ACCA
F3

FREE ONLINE CBE BASED MOCK EXAM

50 Questions
Updated for
Exams in

2010
Prepared by | Hasaan Fazal


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ACCA – F3

Financial Accounting | CBE Based Test

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Financial Accounting | CBE Based Test

ACCA – F3

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1
Which of the following is NOT the likely effect that will take place if provision for bad debt is
increased?
A.
B.
C.
D.

Net debtors are lesser than previous year
Debit balance in profit and loss account
Greater closing balance of the provision account
Increased provision expense

2
Bulla ki Jana Co. has the following information relating to his bank account at May 31
Balance as per bank statement

outstanding cheques
Deposit in transit
Service charges
Interest credited by the bank


9000
3300
1100
10
43

Compute balance as per cash book at May 31

3
In standing order:
A.
B.
C.
D.

Bank is instructed to pay specified amounts
Bank is instructed to receive specified amounts
Someone is instructed to pay directly into our bank
All of the above

4
Which of the following are NOT the examples of depreciation?
A.
B.

C.
D.

Rot, rust
Decay, erosion
Inadequacy, amortization
Theft, embezzlement

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ACCA – F3

Financial Accounting | CBE Based Test

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Financial Accounting | CBE Based Test

ACCA – F3

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FOLLOWING DATA RELATES TO Question 5 - 6
P-IV has purchased a new computer and in consideration has paid 6000 in cash, 2000 by cheque
which P-IV has borrowed from P-V and for the remaining amount he has exchanged the older
computer for 4000
Calculate:

Q. 5 Trade-in value of new computer
Q. 6 Profit/loss earned by the P-IV on older computer if it had a cost of 10,000 and was depreciated on
straight line basis at 10% and is used for 1 year. *Indicate loss with “-“sign e.g. – xxx]

7
X receives a credit note from one of his suppliers.
How would X record this?
Account to be debited
A.
B.
C.
D.

purchases

purchases returns
supplier
supplier

account to be credited
supplier
supplier
purchases
purchases returns

8
External users of financial statements obtain information regarding the entity on:
A.
B.
C.
D.

Regular basis
Periodic basis
Emergency basis
None of the above

This data relates to Question 9 - 12
If Mr. B purchased “Alpha” worth 10,550 (inclusive of tax) and sold “Beta” worth 20,000 (exclusive of
tax) than calculate:

Q.9 Input tax
Q. 10 Tax payable if any to tax authorities
Q. 11 Amount that is recorded in sales ledger
Q. 12 Amount that is recorded in purchases ledger

NOTE: Assume tax rate of 10% for both input and output tax purposes

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Financial Accounting | CBE Based Test

ACCA – F3

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13
A trader’s net profit for a financial year was calculated as $20 000. It was then discovered that the
stock at the end of the year was undervalued by $2000.
What will be the effect of correcting this error on the gross profit and net profit?
gross profit $
decrease 2000
decrease 2000
increase 2000
increase 2000

A
B
C
D


net profit $
decrease 2000
increase 2000
decrease 2000
increase 2000

14
Which of the following entries would NOT affect the agreement of the totals in the trial balance?
(i) A bill for $800 for electricity has been omitted from the ledgers.
(ii) An invoice for plant repairs has been charged to the plant fixed asset account.
(iii) A cash sale has been recorded as debit cash sales, credit cash.
(iv) A credit note for $1500 for goods returned by a customer had been recorded in the correct
ledgers, but as $15,000.
A (i) only
B (i) and (ii) only
C (i), (ii) and (iii) only
D All of them.

15
At the beginning of Period 11, Zem Ltd had opening stock of 40 units of product X valued at $5.00
each. During Period 6, the following stock movements occurred:
Day 5 Sold 35 items for $6.00 each
Day 10 Bought 9 items for $7.00 each
Day 14 Sold 13 items for $8.00 each
Using the FIFO method of stock valuation, the closing stock at the end of Period 11 was
A $5.00
B $6.00
C $7.00
D $8.00


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Financial Accounting | CBE Based Test

ACCA – F3

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16
Karachi and Lahore are in partnership. Interest is to be charged on partners’ drawings.
Which entry will record this, if they are following “fixed capital” system?
Debit
A Appropriation Account
B partners’ current accounts
C partners’ capital accounts
D Profit and Loss Account

Credit
partners’ current accounts
Appropriation Account
Profit and Loss Account
partners’ current accounts

17
When there is inflation, the historical cost convention has the effect of

A overstating profits and understating balance sheet values.
B understating cash flow and overstating cash in the balance sheet.
C understating profits and overstating balance sheet values.
D overstating cash flow and understating cash in the balance sheet.

18
A firm has received the following business documents from X, a supplier.

October 5
October 10
October 12
October 22
November 4

invoice
invoice
credit note
invoice
invoice

$
650
120
150
230
790

There was no opening balance on X’s account and the firm made no payments to X during October.
What was the balance on the supplier’s statement of account at 31 October?
A $850 B $1150 C $1640 D $1940


19
A separate legal entity concept (for accounting purposes) applies to:
A.
B.
C.
D.

Sole trader ship
Partnership
Companies
All of the above

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Financial Accounting | CBE Based Test

ACCA – F3

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20
On assets like coal mines which of the following word is used instead of depreciation?
A.
B.

C.
D.

Erosion
Decay
Depletion
Amortization

The following data relates to Question 21 - 23
Mr. Credit is running a successful business which has been much profitable to this date. But due to
huge expansion in business and increasing number of customers, the Chief Accountant is of the
opinion that we must give a close look at doubtful customers.
Debtor’s and related provision figures are 10,000 and 150 respectively.
However following adjustments are yet to be made:




Business received a credit note of Rs. 250 from one its buyer.
Bad debts not yet recorded amounts to 150
Provision for the year is to made at 1%

21: What is an aggregate figure that will be transferred to income statement after such adjustments?
22: What is the year end provision for doubtful debt?
23: What is the net figure of debtor’s that will be disclosed in the balance sheet?

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Financial Accounting | CBE Based Test

ACCA – F3

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The following data relates to Question 24 - 26
The complex company is facing confusing economic turmoil these days and apocalyptic downturn of
their business is at full pace. The extract from unadjusted trial balance of Complex Co. is as follows:
Debtors: 90,000
Provision for bad debts: 3150
Bad debts: 550
Discount allowed: 1230
Following matters need attention:
 Mr. Dilemma, a buyer, who already owes us 15,000, has received a wrong invoice from our side.
Sales were actually of 5000 but invoice states that sales were 15,000. This error is yet to be
adjusted.
 Mr. Simple has been declared insolvent this year. Our accountant is pretty much sure that his
estate can recover only 65% of total owed to us. His account is at 5160
 Mr. Survivor is facing deep financial trouble these days and he has not cleared his account even
after due date. Accountant is of the opinion that we should provide 15% on his debt. His account
is at 7,000.
 Provision for bad debts is to be charged at 3%

Required:

24: Total amount of bad debts for the year

25: Provision of bad debt for the year
26: Net debtors for the year
27
Accounting systems which we can buy from a retailer are often termed as:
A.
B.
C.
D.

Tailor-made packages
Off-the-shelve packages
Beta packages
Retailer packages

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Financial Accounting | CBE Based Test

ACCA – F3

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28
Which of the following statements point to DISADVANTAGES specifically of a computer system?
A. Softgear company is using an accounting package which they bought several years ago. System

is working flawlessly to this date, however now it needs up gradation due to recent changes in
accounting standards.
B. High rise systems, a software house manages all their sales and purchases on a computer and
they have not created any backup system as they are of the opinion that their system is near to
perfection there is no need to have an alternative system so they are keeping all their Sales and
Purchases records on that single system.
C. Old Mobile, a car manufacturer, has recently installed a new system. Chief accountant is of a
concern that as human makes mistake if they want to do something fast, same applies for the
computer system.
D. All of the above.

29
Mark marketing company sells different products through their commission based sales person.
Accountant wants to calculate the commission of one of the sales person using Spreadsheet but he is
having trouble in making up the formula. Criteria for calculating the commission is:
Sales person are given commission of 5% on total sales made by the sales person if total sales
made by him exceeds 50,000 in value in addition to 1000 promised commission.
Following is the situation of his spreadsheet:

Suggest a formula to accountant which he should input into the orange box

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Financial Accounting | CBE Based Test


ACCA – F3

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Following information relates to Question 30 - 32
The trial balance of “Out of control” company is not balancing. In order to locate the error you were
asked to prepare total debtors account and total creditors account from the following information
for the period ended 31 December20x9:
Purchases ledger balance (30 Nov 20x9)
Sales ledger balance (30 Nov 20x9)
Purchase ledger balance (1 Jan 2x10)
Sales ledger balance (1 Jan 2x10)

118,740
197,440
145,300
220,240

Totals for December:
Purchases journal
Sales journal
Returns outward journal
Returns inward journal
payments to suppliers
petty cash payment to suppliers
payments from customers
Discounts allowed
Discounts received
Cash refunded to a customer who overpaid his account
Balances in the sales ledger set off against purchase ledger


1,545,620
1,996,620
26,480
45,560
1,461,000
780
1,859,600
58,670
21,340
370
10,360

30: Total of Total debtors account
31: Which account is not balancing?



Total debtors account
Total creditors account

32: What is the amount of difference between two sides?
33
Current accounts are preferred over fluctuating capital accounts because:
A. When partners are putting in greater amounts then the share of loss that they entitled to it acts
as warning.
B. When partners are taking out greater amounts then the share of loss that they entitled to it acts
as warning.
C. When partners are putting in greater amounts then the share of profit that they entitled to it
acts as warning.

D. When partners are taking out greater amounts then the share of profit that they entitled to it
acts as warning.

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Financial Accounting | CBE Based Test

ACCA – F3

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34
Mr. Partshipner is a limited liability partner in firm. The financial statements of partnership are
extracted and his details relating to Mr. Partshernip are as follows for the year ended 31 March 20x9:
Current account balance: 21,000
Capital account balance: 50,000
Share in the profit: 7160
Salary: 6300
To what amount his liability is limited?
A. 71,000
B. 34,460
C. 21,000
D. 50,000

Following information relates to Question 35 – 37

You are a CFO of “Half-life” Co. One of your subordinates has made a calculation on retained
earnings for the year and now you are checking it whether everything is done correctly.
The following information is provided to you for the year ended 31st May 2009:
Profit after tax: 118,000
Ordinary shares ($1): $500,000
Irredeemable preference shares ($2): $200,000
Redeemable preference shares ($1.5): 100,000
Proposed dividends:
 Preference dividend of 10%
 Ordinary dividend of 13%
Other information:
 Retained profits from last year: 53,000
 50% of redeemable preference shares are cumulative preference shares.
 Transfers to general reserves 18,000

35: Total ordinary dividend
36: Total preference dividend (to be treated in appropriation account)
37: Total retained profits carried forward to next year

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Financial Accounting | CBE Based Test

ACCA – F3


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Following information relates to Question 38 - 40
Following is the data of Simmering Co. relating to its past 5 years profit and profit appropriation
2001

2002

2003

2004

2005

Profit for the year

5000

3150

2002

15,770

6230

Ordinary dividend
Cumulative preference
share dividend


3000

3000

3000

3000

3000

6000

4000

1050

3000

3650

38: How much ordinary dividend will be paid in the year 2003?
A.
B.
C.
D.

3000
2002
Nil
2900


39: How much cumulative preference dividend will be carried forward at year ended 2003?
40: How much profit will be retained at the year ended 2005?
41
In case we purchased goodwill, the amount to be included in the balance sheet should be the
difference between:
A.
B.
C.
D.

The fair value of consideration received and accumulated fair value of net assets disposed off
The fair value of consideration given and accumulated carrying amount of assets acquired
The fair value of consideration received and accumulated carrying amount of assets acquired
None of the above

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Financial Accounting | CBE Based Test

ACCA – F3

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Following data relates to Question 42 - 45

S.T.A.L.K.E.R. Inc is finalizing its financial statements. You as accounting expert are approached by on
of its directors to obtain information regarding accounting of its two assets.
Company has two assets namely Chernobyl and Biohazard.
Information regarding both assets is as follows:
Chernobyl:
Cost: 180,000
Accumulated depreciation 90,000
Revaluation reserve: 50,000
Depreciation rate: 5%
Depreciation Method: Straight-line
Biohazard:
Cost: 268,000
Accumulated depreciation: 173,000
Depreciation rate: 15%
Depreciation method: Reducing balance



The current market value of Biohazard is significantly different from its current carrying amount
and company has decided to revalue its asset to 300,000 at the start of its financial year.
At year end company disposed Chernobyl, after charging depreciation for the year, for 150,000

Required:

42 Amount of revaluation reserve on biohazard at the year end?
43 Total depreciation for year ended that will be recorded in the income statement?
44 Profit or loss earned on sale of Chernobyl
[NOTE: Indicate loss with adding minus before number e.g. – xxx]

45 How much “excess depreciation” will be adjusted incase of Biohazard


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Financial Accounting | CBE Based Test

ACCA – F3

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Following data relates to Question 46 - 48
Master Minds plc of Pakistan, Fortune 100 Company, is producing a novel product “Bulb heads”.
Management of the company is pretty sure that this product will rock the current market and will not
only capture 80% of customers locally but will also be a huge success in international market.
Company has completed their research 2 years back with a total of 2000 million rupees spent. During
2 years company has completed its development and has tested first prototype working flawlessly.
Total expenditure on development was Rs.5000 million and completed dated December 2009.
Company anticipated that product’s commercial life is 7 years.
Company started commercial production on 1st January 2011. 1 year after its development has been
completed. The revenue that product earned during 2011, 2012 and 2013 is Rs. 10,000 milliion,
Rs.12,000 million and Rs. 5,000 million respectively.
However, because of fast adaption of new technology company faced strong competition from one
of its rival “Pak-tronics” and company has confirmed that its product will lose commercial life by the
year 2015.
Company has decided to amortize the development cost over its useful life.


46: Accountant is of the opinion that research expenditure was huge so keeping its materiality under
consideration we should capitalize the research cost. Do you think he is right?

47: What will be the carrying amount of capitalized development expenditure at the end of 2012?
48: What will be the amount of amortization for the year ended 2015?
49



A possible obligation depending on whether some uncertain future event occurs, or
A present obligation but payment is not probable or the amount cannot be measured reliably

The above two points refers to definition of:
A. Liability
B. Deferred liability
C. Contingent asset
D. None of the above

50
Which of the following are fundamental principles of preparing a financial statement?
A.
B.
C.
D.

Going Concern, Materiality, Prudence
Consistency, Accrual basis, Prudence
Going Concern, Consistency, Accrual basis
Materiality, Consistency, Prudence


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