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CIMA BA3 - Fundamentals of financial accounting

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Total 393 questions

Refer to the exhibit.

Jordan has the following assets and liabilities at 1 January:

What is the capital balance at 1 January?

A.

$38,000

B.

$14,000

C.

$22,000

D.

$18,000

What will be the effect on the financial statements if the closing inventory figure is decreased?

A.

An increase in cost of sales, an increase in gross profit and a decrease in the inventory figure in the statement of financial position.

B.

A decrease in cost of sales, a decrease in gross profit and a decrease in the inventory figure in the statement of financial position.

C.

A decrease in cost of sales, an increase in gross profit and a decrease in the inventory figure in the statement of financial position.

D.

An increase in cost of sales, a decrease in gross profit and a decrease in the inventory figure in the statement of financial position.

The external auditor seeks to provide an opinion on whether the accounts show a true and fair view

What is the international term for 'true and fair view'?

A.

Going concern

B.

Prudence

C.

Fair presentation

D.

Completeness

A company has a year end of 31 December. Rent of $12,000 was paid on 1 October in year 1 to cover the period to 30 September year 2 and on 1 October year 2 $16,000 was paid for the following year

The figure for rent payable that should be shown in the income statement for the year 2 will be

Cost of goods sold for a manufacturing company is the total of

A.

prime costs + production overheads + opening work in progress - closing work in progress + opening inventories of finished goods - closing inventories of finished goods

B.

prime costs + production overheads + opening inventories of raw materials - closing inventories of raw materials + opening work in progress - closing work in progress

C.

prime costs + production overheads - opening work in progress + closing work in progress - opening inventories of finished goods + closing inventories of finished goods

D.

prime costs + production overheads + opening inventories of raw materials - closing inventories of raw materials + opening work in progress - closing work in progress + opening inventories of finished goods - closing inventories of finished goods

Refer to the Exhibit.

At the beginning of the month, an organization had opening inventory of 30 units of a product, valued at £3.00 each. During the month, it had inventory movements, occurring on the following dates:

Using the FIFO method of inventory valuation, the closing inventory at the end of the month was:

Give your answer to 2 decimal places.

Which FOUR of the following should be categorised as a DEBIT (DR) when filling out a T-account?

A.

Increase in expenses

B.

Increase in income

C.

Increase in capital

D.

Increase in assets

E.

Decrease in assets

F.

Increase in liabilities

G.

Decrease in liabilities

After calculating your company's profit for the year, you discover that:

(a) A non-current asset costing £2,000 has been included in the purchases account; the asset has not been included in the closing inventory figure; nor has it been depreciated by the normal 25% per annum

(b) Closing inventory of raw materials, costing £500, have been treated as closing inventory of stationery.

These two errors have had the effect of.

A.

Understating gross profit by £2,500 and understating net profit by £1,500

B.

Understating both gross profit and net profit by £2,500

C.

Understating gross profit by £2,000 and understating net profit by £2,500

D.

Understating both gross profit and net profit by £1,500

GG has the following statement of profit or loss extract for the year ended 31 December 20X3

What is the interest cover for GG for the year ended 31 December 20X3?

2.8 times

4.0 times.

4.5 times

3.5 times

External auditors are primarily responsible for:

A.

Checking the accuracy of all entries in the accounting system

B.

Preparing the financial accounts

C.

Detecting errors and fraud

D.

Determining that the accounts show a fair representation of the affairs of the company