ACCT1501 Practice Exam Questions

QUESTION 1 (6 Marks)

2015S1

Bank Reconciliation

The following information is given about Nadak Co.:

1. The August 31 balance shown on the bank statement is $9,810.
2. There is a deposit in transit of $1,260 at August 31.
3. Outstanding cheques at August 31 totalled $1,890.
4. A bank charge of $40 for cheques was made to the account during August, as
shown on the bank statement. Although the company was expecting a charge,
its amount was not known until the bank statement arrived.
5. In the process of reviewing the cheques, it was determined that a cheque
issued to a supplier in payment of accounts payable of $361 had been recorded
as $631.
6. The August 31 balance in the general ledger Cash account, before
reconciliation, is $8,950.
Required:
Part A: Prepare a bank reconciliation as of August 31, 2011.

(4 marks)

ACCT1501 Practice Exam Questions

2015S1

Part B: Prepare any necessary adjusting journal entries.

(2 marks)
Debit
$

Account name

Credit
$

ACCT1501 Practice Exam Questions

2015S1

QUESTION 2 (9 Marks) Financial Reporting Principles, Accounting Standards

and Auditing, & Sustainability Reporting
Provide short answers to the following:
1. What are generally accepted accounting principles? (2 Marks)

2. Going concern assumption is one of the key assumptions to financial reports.

What is going concern assumption? Why is assumption important in the
preparation of financial statements? (4 marks)

ACCT1501 Practice Exam Questions

2015S1

3. Describe Scope 1 and Scope 2 emissions and provide an example for each of
them. (3 marks)

ACCT1501 Practice Exam Questions

2015S1

QUESTION 3 Financial Statement Analysis (8 marks)

BPS Ltd, a supplier of telecommunications equipment, retails its products through
suburban outlets. Shown below are the calculations of some of its key financial ratios
for 2011 and 2012.
2012
2011
Return on Equity
13%
12%
Return on Assets
8%
9%
Profit margin
20%
18%
Asset turnover
0.40
0.50
Days in inventory
72 days
55 days
Days in debtors
42 days
42 days
Current ratio
1.6
1.5
Quick ratio
0.7
1.1
Debt-to-Equity ratio
1.4
1.0
Return on Equity

Operating Profit after Tax

Shareholders' Equity

Return on Assets

Operating Profit after Tax

Total Assets

Financial Leverage

Total Assets
Total Shareholders Equity

Profit Margin

Earnings Before Interest and Tax

Sales

Asset Turnover

Sales
Total Assets

Days in Inventory

Average Inventory x 365

COGS

Days in Debtors

Average Trade Debtors x 365

Credit Sales

Current Ratio

Current Assets
Current Liabilities

Quick Ratio

Current Assets - Inventory

Current Liabilities
Total Liabilities
Total Shareholders' Equity

Debt to Equity Ratio

ACCT1501 Practice Exam Questions

2015S1

Required
Analyse BPSs profitability, asset management, liquidity and financial
structure for 2012 using the ratio information shown above.

ACCT1501 Practice Exam Questions

QUESTION 4

(15 marks)

2015S1

Control Accounts

Rupert Ltd maintains subsidiary ledgers for debtors and creditors. At 31 May 2014,
the debtors control account has a debit balance of $50,120 and the creditors control
account has a credit balance of $30,670. An extract of totals from the special
journals for the month of June 2014 is as follows:
$
Credit sales
86,500
Cash sales
6,100
Credit purchases
93,200
Cash received from debtors
67,800
Cash paid to creditors
55,890
Cash purchases
4,300
Discount received from
7,500
creditors
Discount allowed to debtors
3,500
Complete the debtors and creditors control accounts as they would appear in the
general ledger.

ACCT1501 Practice Exam Questions

2015S1

QUESTION 5 ADJUSTING ENTRIES AND FINANCIAL STATEMENTS (23

Marks)
The following pre-adjusted trial balance has been prepared for Sydney Company as at
30 June 2014 (for the 12 months beginning on 1 July 2013):
DR

CR

Bank Overdraft

10,000

Accounts Receivable

200,000

Allowance for Doubtful Debts

1,000

Inventory

100,000

Prepaid Rent

10,000

Property, Plant and Equipment

450,000

Accumulated Depreciation - PPE

200,000

Accounts Payable

60,000

Bank loan

50,000

Contributed Capital

310,000

Retained Profit at 1 July 2013

34,000

Sales revenue

450,000

Cost of Goods Sold

265,000

Interest Expense

5,000

Wages Expenses

80,000

Rent Expense

5,000
1,115,000

1,115,000

The following information is given which may give rise to year end adjustments:
Depreciation on Property, Plant and Equipment is provided for on a straight line
basis at 10% per annum, and it is assumed that it will have no salvage value.
The balance in Prepaid Rent relates to the 12 month period from 1 January 2014 to
31 December 2014.
An ageing analysis shows that $4,000 of Accounts Receivable is estimated to be
uncollectible.
On 30 June 2014, the directors declared a dividend of $5,000, which the
shareholders authorised. The dividend is to be paid on 15 September 2014.

ACCT1501 Practice Exam Questions

2015S1

It is discovered that $10,000 cash received during the year and credited to sales are
actually related to services to be delivered in July 2014.
$5,000 of wages relating to June 2014 have not been paid and need to be accrued.
Part A (12 Marks)
Prepare journal entries for the necessary end of period adjustments.
Debit
$

Account name

Credit
$

ACCT1501 Practice Exam Questions

2015S1

Part B (7 Marks)
Prepare an Income Statement for the year ended 30 June 2014:

Part C (4 Marks)
In the Balance Sheet as at 30 June 2014, what would be the closing balance of
retained profits? Show all workings.

10

ACCT1501 Practice Exam Questions

2015S1

QUESTION 6 (15 marks) Inventory

The following information relates to inventory transactions of Promises Ltd for the
month ending 30 June 2014:
Date
1 June
10 June
18 June
25 June
30 June

Cash Purchases

Cash Sales

Balance
100 units @ $10

80 units @ $12
140 units @ $20
30 units @ $14
50 units @ $25

Promises Ltd uses FIFO (first-in-first-out) and perpetual inventory control.

Calculate the cost of goods sold based on the costs of units sold. (3 Marks)

Prepare the journal entries for inventory purchases and cost of sales for the month of
June 2014. (12 Marks)
Date

Debit
$

Account name

11

Credit
$

ACCT1501 Practice Exam Questions

2015S1

12

ACCT1501 Practice Exam Questions

2015S1

QUESTION 7 (10Marks) Noncurrent assets

On 1 July 2011, Promises Ltd purchased equipment at a cost of $150,000. The
equipment is depreciated using the reducing balance method at the rate of 40% per
annum.
Prepare the journal entries for depreciation for each year 30 June 2012, 30 June 2013
and 30 June 2014. (9 Marks)
Date

Debit
$

Account name

What is the book value of the equipment at 30 June 2014? (1 Mark)

13

Credit
$

ACCT1501 Practice Exam Questions

2015S1

Question 8 Management Accounting and Cost Concepts (13.5 marks)

Part A (2 marks)
For each of the items 1-4 in the table below, indicate whether the item is a product
cost or a period cost
Item

Cost Classification

1. A food retailer purchases milk for resale

2. Depreciation of head office computers
3. Salaries of production line workers for a
manufacturer
4. Advertising costs to promote a manufacturers
products

mark each entry

Part B (9.5 marks)
Bandcamp Ltd manufactures guitars. In the month of January 2014, Bandcamp
Ltd recorded:

direct labour cost of $200 000

raw materials purchased of $400 000
total overhead cost of $500 000.

The following information was supplied by Bandcamp Ltds accountant about the
opening and closing inventory:
31 January
1 January
(ending)

(beginning)

Raw materials inventory

$80 000

$95 000

Work in progress inventory

$110 000

$60 000

Finished goods inventory

$255 000

$75 000

Required:

14

ACCT1501 Practice Exam Questions

2015S1

1. Prepare a cost of goods manufactured statement for January 2014.

2. Prepare a cost of goods sold statement for January 2014.

15

ACCT1501 Practice Exam Questions

2015S1

Part C (2 marks)
Tree & Woods Corp., an international furniture company, manufactures and sells
furniture of unique natural material. In 2010, the company sold all 25,000 chairs that
it produced at $200 each. Total costs amounted to $3,300,000 comprised of
$1,300,000 variable costs and $2,000,000 fixed costs. In 2011, the company purchases
a new saw mill for $110,000. The useful life is estimated to be 5 years with a salvage
value of $10,000. Each year, the same amount of depreciation expense is recorded.
The usage of the new saw mill allows Tree & Woods to reduce variable costs for
producing one chair by $7. All other costs remain the same as in 2010.
What was Tree & Woods Corp.s break-even point in number of units in 2010?

16

ACCT1501 Practice Exam Questions

2015S1

Question 9 - MCQ practice questions

You have seen samples of MCQ in the lectures and in your quiz attempts.

17