ACC204 TMAs

1). Given that a machine bought for $5,000 on 1 January 2016, which had an expected useful life of four years\nand an expected residual value of $1,000; the asset was to be depreciated on the straight-line basis. The\nfirm\'s policy is to charge depreciation in the year of disposal. On 31 December 2018, the machine was sold\nfor $1,600.\nWhat amount should be entered in the 2018 statement of comprehensive income for profit or loss on\ndisposal?

(A)Profit of $600
(B)Loss of $600
(C)Profit of $350
(D)Loss of $400

Correct Answer: Profit of $350

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2). What is an error of commission?

(A)An error where a transaction has not been recorded
(B)An error where one side of a transaction has been recorded in the wrong account, and that account is of a different class to the correct account
(C)An error where one side of a transaction has been recorded in the wrong account, and that account is of the same class as the correct account
(D)An error where a transaction has been recorded

Correct Answer: An error where one side of a transaction has been recorded in the wrong account, and that account is of the same class as the correct account

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3). Which one of the following would be an error of principle?

(A)Plant and machinery purchased was credited to a non-current assets account
(B)Plant and machinery purchased was debited to the purchases account
(C)Plant and machinery purchased was debited to the equipment account
(D)All of the above

Correct Answer: Plant and machinery purchased was debited to the purchases account

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4). The debit side of a trial balance totals $800 more than the credit side. Which one of the following errors would fully account for the difference?

(A)$400 paid for plant maintenance has been correctly entered in the cash book and credited to the plant asset account
(B)Discount received $400 has been debited to discount allowed account.
(C)A receipt of $800 for commission receivable has been omitted from the records.
(D)The petty cash balance of $800 has been omitted from the trial balance.

Correct Answer: Discount received $400 has been debited to discount allowed account.

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5). Given that an asset register has a net book value of $67,460. A non-current asset costing $15,000 had been sold\nfor $4,000, making a loss on disposal of $1,250. No entries had been made in the asset register for this\ndisposal.\nWhat is the correct balance on the asset register?

(A)42710
(B)51210
(C)53710
(D)62210

Correct Answer: 62210

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6). An organisation\'s asset register shows a net book value of $145,600. The non-current asset account in the\nnominal ledger shows a net book value of $135,600. The difference could be due to a disposed asset not\nhaving been deducted from the asset register. Which one of the following could represent that asset?

(A)Asset with disposal proceeds of $15,000 and a profit on disposal of $5,000
(B)Asset with disposal proceeds of $15,000 and a net book value of $5,000
(C)Asset with disposal proceeds of $15,000 and a loss on disposal of $5,000
(D)Asset with disposal proceeds of $5,000 and a net book value of $5,000

Correct Answer: Asset with disposal proceeds of $15,000 and a profit on disposal of $5,000

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7). Which one of the following would occur if the purchase of computer stationary was debited to the computer equipment at cost account?

(A)An overstatement of profit and an overstatement of non-current assets
(B)An understatement of profit and an overstatement of non-current assets
(C)An overstatement of profit and an understatement of non-current assets
(D)None of the above

Correct Answer: An overstatement of profit and an overstatement of non-current assets

 

8). The purpose of charging depreciation in accounts is?

(A)To allocate the cost less residual value of a non-current asset over the accounting periods
(B)To ensure that funds are available for the eventual replacement of the asset
(C)To reduce the cost of the asset in the statement of financial position to its estimated market value
(D)To value Inventory items at the higher of cost and

et realisable value.

Correct Answer: To allocate the cost less residual value of a non-current asset over the accounting periods

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9). A company bought a property in Chelsea four years ago on 1 January for $ 170,000. Since then property\nprices have risen substantially and the property has been revalued at $210,000.\nThe property was estimated as having a useful life of 20 years when it was purchased. What amount\nwould be transferred to revaluation reserve?

(A)210000
(B)136000
(C)74000
(D)34000

Correct Answer: 74000

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10). A business purchased a motor car on 1 July 2018 for $20,000. It is to be depreciated at 20 per cent per year\non the straight line basis, assuming a residual value at the end of five years of $4,000, with a proportionate\ndepreciation charge in the year of purchase.\nThe $20,000 cost was correctly entered in the cash book but posted to the debit of the motor vehicles\nrepairs account.\nHow will the business profit for the year ended 31 December 2018 be affected by the error?

(A)Understated by $18,400
(B)Understated by $16,800
(C)Overstated by $18,400
(D)Overstated by $76,840

Correct Answer: Understated by $18,400

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1).Accounting software enables financial transactions to be easily tracked and almost instantaneously
(A)Add and Subtract
(B)Reported and analysed
(C)Collect and report
(D)Analysed and Interprete
Ans: Reported and analysed

2).A quality of financial information that allows a choice to be made among alternative courses of action is said to be
(A)Verifiable
(B)Faithfully represented
(C)Comparable
(D)Understandable
Ans: Comparable

3).Which of the following is NOT an accounting convention?
(A)Consistency
(B)Prudence
(C)Materiality
(D)Realisation
Ans: Realisation

4).FIFO is an abbreviation of
(A)First institute of Forensic Orgsnization
(B)Federal insurance future online
(C)First In First Out
(D)Find in Fact Oil
Ans: First In First Out

5).Perpetual inventory approach maintains inventory records on a
(A)Accounting Basis
(B)Going Concern Basis
(C)Actual Basis
(D)Continuous basis
Ans: Continuous basis

6).The means of communicating to interested parties, information on the resources, obligations and performance of the reporting economic entity or enterprise is
(A)Statement of comprehensive Income
(B)Statement of changes in financial position
(C)Financial Statement
(D)Statement of cash flows
Ans: Financial Statement

7).A method of depreciation in which a fixed amount is charged to the Income Statement every year is..................method
(A)Reducing Balance
(B)Straight Line
(C)Sum of the yeas digits
(D)Sinking Fund
Ans: Straight Line

8).Inventories are generally referred to as the
(A)Goods Sold
(B)Unsold portion of goods held for resale
(C)Raw material
(D)Stocks
Ans: Unsold portion of goods held for resale

9).Which of the following is NOT information to be disclosed in financial statements?
(A)Statement of financial position
(B)Statement of comprehensive income
(C)Statement of accounting policies
(D)Directors’️ Report
Ans: Directors’️ Report

10).Depreciation in accounting is only
(A)A cost allocation process
(B)A cost Reduction process
(C)Cost Incremental
(D)Prudence
Ans: A cost allocation process