A2 Revision questions

1. Gene’s business has the following balances at 30 November:

   

   Gene’s business has an overdraft limit of £14 000. Half of the amount payable to HMRC has been owed for almost two months.

   Prepare a statement of financial position for Gene’s business at 30 November

   Comment on the cash position of the business

2. Deirdre’s business has non-current assets of £30 000, current assets of £17 500 and current liabilities of £3 600. There are no long-term liabilities. Deirdre’s capital is?

   1. £51 100
   2. £16 100
   3. £43 900
   4. £8 900


3. The following figures has been provided by Jennifer for her catering business. Sales £8,200, Opening inventory £1,300, closing inventory £900, Purchases £6,400, Carriage inwards £200. Calculate Jennifer’s cost of goods sold

   1. £6,800
   2. £1,200
   3. £7,000
   4. £6,200

4. TB Wallis started trading on I January 2019, he has the following figures for the first year of trading: Carriage inwards£3,470, Returns outwards£1,390, Return inwards£7,470, Sales £249,000, Purchases £168,300 and Inventory as at 31December 2019£25,630. Calculate his gross profit for the first year of trading:

   1. £104,250
   2. £100,250
   3. £96,780
   4. £116,380

5. A motor vehicle which cost £30,000 is depreciated at 20% per annum using the reducing balance method. The depreciation charge for the second year would be:

   1. £13,800
   2. £8,000
   3. £4,800
   4. £7,200

6. If a business’ rent for the year is £38,000 but it had only paid £32,000, this means:

   1. The total rent incurred during the year should be £32,000
   2. There is an accrual of £32,000 for the year
   3. The total rent incurred during the year should be £38,000
   4. There is a rent accrual of £6,000 for the year to bemade in the accounts

7. A business buys equipment costing £28,000 and depreciates it using the reducing balance method at 20% per annum. Three years later it was sold for £15,000. The profit or loss on the transaction was:

   1. Neither a profit or a loss
   2. A profit of £8,784
   3. A profit of £664
   4. A loss of £664

8. A motor vehicle which cost £30,000 is depreciated at 20% per annum using Straight line method. The depreciation charge for the second year would be:

   1. £12,000
   2. £6,000
   3. £3,000
   4. £4,800

9. Which of the following three statements about marginal costing are correct?

   1. Marginal costing:
   2. is an approach to costing that excludes fixed costs?
   3. provides a sounder basis for decision making than absorption costing
   4. is only useful in respect of businesses that incur variable costs

10. Which of the following three statements about marginal costing are correct?

    1. Marginal costing:
    2. is an approach to costing that excludes fixed costs?
    3. provides a sounder basis for decision making than absorption costing
    4. is only useful in respect of businesses that incur variable costs

11. A business makes 2,000 units of a particular product. It spent £24,000 on material and it paid its operatives £40,000. Other costs of running the factory were £50,000. The sales force was also paid £18,000 and the head office costs were £100,000. In order to break even the selling price per unit will have to be:

    1. £84
    2. £116
    3. £32
    4. £66

12. A company currently sells 10,000 units of a product at £9.00 per unit and makes £20,000 profit. Variable costs currently stand at £6.00 per unit. By how much would variable costs have to increase before the company makes neither a profit nor a loss?

    1. £2.00
    2. £3.00
    3. £4.00
    4. £1.00

13. Prate’s business makes an operating profit of £29 975 in the year ended 31 December 2018, after deducting £7668 for depreciation. At 31 December 2018 her statement of financial position showed inventory of £33 250, receivables and prepayments of £26 772 and payables of £35 556. On 31 December 2019 the corresponding figures were: inventory £34 490, receivables and prepayments £22 894 and payables £29 493. What is the net cash inflow from operating activities to be included in Prate’s statement of cash flows for the year ended 31 December 2019?

    1. £33 400
    2. £34 218
    3. £38 588
    4. £41 068

14. he breakeven point in units is represented by the equation:

    1. (Sales revenue - Fixed costs)/ Contribution per unit
    2. Fixed costs / selling price per unit
    3. Fixed costs / Contribution per unit
    4. Fixed costs / Variable costs

15. Bakersfield Limited purchases some of its goods on credit and some for cash. On average, in any given month, the company would expect 20% of its purchases of goods to be paid for in cash. 60% of the purchases on credit would be paid for in the next following month, and 40% in the month after that.

    1. September £126 000
    2. October £135 000
    3. November £128 500
    4. December £121 500

16. Bertrand sells goods entirely on credit. In respect of sales in any given month, he expects 50% to be paid for in the next following month, 40% in the month after that, and 10% in the month after that. (So, for example, 50% of sales made on credit in January would be received in February, 40% in March and 10% in April).

    1. May 352 000
    2. June £53 500
    3. July £57 800
    4. August £56 000

17. Grimsby Ltd is specialist in bath products. They are about to introduce a new product into the market. The estimated selling price is £1,452, the variable cost is £353 unit and the fixed cost is £94,325. The directors will like to know many baths they have to sell to achieve a profit of £50,000.

    1. £124
    2. £144
    3. £131
    4. £136


18. Which of the following transactions increases or decreases the net cash flow from operating activities?

    1. Sale of a non-current asset
    2. Purchase of inventory for resale
    3. Payment of interest on a loan
    4. Drawings

19. A business has trade payables at its year end of £206,460. Purchases for the year are £1, 952,278 of which 90% were made on credit. What is the trade payable turnover?

    1. 42.9 days
    2. 38.6 days
    3. 34.7 days
    4. 11.7days
20. 

Continue your exploration of A Visual Exploration of Recent Protests and Research Findings with our related content.