ICAEW ACCOUNTING MOCK (PILOT TEST)

This is mock exam for Accounting certificate ICAEW. Time Allowed is 1.5 Hours to answer all 25
questions. For question no 1, please use the answer template to key in the figures for question 1(a) to1
(q) . Answer All questions. Please take note that NO symbol such as $,./ needed. ONLY bracket for
cost/expenses can be used for example (20000 )
* Required

1. Email *

2. Name *
This is a long question section, you will need to prepare a full set of Statement of financial
position and statement of profit or loss in a paper to answer question 1 a) to 1 u)

1 a) Revenue
1b) Cost of sales

1c) Distribution cost

1d) Administrative expenses

1e) Other operating expenses

1f) Finance cost

1g) Income tax expense

1h) Tangible non - current asset

1 i) Inventory

1 j) Trade receivable

1 k) Prepayment
1 l) Ordinary share capital

1 m) Retained earning

1 n) Share premium

1 o) Borrowings

1 p) Trade and other payables

1 q) Tax Payable

1 r) Accruals

1 s) Deferred income

1t) Provision

1u) Bank overdraft

2) Which of the following is an aspect of relevance, according to the IASB’s Conceptual
Framework?

Mark only one oval.

Neutrality

Free from error

Completeness

Materiality

3) Which of the following statements about accounting concepts and the characteristics
of financial information is correct?

Mark only one oval.

Financial statements are required to give a true and fair view. These terms have clear
definitions which are included in IAS 1, Presentation of Financial Statements.

The historical cost concept means that only items capable of being measured in monetary
terms can be recognised in financial statements.

It may sometimes be necessary to exclude information that is relevant and reliable from
financial statements because it is too difficult for some users to understand.

A specific disclosure requirement of an IFRS Standard need not be satisfied if the information
is immaterial.

4) A business can make a profit and yet have a decreased bank balance. Which of the
following might cause this to happen?

Mark only one oval.

The sale of non-current assets at a loss

The charging of depreciation in the statement of profit or loss

The lengthening of the period of credit given to customers

The lengthening of the period of credit taken from suppliers

5) On 1 April Salman had a balance of £100 (the imprest amount) in petty cash. At the end
of April, he has vouchers totalling £38, a receipt for a refund for stationery of £4 and a
note to say that an employee was reimbursed £12 in respect of postage costs but no
voucher was issued. How much does Salman need to reinstate his imprest balance at 30
April?

Mark only one oval.

£34

£46

£54

£66

6) Dennis Co has a 31 July reporting date. On 15 July 2016 Dennis Co bought an

equipment for £127,000. £27,000 cash was paid to the supplier and the balance of the
purchase price was financed by taking out a loan for £100,000. The loan will be repaid in
10 equal half-yearly instalments, with the first instalment falling due on 15 January 2017.
How should this transaction be reported in Dennis Co’s statement of financial position at
31 July 2016?

Mark only one oval.

A non-current asset of £127,000, a current liability of £80,000 and a non-current liability of

£20,000

A non-current asset of £127,000, a current liability of £20,000 and a non-current liability of

£80,000

A non-current asset of £127,000 and a non-current liability of £100,000

A non-current asset of £127,000 and a current liability of £100,000

7) The trial balance of Cocco Plc for the year ending 31 March 2017 did not agree, and a
suspense account was opened for the difference. A check in the bookkeeping system
revealed a number of errors. Which two of the errors below would require an entry to the
suspense account as part of the process of correcting them?

Check all that apply.

The payments side of the cash book had been overstated by £2,000
The cost of an item of plant £67,000 had been entered in the cash book and in the plant account
as £76,000.
The total of the discount received column in the cash book, £421, had been credited in error tothe
purchases account
Bank charges of £280 appeared in the bank statement in March 2017 but had not been entered in
the company’s records.
£3,500 paid for rent was credited to the rent account as £5,300.

8) At 31 May 2017, the closing inventory at cost for Monster Plc amounted to £376,800.The
following items were included at cost in the total: 1) 195 backpack, which had cost £270
each and normally sold for £400 each. Owing to a defect in manufacture, they were sold
after 31 May 2017 at 80% of their normal price. Selling expenses amounted to 10% of the
proceeds. 2) 320 gloves, which had cost £55 each. These too were found to be defective.
Remedial work in June 2017 cost £12 per glove, and selling expenses were £2 per glove.
They were sold for £68 each. What should the inventory value be after considering the
above items?
£376,480

£376,800

£324,150

£341,750

9) Rilakuma manufactures instant noodles. The company accountant is preparing the

2017 financial statements and considering the effect of a claim for damages of £23,500
received during the year. The company has offered the claimant £8,000 to settle the
claim. The customer has declined the offer and made a claim to the court. The company’s
legal advisors have noted that a similar claim was recently rejected in court. How should
the claim be reported in the 2017 financial statements?

Mark only one oval.

As a provision of £8,000

As a provision of £23,500

Disclosure as a contingent liability

No disclosure
10) i. Accounting concepts and individual judgement ii. Fair presentation iii. National or
local legislation iv. Generally accepted accounting principles (GAAP) Which of the above
factors have shaped financial accounting?

i & ii

i,ii,iii,and iv

iii & iv

ii & iii

11) Felix Co is registered company for sales tax at 20%. On 1 June 2016 the sales tax
account showed sales tax recoverable by Felix Co of £1,320. During the month of June,
Felix Co recorded the following transaction: Sales (including sales tax) £34,440,
purchases (excluding sales tax) £18,400, Sales return (including sales tax) £2,160,
Purchased return (excluding sales tax) £1,100. How much sales tax does Felix Co need to
pay to the tax authority at 30 June 2016?

£600

£1,320

£5,554

£3,680

12) A business sublets part of its office accommodation. The rent is received quarterly in
advance on 1 February, 1 May, 1 August and 1 November. The annual rent has been
£36,000 for some years, but it was decreased to £28,800 from 1 September 2016.What
amounts for this rent should appear in the company’s financial statements for the year
ended 31 March 2017? *

Mark only one oval.

Statement of profit or loss £32,400, Statement of financial position £4,800 in sundry

receivables

Statement of profit or loss £31,800, Statement of financial position £2,400 in sundry

receivables

Statement of profit or loss £31,800, Statement of financial position £2,400 in sundry payables

Statement of profit or loss £32,400, Statement of financial position £4,800 in sundry payables
13) Rory Co has an authorized issue of shares of 5,000,000 at 50p per share. On 1
January 2017, Rory Co issued 2,000,000 shares at par and they are all paid up for. On 31
March 2017, Rory Co made a rights issue of 1 for every 2 shares at 75p per share. Finally,
on 30 September 2017, Rory Co made a bonus issue of 1 for every 3 shares. What is the
value of Rory Co’s share capital on 31 December 2017?

£2,000,000

£5,000,000

£7,500,000

£6,500,000
14) On 1 February 2017, Melissa’s Receivables Control Account has a balance of £15,000.
Payments received from customers were £68,000 including cash sales of £3,750. The
balance on 31 January 2018 was £12,500. How much was Melissa’s credit sales for the
period?

Mark only one oval.

£66,750

£69,250

£80,500

£61,750

15) A payables ledger control account has a closing balance of £25,350. This includes
purchases returns of £1,550 which had been entered into the wrong side of the control
account. A contra of £2,700 to the receivables ledger control account is omitted out in
the payables ledger control account. What is the correct closing balance for the payables
ledger control account?

Mark only one oval.

£19,550

£21,100

£22,250

£25,750

16) Faris Co is a company which specialised in developing new materials and

manufacturing processes for the furniture industries. Currently, Faris is developing a new
colour-fast dye technology for replacing the current most successful product to save
cost. Faris has incurred £2,500,000 in the current period to develop the technology. The
expected cost to complete the project is £3,000,000. Faris has demonstrated that the
product is viable and has the intention to complete the product but there is no
expectation date to complete due to shortage of fund. How should the above be
reported in Faris Co’s financial statements for the year?

Mark only one oval.

£5.5m should be expensed to the statement of profit or loss

£5.5m should be capitalised as intangible asset

£2.5m should be expensed to the statement of profit or loss

£3m should be capitalised as intangible asset

17) The sales revenue of Babal Co was £2million and its receivable were 5% of sales. Babal
Co wishes to have a specific allowance for receivables of £4,000, which would make the
allowance one-third higher than the current allowance. How will the profit for the period
be affected by the change in allowance?

Mark only one oval.

Profit will be reduced by £1,000

Profit will be increased by £1,000

Profit will be reduced by £1,333

Profit will be increased by £1,333

18) The cash book shows a bank balance of £7,755 overdrawn at 31 August 2016. It is
subsequently discovered that a standing order for £125 has been entered twice, and that
a dishonoured cheque for £450 has been debited in the cash book instead of credited.
The correct bank balance should be:

Mark only one oval.

£5,100 overdrawn

£6,730 overdrawn

£6,980 overdrawn

£8,530 overdrawn

19) The following year-end adjustments are required: Closing inventory of £80,000 to be
recorded, depreciation at 20% straight line to be charged in assets with a cost of
£90,000, an irrecoverable debt of £200 to be written off, deferred income of £6,000 to
be recorded. What is the impact on net assets of these adjustments?

Mark only one oval.

£55,800 increase

£55,800 decrease

£145,800 increase

£145,800 decrease
20) Ariff sells cars and he is preparing the financial statements for the current accounting
period that ends on 31 December 2016. On 1 January 2017, a fire had destroyed one of his
warehouses. The cost of cars destroyed was £1,000,000 and the cost of the warehouse
building destroyed was £500,000. How should the above event be reported in Ariff’s
financial statements for the current period?

Check all that apply.

Decrease inventory by £1,000,000

Decrease non-current assets by £500,000
Disclose inventory destroyed of £1,000,000 in the notes
Disclose non-current assets destroyed of £500,000 in the notes

21) On 1 January 2018, a company purchased some plant. The invoice showed: Cost of
plant £48,000, delivery to factory £400, One-year warranty £800, modifications costing
£2,200 were required to install the plant. What amount be capitalised for the plant?

Mark only one oval.

£51,400

£48,000

£50,600

£48,400

22) Shahir plc acquired a new truck on 1 July 2017 for £99,900 including sales tax at 20%.
The company depreciates all vehicles straight line at 20% per annum on a monthly basis.
What is the carrying amount of Shahir plc’s truck at 31 December 2017?

Mark only one oval.

£89,910

£83,250

£66,600

£74,925
23) Frederick has trade receivables balance of £99,000 at the financial year end.
However, Frederick just found out that one of its clients, Vozzby has gone into liquidation
at year end. Vozzby has an outstanding balance of £7,600. The debt is now regarded as
irrecoverable. Due to this incident, Frederick is starting to provide for receivables
allowance of 5% per annum from trade receivables balance. What is the balance of trade
receivables account to be shown in the statement of financial position as at year end?

Mark only one oval.

£99,000

£91,400

£94,050

£86,830

24) The following journal entry has been recorded by the accounts executive: Debit Sales
£930, Credit Rent Received £930. What is the correct narrative for the above journal
entry?

Mark only one oval.

Being credit purchase of goods

Being correction of error – Rent Received originally recorded as Sales

Being credit sales of goods

Being correction of error – Sales originally recorded as Rent Received

25) Which three of the following items must be disclosed on the face of statement of
profit or loss for the year in accordance with IAS 1 Presentation of Financial Statements?

Check all that apply.

Tax expense
Revenue
Dividend paid
Finance cost