PreparingFinancial
Statements
(International Stream)
PART1
THURSDAY 10 JUNE 2004
QUESTION PAPER
Time allowed 3 hours
This paper is divided into two sections
Section AALL 25 questions are compulsory and MUST be
answered
Section BALL FIVE questions are compulsory and MUST be
answered
Do not open this paper until instructed by the supervisor
This question paper must not be removed from the examination
hall
The Association of Chartered Certified Accountants
Section A – ALL 25 questions are compulsory and MUST be attempted
Please use the Candidate Registration Sheet provided to indicate your chosen answer to each multiple choice question.
Each question within this section is worth 2 marks.
1A business purchased a motor car on 1 July 2003 for $20,000. It is to be depreciated at 20 per cent per year on
the straight line basis, assuming a residual value at the end of five years of $4,000, with a proportionate depreciation
charge in the year of purchase.
The $20,000 cost was correctly entered in the cash book but posted to the debit of the motor vehicles repairs account.
How will the business profit for the year ended 31 December 2003 be affected by the error?
AUnderstated by $18,400
BUnderstated by $16,800
CUnderstated by $18,000
DOverstated by $18,400
2A company has sublet part of its offices and in the year ended 30 November 2003 the rent receivable was:
Until 30 June 2003$8,400 per year
From 1 July 2003$12,000 per year
Rent was paid quarterly in advance on 1 January, April, July, and October each year.
What amounts should appear in the company’s financial statements for the year ended 30 November 2003?
Income statement
Rent receivableBalance sheet
A$9,900$2,000 in sundry payables
B$9,900$1,000 in sundry payables
C$10,200$1,000 in sundry payables
D$9,900$2,000 in sundry receivables
3At 30 September 2002 a company’s allowance for doubtful debts amounted to $38,000, which was five per cent of
the receivables at that date.
At 30 September 2003 receivables totalled $868,500. It was decided to write off $28,500 of debts as bad and to
keep the allowance for doubtful debts at five per cent of receivables.
What should be the charge in the income statement for the year ended 30 September 2003 for bad and doubtful
debts?
A$42,000
B$33,925
C$70,500
D$32,500
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