Question 1

At 30 June 20X5 a company’s allowance for receivables was $39,000. At 30 June 20X6 trade receivables totalled $517,000. It was decided to write off debts totalling $37,000 and to adjust the allowance for receivables to the equivalent of 5% of the trade receivables based on past events. What figure should appear in the statement of profit or loss for the year ended 30 June 20X6 for receivables expense?

Options :

A : $61,000

B : $52,000

C : $22,000

D : $37,000

Answer: C

Question 2

The price elasticity of demand for widgets is 1.1 and the quantity demanded is 5,000 units. The price increases by 8%. What is the new quantity demanded?

Options :

A : 440

B : 4,560

C : 5,440

D : 4,780

Answer: B

Question 3

Drillfast is a drilling corporation with operations at oil rigs around the world. For the 2014 annual report, which business segment should be reported as an operating segment?

Options :

A : South American segment, which contributes 8% of total revenues, 5% of profits and accounts for 9% of assets. South American operating manager reports to the chief operating officer.

B : African segment, which contributes 9% of the company’s assets, 16% of total revenues, and 18% of profits. The African operating manager reports to the British operating manager.

C : Australian segment, which contributes 10% of total revenues, 2% of assets, and 4% of profits. The Australian manager reports to the chief operating officer.

D : Texas based corporate headquarters

Answer: C

Question 4

Which TWO of the following errors would cause the total of the debit column and the total of the credit column of a trial balance not to agree? (1) A transposition error was made when entering a sales invoice into the sales day book (2) A cheque received from a customer was credited to cash and correctly recognised in receivables (3) A purchase of non-current assets was omitted from the accounting records (4) Rent received was included in the trial balance as a debit balance

Options :

A : 1 and 2

B : 1 and 3

C : 2 and 3

D : 2 and 4

Answer: D

Question 5

The following bank reconciliation statement has been prepared by a trainee accountant: $ Overdraft per bank statement 3,860 Less: Unpresented cheques 9,160 ––––––– 5,300 Add: Outstanding lodgements 16,690 ––––––– Cash at bank 21,990 ––––––– What should be the correct balance per the cash book?

Options :

A : $21,990 balance at bank as stated

B : $3,670 balance at bank

C : $11,390 balance at bank

D : $3,670 overdrawn

Answer: B

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