Which of the following items could appear in a company’s statement of cash flows? (1) Proposed dividends(2) Rights issue of shares(3) Bonus issue of shares(4) Repayment of loan
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1 .A business purchased a motor car on 1 July 2011 for USD20,000. It is to be depreciated at 20%per year on the straight line basis, assuming a residual value at the end of five years of USD4,000, with a proportionate depreciation charge in the year of purchase.The USD20,000 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 2011 be affected by the error?
A Understated by USD18,400 B Understated by USD16,800 C Understated by USD18,000 D Overstated by USD18,400
2 .A company’s trial balance failed to agree, the totals being:Debit USD815,602Credit USD808,420Which one of the following errors could fully account for the difference?
A The omission from the trial balance of the balance on the insurance expense account USD7,182 debit B Discount allowed USD3,591 debited in error to the discount received account C No entries made in the records for cash sales totalling USD7,182 D The returns outwards total of USD3,591 was included ...
3 .Which of the following corrections need to be made to the calculation? (1) Depreciation should be deducted, not added.(2) Decrease in inventories should be added, not deducted.(3) Decrease in receivables should be deducted, not added.(4) Decrease in payables should be deducted, not added.
A (1) and (3) B (1) and (4) C (2) and (3) D (2) and (4)
5 .A limited liability company sold a building at a profit.How will this transaction be treated in the company’s statement of cash flows?
A B C D
6 .A company’s draft financial statements showed a profit for the year of USD815,000. However, the trial balance did not balance, and a suspense account has been created and included in the draft statement of financial position.Subsequent checking revealed the following errors:(1) The cost of an item of equipment USD32,000 had been entered correctly in the cash book but recorded in the equipment account as USD23,000.(2)Depreciation at the rate of 20% per year (USD4,600) had been charged in respect of (1) above.(3) Bank charges for the year of USD560 appearing in the bank statements had not been entered in the company’s records.(4) The “motor sundries” column of the analysed cash payments book had been overcast by USD5,000.Which two errors would require an entry to the suspense account in correcting them?
A 1 and 2 B 2 and 3 C 3 and 4 D 1 and 4
7 .A company’s draft financial statements showed a profit for the year of USD815,000. However, the trial balance did not balance, and a suspense account has been created and included in the draft statement of financial position.Subsequent checking revealed the following errors:(1) The cost of an item of equipment USD32,000 had been entered correctly in the cash book but recorded in the equipment account as USD23,000.(2)Depreciation at the rate of 20% per year (USD4,600) had been charged in respect of (1) above.(3) Bank charges for the year of USD560 appearing in the bank statements had not been entered in the company’s records.(4) The “motor sundries” column of the analysed cash payments book had been overcast by USD5,000.What is the company’s profit after the correction of all the errors?
A USD807,640 B USD812,640 C USD817,360 D USD817,640
8 .Where should dividends paid be shown in a company’s published financial statements?
A In the statement of other comprehensive income B In the statement of financial position C In the statement of changes in equity D In profit or loss
