brodidit for students
Home / Practice / ACCA / Financial Accounting / G Preparing financial statements
G Preparing financial statements
10 ACCA Financial Accounting questions with answers and explanations.
Printable worksheet with answer key
-
The estimated income tax for the year is $30,000. The previous year's provision of $25,000 was settled at $26,200. What is the income tax expense?
- 1 $31,200
- 2 $26,200
- 3 $30,000
- 4 $28,800
Show answer
Correct answer: $31,200
The under-provision of $1,200 is added to this year's estimate.
-
Revenue is $500,000, cost of sales $300,000, selling expenses $50,000 and administrative expenses $40,000. What is the operating profit?
- 1 $200,000
- 2 $110,000
- 3 $150,000
- 4 $160,000
Show answer
Correct answer: $110,000
500,000 - 300,000 - 50,000 - 40,000 = 110,000.
-
Which is an adjusting event after the reporting period?
- 1 A fire destroys a warehouse after the year end
- 2 A new loan is taken out after the year end
- 3 The company issues new shares after the year end
- 4 A customer goes bankrupt, confirming that a receivable at the year end is irrecoverable
Show answer
Correct answer: A customer goes bankrupt, confirming that a receivable at the year end is irrecoverable
An adjusting event provides evidence of a condition that existed at the reporting date.
-
Which is a non-adjusting event after the reporting period?
- 1 A fire destroys a warehouse after the year end
- 2 Inventory is found to be damaged before the year end
- 3 A customer's bankruptcy confirms a debt owed at the year end is irrecoverable
- 4 A court case that was ongoing at the year end is settled
Show answer
Correct answer: A fire destroys a warehouse after the year end
The fire is a new condition that arose after the year end, so it is disclosed if material.
-
Profit before income taxes is $50,000, depreciation $8,000, receivables increased by $6,000, payables increased by $3,000 and inventories decreased by $2,000. What is cash from operations (before income taxes paid)?
- 1 $53,000
- 2 $57,000
- 3 $41,000
- 4 $59,000
Show answer
Correct answer: $57,000
Add depreciation, subtract an increase in receivables, add an increase in payables and add a decrease in inventories.
-
In a statement of cash flows, the purchase of equipment is classified as:
- 1 Operating activities
- 2 It is not shown
- 3 Financing activities
- 4 Investing activities
Show answer
Correct answer: Investing activities
Buying and selling non-current assets are investing flows.
-
In a statement of cash flows, the payment of a dividend to shareholders is classified as:
- 1 Operating activities
- 2 Financing activities
- 3 Investing activities
- 4 It is not shown
Show answer
Correct answer: Financing activities
Dividends are a return to those who finance the entity.
-
A sole trader's cost of sales is $60,000 and goods are sold at a mark-up of 25 percent on cost. What are the sales?
- 1 $85,000
- 2 $80,000
- 3 $60,000
- 4 $75,000
Show answer
Correct answer: $75,000
Sales = 60,000 x 1.25 = 75,000. A 25 percent margin on sales would be $80,000, which is a different figure.
-
Opening net assets were $40,000 and closing net assets $55,000. Drawings were $12,000 and no capital was introduced. What was the profit for the year?
- 1 $67,000
- 2 $15,000
- 3 $3,000
- 4 $27,000
Show answer
Correct answer: $27,000
Profit = increase in net assets + drawings = 15,000 + 12,000.
-
A revaluation gain on a non-current asset is reported in:
- 1 Other comprehensive income
- 2 Operating expenses
- 3 Cost of sales
- 4 Revenue
Show answer
Correct answer: Other comprehensive income
It is recognised in other comprehensive income and added to the revaluation surplus.