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ACFI1301 Sample Questions for Accounting Exercise

SAMPLE QUESTIONS

Simone begins a business selling hats.  Simone employs you to be her financial accountant.

Answer the following questions, each question can be answered independently and has no relevance to other questions.

Question 1:  Accounting terminology

Identify the missing word to complete the text below:

“An asset is a resource __________ by the entity as a result of past events and from which future economic benefits are expected to flow to the entity”. 1 mark

Question 2:  Accounting for inventory

a) Simone purchases inventory totalling £4,500. What journal entry would Simone use to record this transaction? Assume this inventory was bought on credit (i.e. cash will be paid later). 2 marks

b) At the end of the accounting period, Simone’s closing inventory is £2,100. The total purchases in the period amounted to £12,000 and she had no inventory at the start of the accounting period. Calculate the Cost of Sales.3 marks

c) Simone noticed that a box of hats she purchased for £120 has been damaged and she can only sell these hats for £90. How should the inventory be valued according to the accounting standard IAS 2?1 mark

Question 3:  Accounting for Theory

Explain the matching concept. 2 marks

Question 4:  Accounting for Depreciation (straight line)

Simone bought some shop fittings when she opened her shop.  Calculate the annual depreciation using the straight-line method:

A shelf cost £5000.  After 5 years, at the end of its life, it will be worth £1000. 4 marks

Question 5:  Ledger Accounts

The opening balance in the petty cash account is £500. This is also the float amount. The following transactions crossed the petty cash account.

£

Paid for stationary                          20

Paid for fuel                          70

Paid for milk for the staff kitchen     5

Returned some stationary                   8

Paid for a small invoice               150

How much does the petty cash account need to be topped up by? 6 marks

Question 6:  Accounting for Cost of Sales/Trading Account

Based on the above extract, what is the Gross Profit of the business? 4 Marks

Question 7:  Double Entry Accounting and Journals

Assume the financial year end of Simone’s business is 31 October 2020. The following adjustments need to be made at year end. What is the double entry?

2 x 4 marks

Question 8:  Producing a subsection of the Statement of Financial Position

Here is a list of some of the ledger balances.

Calculate the non-current asset value. 4 marks

Question 9:  Bank Reconciliation

Simone’s cash book balance at 31 October 2020 was a debit balance of £1240. You compare the transactions below to the Bank Statement.

£

Calculate the bank statement balance for Simone at 31 October 2020.

4 marks

Question 10:  Accounting Equation

Simone injected £12,000 into her hat business at the start of the venture. Her business generated a profit for the year of £62,400. Simone drew £12,000 worth of goods in the same financial period. What is the equity in Simone’s business at the end of the accounting period?

3 marks