ACCA F3 Revision Mock - Answers J12

ACCA

Paper F3

Financial Accounting

June 2012

Revision Mock – Answers

To gain maximum benefit, do not refer to these answers until you have completed the revision mock questions and submitted them for marking.

ACCA F3: FINANCIAL ACCOUNTING

2 KAPLAN PUBLISHING

© Kaplan Financial Limited, 2012

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REVISION MOCK ANSWERS

KAPLAN PUBLISHING 3

1 C

Dividends received and proceeds of sale of a non-current asset are cash inflows. The rest of the items are non cash items.

2 B

$ Overdraft per bank statement (7,700) Add: Unpresented cheques (18,300) Less: Lodgements/deposits credited 30,600 –––––– Bank balance per cash book (positive) 4,600 ––––––

3 B

$ Total rent received during the year 902,400 Add: 1/8/20X8 rent received in advance 27,600 Less: 31/7/20X9 rent received in advance (61,300) Less: 1/8/20X8 rent in arrears (41,700) Add: 31/7/20X9 rent in arrears 33,500 ––––––– Total rent receivable for the year ended 31/7/20X9 860,500 –––––––

4 C

$ Opening receivables 26,000 Credit sales 300,000 Payments from credit customers (295,000) Irrecoverable debts written off during the year (6,800) Further irrecoverable debts written off (2,600) –––––– Closing receivables 21,600 ––––––

Closing allowance 10% × $21,600 2,160

Opening allowance (1,860) –––––– Increase in allowance 300 Irrecoverable debts − written off during the year 6,800 − discovered at the year end 2,600 –––––– Total irrecoverable debt expense 9,700 ––––––


4 KAPLAN PUBLISHING

5 C

(($2,170,000 – $682,000) / $2,170,000) * 100 = 68.6%

6 D

Receivables

Bal b/d 45,300 Discounts allowed 3,500 Dishonoured cheques 4,800 Sales returns 2,800 Credit sales 523,720 Bank (balance) 518,800

––––––– Bal c/d 48,720

––––––– 573,820

––––––– 573,820

––––––– Bal b/d 48,720

7 A

$

Assets held all year (280,000 − 48,000 – 18,000) × 20%) = 42,800

1/11/20X6 Disposals (48,000 × 2/12 × 20%) = 1,600

1/3/20X7 Disposal (18,000 × 6/12 × 20%) = 1,800

Assets acquired

1/1/20X7 (60,000 × 20% × 8/12) = 8,000

1/3/20X7 (*30,000 × 20% × 6/12) = 3,000

–––––– 57,200 ––––––

*Part exchange allowance plus cash paid ($18,000 + $12,000)

8 B

($600,000 – $475,000) / $475,000) * 100

9 A

$ Value of inventory at 8 August 17,800 Less: Purchases at cost (5,400)

Add: Sales at cost $8,160 × 100/120 6,800

–––––– Value of inventory at cost 19,200 ––––––


KAPLAN PUBLISHING 5

10 B

Sales tax account

Bank (part payment on account to the tax authority)

20,800

Bal b/d (amount owing to the tax authority)

45,800

Purchases (input tax) 564,000 Sales (output tax) 587,500 Purchases returns (sales tax) 19,975 Bal c/d 68,475

–––––––

––––––– 653,275

––––––– 653,275

––––––– Bal b/d 68,475

11 C

$ Current year's income tax estimate 76,000 Less: Overprovision of previous year’s income tax (80,000 – 77,000) (3,000) ––––––– Total income tax charge $73,000 –––––––

12 $15,000

Fair Value of consideration $120,000 Fair value of NCI $45,000 ––––––– $165,000 Fair value of NA at acquisition ($150,000) ––––––– Goodwill $15,000

13 B

(Trade payables / Credit purchases) * 365

($35,000 / $210,000 – $20,000) * 365 = 67.2 days

Sales $200,000 COS Opening inventory $20,000 Purchases (Bal fig) $210,000 Closing Inventory ($35,000) ––––––– ($195,000) ––––––– Profit $5,000


6 KAPLAN PUBLISHING

14 $4,300

$3,150 + $1,250 – $ 100 = $4,300

($1,000 / 125 *25) * 50% = $100

15 D

The bank statements and the general ledger are not books of prime entry.

16 C

IAS 16 gives guidance on property, plant and equipment.

IAS 38 gives guidance on intangible assets.

IAS 2 gives guidance on inventory valuation. Inventory is a current asset.

IAS 10 gives guidance on events after the reporting/balance sheet date.

17 B

Payables ledger control account

Total individual payables balances

Balances b/f $18,000 $18,200 (i) Invoice omitted $100 $100 (ii) Undercast PDB $200 − (iii) Debit balances omitted − ($100) ––––––– ––––––– Corrected balances c/f $18,300 $18,200

18 C

Proposed dividends after the year-end are not included in the financial statements according to IAS 10. The rest of the items are all included in the statement of changes in equity.

19 $5,991 (debit)

Suspense a/c

$ $ Bal b/d (derived) 5,991 (i) Rent ($3,000 × 2) 6,000

(iii) Payables ($98 – $89) 9 –––––

–––––

6,000 –––––

6,000 –––––

(ii) The omission of credit sales would not have affected the suspense account.


KAPLAN PUBLISHING 7

20 D

$ Disposal proceeds 13,000 Cost of machine sold (year ended 31/12/20X5) 20,000

Depreciation charge 20% × 20,000 (y/e 31/12/20X5) (4,000)

–––––– 16,000

Depreciation charge 20% × 16,000 (y/e 31/12/20X6) (3,200)

–––––– Net book value as at 31/12/20X6 (12,800) –––––– Profit on disposal 200 ––––––

21 A

$4,000 / 100* 25 = $1,000

25% still in inventory, $250 unrealised profit.

NB: As it is margin sales = 100%, cost of sales 75% and profit 25%

22 A

The revaluation reserve of $900,000 will be the difference between the revalued amount ($1,800,000) and net book value ($900,000). The revaluation reserve account will be credited with $900,000. The accumulated depreciation account will be debited by $300,000. The cost account will be debited by $600,000.

$ Dr Cost 600,000 Dr Accumulated depreciation 300,000 Cr Revaluation reserve 900,000

23 Assets − Liabilities = Capital

$ Cash 2,000 Buildings 80,000 Receivables 15,000 Inventory 21,000 Payables (20,000) Bank overdraft (5,000) –––––– Capital 93,000 ––––––


8 KAPLAN PUBLISHING

24 A

This is incorrect: IAS 8 permits a company to change its policies and estimates if it makes the accounts more relevant to their circumstances. This could be caused due to changes in accounting standards, the business environment or the internal company environment.

25 C

$ Profit for the year 250,000 + Depreciation charges 28,000 − Loan repaid (50,000) − Payments for non-current assets (90,000) + Issue of shares 100,000 − Increase in inventories (18,000) ––––––– Increase in cash and bank 220,000 –––––––

26 C

$ Retained profit for the year ($105,000 – $55,000) 50,000 Dividends 4,000 Taxation 16,000

Debenture interest payable(10% × $70,000) 7,000 –––––––

Profit before interest and tax 77,000 –––––––

27 D

Acid Test Ratio (Quick Ratio) is a liquidity ratio.

28 0.99

26.4 / 26.7

Asset turnover * Operating profit margin = ROCE

Rearrange

ROCE / Operating profit margin = Asset turnover

29 D

(A) is incorrect since development expenditure may have to be capitalised if IAS 38 conditions are satisfied.

IAS 10 states that only dividends proposed before the year end should be accrued in the financial statements.

IAS 37 states that contingent liabilities should be provided if the likelihood is probable/possible.


KAPLAN PUBLISHING 9

30 A

$ $ Sales 800,000 Opening inventory 60,000 Purchases 780,000 Returns outwards (12,000) Carriage inwards 4,500 Goods withdrawn by the owner (1,600) Closing inventory (62,000) ––––––– Cost of sales 768,900 (768,900) ––––––– ––––––– Gross profit 31,100 –––––––

31 D

Max $50,000 Ruby post acquisition reserves ($20,000-$15,000) = $5,000 ––––––– Consolidated $55,000

32 A

Closing inventory 100 + 550 – 400 + 720 – 530 = 440 units @$2.70 = $1,188

33 C

Opening development costs 720,000 Development costs incurred during the year 120,000 Total development costs 840,000 Development costs amortised to the statement of comprehensive

income $840,000/4years × 3/12 (1/4/20X7 to 30/6/20X7) (52,500)

––––––– Closing development cost taken to the statement of financial position 785,500

34 A

Bank account

$ $ Receipt from customer 400 Bal b/d 550 Bank charges 80 Bal c/d 230

–––

–––– 630

–––– 630

–––– Bal b/d 230


10 KAPLAN PUBLISHING

$ Bank statement balance (positive balance on statement = credit) 210 Add: Bank error 60 Less: Unpresented cheques (800) Add: Lodgements/deposits credited 300 ––––– Bank overdraft per cash book (230) –––––

35 B

SOCIE SOFP $ $

Preference dividend (20% × $10,000) 2,000

Ordinary dividend declared before the year end

(5c × 100,000) 5,000 5,000

––––– ––––– 7,000 5,000 ––––– –––––

Ordinary dividends declared after the year end will not be in the financial statements but will be disclosed as per IAS 10 Events After the Reporting Date.

36 D

(ii) A rights issue of $120,000.

Plus (iv) A receipt of $130,000 8% loan notes.

Less (iii) A repayment of $80,000 10% loan notes.

Resulting in a total net cash inflow of $170,000.

The bonus issue is not a cash flow.

37 C

$ Receivables at 1/9/20X6 540,000 Credit sales 2,500,000 Payment from credit customers (2,485,000) –––––––– 555,000 Less: Irrecoverable debts written off (55,000) Less: Specific allowance (10,000) –––––––– 490,000

Less: Closing allowance for receivables (10% × $490,000) (49,000)

–––––––– Receivables at 31/8/20X7 441,000 ––––––––


KAPLAN PUBLISHING 11

38 C

39 A

Fair value of consideration $900,000 Fair value of NVI at acquisition $325,000 –––––––– $1,225,000 Less Fair value of net assets at acquisition ($880,000) –––––––– Goodwill $345,000

40 B

41 C

Payables Ledger Control Account

Cash paid to suppliers 348,000 Bal b/d 35,800 Discounts received 28,000 Credit purchases 400,000 Sales ledger contra 14,000 Returns outwards 5,800 Bal c/d 40,000

–––––––

––––––– 435,800

––––––– 435,800

––––––– Bal b/d 40,000

42 D

Last year’s proposed dividends $60,000

This year’s interim dividends (100,000 − 65,000) $35,000 –––––––

Total dividends paid $95,000 –––––––

Alternatively: Opening proposed dividends $60,000 Add: Dividends for the year $100,000 Less: Closing proposed dividends ($65,000)

––––––– Total dividends paid $95,000

–––––––



43 C

Product A $530 Product B $1,400 Product C $296

–––––– Total value $2,226

––––––

NB: Storage should not be included. It doesn’t affect product C since NRV is still lower.

44 B

The opening suspense account will be $14,644 credit ($42,333 − $27,689).

The correcting entry in B will be:

Dr Cash $1,000

Cr Suspense $1,000

The suspense account would therefore increase.

A and C have no effect on the suspense account.

D would reduce the difference on the suspense account.

45 A

The sales returns has been overstated thus needs to be reduced in both the sales returns and the sales ledger control account.

46 C

$ Opening inventory 20,000 Purchases 170,000 Purchase returns (3,500) Carriage inwards 600 Goods withdrawn by the owner (700) Closing inventory (18,000)

––––––– Cost of sales 168,400

–––––––

47 D

The following is incorrect in:

A − A credit entry decreases profit.

B − A credit entry decreases liabilities.

C − A debit entry increases profit.


KAPLAN PUBLISHING 13

48 A

49 B

Statement of comprehensive income:

Old rent cost $24,000 per annum

New rent cost $24,000 × 110% = $26,400 per annum

1.1.X6 – 30.6.X6 24,000 × 6/12 $12,000

1.7.X6 – 31.12.X6 26,400 × 6/12 $13,200 –––––––

$25,200 –––––––

Statement of financial position:

Rent

Bal b/d 750 Bank 25,700 I&E a/c 25,200 −

–––––– Bal c/d (β) 1,250

–––––– 26,450

–––––– 26,450

–––––– Bal b/d 1,250

50 D

Since it is highly likely that the claim will be successful a full provision must be made.

ACCA F3 Revision Mock - Answers J12

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