Reserves
Which of the following is a distributable reserve?
- Aasset replacement reserve
- Basset revaluation reserve
- Ccapital redemption reserve
- Dshare premium account
A sales journal total of $7 160 was entered in the sales account as $7 640.
Which entries are required to correct the error?
| Debit | Credit | |
|---|---|---|
| A | sales account $480 | debtors account $480 |
| B | debtors account $480 | sales account $480 |
| C | sales account $480 | suspense account $480 |
| D | suspense account $480 | sales account $480 |
A business purchases a machine for $5 200. Its estimated useful life is 5 years and will have a scrap value of $1 400.
What is the net book value of the machine at the end of year two?
The following relates to a swimming club for the year ending 31 December 2012:
| Number of club members | 100 |
| Annual subscriptions per member | $16 |
| Subscriptions accrued at 1 January 2012 | $300 |
| Subscriptions accrued at 31 December 2012 | $180 |
Subscriptions received in 2012 were
A business' accounts showed a gross profit of $16 250 for the year. After drafting the financial statements, it was found that opening inventory had been overstated by $1 200 and the closing inventory had been understated by $1 700.
What is the corrected gross profit for the year?
Goods worth $7 000 were taken for private use by the proprietor.
Which accounting entries are correct?
| Debit | Credit | |
|---|---|---|
| A | drawings $7 000 | closing stock $7 000 |
| B | drawings $7 000 | purchases $7 000 |
| C | general expenses $7 000 | drawings $7 000 |
| D | general expenses $7 000 | purchases $7 000 |
A company's trial balance shows debit balances exceeding credit balances by $1 590.
What could explain this?
The fair value of a company's net assets is $600 000. Mutombeni Ltd acquired the business as a going concern for $550 000.
The difference between the valuation of net assets and purchase price is
Rudo, Tapiwa and Vuso are in partnership sharing profits and losses in the ratio 3:2:1. Rudo is allowed a salary of $20 000 annually. Tapiwa has made a loan to the partnership at an interest of $10 000 per annum. Profit for the year is $300 000.
What is Vuso's share of profits?
The following are annual results for a company's three departments X, Y and Z.
| X $ | Y $ | Z $ | |
|---|---|---|---|
| Sales | 400 000 | 480 000 | 640 000 |
| Less Marginal costs | 260 000 | 300 000 | 200 000 |
| Fixed costs apportioned | 160 000 | 180 000 | 260 000 |
| Net Profit(Loss) | (20 000) | - | 180 000 |
Fixed costs will not decrease if any department is closed.
What decision can the company make from the above results?
A company had the following inventory transactions for the month of September:
September 3 Purchased 100 units of inventory at $3 per unit
14 Purchased 200 units at $4,50 per unit
28 Sold 140 units
29 Purchased 124 units at $5 per unit
What is the value of inventory at 30 September based on average cost method?
In the books of a company, the following information was extracted:
| Buildings at cost | $250 000 |
| Provision for depreciation on buildings | $100 000 |
The buildings were revalued at $360 000.
Which entries are required in the company's books to record the revaluation?
| Buildings at cost account | Provision for depreciation | Revaluation reserve | |
|---|---|---|---|
| A | debit $110 000 | debit $100 000 | credit $210 000 |
| B | debit $110 000 | debit $100 000 | credit $360 000 |
| C | debit $110 000 | none | credit $210 000 |
| D | debit $150 000 | debit $100 000 | credit $360 000 |
A manufacturer has inventories of
1. finished goods,
2. work in progress,
3. raw materials.
Which inventory will appear in the income statement?
A company purchases a motor vehicle that cost $10 000 and expects to earn a gross profit margin of 1/3.
What is the company's mark up?
A company made a bonus issue of 2 ordinary shares for every 4 held.
What is the effect on the share capital and total shareholders' funds?
| Share capital | Total shareholders' funds | |
|---|---|---|
| A | no change | increased by 50% |
| B | increased by 50% | no change |
| C | increased by 50% | increased by 50% |
| D | increased by 50% | decreased by 50% |
Extracts from the books of Pungu, a sole trader whose business' inventory was stolen, show the following information:
| $ | |
|---|---|
| Sales | 320 000 |
| Purchases | 312 000 |
| Salvaged inventory | 5 000 |
There were no opening inventories and Pungu's mark up is 25%.
How much inventory was stolen?
Chihera Ltd decided to sell its business whose net assets amounted to $228 000. The purchase consideration was fixed at $240 000 to be settled by:
150 000 ordinary shares of $0,50 each at a premium of $0,25
10% debentures of $30 000 and the balance in cash
The cash to be received is
The following summarised information has been taken from the statement of financial position of a partnership:
| $ | |
|---|---|
| Non current assets | 84 000 |
| Current accounts (debit) | 10 000 |
| Capital accounts | 72 000 |
| Current liabilities | 14 000 |
| Non current liabilities | 30 000 |
What is the amount of current assets?
The issued share capital of a company was 600 000 ordinary shares of $1 each and 100 000 6% cumulative preference shares of $1 each fully paid.
If the company did not make profit in the year, which statement is correct?
The following information relates to a company:
| 31 August 2012 | 31 August 2013 | |
|---|---|---|
| Accounts receivable (net of provision for credit losses) | $34 200 | |
| Accounts receivable control account balance | $38 000 |
The business calculates provision for credit losses at 5% of its accounts receivables.
How much provision for credit losses should be recorded in the income statement for the year ended 31 August 2013?
The following information appeared in the statement of financial position of a company:
| $ | |
|---|---|
| Authorised share capital | 20 000 |
| Issued share capital: 4 000 ordinary shares of $1 each | 4 000 |
| Reserves | |
| Profit and loss | 2 000 |
| General reserve | 800 |
| Share premium | 4 000 |
What is the maximum number of shares that may be legally issued?
The following information relates to the business of Moyo, a sole trader, on 31 December 2013:
| $ | |
|---|---|
| Total purchases for the year | 195 000 |
| Returns inwards | 6 000 |
| Returns outwards | 4 000 |
| Inventory withdrawn for personal use | 10 000 |
Unsold inventory on 31 December 2013 was $2 000 more than on 1 January 2013.
What is the cost of sales?
An extract from the statement of financial position shows the following:
| $ | |
|---|---|
| 8% convertible loan stock | 800 000 |
| Ordinary shares of $1 each | 2 000 000 |
| Profit and loss | (280 000) |
| Assets | 3 600 000 |
| Current liabilities | 1 080 000 |
All convertible loan stock is converted to ordinary shares in the proportion of $1 loan stock to one new ordinary share.
What will be the net asset value per share after the conversion?
A non-current asset which cost $200 000 and has accumulated depreciation of $90 000 is sold for $60 000.
What is the profit or loss on disposal?
The following was extracted from a company's financial statements:
| $ | |
|---|---|
| Profit for the year before finance charges | 400 000 |
| Issued share capital | 800 000 |
| Reserves | 320 000 |
| Non-current liabilities | 1 040 000 |
The return on total capital employed for the company is
An extract from the statement of financial position of a company at 31 December 2013 was as follows:
| $ | |
|---|---|
| Ordinary share capital at $1 per share | 700 000 |
| Profit and loss | 30 000 |
| 7% debentures repayable 2015 | 50 000 |
| Accounts payable | 18 000 |
| Owings | 2 000 |
| Prepayments | 6 700 |
| Bank overdraft | 40 000 |
Current liabilities at 31 December 2013 are
Using the information below, which stakeholder would experience the greatest degree of risk in times of falling profits?
| Firm X $ | Firm Y $ | |
|---|---|---|
| Ordinary share capital | 1 000 | 1 200 |
| 14% debentures | 800 | 400 |
The company had the following budgeted information:
| Selling price per unit | $3,00 |
| Total costs per unit | $2,40 |
| Budgeted production and sales (units) | 12 000 |
Marginal costs are 30% of total costs.
What are the total budgeted fixed overheads?
A business' contribution/sales ratio is 25%. Its sales are $750 000 and fixed costs are $250 000.
What is the profit or loss?
The table shows costs at three activity levels.
| Activity level | 130 units | 180 units | 200 units |
|---|---|---|---|
| Total cost | $31 200 | $39 200 | $42 400 |
The fixed cost is
A company receives payments for 40% of its sales in the month of sale, 30% in the following month and 30% two months after the month of sale.
| $ | |
|---|---|
| January | 360 000 |
| February | 480 000 |
| March | 540 000 |
| April | 440 000 |
The total cash received in April is
The issued share capital of a company is as follows:
500 000 4% preference shares of $1,00 each fully paid
2 000 000 ordinary shares of $0,50 each fully paid
The company's net profit after interest and tax is $200 000.
What is the dividend per share?
A company has the following costs:
| Raw materials | $4 per unit |
| Direct labour | $3 per unit |
| Stepped costs of $6 000 for every batch up to 10 000 units |
What is the cost of producing 25 000 units?
A firm manufactures chairs at a variable cost of $9,60 and annual fixed costs of $14 400.
How many chairs should be sold at a selling price of $12 to make a profit of $16 800?
What do the following break-even charts show regarding the profitability and risk attached to products X and Y?
| Profitability | Risk | |
|---|---|---|
| A | Y is greater | Y is greater |
| B | X is greater | X is less |
| C | Y is less | Y is less |
| D | X is less | X is greater |
Which of the following pair of costing methods is the most suitable for make or buy decision and fixing a selling price?
| Make or buy decision | Fixing a selling price | |
|---|---|---|
| A | absorption | absorption |
| B | absorption | marginal |
| C | marginal | absorption |
| D | marginal | marginal |
Sit the paper here to see which ones you got right. Danho explains every question, keeps your score, and works without a connection.