Depreciation and disclosure
What should be disclosed by way of a note in the financial statements for each class of depreciable asset?
- Adate of acquisition
- Bestimated proceeds of disposal
- Cestimated net residual value
- Duseful economic lives
A company has an authorised share capital of 800 000 ordinary shares of $1,00 each. The net profit after taxation for the year is $150 000. The market value of each share is $3,00.
What is the price/earnings ratio?
The table shows the capital structure of a company.
| $ | |
|---|---|
| Ordinary share capital | 300 000 |
| Share premium | 600 000 |
| Capital redemption reserve | 100 000 |
| Retained profits | 500 000 |
| 10% Debentures | 500 000 |
If the operating profit is $300 000, what is the return on shareholders' funds?
A company's balance sheet extract is given below.
| $ | |
|---|---|
| Share capital and reserves | |
| 100 000 Ordinary shares of $1 each | 100 000 |
| Profit and loss account | (38 000) |
| 62 000 |
The directors have decided to write off the debit balance in the profit and loss account and to make a provision for depreciation on fixed assets of $12 000.
The shareholders have agreed to exchange their shares for new ordinary shares of $0,50 each.
How many shares will be issued to the shareholders?
The table shows information taken from the records of a sole trader at 31 December 2006.
| $ | |
|---|---|
| Balance as per bank statement | 720 000 Dr |
| Uncredited cheques | 4 200 000 |
| Unpresented cheques | 1 750 000 |
What is the balance in the cash book at 31 December 2006?
A business provides the information below.
| 30 June 2002 $ | 30 June 2003 $ | |
|---|---|---|
| Motor vehicles (at cost) | 460 000 | 550 000 |
| Accumulated depreciation | 170 000 | 196 000 |
Information for the year ended 30 June 2003 is as follows:
| $ | |
|---|---|
| Depreciation charged in the profit and loss account | 50 000 |
| Purchase of motor vehicle | 120 000 |
| Loss on sale of motor vehicle | 2 000 |
How much was received from the sale of the motor vehicle?
Purchases and sales for Andy for the month of May 2006 were as follows:
May 1 purchased 160 units at $40 each
8 purchased 150 units at $41 each
15 sold 200 units at $55 each
29 purchased 60 units at $47 each
What is the value of each unit of stock at 31 May based on AVCO?
In the final accounts of a sole trader, the closing stock has been over-valued by $8 000 and an uninsured theft of stock costing $10 000 has not been taken into account.
What is the effect of correcting these errors?
| Gross profit | Net profit | |
|---|---|---|
| A | increased by $2 000 | reduced by $8 000 |
| B | increased by $2 000 | reduced by $18 000 |
| C | reduced by $2 000 | reduced by $2 000 |
| D | reduced by $2 000 | reduced by $18 000 |
The following are extracts from a company's trial balance at 31 December 2006:
| Debit | Credit | |
|---|---|---|
| Creditors control account | $10 420 | $135 042 |
| Bank account | $14 000 | |
| Cash | $9 000 |
There are no other current liabilities.
Which total for current liabilities should be disclosed in the company's financial statement at 31 December 2006?
A business purchased goods for $100 000 less 20% trade discount and was allowed 5% cash discount for prompt payment.
What amount was entered in the purchases journal?
A company's balance sheet includes the following:
| $ | |
|---|---|
| Issued share capital | |
| 4 million ordinary shares of $1 each | 4 000 000 |
| Reserves | |
| Share premium | 4 000 000 |
| Capital redemption reserve | 1 000 000 |
| Profit and loss | 2 000 000 |
What is the maximum number of bonus shares that could legally be issued?
Sato and Tato are partners sharing profits and losses in the ratio of 2:1 respectively. They admit Vato as a partner and the new profit and loss sharing ratio of Sato, Tato and Vato is 2 : 2 : 1 respectively.
Goodwill is valued at $120 000 but is not to be recorded in the accounts.
Which entries will be made in the partner's capital accounts?
| Sato | Tato | Vato | |
|---|---|---|---|
| A | Dr $32 000 | Cr $8 000 | Cr $24 000 |
| B | Dr $48 000 | Dr $48 000 | Cr $96 000 |
| C | Cr $32 000 | Dr $8 000 | Dr $24 000 |
| D | Cr $48 000 | Cr $48 000 | Dr $96 000 |
An extract from Nhanga Limited's profit and loss account for the year ended 30 April 2006 was as follows:
| $ | |
|---|---|
| Ordinary dividend paid and proposed | 350 000 |
| Preference dividend paid and proposed | 120 000 |
The issued share capital at 30 April 2006 consisted of:
| $ | |
|---|---|
| Ordinary shares of $10 each | 4 000 000 |
| 8% Preference shares of $5 each | 1 500 000 |
The market price of the ordinary shares at 30 April 2006 was $30 per share.
What is the dividend yield?
The current liabilities of a business total $400 000. The current ratio is 2,55 : 1 and the quick ratio 0,9 : 1.
What is the figure for stock?
A building cost $400 000 some years ago. At 31 December 2005 its accumulated depreciation was $50 000. On that date it was revalued to $600 000.
What will be the balance on the revaluation reserve?
The following information is for a business which lost all its stock in a fire on 10 June 2005:
| $ | |
|---|---|
| Stock on 30 May 2005 | 1 300 000 |
| Sales for the period 1 - 9 June 2005 | 192 000 |
| Purchases for the period 1 - 9 June 2005 | 150 000 |
What was the value of stock on 9 June 2005, if the business makes a margin of 25%.
The purchases ledger control account for the year showed the following:
| $ | |
|---|---|
| Opening balances: debit | 8 000 |
| Opening balances: credit | 40 000 |
| Suppliers' invoices | 90 000 |
| Discounts received | 1 000 |
| Credit notes received | 3 000 |
| Sales ledger control | 10 000 |
| Closing balances: debit | nil |
| Closing balances: credit | 46 000 |
How much cash did the company pay its creditors during the year?
The difference on a trial balance has been entered in a suspense account.
It was then found that rent received of $700 had been debited to the rent payable account.
Which entry corrects the error?
| rent received account | rent-payable account | suspense account | |
|---|---|---|---|
| A | Cr $700 | Cr $700 | Dr $1 400 |
| B | Cr $700 | Dr 1 400 | Cr $700 |
| C | Cr $1 400 | Dr $700 | Dr $700 |
| D | Dr $700 | Dr $700 | Cr $1 400 |
Sopeng prepares her accounts annually to 30 June. She pays an annual rent of $36 000 and makes the payments quarterly in advance on 1 June, 1 September, 1 December and 1 March.
Which amount should be included in the balance sheet at 30 June 2006?
The following are extracts from the accounts of a company for the years ended 30 June 2005 and 2006:
| 2005 $ | 2006 $ | |
|---|---|---|
| Retained profit carried forward | 100 000 | 140 000 |
| Dividends paid and proposed | 80 000 | 90 000 |
| Transferred to general reserve | 200 000 | 200 000 |
| Interest payable on debentures | 60 000 | 72 000 |
| Taxation | 70 000 | 76 000 |
What was the operating profit for the year ended 30 June 2006?
A company redeems 100 000 $1 redeemable preference shares at a premium of $0,50 per share. The shares were originally issued at par. No new issue of shares was made to finance the redemption.
What is the effect of the redemption on the profit and loss account and the capital redemption reserve?
| profit and loss account | capital redemption reserve | |
|---|---|---|
| A | decreased by $100 000 | increased by $100 000 |
| B | decreased by $100 000 | increased by $150 000 |
| C | decreased by $150 000 | increased by $100 000 |
| D | decreased by $150 000 | increased by $150 000 |
Moyo and Tembo agree to sell their partnership with net assets valued at $420 000 to a limited company.
The goodwill is $100 000 and the purchase consideration is made up of
$120 000 cash
$160 000 debentures
360 000 ordinary shares of $0,50 each
What is the share premium?
A limited company has an authorised share capital of $900 000 in $1,00 ordinary shares. The issued share capital is $600 000. It makes a 1 for 3 rights issue at $2,00 per share which is fully taken up.
What is the balance on the share capital account after the rights issue?
The cost of production for Choga Limited comprised direct materials and direct labour. At the end of a production period the following variances are calculated:
| $ | |
|---|---|
| Direct material usage variance | 1 800 adverse |
| Direct material price variance | 1 500 favourable |
| Direct labour efficiency variance | 900 favourable |
| Direct labour rate variance | 1 000 adverse |
If the actual cost of production was $30 440, what was the standard cost?
A project has an IRR of 13% and the firm's cost of capital is 15%.
At the cost of capital, the NPV will be
A company uses a predetermined rate of $6 per machine hour to absorb production overhead. Each unit of product manufactured requires 2 machine hours.
The following information is available for the month of October:
| Actual production overhead | $643 200 |
| Over-absorbed production overhead | $33 600 |
What was the actual output of the product in October?
The following budgets have been prepared:
| Production volume | 200 000 units | 210 000 units |
|---|---|---|
| $ | $ | |
| Direct material | 360 000 | 378 000 |
| Direct labour | 430 000 | 451 500 |
| Overhead | 520 000 | 531 000 |
What would be the budgeted production cost per unit for 220 000 units?
A company has forecast the following sales in units for the first three months of next year:
| Units | |
|---|---|
| January | 4 000 |
| February | 4 200 |
| March | 4 800 |
The opening stock in January was 600 units. The company requires that stock at the end of each month be equal to half of the sales for the following month.
How many units must be produced in February?
The following information relates to a project whose cost of capital is 10% per annum:
| Present value $ | |
|---|---|
| Initial outlay | (1 000 000) |
| Receipts | 3 411 900 |
| Variable costs | (947 750) |
| Fixed costs | (1 326 850) |
| Net present value | 137 300 |
Which item would make the project unacceptable if it were 10% worse than the budget?
Sit the paper here to see which ones you got right. Danho explains every question, keeps your score, and works without a connection.