ICAEW ACA Certificate Level · Accounting Fundamentals

Maintaining financial records

21 practice questions, each with the answer and an explanation.

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Random questions from this topic, one at a time. You see the answer and the explanation straight after each one.

All 21 questions

  1. A business buys inventory on credit for £4,000 plus VAT at 20% and is registered for VAT. What is the correct double entry?
  2. The owner of a sole trader business takes goods costing £500 from inventory for personal use. Which entry is correct?
  3. A machine cost £48,000 and is depreciated at 25% per annum on the reducing balance method. What is the carrying amount at the end of year 3?
  4. A vehicle bought for £30,000 is depreciated at 20% a year straight line with no residual value, with a full year's charge in the year of purchase and none in the year of disposal. It is sold in the fo…
  5. At the year end, trade receivables total £80,000 before writing off an irrecoverable debt of £2,000. The allowance for receivables is to be 5% of the remaining receivables. The opening allowance was £…
  6. A cash book shows a debit balance of £2,450 before adjustment. Bank charges of £60 and a direct debit of £340 appear on the bank statement but not in the cash book. Cheques issued of £1,200 are unpres…
  7. A receivables ledger control account has an opening balance of £45,200. During the month credit sales were £212,000, sales returns £3,600, cash received £198,500, settlement discounts allowed £2,100 a…
  8. Which of the following should be treated as capital expenditure?
  9. A business buys 100 units at £5 each on 10 January and 200 units at £6 each on 15 January. On 20 January it sells 150 units. What is the value of closing inventory on 31 January using FIFO?
  10. An item of inventory cost £12,000. It can be sold for £15,000 after incurring further selling costs of £4,200. At what amount should it be included in inventory under IAS 2?
  11. For one month an employee's gross pay is £2,500. Income tax deducted under PAYE is £380, employee NIC is £220 and the employee's pension contribution is £100. Employer NIC is £300. What is the total e…
  12. In which book of prime entry is a purchase of goods on credit first recorded?
  13. Which one of the following errors would NOT be revealed by extracting a trial balance?
  14. A company has an imprest petty cash system with a float of £200. At the end of the month vouchers support payments of £134. How much cash is needed to restore the float?
  15. Rent of £9,000 was paid during the year. It included £1,500 relating to the following year. At the start of the year £600 of rent was owing, and it was paid as part of the £9,000. There was no rent ow…
  16. A company takes out a loan of £60,000 on 1 September at 6% a year. Interest is payable annually in arrears. The year end is 31 December. What is the interest accrued at the year end?
  17. A customer pays £5,400 on 1 November for nine months of a service starting on that date. The year end is 31 December. What amount is deferred income in the statement of financial position at 31 Decemb…
  18. Under IFRS 15, when should an entity recognise revenue?
  19. Which of the following situations requires a provision to be recognised under IAS 37 at the year end?
  20. A company's year end is 31 December and its accounts are authorised on 20 March. Which event is an adjusting event after the reporting period?
  21. After the year end but before the accounts are authorised, the directors propose a final dividend of 5p per share on 10 million shares. How should it be treated in the financial statements for the yea…

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