives a trade discount.
(iii) Was informed by his suppliers that he was eligible for a trade discount of 10%.
(iv) Received cash from Felix, who took advantage of the discount offered.
(v) Sent cash, in respect of the credit purchases made in March, to suppliers taking advantage of
the 5% discount offered.
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STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Required:
Question 22 RICARDO
Ricardo, a sole trader, had the following transactions for the month of June:
2 June Sold goods to Claire for $8,500 on credit; offered a 5% quick settlement
discount.
13 June Bought goods from Georgina for $12,000 on credit; Georgina offered a 7% quick
settlement discount.
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14 June Sold goods to Hywel for $9,000 after a 5% trade discount.
21 June Bought goods on credit for $4,500 from Andrew who offered a 2% quick
settlement discount.
22 June
24 June
25 June
(i)
(ii)
(i)
PL
Claire returned goods sold of $1,000.
Claire took advantage of Ricardo’s discount and paid the net amount due
after taking the discount offered.
(ii) Ricardo paid Georgina the amount due after deducting the discount
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offered.
27 June Ricardo paid Andrew in full, after deducting the discount offered.
Required:
Prepare the relevant ledger accounts to record the above transactions, extract a trial balance at
27 June and close the relevant ledger accounts.
SA
Your answer should clearly show transactions with individual customers and suppliers.
(15 marks)
23.1 Which of the following is the correct double entry for making a credit sale?
A Dr Cash
Cr Sales
B Dr Sales
Cr Trade receivables
C Dr Trade receivables
Cr Sales
D Dr Cash
Cr Trade receivables
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 15
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
23.3 A purchase has been recorded on the receipt of goods obtained on credit terms.
Which of the following is the correct double entry to record the subsequent return to the
supplier of these goods?
A Dr Trade payables
E
Cr Purchases
B Dr Trade payables
Cr Sales returns
C Dr Cash
Cr Trade payables
D
Question 24 DINO
Dr Purchases
PL
Cr Trade receivables
A new warehouse was acquired on 31 March 2014. On 21 April 2014, Dino received a water
M
usage demand for $1,000 for the 12 months to 31 March 2015. Payment was made, in full, on
30 April 2014.
An office extension was built. The water usage demand for the 12 months to 31 March 2016
was $1,600. Dino paid the full amount on 1 June 2015.
SA
Required:
(a) Write up the water usage ledger account for EACH of the two accounting years.
(6 marks)
(b) Assuming now that payments were made annually in arrears (i.e. $1,000 on 31 March
2015 and $1,600 on 31 March 2016), write up the water usage ledger account for each of
the two accounting years. (4 marks)
(10 marks)
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STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Question 25 A CREW
The following is an extract from the trial balance of A Crew at 31 December 2014:
Dr Cr
$ $
Stationery 560
Rent 900
Rates (local property tax) 380
Lighting and heating 590
Insurance 260
Wages and salaries 2,970
E
There was stationery still in hand at 31 December 2014 which had cost $15.
Rent of $300 for the last three months of 2014 had not been paid and no entry has been made in the
books at all for it.
Of the rates, $280 was for the year ended 31 March 2015. The remaining $100 was for the three
months ended 31 March 2014.
PL
Fuel had been delivered on 18 December 2014 at a cost of $15 and had been consumed before the end
of 2014. No invoice had been received for the $15 fuel in 2014 and no entry has been made in the
records of the business.
$70 of the insurance paid was in respect of insurance cover for the year 2015.
Nothing was owing to employees for wages and salaries at the close of 2014.
Required:
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Record the above information in the relevant accounts for the year ended 31 December 2014.
Close the accounts.
(8 marks)
Question 26 TOMASZ
Tomasz is in business as an antique dealer. The trial balance of his business at 1 January was as
SA
follows:
Dr Cr
$ $
Capital 5,000
Cash 4,200
Motor van 600
Trade payable – A 200
Trade receivable – B 300
Rent prepaid 100
–––––– ––––––
5,200 5,200
–––––– ––––––
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FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
At 31 March inventory was $700 and rent paid in advance amounted to $150.
Required:
E
(b) Prepare the statement of profit or loss for the period to 31 March and a statement of
financial position at that date. (7 marks)
(12 marks)
Question 27 PUSHKOVA
Revenue
Purchases
Inventory 1 May 2013
Salaries and wages
PL
The following list of account balances was extracted from the books of Pushkova at 30 April 2014:
Dr
$
12,556
3,776
2,447
Cr
$
18,955
(1) Expenses which have been prepaid – Rates $20; Insurance $35.
(2) Expenses which are owing – Motor expenses $56; Rent $24; Sundry expenses $26.
(3) Inventory $4,998.
18 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
1.1 A Although some types of partnership may have a separate legal entity status in certain
jurisdictions this is not a general feature.
1.2 B A partnership can usually raise more money than an individual. Risk of personal
bankruptcy also arises in a partnership and all partners are jointly liable for all
liabilities. There are few requirements for record-keeping for a sole trader (e.g. for
tax purposes) and this is less onerous than would be needed in partnership (e.g. to
determine profit share).
E
1.3 D Financial reporting concerns the presentation of financial statements including
disclosure in accordance with a financial reporting framework. It is wider than
accounting for transactions.
1.4 C Although a statement of cash flows is a financial statement (i.e. a report of historic
cash flow activities) a cash flow forecast is a management tool (e.g. to project future
finance requirements).
1.5 B
Revenue
$ $
25,000
Cost of sales
M
Opening inventory 1,500
Purchases 20,000
———
21,500
Less: Closing inventory (3,000)
——— (18,500)
———
Gross profit 6,500
SA
Less: Expenses
Administration 1,000
Wages 800
——— (1,800)
———
Profit for the year 4,700
———
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1001
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
$ $
Tangible non-current assets
Motor cars 2,800
Current assets
Inventory 3,000
Trade receivables 5,000
Cash in hand 100
———
8,100
———
Total assets 10,900
E
———
Capital account
Capital at 1 January 5,000
Retained earnings 4,700
———
9,700
Less: Drawings
Current liabilities
Bank overdraft
Trade payables
3,200
———
10,900
———
M
Answer 3 TOMAS MAXIM
$ $
Revenue 28,400
Less: Returns (200)
SA
———
28,200
Purchases 16,100
Less: Closing inventory (2,050)
——— (14,050)
———
Gross profit 14,150
Less: Expenses
Salaries 4,162
Rent 2,130
Insurance 174
General expenses 1,596
——— (8,062)
———
Profit for the year 6,088
———
1002 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
$ $
Tangible non-current assets
Motor van 1,700
Current assets
Inventory 2,050
Trade receivables 5,060
Cash (2,628 + 50) 2,678
———
9,788
———
Total assets 11,488
E
———
Capital account
Capital introduced 4,100
Retained earnings 6,088
———
10,188
Less: Drawings
Current liabilities
Trade payables
6,400
———
11,488
———
4.2 C Drawings are an appropriation of profit – they are not a financial obligation.
4.3 B Leased land and investments are tangible assets. Royalty receipts are income.
SA
4.5 B Installation costs are incurred in putting the asset into first use. Servicing costs are
revenue in nature. A manufacturer’s warranty is not a capital cost of an asset
acquired (but rather a prepayment for future possible repair costs). As the cars are
purchased for resale they are inventory items (i.e. revenue expenditure).
4.6 A Self-constructed assets are capitalised in the same way as if they had been purchased.
The manager’s salary, etc is clearly a revenue expense (relating to day-to-day
operations). Costs of repairs are expensed also. A market survey is a research cost
which must be expensed when incurred because of the uncertainty of future economic
benefits (more on this later).
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1003
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
5.1 A Not all procedures will be formal. An accounting system of itself does not ensure
efficient operations (although a sound accounting system will be necessary to this
objective). The prevention and detection of fraud and error is just one management
objective (and so not the sole objective of a sound accounting system). Accounting
records are just one aspect of an accounting system and may be manual.
5.2 B This is the objective concerning assets at an organisation level. (The other objectives
are subsidiary internal control objectives which contribute to the organisational
objective.)
E
5.3 D Whereas the journal is a book of original entry, ledgers and registers are additional,
subsidiary records.
(1)
system.
Introduction of capital
PL
sales invoice, goods despatch note and customer statement are all relevant to a sales
$ $
Cash 10,000 Capital 10,000
M
——— ———
(2) Purchase of Atari
$ $
Inventory 1,000 Capital 10,000
Cash 9,000
——— ———
10,000 10,000
SA
——— ———
(3) Purchase of Amstrad
$ $
Inventory 3,500 Capital 10,000
Cash 6,500
——— ———
10,000 10,000
——— ———
(4) Sale of Atari
$ $
Inventory 2,500 Capital 10,000
Cash 8,000 Profit 500
——— ———
10,500 10,500
––—— ———
1004 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
E
Cash 7,500
——— ———
10,200 10,200
——— ———
(7) Purchase of Compaq
$ $
(8)
Tangible non-current assets
Inventory
Cash
Sale of Amstrad
PL 200
6,500
3,500
———
10,200
———
$
Capital
Profit
10,000
———
200
10,200
———
$
Non-current assets 200 Capital 10,000
M
Inventory 4,000 Profit 950
Cash 6,750
——— ———
10,950 10,950
——— ———
(9) Drawings
$ $
SA
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1005
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
$ $
Tangible non-current assets 200 Capital, 1 May 10,550
Inventory (Compaq and IBM) 9,600 Profit 700
Cash (W) 850 ———
11,250
Less: Drawings (600)
——— ———
10,650 10,650
——— ———
WORKING
E
Cash
$
Balance at 1 May 6,350
Cash receipts $(4,500 + 1,800) 6,300
———
(c)
Balance at 31 May
PL
Less: Cash payments $(3,000 + 2,500 + 100 + 600 + 5,600)
———
850
$ $
6,300
Opening inventory 4,000
M
Purchases $(5,500 + 5,600) 11,100
———
15,100
Less: Closing inventory (9,600)
——— (5,500)
———
Gross profit 800
Less: Telephone expense (100)
SA
———
Profit for the period 700
———
1006 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
E
———
11,250
Less: Drawings (600)
———
Total capital 10,650
———
Item
7.1
7.2
Answer Justification
B
PL
Accruals concept underlies the basis of preparation of financial statements, not double
entry bookkeeping principles. Bookkeeping is based on the concept of a separate
business entity which may not be a separate legal entity (e.g. sole trader).
Net assets are increased by the introduction of capital and making profit. Drawings
are an appropriation of profit which reduce net assets.
M
7.3 B $
Opening net assets 5,000
Add: Profit (al fig) 2,700
Less: Drawings (700)
———
Closing net assets 7,000
———
SA
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1007
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Answer 8 ROMAN
$ $
1 Jan Capital a/c 350 15 Jan Purchases a/c 200
31 Jan Sales a/c 300 23 Jan Motor expenses a/c 40
31 Jan Balance c/d 410
—— ——
650 650
—— ——
E
1 Feb Balance b/d 410 7 Feb Purchases a/c 200
5 Feb Loan a/c (Denis) 300 21 Feb Rent a/c 50
8 Feb Sales a/c 150
28 Feb Sales a/c 300 28 Feb Balance c/d 910
——— ———
1,160 1,160
910
410
Capital a/c
$
1 Jan
31 Jan
Cash a/c
I & E a/c
———
350
60
$
—— ——
M
410 410
—— ——
1 Feb Balance b/d 410
28 Feb Balance c/d 610 28 Feb I & E a/c 200
—— ——
610 610
—— ——
SA
Loan a/c
$ $
28 Feb Balance c/d 300 5 Feb Cash a/c 300
—— ——
1 Mar Balance b/d 300
1008 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
$ $
23 Jan Cash a/c 40 31 Jan I & E a/c 40
— —
Purchases a/c
$ $
15 Jan Cash a/c 200 31 Jan Trading (or I & E) a/c 200
—— ——
E
7 Feb Cash a/c 200 28 Feb Trading (or I & E) a/c 200
—— ——
Rent a/c
$ $
21 Feb
31 Jan
Cash a/c
$
28 Feb I & E a/c
Sales a/c
300
——
28 Feb Trading (or I & E) a/c 450 8 Feb Cash a/c 150
M
28 Feb Cash a/c 300
—— ——
450 450
—— ——
31 January 28 February
SA
Dr Cr Dr Cr
$ $ $ $
Cash 410 910
Capital 350 410
Loan – 300
Motor expenses 40 –
Purchases 200 200
Rent – 50
Revenue 300 450
—— —— ——— ———
650 650 1,160 1,160
—— —— ——— ———
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1009
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
(c) Statements of profit or loss for the months ended 31 January and 28 February
31 January 28 February
$ $
Revenue 300 450
Less: Purchases (200) (200)
—— ——
Gross profit 100 250
Less: Expenses
Motor expenses (40)
Rent (50)
—— ——
Profit for the period 60 200
E
—— ——
31 January 28 February
$ $
Current asset
Cash
Capital
Capital b/f
Introduced
Add: Profit for month
Capital c/f
PL 410
——
–
350
——
60
410
910
——
410
–
200
——
610
Non-current liability
Loan – 300
M
—— ——
410 910
—— ——
Answer 9 PETR
$ $
5 Apr Capital a/c 300 7 Apr Purchases a/c 200
8 Apr Loan a/c 250 15 Apr Motor van a/c 150
20 Apr Revenue a/c 350 28 Apr Rent a/c 50
29 Apr Loan a/c 200
30 Apr Drawings a/c 60
30 Apr Balance c/d 240
—— ——
900 900
—— ——
1 May Balance b/d 240
1010 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Capital a/c
$ $
30 Apr Drawings a/c 60 5 Apr Bank a/c 300
30 Apr Balance c/d 440 30 Apr I & E a/c (profit) 200
—— ——
500 500
—— ——
1 May Balance b/d 440
Tutorial note: Because Petr is a sole trader there is no requirement to distinguish a fixed
amount of capital introduced and retained earnings. However, separate accounts could be
E
kept.
Purchases a/c
$ $
7 Apr Bank a/c 200 30 Apr Trading a/c 200
—— ——
29 Apr
30 Apr
Bank a/c
Balance c/d
PL 200
——
50
250
——
$
Loan a/c
——
250
——
M
1 May Balance b/d 50
$ $
15 Apr Bank a/c 150 30 Apr Balance c/d 150
—— ——
SA
Rent a/c
$ $
28 Apr Bank a/c 50 30 Apr I & E a/c 50
— —
Revenue a/c
$ $
30 Apr Trading a/c 350 20 Apr Bank a/c 350
—— ——
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1011
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Drawings a/c
$ $
30 Apr Bank a/c 60 30 Apr Capital a/c 60
— —
E
Loan 50
Motor van 150
Rent 50
Revenue 350
Drawings 60
—— ——
(c)
Revenue
Purchases
PL
Statement of profit or loss for the month ended 30 April
200
$
(100)
——
700
——
$
350
stage in respect of closing inventory. The double entry is a credit to cost of sales and a debit to
the inventory account. The balance on the inventory account will then appear in the statement
of financial position.
1012 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
E
Introduced 300
Add: Profit for the period 200
——
500
Less: Drawings (60)
——
Current liabilities
Loan
Answer 10 GRIGORY
PL 440
——
50
490
——
Capital a/c
$ $
31 Jan Balance c/d 5,000 1 Jan Bank a/c 5,000
——— ———
5,000 5,000
——— ———
1 Feb Balance b/d 5,000
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1013
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
$ $
2 Jan Bank a/c 600 31 Jan Balance c/d 600
—— ——
1 Feb Balance b/d 600
Purchases a/c
$ $
3 Jan Bank a/c 1,300 31 Jan Balance c/d 1,300
E
——— ———
1 Feb Balance b/d 1,300
Loan a/c
$ $
27 Jan
31 Jan
Bank a/c
Balance c/d
PL———
———
350
650
1,000
4 Jan Bank a/c
1,000
———
650
M
$ $
10 Jan Bank a/c 200 31 Jan Balance c/d 200
—— ——
1 Feb Balance b/d 200
Revenue a/c
SA
$ $
31 Jan Balance c/d 800 13 Jan Bank a/c 300
20 Jan Bank a/c 500
—— ——
800 800
—— ——
$ $
24 Jan Bank a/c 150 31 Jan Balance c/d 150
—— ——
1 Feb Balance b/d 150
1014 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Drawings a/c
$ $
30 Jan Bank a/c 175 31 Jan Balance c/d 175
—— ——
1 Feb Balance b/d 175
E
Capital 5,000
Motor van 600
Purchases 1,300
Loan 650
Motor van expenses 200
Revenue 800
(c)
Storage expenses
Drawings
PL
Statement of profit or loss for the month ended 31 January
Revenue
———
———
$
150
175
6,450
———
6,450
———
$
800
Purchases 1,300
M
Less: Closing inventory (800)
———
Cost of goods sold (500)
——
Gross profit 300
Less: Expenses
Motor van expenses 200
Storage expenses 150
SA
—— (350)
——
Loss for the period (50)
——
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1015
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
E
At 1 January 5,000
Less: Loss for the period (50)
———
4,950
Less: Drawings (175)
———
Current liability
Loan
Answer 11 DANA
(a)
PL
Cash at bank a/c
4,775
———
650
5,425
———
M
$ $
2 Mar Capital a/c 525 16 Mar Purchases a/c 300
29 Mar Revenue a/c 450 24 Mar Sundry expenses a/c 60
31 Mar Balance c/d 615
—— ——
975 975
—— ——
SA
1016 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Capital a/c
$ $
31 Mar Balance c/d 525 2 Mar Bank a/c 525
—— ——
Loan a/c
E
$ $
30 Apr Balance c/d 450 6 Apr Bank a/c 450
—— ——
1 May Balance b/d 450
60
——
60
——
$
31 Mar Balance c/d
60
——
$ $
16 Mar Bank a/c 300 31 Mar Balance c/d 300
—— ——
$ $
22 Apr Bank a/c 75 30 Apr Balance c/d 75
— ——
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1017
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Revenue a/c
$ $
31 Mar Balance c/d 450 29 Mar Bank a/c 450
—— ——
E
1 May Balance c/d 1,125
31 Mar 30 Apr
$ $ $ $
Cash at bank
Capital
Loan
Sundry expenses
Purchases
Establishment costs
Revenue
PL 615
——
60
300
–
975
——
525
–
450
——
975
——
1,365
60
600
75
——— ———
2,100
——— ———
525
450
1,125
2,100
(c) Statement of profit or loss for the two months ended 30 April
M
$ $
Sales 1,125
Less: Purchases (600)
——
Gross profit 525
Less: Expenses
SA
Miscellaneous expenses 60
Establishment costs 75
——
(135)
——
Profit for the period 390
——
1018 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
31 Mar 30 Apr
$ $
Current assets
Cash 615 1,365
—— ———
E
Non-current liabilities
Loan – 450
—— ———
615 1,365
—— ———
Answer 12 PATEL
1 Jan
2 Jan
5 Jan
Capital a/c
Loan a/c
Revenue a/c
PL Cash at bank a/c
10,000
4,000
3,000
———
$
3 Jan
4 Jan
6 Jan
31 Jan
Motor van a/c
Purchases a/c
Motor expenses a/c
Balance c/d
$
900
2,300
250
13,550
———
17,000 17,000
M
——— ———
16,750 16,750
——— ———
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1019
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Capital a/c
$ $
31 Jan Balance c/d 10,000 1 Jan Bank a/c 10,000
——— ———
E
——— ———
Loan a/c
200
3,800
———
4,000
———
2 Jan Bank a/c
———
4,000
———
$
4,000
M
31 Mar Balance c/d 3,800 1 Mar Balance b/d 3,800
——— ———
$ $
SA
1020 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Purchases a/c
$ $
4 Jan Bank a/c $2,300 31 Jan Balance c/d $2,300
——— ——
E
1 Mar Balance b/d 5,520
1 Mar Bank a/c 2,900 31 Mar I & E a/c 8,420
——— ———
8,420 8,420
——— ———
31 Jan
28 Feb
Balance c/d
Balance c/d
PL 3,000
———
6,200
———
Revenue a/c
$
5 Jan
1 Feb
5 Feb
Bank a/c
Balance b/d
Bank a/c
———
$
3,000
3,000
3,200
———
6,200 6,200
——— ———
M
1 Mar Balance b/d 6,200
31 Mar I & E a/c 8,825 2 Mar Bank a/c 2,625
——— ———
8,825 8,825
——— ———
$ $
6 Jan Bank a/c 250 31 Jan Balance c/d 250
—— ——
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1021
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Drawings a/c
$ $
2 Feb Bank a/c 300
6 Feb Purchases a/c 280 28 Feb Balance c/d 580
—— ——
580 580
—— ——
E
$ $
3 Feb Bank a/c 160 28 Feb Balance c/d 160
—— ——
160
——
$
225
Rent a/c
$
225
——
† Alternatively may be recorded in a separate trading a/c and the gross profit transferred to the I
& E a/c.
1022 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Inventory a/c
$ $
31 Mar Transfer I & E a/c 1,170 31 Mar Balance c/d 1,170
——— ———
Tutorial note: Inventory only needs to be brought into the ledger a/cs at a period end when I
& E a/cs are closed and profit for the period is determined. It was not specifically asked for but
is shown for completeness.
E
31 January 28 February
31 March*
Dr Cr Dr Dr Cr Cr
$ $ $ $ $ $
Cash at bank 13,550 12,590
12,090
Capital 10,000 10,00010,000
Loan 4,000 3,800 3,800
Motor van
Purchases
Sales
Motor expenses
Drawings
Office equipment
Rent
PL 900
2,300
250
3,000
250
580
160
900
8,420
6,200
250
580
160
225
8,825
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1023
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
E
13,550 13,310 13,260
——— ——— ———
Total assets 14,450 14,370 14,320
——— ——— ———
Capital account
At start of month
Add: Retained earnings
Less: Drawings
Non-current liabilities
Loan
PL 10,000
———
———
450
10,450
–
10,450
2,800
10,000
1,150
———
11,150
(580)
———
10,570
2,600
10,000
1,100
———
11,100
(580)
———
10,520
2,600
Current liabilities
Loan 1,200 1,200 1,200
M
——— ——— ———
14,450 14,370 14,320
——— ——— ———
Tutorial note: With the exception of inventory (and retained earnings) all the amounts are as
per the trial balance.
SA
Answer 13 BOHM
Bank a/c
$ $
1 Jan Capital a/c 5,000 5 Jan Fixtures and fittings a/c 2,000
13 Jan Sales a/c 300 10 Jan Dvorak’s a/c 900
14 Jan Jovanovich’s a/c 250 14 Jan Balance c/d 2,650
——— ———
5,550 5,550
——— ———
1024 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Capital a/c
$ $
14 Jan Balance c/d 5,000 1 Jan Bank a/c 5,000
——— ———
$ $
5 Jan Bank a/c 2,000 14 Jan Balance c/d 2,000
E
——— ———
Purchases a/c
7 Jan
14 Jan
Dvorak’s a/c
Trading a/c
PL 1,000
———
$
14 Jan
$
100
——
9 Jan
Trading a/c
Dvorak’s a/c
$
1,000
———
$
100
——
M
Tutorial note: Purchases returns may alternatively be credited to the purchases account and the net
amount transferred to the trading a/c.
Dvorak’s a/c
$ $
9 Jan Purchases returns a/c 100 7 Jan Purchases a/c 1,000
10 Jan Bank a/c 900
SA
——— ———
1,000 1,000
——— ———
Sales a/c
$ $
14 Jan Trading a/c 600 11 Jan Jovanovich’s a/c 300
13 Jan Bank a/c 300
—— ——
600 600
—— ——
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1025
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
$ $
12 Jan Jovanovich’s a/c 50 14 Jan Trading a/c 50
—— ——
Jovanovich’s a/c
$ $
11 Jan Sales a/c 300 12 Jan Sales returns a/c 50
14 Jan Bank a/c 250
—— ——
E
300 300
—— ——
Tutorial note: Sales returns may alternatively be debited to the sales revenue a/c and the net amount
transferred to the trading a/c.
(1)
(7)
(14)
Capital a/c
Doyle’s a/c
PL $
10,000
Sales a/c (cash sale to Greene) 1,000
100
Bank a/c
(2)
(4)
(5)
(8)
(10)
Purchases a/c
Rent a/c
Stationery a/c
Moore’s a/c
Stationery a/c
$
200
1,000
60
140
40
(11) Motor expenses 150
(12) Petros’s a/c 1,000
M
(13) Drawings 300
Balance c/d 8,210
——— ———
11,100 11,100
——— ———
Capital a/c
$ $
Balance c/d 10,000 (1) Bank 10,000
——— ———
1026 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Purchases a/c
$ $
(2) Bank a/c 200 Trading a/c 600
(3) Moore’s a/c 400
—— ——
600 600
—— ——
Moore’s a/c
$ $
E
(8) Bank a/c 140 (3) Purchases a/c 400
Balance c/d 260
—— ——
400 400
—— ——
Rent a/c
I & E a/c
$
260
1,000
———
Stationery a/c
M
$ $
(5) Bank a/c 60 I & E a/c 100
(10) Bank a/c 40
—— ——
100 100
–— ——
SA
Petros’ a/c
$ $
(12) Bank a/c 1,000 (6) Van a/c 4,000
Balance c/d 3,000
——— ———
4,000 4,000
——— ———
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1027
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Van a/c
$ $
(6) Petros’s a/c 4,000 Balance c/d 4,000
——— ———
Sales a/c
$ $
Trading a/c 1,140 (7) Bank a/c 1,000
E
(9) Doyle’s a/c 140
——— ———
1,140 1,140
——— ———
140
140
–—
$
(14) Bank a/c
Balance c/d
$
100
——
40
140
——
Balance b/d 40
M
Motor expenses a/c
$ $
(11) Bank a/c 150 I & E a/c 150
—— ——
Drawings a/c
SA
$ $
(13) Bank a/c 300 Balance c/d 300
—— ——
1028 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Answer 15 VIKTOR
Bank a/c
$ $
(1) Capital a/c 1,000 (5) Rent a/c 40
(7) Sales a/c 420 (3) Electricity 100
(4) Motor car a/c 200
(6) Drawings 60
Balance c/d 1,020
——— ———
1,420 1,420
——— ———
E
Balance b/d 1,020
Capital a/c
Drawings a/c
Balance c/d PL ———
60
1,170
1,230
———
$
Bank a/c
Transfer I & E a/c (profit)
Balance b/d
———
$
1,000
230
1,230
———
1,170
Purchases a/c
M
$ $
(2) ABC 400 Trading a/c 400
—— ——
ABC a/c
SA
$ $
Balance c/d 400 (2) Purchases a/c 400
—— ——
Tutorial note: Alternatively profit can be carried down in the I & E a/c or transferred to retained
earnings or other “accumulated profit” a/c.
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1029
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Sales a/c
$ $
Trading a/c 770 (5) XYZ 350
(7) Bank a/c 420
—— ——
770 770
—— ——
Electricity a/c
$ $
E
(3) Bank a/c 100 I & E a/c 100
—— ——
Rent a/c
$
I & E a/c
$
(4) Bank a/c 200 Balance c/d 200
—— ——
M
XYZ a/c
$ $
(5) Sales a/c 350 Balance c/d 350
—— ——
SA
Drawings a/c
$ $
(6) Bank a/c 60 Transfer to capital a/c 60
—— ——
1030 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Trading a/c
$ $
Purchases 400 Sales 770
Transfer I & E a/c (gross profit) 370
—— ——
770 770
—— ——
$ $
E
Electricity 100 Transfer trading a/c 370
Rent 40
Transfer capital a/c (profit) 230
—— ——
370 370
Double entries
Tutorial note: Requirement specified the accounts rather than the statement of profit or loss.
Answer 16 ANGELO
(a)
5,000
$ $
——
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1031
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
$ $
(10) Dr Telephone a/c 75
Cr Trade payables a/c 75
E
(14) Dr Trade payables a/c 75
Cr Cash a/c 75
(16)
(17)
Dr
Dr
Cr
Cash a/c
Cr
Sales a/c
Cash a/c
300
1,800
300
1,800
$ $
M
(1) Capital 5,000 (2) Rent expense 300
(4) Sales 900 (3) Purchases (Cézanne) 2,000
(7) Sales 2,250 (5) Motor vehicle 2,000
(8) Rental income 100 (6) Purchases (Dali) 1,500
(11) Sales 300 (12) Payables (Bookworm) 500
(13) Receivables (Salvador) 600 (14) Payables (telephone) 75
(15) Receivables (Quinn) 475 (16) Payables (Bookworm) 300
SA
Capital a/c
$ $
Balance c/d 5,000 (1) Cash 5,000
_____ _____
5,000 5,000
_____ _____
Balance b/d 5,000
1032 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
$ $
(2) Cash 300 Balance c/d 300
____ ____
300 300
____ ____
Balance b/d 300 Transfer to I & E a/c 300
Purchases a/c
$ $
E
(3) Cash (Cézanne) 2,000
(6) Cash (Dali) 1,500
(9) Payables (Bookworm) 1,000 Balance c/d 4,500
_____ _____
4,500 4,500
Balance b/d
PL _____
4,500
$
Sales a/c
Transfer to I & E a/c
(4)
(7)
(11)
Cash
Cash
Cash/Receivables
_____
4,500
$
900
2,250
1,800
Balance c/d 6,750 (17) Cash 1,800
M
_____ _____
6,750 6,750
_____ _____
Transfer to I & E a/c 6,750 Balance b/d 6,750
$ $
(5) Cash 2,000 Balance c/d 2,000
_____ _____
2,000 2,000
_____ _____
Balance b/d 2,000
$ $
Balance c/d 100 (8) Cash 100
____ ____
100 100
____ ___
Transfer to I & E a/c 100 Balance b/d 100
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1033
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
$ $
(11) Sales 1,500 (13) Cash (Salvador) 600
(15) Cash (Quinn) 475
Balance c/d 425
_____ _____
1,500 1,500
_____ _____
Balance b/d 425
E
$ $
(12) Cash (Bookworm) 500 (9) Purchases (El Greco) 1,000
(14) Cash (Telephone) 75 (10) Telephone 75
(16) Cash (Bookworm) 300
Balance c/d 200
PL _____
1,075
_____
Balance b/d
Telephone a/c
$
_____
1,075
_____
200
$
(10) Trade payables 75 Balance c/d 75
M
___ ___
75 75
___ ___
Balance b/d 75 Transfer to I & E a/c 75
$ $
Purchases 4,500 Sales 6,750
Rent expense 300 Rental income 100
Telephone 75
Balance (= Profit) 1,975
_____ _____
6,850 6,850
_____ _____
1034 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
E
______ ______
12,050 12,050
——— ———
Sales
Less:
Gross profit
Sundry income
Cost of goods sold
Purchases PL 4,500
______
2,250
100
_____
$
6,750
2,350
Less: Other expenses
Rent 300
M
Telephone 75
____
375
———
Profit for the period 1,975
———
SA
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1035
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Current assets
Trade receivables 425
Cash 4,750
______
5,175
———
Total assets 7,175
E
———
$
Capital 5,000
Profit for the year 1,975
_____
Proprietor’s interest
Current liabilities
Trade payables
Answer 17 STEFAN
(a)
PL Bank a/c
———
6,975
200
7,175
———
M
$ $
1 Nov Capital a/c 3,000 7 Nov Fixtures and fittings a/c 560
12 Nov Sales a/c 400 23 Nov Drawings a/c 100
29 Nov A’s a/c 400 25 Nov Y’s a/c 300
28 Nov X’s a/c 400
30 Nov Balance c/d 2,440
——— ———
SA
3,800 3,800
——— ———
Purchases a/c
$ $
3 Nov X’s a/c 400 30 Nov Drawings a/c 20
5 Nov Y’s a/c 350 30 Nov Balance c/d 730
—— ——
750 750
—— ——
1036 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
X’s a/c
$ $
28 Nov Bank a/c 400 3 Nov Purchases a/c 400
—— ——
Y’s a/c
$ $
25 Nov Bank a/c 300 5 Nov Purchases a/c 350
30 Nov Balance c/d 50
—— ——
E
350 350
—— ——
560
30 Nov Balance c/d
Sales a/c
$
560
——
$ $
M
8 Nov A’s a/c 500
30 Nov Balance c/d 900 12 Nov Bank a/c 400
—— ——
900 900
—— ——
A’s a/c
$ $
8 Nov Sales a/c 500 29 Nov Bank a/c 400
30 Nov Balance c/d 100
—— ——
500 500
—— ——
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1037
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Drawings a/c
$ $
23 Nov Bank a/c 100
30 Nov Purchases a/c 20 30 Nov Balance c/d 120
—— ——
120 120
—— ——
Capital a/c
E
$ $
1 Nov Bank a/c 3,000
30 Nov Balance c/d 3,000
——— ———
3,000 3,000
(b)
Cash at bank
Capital
Purchases
PL
Trial balance at 30 November
———
Dr
$
2,440
730
———
3,000
Cr
$
3,000
$ $
Sales 900
Purchases 730
Less: Closing inventory (250)
—— (480)
——
Gross profit 420
——
1038 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
E
Capital account
Capital introduced 3,000
Add: Profit for the month 420
———
3,420
Less: Drawings
Current liabilities
Trade payables
———
50
3,350
———
Answer 18 R RYBIN
M
(a) Bank a/c
$ $
1 Dec Capital a/c 5,000 1 Dec Fixtures and fittings a/c 1,000
31 Dec Didnko’s a/c 600 7 Dec Rent a/c 40
31 Dec Sales a/c 100 10 Dec Electricity 150
10 Dec Motor van a/c 1,500
SA
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1039
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Agladze’s a/c
$ $
31 Dec Bank a/c 400 9 Dec Purchases a/c 400
—— ——
Buczak’s a/c
$ $
31 Dec Bank a/c 300 13 Dec Purchases a/c 300
—— ——
E
Coke’s a/c
$ $
31 Dec Balance c/d 140 20 Dec Purchases a/c 140
—— ——
$
600
——
1 Jan Balance b/d
Drawings a/c
140
$
600
——
$ $
M
31 Dec Bank a/c 100 31 Dec Balance c/d 100
—— ——
1 Jan Balance b/d 100
Ergo’s a/c
SA
$ $
14 Dec Sales a/c 800 31 Dec Balance c/d 800
—— ——
1 Jan Balance b/d 800
Electricity a/c
$ $
10 Dec Bank a/c 150 31 Dec Balance c/d 150
—— ——
1 Jan Balance b/d 150
1040 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
$ $
31 Dec Bank a/c 250 31 Dec Balance c/d 250
—— ——
1 Jan Balance b/d 250
$ $
1 Dec Bank a/c 1,000 31 Dec Balance c/d 1,000
E
——— ———
1 Jan Balance b/d 1,000
Fesan’s a/c
$ $
29 Dec Sales a/c
1,500
300
$
31 Dec Balance c/d
$
1,500
——— ———
M
1 Dec Balance b/d 1,500
Purchases a/c
$ $
9 Dec Agladze’s a/c 400
13 Dec Buczak’s a/c 300
SA
Rent a/c
$ $
7 Dec Bank a/c 40 31 Dec Balance c/d 40
—— ——
1 Jan Balance b/d 40
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1041
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Sales a/c
$ $
10 Dec Didnko’s a/c 600
14 Dec Ergo’s a/c 800
29 Dec Fesan’s a/c 300
31 Dec Balance c/d 1,800 31 Dec Bank a/c 100
——— ———
1,800 1,800
——— –——
1 Jan Balance b/d 1,800
E
Stationery a/c
$ $
20 Dec Bank a/c 200 31 Dec Balance c/d 200
—— ——
1 Jan Balance b/d
Capital a/c
$
5,000
———
1 Dec Bank a/c
5,000
M
(b) Trial balance at 31 December
Dr Cr
$ $
Cash at bank 1,760
Capital 5,000
Drawings 100
Coke 140
SA
Ergo 800
Electricity 150
Office equipment 250
Fixtures and fittings 1,000
Fesan 300
Motor van 1,500
Purchases 840
Rent 40
Sales 1,800
Stationery 200
——— ———
6,940 6,940
——— ———
1042 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
E
—— (390)
———
Profit for the period 720
———
Non-current assets
Fixtures and fittings
Office equipment
Motor van
Current assets
Inventory
Trade receivables (800 + 300)
PL $
150
1,100
$
1,000
250
1,500
———
2,750
Capital account
Capital introduced 5,000
SA
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1043
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Answer 19 NIXON
$ $
1 Jan Balance b/d 343 5 Jan Wages a/c 12
7 Jan Smith’s a/c 18 9 Jan Max’s a/c 21
11 Jan Sales a/c 64 14 Jan Wages a/c 14
21 Jan Sales a/c 110 14 Jan Purchases a/c 75
23 Jan Harvey’s a/c 25 15 Jan Rich’s a/c 162
28 Jan Sales a/c 84 20 Jan Fixtures and fittings a/c 32
31 Jan Sales a/c 30 21 Jan Wages a/c 17
23 Jan Office expenses a/c 3
E
28 Jan Wages a/c 15
31 Jan Balance c/d 323
—— ——
674 674
—— ——
1 Feb
31 Jan
Balance b/d
Balance c/d
PL 323
Capital a/c
1,091
———
1 Jan
31 Jan
Balance b/d
I & E a/c
1,049
———
42
$
1,091 1,091
——— ———
M
1 Feb Balance b/d 1,091
$ $
SA
1044 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Sales a/c
$ $
31 Jan Trading a/c 412 2 Jan Harvey’s a/c 124
11 Jan Bank a/c 64
21 Jan Bank a/c 110
28 Jan Bank a/c 84
31 Jan Bank a/c 30
—— ——
412 412
—— ——
E
Wages a/c
$ $
5 Jan Bank a/c 12 31 Jan I & E a/c 58
14 Jan Bank a/c 14
21 Jan
28 Jan
Bank a/c
Bank a/c
PL 17
15
——
58
——
Purchases a/c
$
——
58
——
$
5 Jan Rich’s a/c 150 31 Jan Trading a/c 225
M
14 Jan Bank a/c 75
—— ——
225 225
—— ——
$ $
23 Jan Bank a/c 3 31 Jan I & E a/c 3
— —
$ $
1 Jan Balance b/d 18 7 Jan Bank a/c 18
— —
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1045
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
$ $
1 Jan Balance b/d 39 23 Jan Bank a/c 25
2 Jan Sales a/c 124 31 Jan Balance c/d 138
—— ——
163 163
—— ——
E
$ $
1 Jan Balance b/d 26 31 Jan Balance c/d 26
—– ——
$
162
——
162
——
1 Jan
5 Jan
Balance b/d
Purchases a/c
——
$
12
150
162
——
M
Payables – Max’s a/c
$ $
9 Jan Bank a/c 21 1 Jan Balance b/d 21
—— ——
SA
Inventory a/c
$ $
1 Jan Balance b/d 458 31 Jan Trading a/c 458
—— ——
1046 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
(b) Trial balance (extracted before the ledger accounts were closed)
Dr Cr
$ $
Cash at bank 323
Capital 1,049
Fixtures and fittings 230
Sales 412
Wages 58
Purchases 225
Office expenses 3
Receivables
Harvey 138
E
Moon 26
Inventory 458
——— ———
1,461 1,461
——— ———
(c)
Revenue
Opening inventory
Purchases
458
225
——
683
(374)
——
$
412
——
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1047
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
E
At 1 January 1,049
Add: Profit for the period 42
———
1,091
———
Answer 20 MCQs LEDGER ACCOUNTING
Item
20.1
20.2
Answer Justification
A
PL
Purchases will be reduced to reflect the removal of goods (at cost). No sale is
recognised. Double-entries are not made to the inventory account for transactions
involving goods. Inventory is effectively unsold purchases and dealt with as a period-
end adjustment (see later).
20.3 B A bank account may be overdrawn and hence a liability. Sales revenue is an income
item which is closed to the income and expenditure account (so does not have a
M
balance) which in turn is closed with a transfer to retained earnings (so does not have
a balance). The balance on the inventory account at the end of the year must
represent an asset (i.e. debit balance).
20.4 D Of the errors suggested only a transposition error will create a difference between
credit and debit entries.
SA
20.5 B Errors of omission are not detected by the trial balance. It can be extracted at any
time. It does not prove the arithmetic accuracy of the books (e.g. as well as omissions
there could be compensating errors). Financial statements cannot be prepared directly
from a trial balance as further adjustments will be required.
Answer 21 DAMIEN
Discounts a/c
$ $
Discount allowed to Felix Discount received from suppliers
(3% $500) 15 (5% $260 – settlement only) 13
I & E a/c 2
—— ——
15 15
—— ——
1048 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
Answer 22 RICARDO
Revenue a/c
$ $
2 Jun Claire – receivable a/c 8,500
14 Jun Hywel – receivable a/c 9,000
20 Jun Cash a/c 6,000
27 Jun Trading a/c 28,500 24 Jun Mandy – receivable a/c 5,000
——— ———
28,500 28,500
——— ———
E
Sales returns
$ $
22 Jun Claire – receivable 1,000 27 Jun Trading a/c 1,000
——— ———
13 Jun
21 Jun
Georgina – payable a/c
Andrew – payable a/c
PL
Tutorial note: Sales returns may alternatively be debited to the sales revenue a/c.
$
12,000
4,500
———
16,500
Purchases a/c
16,500
———
16,500
——— ———
M
Cash a/c
$ $
20 Jun Sales a/c 6,000 25 Jun Georgina – payable 11,160
24 Jun Claire – receivable 7,125 27 Jun Andrew – payable 4,410
25 Jun Hywel – receivable 9,000 27 Jun Balance c/d 6,555
——— ———
SA
22,125 22,125
——— ———
Bal b/d 6,555
$ $
24 Jun Claire – receivable 375 27 Jun I & E a/c 375
—— ——
375 375
—— ——
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1049
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
$ $
25 Jun Georgina – payable 840
27 Jun I & E a/c 930 27 Jun Andrew – payable 90
—— ——
930 930
—— ——
$ $
2 Jun Sales a/c 8,500 22 Jun Sales returns 1,000
E
24 Jun Cash a/c 7,125
24 Jun Discounts allowed a/c 375
——— ———
8,500 8,500
——— ———
———
$
9,000 25 Jun
$
Cash a/c
$
9,000
———
$
24 Jun Sales a/c 5,000 27 Jun Balance c/d 5,000
M
——— ———
Balance b/d 5,000
$ $
25 Jun Cash a/c 11,160 13 Jun Purchases a/c 12,000
SA
$ $
27 Jun Cash a/c 4,410 21 Jun Purchases a/c 4,500
27 Jun Discounts received a/c 90
——— ———
4,500 4,500
——— ———
1050 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
E
Answer 23 MCQs CREDIT TRANSACTIONS
23.1 C
23.2
23.3
Answer 24 DINO
A
A
PL
A settlement discount is given for prompt payment so it is not recognised until
payment is received (when the discount allowed is recognised as expense). When a
trade discount is given a sale is recorded at the net amount.
Both purchases and trade payables will be reduced initially. Only if the goods had
been paid for will there be a subsequent recording of a cash refund received (or a
subsequent payment to the same supplier may be reduced accordingly).
WORKINGS
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1051
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
(b)
Water usage a/c
$ $
31.12.2014 Balance c/d 750 I & E a/c 750 †
_____ _____
750 750
_____ _____
31.3.2015 Cash 1,000 1.1.2015 Balance b/d 750
31.12.2015 Balance c/d 1,200 I & E a/c 1,450 †
_____ _____
2,200 2,200
E
_____ _____
1.1.2016 Balance b/d 1,200
† Tutorial note: The I & E a/c charges must be the same as determined in (a)!
Answer 25 A CREW
$
560
——
560
31 Dec
31 Dec
I & E a/c
Balance c/d
$
545
——
15
560
—— ——
M
1 Jan Balance b/d 15
Rent a/c
$ $
31 Dec Balance per TB 900 31 Dec I & E a/c 1,200
31 Dec Balance c/d 300
SA
——— ———
1,200 1,200
——— ———
Rates a/c
$ $
31 Dec Balance per TB 380 31 Dec I & E a/c 310
31 Dec Balance c/d 70
—— ——
380 380
—— ——
1 Jan Balance b/d 70
1052 ©2014 DeVry/Becker Educational Development Corp. All rights reserved.
STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
$ $
31 Dec Balance per TB 590 31 Dec I & E a/c 605
31 Dec Balance c/d 15
—— ——
605 605
—— ——
1 Jan Balance b/d 15
Insurance a/c
E
$ $
31 Dec Balance per TB 260 31 Dec I & E a/c 190
31 Dec Balance c/d 70
—— ——
260 260
—— ——
1 Jan Balance b/d
$
31 Dec I & E a/c
Tutorial note: As an alternative to c/d on the individual expense a/cs they may be transferred to
$
2,970
———
$ $
31 Dec Stationery 15
31 Dec Rates 70
31 Dec Insurance 70 31 Dec Balance c/d 155
—— ——
SA
155 155
—— ——
1 Jan Balance b/d 155
$ $
31 Dec Rent 300
31 Dec Balance c/d 315 31 Dec Light and heat 15
—— ——
315 315
—— ——
1 Jan Balance b/d 315
©2014 DeVry/Becker Educational Development Corp. All rights reserved. 1053
FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
Answer 26 TOMASZ
E
Drawings 500
Motor running expenses 350
——— ———
8,200 8,200
——— ———
WORKING
Balance b/d
Revenue a/c
PL ———
$
4,200
3,000
Bank a/c
Purchases a/c
Drawings a/c
Motor running expenses a/c
Rent a/c
Balance c/d
2,000
500
350
250
4,100
———
$
7,200 7,200
——— ———
M
(b) Statement of profit or loss for the three months ended 31 March
$ $
Revenue 3,000
Purchases 2,000
Less: Closing inventory (700)
——— (1,300)
SA
———
Gross profit 1,700
Less: Expenses
Motor running expenses 350
Rent (350 – 150) 200
——— (550)
———
Profit for the period 1,150
———
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STUDY QUESTION BANK – FINANCIAL ACCOUNTING (F3/FFA)
E
———
Capital account
At 1 January 5,000
Add: Profit for the period 1,150
———
Less: Drawings
Current liabilities
Trade payables
———
200
5,850
———
Answer 27 PUSHKOVA
M
Statement of profit or loss for the year ended 30 April 2014
$ $
Revenue 18,955
Opening inventory 3,776
Purchases 12,556
———
16,332
SA
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FINANCIAL ACCOUNTING (F3/FFA) – STUDY QUESTION BANK
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PL
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